AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 2003

REGISTRATION STATEMENT NOS. 333-
333-63082
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

THE GOLDMAN SACHS GROUP, INC.
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)

<Table>

DELAWARE 13-4019460
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NO.)
ORGANIZATION)
</Table>

------------------------
85 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 902-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

KENNETH L. JOSSELYN
THE GOLDMAN SACHS GROUP, INC.
85 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 902-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
DAVID B. HARMS
ROBERT W. REEDER III
SULLIVAN & CROMWELL LLP
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement.
------------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

CALCULATION OF REGISTRATION FEE

<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED (1)(2)(3)(4) PRICE PER UNIT(5) PRICE(5)(6) REGISTRATION FEE(4)(7)
- ---------------------------------------------------------------------------------------------------------------------------------

Debt Securities................... 100%
- ---------------------------------- ----------------------
Warrants.......................... 100%
- ---------------------------------- ----------------------
Purchase Contracts................ 100%
- ---------------------------------- ----------------------
Units(8).......................... $16,815,000,000 100% $16,815,000,000 $1,360,334
- ---------------------------------- ----------------------
Preferred Stock................... 100%
- ---------------------------------- ----------------------
Depositary Shares(9).............. 100%
- ---------------------------------- ----------------------
Common Stock, par value $0.01 per
share(10)....................... (9)
- ---------------------------------- ----------------------
Rights(11)........................ (10)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>

(1) An indeterminate aggregate initial offering price or number of the
securities is being registered as may from time to time be issued at
indeterminate prices, with an aggregate initial offering price not to
exceed $16,815,000,000 or the equivalent thereof in one or more other
currencies, currency units or composite currencies.

(2) This registration statement also covers an undeterminable amount of the
registered securities that may be reoffered and resold on an ongoing basis
after their initial sale in market-making transactions by affiliates of the
registrant.

(3) Includes such indeterminate amounts of debt securities, warrants, purchase
contracts, units, preferred stock and depositary shares as may be issued
upon exercise, conversion or exchange of any securities that provide for
that issuance. Also includes such indeterminate amounts of debt securities,
warrants and purchase contracts as may be issued in units and such
indeterminate amount of preferred stock as may be represented by depositary
shares.

(4) Pursuant to Rule 429 under the Securities Act, the prospectus filed as part
of this Registration Statement also relates to (a) $8,185,000,000 aggregate
initial offering price of the registrant's debt securities, warrants,
purchase contracts, units, preferred stock and depositary shares that were
previously registered pursuant to Registration Statement No. 333-63082 and
have not yet been issued and sold and (b) an undeterminable amount of the
registrant's medium-term notes and debt securities that were previously
registered and may be reoffered or resold on an ongoing basis after their
initial sale in market-making transactions by affiliates of the registrant.
The securities described in (b) include those described in (a) as well as
others that have already been issued and sold pursuant to Registration
Statement No. 333-63082 and other Registration Statements, all of the
securities registered on which have been issued and sold. A filing fee of
$2,862,500 was paid with respect to the $11,450,000,000 aggregate initial
offering price of debt securities, warrants, purchase contracts, units,
preferred stock and depositary shares registered pursuant to Registration
Statement (No. 333-63082).

(5) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act.

(6) Separate consideration may not be received for registered securities that
are issuable on exercise, conversion or exchange of other securities or
that are issued in units or represented by depositary shares.

(7) Pursuant to Rule 457(p) under the Securities Act, the registration fee is
offset by (a) $294,402 of the registration fee previously paid by the
registrant under Registration Statement File No. 333-77541, which was
initially filed on April 30, 1999, and (b) $904,421 of the registration fee
previously paid by the registrant under Registration Statement File No.
333-34042, which was initially filed on April 5, 2000.

(8) Each unit will be issued under a unit agreement or indenture and will
represent an interest in two or more debt securities, warrants and purchase
contracts, which may or may not be separable from one another.

(9) Each depositary share will be issued under a deposit agreement, will
represent an interest in a fractional share or multiple shares of preferred
stock and will be evidenced by a depositary receipt.

(10) Such indeterminate number of shares of common stock as may be issued upon
exercise, conversion or exchange of any debt securities, preferred stock,
warrants or purchase contracts that provide for such exercise, conversion
or exchange are being registered hereby.

(11) Each share of common stock includes one shareholder protection right as
described under "Description of Capital Stock".

This Registration Statement, which is a new Registration Statement, also
constitutes Post-Effective Amendment No. 1 to Registration Statement No.
333-63082, which was declared effective on June 25, 2001. Such Post-Effective
Amendment shall hereafter become effective concurrently with the effectiveness
of this Registration Statement and in accordance with Section 8(c) of the
Securities Act.

Upon effectiveness of this Registration Statement and the above-referenced
Post-Effective Amendment, all of the securities that may be offered pursuant to
the prospectus contained in this Registration Statement and that have not
previously been sold may be offered as debt securities, warrants, purchase
contracts, units, preferred stock or depositary shares.

EXPLANATORY NOTE

The prospectus contained herein relates to both of the following:

- the initial offering of debt securities, warrants, purchase contracts,
units, preferred stock and depositary shares of The Goldman Sachs Group,
Inc. on a continuous or delayed basis, at an aggregate initial public
offering price of up to $25,000,000,000; and

- market-making transactions that may occur on a continuous or delayed
basis in the securities described above, after they are initially offered
and sold, and in debt securities of The Goldman Sachs Group, Inc., the
initial offering and sale of which have already occurred.

When the prospectus is delivered to an investor in the initial offering
described above, the investor will be informed of that fact in the confirmation
of sale. When the prospectus is delivered to an investor who is not so informed,
it is delivered in a market-making transaction.

THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES NOR DOES IT SEEK AN OFFER TO
BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.

SUBJECT TO COMPLETION. DATED MAY 15, 2003.

$25,000,000,000
THE GOLDMAN SACHS GROUP, INC.
[GOLDMAN SACHS LOGO]
Debt Securities
Warrants
Purchase Contracts
Units
Preferred Stock
Depositary Shares
----------------------
The Goldman Sachs Group, Inc. from time to time may offer to sell debt
securities, warrants and purchase contracts, either individually or in units, as
well as preferred stock, either separately or represented by depositary shares.
The debt securities, warrants, purchase contracts and preferred stock may be
convertible into or exercisable or exchangeable for common or preferred stock or
other securities of Goldman Sachs or debt or equity securities of one or more
other entities. The common stock of Goldman Sachs is listed on the New York
Stock Exchange and trades under the ticker symbol "GS". The total amount of debt
securities, warrants, purchase contracts, units, preferred stock and depositary
shares will have an initial aggregate offering price of up to $25,000,000,000,
or the equivalent amount in other currencies, currency units or composite
currencies, although Goldman Sachs may increase this amount in the future.

Goldman Sachs may offer and sell these securities to or through one or more
underwriters, dealers and agents, including the firm named below, or directly to
purchasers, on a continuous or delayed basis.

This prospectus describes some of the general terms that may apply to these
securities and the general manner in which they may be offered. The specific
terms of any securities to be offered, and the specific manner in which they may
be offered, will be described in a supplement to this prospectus.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------------
Goldman Sachs may use this prospectus in the initial sale of these
securities. In addition, Goldman, Sachs & Co. or any other affiliate of Goldman
Sachs may use this prospectus in a market-making transaction in any of these or
similar securities after its initial sale. UNLESS GOLDMAN SACHS OR ITS AGENT
INFORMS THE PURCHASER OTHERWISE IN THE CONFIRMATION OF SALE, THIS PROSPECTUS IS
BEING USED IN A MARKET-MAKING TRANSACTION.
----------------------
GOLDMAN, SACHS & CO.
----------------------
Prospectus dated May , 2003.

TABLE OF CONTENTS

<Table>
<Caption>
Page
----

Available Information....................................... 2
Prospectus Summary.......................................... 4
Ratio of Earnings to Fixed Charges.......................... 8
Use of Proceeds............................................. 8
Description of Debt Securities We May Offer................. 9
Description of Warrants We May Offer........................ 32
Description of Purchase Contracts We May Offer.............. 49
Description of Units We May Offer........................... 54
Description of Preferred Stock We May Offer................. 60
Description of Capital Stock................................ 68
Legal Ownership and Book-Entry Issuance..................... 73
Considerations Relating to Securities Issued in Bearer
Form...................................................... 79
Considerations Relating to Indexed Securities............... 83
Considerations Relating to Securities Denominated or Payable
in or Linked to a Non-U.S. Dollar Currency................ 86
United States Taxation...................................... 89
Plan of Distribution........................................ 109
Employee Retirement Income Security Act..................... 112
Validity of the Securities.................................. 112
Experts..................................................... 112
Cautionary Statement Pursuant to the Private Securities
Litigation Reform Act of 1995............................. 113
</Table>

AVAILABLE INFORMATION

The Goldman Sachs Group, Inc. is required to file annual, quarterly and
current reports, proxy statements and other information with the SEC. You may
read and copy any documents filed by us at the SEC's public reference room at
450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. Our filings
with the SEC are also available to the public through the SEC's Internet site at
http://www.sec.gov and through the NYSE, 20 Broad Street, New York, New York
10005, on which our common stock is listed.

We have filed registration statements on Form S-3 with the SEC relating to
the securities covered by this prospectus. This prospectus is a part of the
registration statements and does not contain all of the information in the
registration statements. Whenever a reference is made in this prospectus to a
contract or other document of Goldman Sachs, please be aware that the reference
is only a summary and that you should refer to the exhibits that are a part of
the registration statements for a copy of the contract or other document. You
may review a copy of the registration statements at the SEC's public reference
room in Washington, D.C., as well as through the SEC's Internet site.

The SEC's rules allow us to "incorporate by reference" information into
this prospectus. This means that we can disclose important information to you by
referring you to another document. Any information referred to in this way is
considered part of this prospectus from the date we file that document. Any
reports filed by us with the SEC after the date of this prospectus and before
the date that the offering of the securities by means of this prospectus is
terminated will automatically update and, where applicable, supersede any
information contained in this prospectus or incorporated by reference in this
prospectus.

The Goldman Sachs Group, Inc. incorporates by reference into this
prospectus the following documents or information filed with the SEC:

(1) Annual Report on Form 10-K for the fiscal year ended November 29,
2002 (File No. 001-14965);

(2) Quarterly Report on Form 10-Q for the quarter ended February 28,
2003 (File No. 001-14965);

(3) Current Report on Form 8-K, dated and filed on December 19, 2002
(File No. 001-14965);

(4) Current Report on Form 8-K, dated December 20, 2002 and filed on
December 23, 2002 (File No. 001-14965);

(5) Current Report on Form 8-K, dated and filed on January 15, 2003
(File No. 001-14965);

(6) Current Report on Form 8-K, dated and filed on March 20, 2003 (File
No. 001-14965);

(7) Current Report on Form 8-K, dated and filed on April 16, 2003 (File
No. 001-14965);

(8) Current Report on Form 8-K, dated and filed on April 28, 2003 (File
No. 001-14965);

(9) The description of common stock contained in the Registration
Statement on Form 8-A, dated April 27, 1999 (File No. 001-14965),
of The Goldman Sachs Group, Inc., filed with the SEC under Section
12(b) of the Securities Exchange Act of 1934;

(10) All documents filed by The Goldman Sachs Group, Inc. under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 on
or after the date of

this registration statement and prior to effectiveness of this
registration statement; and

(11) All documents filed by The Goldman Sachs Group, Inc. under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 on
or after the date of this prospectus and before the termination of
this offering.

We will provide without charge to each person, including any beneficial
owner, to whom this prospectus is delivered, upon his or her written or oral
request, a copy of any or all documents referred to above which have been or may
be incorporated by reference into this prospectus excluding exhibits to those
documents unless they are specifically incorporated by reference into those
documents. You can request those documents from Investor Relations, 10 Hanover
Square, New York, New York 10005, telephone (212) 902-0300.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus
or incorporated by reference into this prospectus as further described above
under "Available Information". This summary does not contain all the information
that you should consider before investing in the securities being offered by
this prospectus. You should carefully read the entire prospectus, the documents
incorporated by reference into this prospectus and the prospectus supplement
relating to the securities that you propose to buy, especially any description
of investment risks that we may include in the prospectus supplement.

GOLDMAN SACHS

Goldman Sachs is a leading global investment banking, securities and
investment management firm that provides a wide range of services worldwide to a
substantial and diversified client base that includes corporations, financial
institutions, governments and high-net-worth individuals. Founded in 1869, we
are one of the oldest and largest investment banking firms. Our headquarters are
located at 85 Broad Street, New York, New York 10004, telephone (212) 902-1000,
and we maintain offices in London, Frankfurt, Tokyo, Hong Kong and other major
financial centers around the world.

THE SECURITIES WE ARE OFFERING

We may offer any of the following securities from time to time:

- debt securities;

- warrants;

- purchase contracts;

- units, comprised of two or more debt securities, warrants and purchase
contracts, in any combination; and

- preferred stock, either directly or represented by depositary shares.

When we use the term "securities" in this prospectus, we mean any of the
securities we may offer with this prospectus, unless we say otherwise. This
prospectus, including the following summary, describes the general terms that
may apply to the securities; the specific terms of any particular securities
that we may offer will be described in a separate supplement to this prospectus.

DEBT SECURITIES

Our debt securities may be senior or subordinated in right of payment. For
any particular debt securities we offer, the applicable prospectus supplement
will describe the specific designation, the aggregate principal or face amount
and the purchase price; the ranking, whether senior or subordinated; the stated
maturity; the redemption terms, if any; the rate or manner of calculating the
rate and the payment dates for interest, if any; the amount or manner of
calculating the amount payable at maturity and whether that amount may be paid
by delivering cash, securities or other property; the terms on which the debt
securities may be convertible into or exercisable or exchangeable for common
stock or other securities of The Goldman Sachs Group, Inc. or any other entity,
if any; and any other specific terms. We will issue the senior and subordinated
debt securities under separate debt indentures between us and The Bank of New
York, as trustee.

WARRANTS

We may offer two types of warrants:

- warrants to purchase our debt securities; and

- warrants to purchase or sell, or whose cash value is determined by
reference to the performance, level or value of, one or more of the
following:

-- securities of one or more issuers, including our common or preferred
stock or other securities described in this prospectus or debt or
equity securities of third parties;

-- one or more currencies;

-- one or more commodities;

-- any other financial, economic or other measure or instrument,
including the occurrence or non-occurrence of any event or
circumstance; and

-- one or more indices or baskets of the items described above.

For any particular warrants we offer, the applicable prospectus supplement
will describe the underlying property; the expiration date; the exercise price
or the manner of determining the exercise price; the amount and kind, or the
manner of determining the amount and kind, of property to be delivered by you or
us upon exercise; and any other specific terms. We may issue the warrants under
the warrant indenture between us and The Bank of New York, as trustee, or under
warrant agreements between us and one or more warrant agents.

PURCHASE CONTRACTS

We may offer purchase contracts for the purchase or sale of, or whose cash
value is determined by reference to the performance, level or value of, one or
more of the following:

- securities of one or more issuers, including our common or preferred
stock or other securities described in this prospectus and debt or equity
securities of third parties;

- one or more currencies;

- one or more commodities;

- any other financial, economic or other measure or instrument, including
the occurrence or non-occurrence of any event or circumstance; and

- one or more indices or baskets of the items described above.

For any particular purchase contracts we offer, the applicable prospectus
supplement will describe the underlying property; the settlement date; the
purchase price or manner of determining the purchase price and whether it must
be paid when the purchase contract is issued or at a later date; the amount and
kind, or the manner of determining the amount and kind, of property to be
delivered at settlement; whether the holder will pledge property to secure the
performance of any obligations the holder may have under the purchase contract;
and any other specific terms. We may issue purchase contracts under an indenture
described above or a unit agreement described below.

UNITS

We may offer units, comprised of two or more debt securities, warrants and
purchase contracts, in any combination. For any particular units we offer, the
applicable prospectus
5

supplement will describe the particular securities comprising each unit; the
terms on which those securities will be separable, if any; whether the holder
will pledge property to secure the performance of any obligations the holder may
have under the unit; and any other specific terms of the units. We may issue the
units under unit agreements between us and one or more unit agents.

PREFERRED STOCK AND DEPOSITARY SHARES

We may offer our preferred stock, par value $0.01 per share, in one or more
series. For any particular series we offer, the applicable prospectus supplement
will describe the specific designation; the aggregate number of shares offered;
the rate and periods, or manner of calculating the rate and periods, for
dividends, if any; the stated value and liquidation preference amount, if any;
the voting rights, if any; the terms on which the series will be convertible
into or exercisable or exchangeable for our common stock, preferred stock of
another series or other securities described in this prospectus, debt or equity
securities of third parties or property, if any; the redemption terms, if any;
and any other specific terms. We may also offer depositary shares, each of which
would represent an interest in a fractional share or multiple shares of
preferred stock. We may issue the depositary shares under deposit agreements
between us and one or more depositaries.

FORM OF SECURITIES

We will issue the securities in book-entry form through one or more
depositaries, such as The Depository Trust Company, Euroclear or Clearstream,
named in the applicable prospectus supplement. Each sale of a security in
book-entry form will settle in immediately available funds through the
depositary, unless otherwise stated. We will issue the securities only in
registered form, without coupons, although we may issue the securities in bearer
form if so specified in the applicable prospectus supplement.

PAYMENT CURRENCIES

Amounts payable in respect of the securities, including the purchase price,
will be payable in U.S. dollars, unless the applicable prospectus supplement
says otherwise.

LISTING

If any securities are to be listed or quoted on a securities exchange or
quotation system, the applicable prospectus supplement will say so.

RATIO OF EARNINGS TO FIXED CHARGES

The Goldman Sachs Group, Inc.'s consolidated ratios of earnings to fixed
charges for the three-month periods ended February 28, 2003 and February 22,
2002 and for each of the fiscal years ended November 29, 2002, November 30,
2001, November 24, 2000, November 26, 1999 and November 27, 1998 are included in
this prospectus. See "Ratio of Earnings to Fixed Charges" below.

USE OF PROCEEDS

We intend to use the net proceeds from the sales of the securities to
provide additional funds for our operations and for other general corporate
purposes.

MANNER OF OFFERING

The securities will be offered in connection with their initial issuance or
in market-making transactions by our affiliates after initial issuance. Those
offered in market-making transactions may be securities that we will not issue
until after the date of this prospectus as well as debt securities that we have
previously issued. The initial aggregate offering price specified on the cover
of this prospectus relates to the securities that we have not yet issued.

When we issue new securities, we may offer them for sale to or through
underwriters, dealers and agents, including our affiliates, or directly to
purchasers. The applicable prospectus supplement will include any required
information about the firms we use and the discounts or commissions we may pay
them for their services.

Our affiliates that we refer to above may include, among others, Goldman,
Sachs & Co., for offers and sales in the United States, and Goldman Sachs
International and Goldman Sachs (Asia) L.L.C., for offers and sales outside the
United States.

RATIO OF EARNINGS TO FIXED CHARGES

<Table>
<Caption>
THREE MONTHS
ENDED
YEAR ENDED NOVEMBER FEBRUARY
----------------------------------------- --------------
2002 2001 2000 1999 1998 2003 2002
----- ----- ----- ----- ----- ----- -----

Ratio of Earnings to Fixed
Charges (unaudited)(1)(2).... 1.36x 1.24x 1.30x 1.16x 1.21x 1.52x 1.39x
</Table>

- -------------------------

(1) Our pre-tax earnings in fiscal year 1999 and in subsequent fiscal periods
reflect payments for services rendered by managing directors who, before our
conversion to corporate form, were profit participating limited partners. In
prior years, these payments were accounted for as distributions of partners'
capital rather than as compensation and benefits expense. As a result, these
payments are not reflected in operating expenses in 1998 and, therefore, the
pre-tax earnings in this period are not comparable to fiscal years 1999,
2000, 2001 and 2002. Please refer to our consolidated financial statements
and their notes, which are incorporated into this prospectus by reference,
for further information. See "Available Information" for information about
how to obtain copies of our consolidated financial statements.

(2) For purposes of the ratio of earnings to fixed charges, "earnings" represent
pre-tax earnings plus fixed charges and "fixed charges" represent interest
expense plus that portion of rent expense that, in our opinion, approximates
the interest factor included in rent expense.

As of the date of this prospectus, we have no preferred stock outstanding.

USE OF PROCEEDS

We intend to use the net proceeds from the sales of the securities to
provide additional funds for our operations and for other general corporate
purposes.

DESCRIPTION OF DEBT SECURITIES WE MAY OFFER

Please note that in this section entitled "Description of Debt Securities We May
Offer", references to The Goldman Sachs Group, Inc., "we", "our" and "us" refer
only to The Goldman Sachs Group, Inc. and not to its consolidated subsidiaries.
Also, in this section, references to "holders" mean those who own debt
securities registered in their own names, on the books that we or the trustee
maintain for this purpose, and not those who own beneficial interests in debt
securities registered in street name or in debt securities issued in book-entry
form through one or more depositaries. Owners of beneficial interests in the
debt securities should read the section below entitled "Legal Ownership and
Book-Entry Issuance".

DEBT SECURITIES MAY BE SENIOR OR SUBORDINATED

We may issue senior or subordinated debt securities. Neither the senior
debt securities nor the subordinated debt securities will be secured by any
property or assets of The Goldman Sachs Group, Inc. or its subsidiaries. Thus,
by owning a debt security, you are one of our unsecured creditors.

The senior debt securities and, in the case of senior debt securities in
bearer form, any related interest coupons, will constitute part of our senior
debt, will be issued under our senior debt indenture described below and will
rank equally with all of our other unsecured and unsubordinated debt.

The subordinated debt securities and, in the case of subordinated debt
securities in bearer form, any related interest coupons will constitute part of
our subordinated debt, will be issued under our subordinated debt indenture
described below and will be subordinate in right of payment to all of our
"senior indebtedness", as defined in the subordinated debt indenture. The
prospectus supplement for any series of subordinated debt securities or the
information incorporated in this prospectus by reference will indicate the
approximate amount of senior indebtedness outstanding as of the end of our most
recent fiscal quarter. Neither indenture limits our ability to incur additional
senior indebtedness.

When we refer to "debt securities" in this prospectus, we mean both the
senior debt securities and the subordinated debt securities.

THE SENIOR DEBT INDENTURE AND THE SUBORDINATED DEBT INDENTURE

The senior debt securities and the subordinated debt securities are each
governed by a document called an indenture -- the senior debt indenture, in the
case of the senior debt securities, and the subordinated debt indenture, in the
case of the subordinated debt securities. Each indenture is a contract between
us and The Bank of New York, which will initially act as trustee. The indentures
are substantially identical, except for our covenant described below under
"-- Restriction on Liens", which is included only in the senior debt indenture,
and the provisions relating to subordination, which are included only in the
subordinated debt indenture.

The trustee under each indenture has two main roles:

- First, the trustee can enforce your rights against us if we default.
There are some limitations on the extent to which the trustee acts on
your behalf, which we describe later under "-- Default, Remedies and
Waiver of Default".

- Second, the trustee performs administrative duties for us, such as
sending you interest payments and notices.

See "-- Our Relationship With the Trustee" below for more information about the
trustee.

When we refer to the indenture or the trustee with respect to any debt
securities, we mean the indenture under which those debt securities are issued
and the trustee under that indenture.

WE MAY ISSUE MANY SERIES OF DEBT SECURITIES

We may issue as many distinct series of debt securities under either debt
indenture as we wish. This section summarizes terms of the securities that apply
generally to all series. The provisions of each indenture allow us not only to
issue debt securities with terms different from those of debt securities
previously issued under that indenture, but also to "reopen" a previously issued
series of debt securities and issue additional debt securities of that series.
We describe most of the financial and other specific terms of your series,
whether it be a series of the senior debt securities or subordinated debt
securities, in the prospectus supplement accompanying this prospectus. Those
terms may vary from the terms described here.

As you read this section, please remember that the specific terms of your debt
security as described in your prospectus supplement will supplement and, if
applicable, may modify or replace the general terms described in this section.
If there are any differences between your prospectus supplement and this
prospectus, your prospectus supplement will control. Thus, the statements we
make in this section may not apply to your debt security.

When we refer to a series of debt securities, we mean a series issued under
the applicable indenture. When we refer to your prospectus supplement, we mean
the prospectus supplement describing the specific terms of the debt security you
purchase. The terms used in your prospectus supplement will have the meanings
described in this prospectus, unless otherwise specified.

AMOUNTS THAT WE MAY ISSUE

Neither debt indenture limits the aggregate amount of debt securities that
we may issue or the number of series or the aggregate amount of any particular
series. We may issue debt securities and other securities in amounts that exceed
the total amount specified on the cover of this prospectus, at any time without
your consent and without notifying you.

The indentures and the debt securities do not limit our ability to incur
other indebtedness or to issue other securities. Also, we are not subject to
financial or similar restrictions by the terms of the debt securities, except as
described below under "-- Restriction on Liens".

PRINCIPAL AMOUNT, STATED MATURITY AND MATURITY

The principal amount of a debt security means the principal amount payable
at its stated maturity, unless that amount is not determinable, in which case
the principal amount of a debt security is its face amount. Any debt securities
owned by us or any of our affiliates are not deemed to be outstanding.

The term "stated maturity" with respect to any debt security means the day
on which the principal amount of your debt security is scheduled to become due.
The principal may become due sooner, by reason of redemption or acceleration
after a default or otherwise in accordance with the terms of the debt security.
The day on which the principal actually becomes due, whether at the stated
maturity or earlier, is called the "maturity" of the principal.

We also use the terms "stated maturity" and "maturity" to refer to the days
when other payments become due. For example, we may refer to a regular interest
payment date when an

installment of interest is scheduled to become due as the "stated maturity" of
that installment. When we refer to the "stated maturity" or the "maturity" of a
debt security without specifying a particular payment, we mean the stated
maturity or maturity, as the case may be, of the principal.

WE ARE A HOLDING COMPANY

Because our assets consist principally of interests in the subsidiaries
through which we conduct our businesses, our right to participate as an equity
holder in any distribution of assets of any of our subsidiaries upon the
subsidiary's liquidation or otherwise, and thus the ability of our security
holders to benefit from the distribution, is junior to creditors of the
subsidiary, except to the extent that any claims we may have as a creditor of
the subsidiary are recognized. In addition, dividends, loans and advances to us
from some of our subsidiaries, including Goldman, Sachs & Co., are restricted by
net capital requirements under the Securities Exchange Act of 1934 and under
rules of securities exchanges and other regulatory bodies. Furthermore, because
some of our subsidiaries, including Goldman, Sachs & Co., are partnerships in
which we are a general partner, we may be liable for their obligations. We also
guarantee many of the obligations of our subsidiaries. Any liability we may have
for our subsidiaries' obligations could reduce our assets that are available to
satisfy our direct creditors, including investors in our securities.

THIS SECTION IS ONLY A SUMMARY

The debt indentures and their associated documents, including your debt
security, contain the full legal text of the matters described in this section
and your prospectus supplement. We have filed copies of the indentures with the
SEC as exhibits to our registration statements. See "Available Information"
above for information on how to obtain copies of them.

This section and your prospectus supplement summarize all the material
terms of the indentures and your debt security. They do not, however, describe
every aspect of the indentures and your debt security. For example, in this
section and your prospectus supplement, we use terms that have been given
special meaning in the indentures, but we describe the meaning for only the more
important of those terms.

GOVERNING LAW

The debt indentures and the debt securities will be governed by New York
law.

CURRENCY OF DEBT SECURITIES

Amounts that become due and payable on your debt security in cash will be
payable in a currency, composite currency, basket of currencies or currency unit
or units specified in your prospectus supplement. We refer to this currency,
composite currency, basket of currencies or currency unit or units as a
"specified currency". The specified currency for your debt security will be U.S.
dollars, unless your prospectus supplement states otherwise. Some debt
securities may have different specified currencies for principal and interest.
You will have to pay for your debt securities by delivering the requisite amount
of the specified currency for the principal to Goldman, Sachs & Co. or another
firm that we name in your prospectus supplement, unless other arrangements have
been made between you and us or you and that firm. We will make payments on your
debt securities in the specified currency, except as described below in
"-- Payment Mechanics for Debt Securities". See "Considerations Relating to
Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency"
below for more information about risks of investing in debt securities of this
kind.

FORM OF DEBT SECURITIES

We will issue each debt security in global -- i.e., book-entry -- form
only, unless we specify otherwise in the applicable prospectus supplement. Debt
securities in book-entry form will be represented by a global security
registered in the name of a depositary, which will be the holder of all the debt
securities represented by the global security. Those who own beneficial
interests in a global debt security will do so through participants in the
depositary's securities clearance system, and the rights of these indirect
owners will be governed solely by the applicable procedures of the depositary
and its participants. We describe book-entry securities below under "Legal
Ownership and Book-Entry Issuance".

In addition, we will generally issue each debt security in registered form,
without coupons, unless we specify otherwise in the applicable prospectus
supplement. If we issue a debt security in bearer form, the provisions described
below under "Considerations Relating to Securities Issued in Bearer Form" would
apply to that security. As we note in that section, some of the features of the
debt securities that we describe in this prospectus may not apply to bearer debt
securities.

TYPES OF DEBT SECURITIES

We may issue any of the following three types of senior debt securities or
subordinated debt securities:

FIXED RATE DEBT SECURITIES

A debt security of this type will bear interest at a fixed rate described
in the applicable prospectus supplement. This type includes zero coupon debt
securities, which bear no interest and are instead issued at a price lower than
the principal amount. See "-- Original Issue Discount Debt Securities" below for
more information about zero coupon and other original issue discount debt
securities.

Each fixed rate debt security, except any zero coupon debt security, will
bear interest from its original issue date or from the most recent date to which
interest on the debt security has been paid or made available for payment.
Interest will accrue on the principal of a fixed rate debt security at the fixed
yearly rate stated in the applicable prospectus supplement, until the principal
is paid or made available for payment or the debt security is converted or
exchanged. Each payment of interest due on an interest payment date or the date
of maturity will include interest accrued from and including the last date to
which interest has been paid, or made available for payment, or from the issue
date if none has been paid or made available for payment, to but excluding the
interest payment date or the date of maturity. We will compute interest on fixed
rate debt securities on the basis of a 360-day year of twelve 30-day months,
unless your prospectus supplement provides that we will compute interest on a
different basis. We will pay interest on each interest payment date and at
maturity as described below under "-- Payment Mechanics for Debt Securities".

FLOATING RATE DEBT SECURITIES

A debt security of this type will bear interest at rates that are
determined by reference to an interest rate formula. In some cases, the rates
may also be adjusted by adding or subtracting a spread or multiplying by a
spread multiplier and may be subject to a minimum rate or a maximum rate. If
your debt security is a floating rate debt security, the formula and any
adjustments that apply to the interest rate will be specified in your prospectus
supplement.

Each floating rate debt security will bear interest from its original issue
date or from the most recent date to which interest on the debt security has
been paid or made available for payment. Interest will accrue on the principal
of a floating rate debt security at the yearly rate determined
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according to the interest rate formula stated in the applicable prospectus
supplement, until the principal is paid or made available for payment. We will
pay interest on each interest payment date and at maturity as described below
under "-- Payment Mechanics for Debt Securities".

CALCULATION OF INTEREST. Calculations relating to floating rate debt
securities will be made by the calculation agent, an institution that we appoint
as our agent for this purpose. That institution may include any affiliate of
ours, such as Goldman, Sachs & Co. The prospectus supplement for a particular
floating rate debt security will name the institution that we have appointed to
act as the calculation agent for that debt security as of its original issue
date. We may appoint a different institution to serve as calculation agent from
time to time after the original issue date of the debt security without your
consent and without notifying you of the change.

For each floating rate debt security, the calculation agent will determine,
on the corresponding interest calculation or determination date, as described in
the applicable prospectus supplement, the interest rate that takes effect on
each interest reset date. In addition, the calculation agent will calculate the
amount of interest that has accrued during each interest period -- i.e., the
period from and including the original issue date, or the last date to which
interest has been paid or made available for payment, to but excluding the
payment date. For each interest period, the calculation agent will calculate the
amount of accrued interest by multiplying the face or other specified amount of
the floating rate debt security by an accrued interest factor for the interest
period. This factor will equal the sum of the interest factors calculated for
each day during the interest period. The interest factor for each day will be
expressed as a decimal and will be calculated by dividing the interest rate,
also expressed as a decimal, applicable to that day by 360 or by the actual
number of days in the year, as specified in the applicable prospectus
supplement.

Upon the request of the holder of any floating rate debt security, the
calculation agent will provide for that debt security the interest rate then in
effect -- and, if determined, the interest rate that will become effective on
the next interest reset date. The calculation agent's determination of any
interest rate, and its calculation of the amount of interest for any interest
period, will be final and binding in the absence of manifest error.

All percentages resulting from any calculation relating to a debt security
will be rounded upward or downward, as appropriate, to the next higher or lower
one hundred-thousandth of a percentage point, e.g., 9.876541% (or .09876541)
being rounded down to 9.87654% (or .0987654) and 9.876545% (or .09876545) being
rounded up to 9.87655% (or .0987655). All amounts used in or resulting from any
calculation relating to a floating rate debt security will be rounded upward or
downward, as appropriate, to the nearest cent, in the case of U.S. dollars, or
to the nearest corresponding hundredth of a unit, in the case of a currency
other than U.S. dollars, with one-half cent or one-half of a corresponding
hundredth of a unit or more being rounded upward.

In determining the base rate that applies to a floating rate debt security
during a particular interest period, the calculation agent may obtain rate
quotes from various banks or dealers active in the relevant market, as described
in the applicable prospectus supplement. Those reference banks and dealers may
include the calculation agent itself and its affiliates, as well as any
underwriter, dealer or agent participating in the distribution of the relevant
floating rate debt securities and its affiliates, and they may include
affiliates of The Goldman Sachs Group, Inc.

INDEXED DEBT SECURITIES

A debt security of this type provides that the principal amount payable at
its maturity, and/or the amount of interest payable on an interest payment date,
will be determined by reference to:

- securities of one or more issuers;

- one or more currencies;
13

- one or more commodities;

- any other financial, economic or other measure or instrument, including
the occurrence or non-occurrence of any event or circumstance; and/or

- one or more indices or baskets of the items described above.

If you are a holder of an indexed debt security, you may receive an amount at
maturity that is greater than or less than the face amount of your debt security
depending upon the value of the applicable index at maturity. The value of the
applicable index will fluctuate over time.

An indexed debt security may provide either for cash settlement or for
physical settlement by delivery of the underlying property or another property
of the type listed above. An indexed debt security may also provide that the
form of settlement may be determined at our option or at the holder's option.
Some indexed debt securities may be convertible, exercisable or exchangeable, at
our option or the holder's option, into or for securities of The Goldman Sachs
Group, Inc. or an issuer other than The Goldman Sachs Group, Inc.

If you purchase an indexed debt security, your prospectus supplement will
include information about the relevant index, about how amounts that are to
become payable will be determined by reference to the price or value of that
index and about the terms on which the security may be settled physically or in
cash. The prospectus supplement will also identify the calculation agent that
will calculate the amounts payable with respect to the indexed debt security and
may exercise significant discretion in doing so. The calculation agent may be
Goldman, Sachs & Co. or another of our affiliates. See "Considerations Relating
to Indexed Securities" for more information about risks of investing in debt
securities of this type.

ORIGINAL ISSUE DISCOUNT DEBT SECURITIES

A fixed rate debt security, a floating rate debt security or an indexed
debt security may be an original issue discount debt security. A debt security
of this type is issued at a price lower than its principal amount and provides
that, upon redemption or acceleration of its maturity, an amount less than its
principal amount will be payable. An original issue discount debt security may
be a zero coupon debt security. A debt security issued at a discount to its
principal may, for U.S. federal income tax purposes, be considered an original
issue discount debt security, regardless of the amount payable upon redemption
or acceleration of maturity. See "United States Taxation -- Taxation of Debt
Securities -- United States Holders -- Original Issue Discount" below for a
brief description of the U.S. federal income tax consequences of owning an
original issue discount debt security.

INFORMATION IN THE PROSPECTUS SUPPLEMENT

Your prospectus supplement will describe the specific terms of your debt
security, which will include some or all of the following:

- whether it is a senior debt security or a subordinated debt security;

- any limit on the total principal amount of the debt securities of the
same series;

- the stated maturity;

- the specified currency or currencies for principal and interest, if not
U.S. dollars;

- the price at which we originally issue your debt security, expressed as a
percentage of the principal amount, and the original issue date;

- whether your debt security is a fixed rate debt security, a floating rate
debt security or an indexed debt security;

- if your debt security is a fixed rate debt security, the yearly rate at
which your debt security will bear interest, if any, and the interest
payment dates;

- if your debt security is a floating rate debt security, the interest rate
basis; any applicable index currency or maturity, spread or spread
multiplier or initial, maximum or minimum rate; the interest reset,
determination, calculation and payment dates; the day count used to
calculate interest payments for any period; and the calculation agent;

- if your debt security is an indexed debt security, the principal amount,
if any, we will pay you at maturity, the amount of interest, if any, we
will pay you on an interest payment date or the formula we will use to
calculate these amounts, if any, and the terms on which your debt
security will be exchangeable for or payable in cash, securities or other
property;

- if your debt security may be converted into or exercised or exchanged for
common or preferred stock or other securities of The Goldman Sachs Group,
Inc. or debt or equity securities of one or more third parties, the terms
on which conversion, exercise or exchange may occur, including whether
conversion, exercise or exchange is mandatory, at the option of the
holder or at our option, the period during which conversion, exercise or
exchange may occur, the initial conversion, exercise or exchange price or
rate and the circumstances or manner in which the amount of common or
preferred stock or other securities issuable upon conversion, exercise or
exchange may be adjusted;

- if your debt security is also an original issue discount debt security,
the yield to maturity;

- if applicable, the circumstances under which your debt security may be
redeemed at our option or repaid at the holder's option before the stated
maturity, including any redemption commencement date, repayment date(s),
redemption price(s) and redemption period(s);

- the authorized denominations, if other than $1,000 and integral multiples
of $1,000;

- the depositary for your debt security, if other than DTC, and any
circumstances under which the holder may request securities in non-global
form, if we choose not to issue your debt security in book-entry form
only;

- if your debt security will be issued in bearer form, any special
provisions relating to bearer securities that are not addressed in this
prospectus;

- if applicable, the circumstances under which we will pay additional
amounts on any debt securities held by a person who is not a United
States person for tax purposes and under which we can redeem the debt
securities if we have to pay additional amounts;

- the names and duties of any co-trustees, depositaries, authenticating
agents, paying agents, transfer agents or registrars for your debt
security; and

- any other terms of your debt security, which could be different from
those described in this prospectus.

MARKET-MAKING TRANSACTIONS. If you purchase your debt security -- or any
of our other securities we describe in this prospectus -- in a market-making
transaction, you will receive information about the price you pay and your trade
and settlement dates in a separate confirmation of sale. A market-making
transaction is one in which Goldman, Sachs & Co. or another of our affiliates
resells a security that it has previously acquired from another holder. A
market-making transaction in a particular security occurs after the original
issuance and sale of the security.

REDEMPTION AND REPAYMENT

Unless otherwise indicated in your prospectus supplement, your debt
security will not be entitled to the benefit of any sinking fund -- that is, we
will not deposit money on a regular basis into any separate custodial account to
repay your debt securities. In addition, we will not be entitled to redeem your
debt security before its stated maturity unless your prospectus supplement
specifies a redemption commencement date. You will not be entitled to require us
to buy your debt security from you, before its stated maturity, unless your
prospectus supplement specifies one or more repayment dates.

If your prospectus supplement specifies a redemption commencement date or a
repayment date, it will also specify one or more redemption prices or repayment
prices, which may be expressed as a percentage of the principal amount of your
debt security. It may also specify one or more redemption periods during which
the redemption prices relating to a redemption of debt securities during those
periods will apply.

If your prospectus supplement specifies a redemption commencement date,
your debt security will be redeemable at our option at any time on or after that
date or at a specified time or times. If we redeem your debt security, we will
do so at the specified redemption price, together with interest accrued to the
redemption date. If different prices are specified for different redemption
periods, the price we pay will be the price that applies to the redemption
period during which your debt security is redeemed.

If your prospectus supplement specifies a repayment date, your debt
security will be repayable at the holder's option on the specified repayment
date at the specified repayment price, together with interest accrued to the
repayment date.

If we exercise an option to redeem any debt security, we will give to the
holder written notice of the principal amount of the debt security to be
redeemed, not less than 30 days nor more than 60 days before the applicable
redemption date. We will give the notice in the manner described below in
"-- Notices".

If a debt security represented by a global debt security is subject to
repayment at the holder's option, the depositary or its nominee, as the holder,
will be the only person that can exercise the right to repayment. Any indirect
owners who own beneficial interests in the global debt security and wish to
exercise a repayment right must give proper and timely instructions to their
banks or brokers through which they hold their interests, requesting that they
notify the depositary to exercise the repayment right on their behalf. Different
firms have different deadlines for accepting instructions from their customers,
and you should take care to act promptly enough to ensure that your request is
given effect by the depositary before the applicable deadline for exercise.

Street name and other indirect owners should contact their banks or brokers for
information about how to exercise a repayment right in a timely manner.

We or our affiliates may purchase debt securities from investors who are
willing to sell from time to time, either in the open market at prevailing
prices or in private transactions at negotiated prices. Debt securities that we
or they purchase may, at our discretion, be held, resold or canceled.

MERGERS AND SIMILAR TRANSACTIONS

We are generally permitted to merge or consolidate with another corporation
or other entity. We are also permitted to sell our assets substantially as an
entirety to another corporation or other entity. With regard to any series of
debt securities, however, we may not take any of these actions unless all the
following conditions are met:

- If the successor entity in the transaction is not The Goldman Sachs
Group, Inc., the successor entity must be organized as a corporation,
partnership or trust and must expressly assume our obligations under the
debt securities of that series and the indenture with respect to that
series. The successor entity may be organized under the laws of any
jurisdiction, whether in the United States or elsewhere.

- Immediately after the transaction, no default under the debt securities
of that series has occurred and is continuing. For this purpose, "default
under the debt securities of that series" means an event of default with
respect to that series or any event that would be an event of default
with respect to that series if the requirements for giving us default
notice and for our default having to continue for a specific period of
time were disregarded. We describe these matters below under "-- Default,
Remedies and Waiver of Default".

If the conditions described above are satisfied with respect to the debt
securities of any series, we will not need to obtain the approval of the holders
of those debt securities in order to merge or consolidate or to sell our assets.
Also, these conditions will apply only if we wish to merge or consolidate with
another entity or sell our assets substantially as an entirety to another
entity. We will not need to satisfy these conditions if we enter into other
types of transactions, including any transaction in which we acquire the stock
or assets of another entity, any transaction that involves a change of control
of The Goldman Sachs Group, Inc. but in which we do not merge or consolidate and
any transaction in which we sell less than substantially all our assets.

Also, if we merge, consolidate or sell our assets substantially as an
entirety and the successor is a non-U.S. entity, neither we nor any successor
would have any obligation to compensate you for any resulting adverse tax
consequences relating to your debt securities.

SUBORDINATION PROVISIONS

Holders of subordinated debt securities should recognize that contractual
provisions in the subordinated debt indenture may prohibit us from making
payments on those securities. Subordinated debt securities are subordinate and
junior in right of payment, to the extent and in the manner stated in the
subordinated debt indenture, to all of our senior indebtedness, as defined in
the subordinated debt indenture, including all debt securities we have issued
and will issue under the senior debt indenture and all warrants we will issue
under the warrant indenture.

The subordinated debt indenture defines "senior indebtedness" as all
indebtedness and obligations of, or guaranteed or assumed by, The Goldman Sachs
Group, Inc. for borrowed money or evidenced by bonds, debentures, notes or other
similar instruments, whether existing now or in the future, and all amendments,
renewals, extensions, modifications and refundings of any indebtedness or
obligations of that kind. Senior debt excludes the subordinated debt securities
and any other indebtedness or obligations specifically designated as being
subordinate, or not superior, in right of payment to the subordinated debt
securities.

The subordinated debt indenture provides that, unless all principal of and
any premium or interest on the senior indebtedness has been paid in full, no
payment or other distribution may be made in respect of any subordinated debt
securities in the following circumstances:

- in the event of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization, assignment for creditors or
other similar proceedings or events involving us or our assets;

- (a) in the event and during the continuation of any default in the
payment of principal, premium or interest on any senior indebtedness
beyond any applicable grace period or (b) in the event that any event of
default with respect to any senior indebtedness has occurred and is
continuing, permitting the holders of that senior indebtedness (or a
trustee) to accelerate the maturity of that senior indebtedness, whether
or not the maturity is in fact accelerated (unless, in the case of (a) or
(b), the payment default or event of default has been cured or waived or
ceased to exist and any related acceleration has been rescinded) or (c)
in the event that any judicial proceeding is pending with respect to a
payment default or event of default described in (a) or (b); or

- in the event that any subordinated debt securities have been declared due
and payable before their stated maturity.

If the trustee under the subordinated debt indenture or any holders of the
subordinated debt securities receive any payment or distribution that is
prohibited under the subordination provisions, then the trustee or the holders
will have to repay that money to the holders of the senior indebtedness.

Even if the subordination provisions prevent us from making any payment
when due on the subordinated debt securities of any series, we will be in
default on our obligations under that series if we do not make the payment when
due. This means that the trustee under the subordinated debt indenture and the
holders of that series can take action against us, but they will not receive any
money until the claims of the holders of senior indebtedness have been fully
satisfied.

The subordinated debt indenture allows the holders of senior indebtedness
to obtain a court order requiring us and any holder of subordinated debt
securities to comply with the subordination provisions.

RESTRICTION ON LIENS

In the senior debt indenture, we promise, with respect to each series of
senior debt securities, not to create, assume, incur or guarantee any debt for
borrowed money that is secured by a lien on the voting or profit participating
equity ownership interests that we or any of our subsidiaries own in Goldman,
Sachs & Co., or in any subsidiary that beneficially owns or holds, directly or
indirectly, those interests in Goldman, Sachs & Co., unless we also secure the
senior debt securities of that series on an equal or priority basis with the
other secured debt. Our promise, however, is subject to an important exception:
we may secure debt for borrowed money with liens on those interests without
securing the senior debt securities of any series if our board of directors
determines that the liens do not materially detract from or interfere with the
value or control of those interests, as of the date of the determination.

The subordinated debt indenture does not include the promise described in the
preceding paragraph.

Except as noted above, neither indenture restricts our ability to put liens
on our interests in our subsidiaries other than Goldman, Sachs & Co., nor do the
indentures restrict our ability to sell or otherwise dispose of our interests in
any of our subsidiaries, including Goldman, Sachs & Co. In addition, the
restriction on liens in the senior debt indenture applies only to liens that
secure debt for borrowed money. For example, liens imposed by operation of law,
such as liens to secure statutory obligations for taxes or workers' compensation
benefits, or liens we create to secure obligations to pay legal judgments or
surety bonds, would not be covered by this restriction.

DEFEASANCE AND COVENANT DEFEASANCE

Unless we say otherwise in the applicable prospectus supplement, the
provisions for full defeasance and covenant defeasance described below apply to
each senior and subordinated debt security. In general, we expect these
provisions to apply to each debt security that has a specified currency of U.S.
dollars and is not a floating rate or indexed debt security.

FULL DEFEASANCE. If there is a change in U.S. federal tax law, as
described below, we can legally release ourselves from all payment and other
obligations on any debt securities. This is called full defeasance. For us to do
so, each of the following must occur:

- We must deposit in trust for the benefit of all holders of those debt
securities a combination of money and U.S. government or U.S. government
agency notes or bonds that will generate enough cash to make interest,
principal and any other payments on those debt securities on their
various due dates;

- There must be a change in current U.S. federal tax law or an Internal
Revenue Service ruling that lets us make the above deposit without
causing the holders to be taxed on those debt securities any differently
than if we did not make the deposit and just repaid those debt securities
ourselves. Under current federal tax law, the deposit and our legal
release from your debt security would be treated as though we took back
your debt security and gave you your share of the cash and notes or bonds
deposited in trust. In that event, you could recognize gain or loss on
your debt security;

- We must deliver to the trustee a legal opinion of our counsel confirming
the tax law change described above; and

- In the case of the subordinated debt securities, the following
requirements must also be met:

-- No event or condition may exist that, under the provisions described
above under "-- Subordination Provisions" above, would prevent us
from making payments of principal, premium or interest on those
subordinated debt securities on the date of the deposit referred to
above or during the 90 days after that date; and

-- We must deliver to the trustee an opinion of counsel to the effect
that (a) the trust funds will not be subject to any rights of holders
of senior indebtedness and (b) after the 90-day period referred to
above, the trust funds will not be subject to any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, except that if a court were to rule
under any of those laws in any case or proceeding that the trust
funds remained our property, then the relevant trustee and the
holders of the subordinated debt securities would be entitled to some
enumerated rights as secured creditors in the trust funds.

If we ever fully defeased your debt security, you would have to rely solely
on the trust deposit for payments on your debt security. You would not be able
to look to us for payment in the event of any shortfall.

COVENANT DEFEASANCE. Under current U.S. federal tax law, we can make the
same type of deposit described above and be released from the restriction on
liens described under "-- Restriction on Liens" above and any other restrictive
covenants relating to your debt security that may be described in your
prospectus supplement. This is called covenant defeasance. In that event, you
would lose the protection of those restrictive covenants. In order to achieve
covenant defeasance for any debt securities, we must do both of the following:

- We must deposit in trust for the benefit of the holders of those debt
securities a combination of money and U.S. government or U.S. government
agency notes or bonds that will generate enough cash to make interest,
principal and any other payments on those debt securities on their
various due dates; and

- We must deliver to the trustee a legal opinion of our counsel confirming
that under current U.S. federal income tax law we may make the above
deposit without causing the holders to be taxed on those debt securities
any differently than if we did not make the deposit and just repaid those
debt securities ourselves.

In addition, in order to achieve covenant defeasance for any subordinated debt
securities that have the benefit of any restrictive covenants, both conditions
described in the last bullet point under "-- Full Defeasance" above must be
satisfied. Subordinated debt securities will not have the benefit of any
restrictive covenants unless the applicable prospectus supplement specifically
provides that they do.

If we accomplish covenant defeasance with regard to your debt security, the
following provisions of the applicable indenture and your debt security would no
longer apply:

- If your debt security is a senior debt security, our promise not to
create liens on our voting or profit participating equity ownership
interests in Goldman, Sachs & Co. described above under "-- Restriction
on Liens";

- Any additional covenants that your prospectus supplement may state are
applicable to your debt security; and

- The events of default resulting from a breach of covenants, described
below in the fourth bullet point under "-- Default, Remedies and Waiver
of Default -- Events of Default".

If we accomplish covenant defeasance on your debt security, you can still
look to us for repayment of your debt security in the event of any shortfall in
the trust deposit. You should note, however, that if one of the remaining events
of default occurred, such as our bankruptcy, and your debt security became
immediately due and payable, there may be a shortfall. Depending on the event
causing the default, you may not be able to obtain payment of the shortfall.

DEFAULT, REMEDIES AND WAIVER OF DEFAULT

You will have special rights if an event of default with respect to your
series of debt securities occurs and is continuing, as described in this
subsection.

EVENTS OF DEFAULT

Unless your prospectus supplement says otherwise, when we refer to an event
of default with respect to any series of debt securities, we mean any of the
following:

- We do not pay the principal or any premium on any debt security of that
series on the due date;

- We do not pay interest on any debt security of that series within 30 days
after the due date;

- We do not deposit a sinking fund payment with regard to any debt security
of that series on the due date, but only if the payment is required under
provisions described in the applicable prospectus supplement;

- We remain in breach of our covenant described above under "-- Restriction
on Liens", in the case of any series of senior debt securities, or any
other covenant we make in the indenture for the benefit of the relevant
series, for 60 days after we receive a notice of default stating that we
are in breach and requiring us to remedy the breach. The notice must be
sent by the trustee or the holders of at least 10% in principal amount of
the relevant series of debt securities;

- We file for bankruptcy or other events of bankruptcy, insolvency or
reorganization relating to The Goldman Sachs Group, Inc. occur. Those
events must arise under U.S. federal or state law, unless we merge,
consolidate or sell our assets as described above and the successor firm
is a non-U.S. entity. If that happens, then those events must arise under
U.S. federal or state law or the law of the jurisdiction in which the
successor firm is legally organized; or

- If the applicable prospectus supplement states that any additional event
of default applies to the series, that event of default occurs.

REMEDIES IF AN EVENT OF DEFAULT OCCURS

If you are the holder of a subordinated debt security, all the remedies
available upon the occurrence of an event of default under the subordinated debt
indenture will be subject to the restrictions on the subordinated debt
securities described above under "-- Subordination Provisions".

If an event of default has occurred with respect to any series of debt
securities and has not been cured or waived, the trustee or the holders of not
less than 25% in principal amount of all debt securities of that series may
declare the entire principal amount of the debt securities of that series to be
due immediately. If the event of default occurs because of events in bankruptcy,
insolvency or reorganization relating to The Goldman Sachs Group, Inc., the
entire principal amount of the debt securities of that series will be
automatically accelerated, without any action by the trustee or any holder.

Each of the situations described above is called an acceleration of the
maturity of the affected series of debt securities. If the maturity of any
series is accelerated and a judgment for payment has not yet been obtained, the
holders of a majority in principal amount of the debt securities of that series
may cancel the acceleration for the entire series.

If an event of default occurs, the trustee will have special duties. In
that situation, the trustee will be obligated to use those of its rights and
powers under the relevant indenture, and to use the same degree of care and
skill in doing so, that a prudent person would use in that situation in
conducting his or her own affairs.

Except as described in the prior paragraph, the trustee is not required to
take any action under the relevant indenture at the request of any holders
unless the holders offer the trustee reasonable protection from expenses and
liability. This is called an indemnity. If the trustee is provided with an
indemnity reasonably satisfactory to it, the holders of a majority in principal
amount of all debt securities of the relevant series may direct the time, method
and place of conducting any lawsuit or other formal legal action seeking any
remedy available to the trustee with respect to that series. These majority
holders may also direct the trustee in performing any other action under the
applicable indenture with respect to the debt securities of that series.

Before you bypass the trustee and bring your own lawsuit or other formal
legal action or take other steps to enforce your rights or protect your
interests relating to any debt security, all of the following must occur:

- The holder of your debt security must give the trustee written notice
that an event of default has occurred, and the event of default must not
have been cured or waived;

- The holders of not less than 25% in principal amount of all debt
securities of your series must make a written request that the trustee
take action because of the default, and they or other holders must offer
to the trustee indemnity reasonably satisfactory to the trustee against
the cost and other liabilities of taking that action;

- The trustee must not have taken action for 60 days after the above steps
have been taken; and

- During those 60 days, the holders of a majority in principal amount of
the debt securities of your series must not have given the trustee
directions that are inconsistent with the written request of the holders
of not less than 25% in principal amount of the debt securities of your
series.

You are entitled at any time, however, to bring a lawsuit for the payment
of money due on your debt security on or after its due date.

WAIVER OF DEFAULT

The holders of not less than a majority in principal amount of the debt
securities of any series may waive a default for all debt securities of that
series. If this happens, the default will be treated as if it has not occurred.
No one can waive a payment default on your debt security, however, without the
approval of the particular holder of that debt security.

WE WILL GIVE THE TRUSTEE INFORMATION ABOUT DEFAULTS ANNUALLY

We will furnish to each trustee every year a written statement of two of
our officers certifying that to their knowledge we are in compliance with the
applicable indenture and the debt securities issued under it, or else specifying
any default under the indenture.

Book-entry and other indirect owners should consult their banks or brokers for
information on how to give notice or direction to or make a request of the
trustee and how to declare or cancel an acceleration of the maturity. Book-entry
and other indirect owners are described below under "Legal Ownership and
Book-Entry Issuance".

MODIFICATION OF THE DEBT INDENTURES AND WAIVER OF COVENANTS

There are four types of changes we can make to either debt indenture and
the debt securities of any series issued under that indenture.

CHANGES REQUIRING EACH HOLDER'S APPROVAL

First, there are changes that cannot be made without the approval of each
holder of a debt security affected by the change under a particular debt
indenture. Here is a list of those types of changes:

- change the stated maturity for any principal or interest payment on a
debt security;

- reduce the principal amount, the amount payable on acceleration of the
maturity after a default, the interest rate or the redemption price for a
debt security;

- permit redemption of a debt security if not previously permitted;

- impair any right a holder may have to require repayment of its debt
security;

- impair any right that a holder of an indexed or any other debt security
may have to exchange or convert the debt security for or into securities
or other property;

- change the currency of any payment on a debt security;

- change the place of payment on a debt security;

- impair a holder's right to sue for payment of any amount due on its debt
security;

- reduce the percentage in principal amount of the debt securities of any
one or more affected series, taken separately or together, as applicable,
the approval of whose holders is needed to change the indenture or those
debt securities;

- reduce the percentage in principal amount of the debt securities of any
one or more affected series, taken separately or together, as applicable,
the consent of whose holders is needed to waive our compliance with the
applicable indenture or to waive defaults; and

- change the provisions of the applicable indenture dealing with
modification and waiver in any other respect, except to increase any
required percentage referred to above or to add to the provisions that
cannot be changed or waived without approval of the holder of each
affected debt security.

CHANGES NOT REQUIRING APPROVAL

The second type of change does not require any approval by holders of the
debt securities of an affected series. These changes are limited to
clarifications and changes that would not adversely affect the debt securities
of that series in any material respect. Nor do we need any approval to make
changes that affect only debt securities to be issued under the applicable
indenture after the changes take effect.

We may also make changes or obtain waivers that do not adversely affect a
particular debt security, even if they affect other debt securities. In those
cases, we do not need to obtain the approval of the holder of the unaffected
debt security; we need only obtain any required approvals from the holders of
the affected debt securities.

MODIFICATION OF SUBORDINATION PROVISIONS

We may not amend the subordinated debt indenture to alter the subordination
of any outstanding subordinated debt securities without the written consent of
each holder of senior indebtedness then outstanding who would be adversely
affected. In addition, we may not modify the subordination provisions of the
subordinated debt indenture in a manner that would adversely affect the
outstanding subordinated debt securities of any one or more series in any
material respect, without the consent of the holders of a majority in aggregate
principal amount of all affected series, voting together as one class.

CHANGES REQUIRING MAJORITY APPROVAL

Any other change to a particular debt indenture and the debt securities
issued under that indenture would require the following approval:

- If the change affects only the debt securities of a particular series, it
must be approved by the holders of a majority in principal amount of the
debt securities of that series.

- If the change affects the debt securities of more than one series of debt
securities issued under the applicable indenture, it must be approved by
the holders of a majority in

principal amount of all series affected by the change, with the debt
securities of all the affected series voting together as one class for
this purpose.

In each case, the required approval must be given by written consent.

The same majority approval would be required for us to obtain a waiver of
any of our covenants in either indenture. Our covenants include the promises we
make about merging and putting liens on our interests in Goldman, Sachs & Co.,
which we describe above under "-- Mergers and Similar Transactions" and
"-- Restriction on Liens", and which, in the latter case, are only for the
benefit of the holders of our senior debt securities. If the holders approve a
waiver of a covenant, we will not have to comply with it. The holders, however,
cannot approve a waiver of any provision in a particular debt security, or in
the applicable indenture as it affects that debt security, that we cannot change
without the approval of the holder of that debt security as described above in
"-- Changes Requiring Each Holder's Approval", unless that holder approves the
waiver.

Book-entry and other indirect owners should consult their banks or brokers for
information on how approval may be granted or denied if we seek to change an
indenture or any debt securities or request a waiver.

SPECIAL RULES FOR ACTION BY HOLDERS

When holders take any action under either debt indenture, such as giving a
notice of default, declaring an acceleration, approving any change or waiver or
giving the trustee an instruction, we will apply the following rules.

ONLY OUTSTANDING DEBT SECURITIES ARE ELIGIBLE

Only holders of outstanding debt securities of the applicable series will
be eligible to participate in any action by holders of debt securities of that
series. Also, we will count only outstanding debt securities in determining
whether the various percentage requirements for taking action have been met. For
these purposes, a debt security will not be "outstanding":

- if it has been surrendered for cancellation;

- if we have deposited or set aside, in trust for its holder, money for its
payment or redemption;

- if we have fully defeased it as described above under "-- Defeasance and
Covenant Defeasance -- Full Defeasance"; or

- if we or one of our affiliates, such as Goldman, Sachs & Co., is the
owner.

ELIGIBLE PRINCIPAL AMOUNT OF SOME DEBT SECURITIES

In some situations, we may follow special rules in calculating the
principal amount of a debt security that is to be treated as outstanding for the
purposes described above. This may happen, for example, if the principal amount
is payable in a non-U.S. dollar currency, increases over time or is not to be
fixed until maturity.

For any debt security of the kind described below, we will decide how much
principal amount to attribute to the debt security as follows:

- For an original issue discount debt security, we will use the principal
amount that would be due and payable on the action date if the maturity
of the debt security were accelerated to that date because of a default;

- For a debt security whose principal amount is not known, we will use any
amount that we indicate in the prospectus supplement for that debt
security. The principal amount of a debt security may not be known, for
example, because it is based on an index that changes from time to time
and the principal amount is not to be determined until a later date; or

- For debt securities with a principal amount denominated in one or more
non-U.S. dollar currencies or currency units, we will use the U.S. dollar
equivalent, which we will determine.

DETERMINING RECORD DATES FOR ACTION BY HOLDERS

We will generally be entitled to set any day as a record date for the
purpose of determining the holders that are entitled to take action under either
indenture. In certain limited circumstances, only the trustee will be entitled
to set a record date for action by holders. If we or the trustee set a record
date for an approval or other action to be taken by holders, that vote or action
may be taken only by persons or entities who are holders on the record date and
must be taken during the period that we specify for this purpose, or that the
trustee specifies if it sets the record date. We or the trustee, as applicable,
may shorten or lengthen this period from time to time. This period, however, may
not extend beyond the 180th day after the record date for the action. In
addition, record dates for any global debt security may be set in accordance
with procedures established by the depositary from time to time. Accordingly,
record dates for global debt securities may differ from those for other debt
securities.

FORM, EXCHANGE AND TRANSFER OF DEBT SECURITIES

If any debt securities cease to be issued in registered global form, they
will be issued:

- only in fully registered form;

- without interest coupons; and

- unless we indicate otherwise in your prospectus supplement, in
denominations of $1,000 and integral multiples of $1,000.

Holders may exchange their debt securities for debt securities of smaller
denominations or combined into fewer debt securities of larger denominations, as
long as the total principal amount is not changed. You may not exchange your
debt securities for securities of a different series or having different terms,
unless your prospectus supplement says you may.

Holders may exchange or transfer their debt securities at the office of the
trustee. They may also replace lost, stolen, destroyed or mutilated debt
securities at that office. We have appointed the trustee to act as our agent for
registering debt securities in the names of holders and transferring and
replacing debt securities. We may appoint another entity to perform these
functions or perform them ourselves.

Holders will not be required to pay a service charge to transfer or
exchange their debt securities, but they may be required to pay for any tax or
other governmental charge associated with the exchange or transfer. The transfer
or exchange, and any replacement, will be made only if our transfer agent is
satisfied with the holder's proof of legal ownership. The transfer agent may
require an indemnity before replacing any debt securities.

If we have designated additional transfer agents for your debt security,
they will be named in your prospectus supplement. We may appoint additional
transfer agents or cancel the appointment of any particular transfer agent. We
may also approve a change in the office through which any transfer agent acts.

If the debt securities of any series are redeemable and we redeem less than
all those debt securities, we may block the transfer or exchange of those debt
securities during the period beginning 15 days before the day we mail the notice
of redemption and ending on the day of that mailing, in order to freeze the list
of holders to prepare the mailing. We may also refuse to register transfers of
or exchange any debt security selected for redemption, except that we will
continue to permit transfers and exchanges of the unredeemed portion of any debt
security being partially redeemed.

If a debt security is issued as a global debt security, only the
depositary -- e.g., DTC, Euroclear and Clearstream -- will be entitled to
transfer and exchange the debt security as described in this subsection, since
the depositary will be the sole holder of the debt security.

The rules for exchange described above apply to exchange of debt securities
for other debt securities of the same series and kind. If a debt security is
convertible, exercisable or exchangeable into or for a different kind of
security, such as one that we have not issued, or for other property, the rules
governing that type of conversion, exercise or exchange will be described in the
applicable prospectus supplement.

PAYMENT MECHANICS FOR DEBT SECURITIES

WHO RECEIVES PAYMENT?

If interest is due on a debt security on an interest payment date, we will
pay the interest to the person in whose name the debt security is registered at
the close of business on the regular record date relating to the interest
payment date as described below under "-- Payment and Record Dates for
Interest". If interest is due at maturity but on a day that is not an interest
payment date, we will pay the interest to the person entitled to receive the
principal of the debt security. If principal or another amount besides interest
is due on a debt security at maturity, we will pay the amount to the holder of
the debt security against surrender of the debt security at a proper place of
payment or, in the case of a global debt security, in accordance with the
applicable policies of the depositary, Euroclear and Clearstream, as applicable.

PAYMENT AND RECORD DATES FOR INTEREST

Unless we specify otherwise in the applicable prospectus supplement,
interest on any fixed rate debt security will be payable semiannually each May
15 and November 15 and at maturity, and the regular record date relating to an
interest payment date for any fixed rate debt security will be the May 1 or
November 1 next preceding that interest payment date. The regular record date
relating to an interest payment date for any floating rate debt security will be
the 15th calendar day before that interest payment date. These record dates will
apply regardless of whether a particular record date is a "business day", as
defined below. For the purpose of determining the holder at the close of
business on a regular record date when business is not being conducted, the
close of business will mean 5:00 P.M., New York City time, on that day.

BUSINESS DAY. The term "business day" means, for any debt security, a day
that meets all the following applicable requirements:

- for all debt securities, is a Monday, Tuesday, Wednesday, Thursday or
Friday that is not a day on which banking institutions in New York City
generally are authorized or obligated by law or executive order to close
and that satisfies any other criteria specified in your prospectus
supplement;

- if the debt security is a floating rate debt security whose interest rate
is based on LIBOR, is also a day on which dealings in the relevant index
currency specified in the applicable prospectus supplement are transacted
in the London interbank market;

- if the debt security has a specified currency other than U.S. dollars or
euros, is also a day on which banking institutions are not authorized or
obligated by law, regulation or executive order to close in the principal
financial center of the country issuing the specified currency;

- if the debt security either is a floating rate debt security whose
interest rate is based on EURIBOR or has a specified currency of euros,
is also a day on which the Trans-European Automated Real-Time Gross
Settlement Express Transfer (TARGET) System, or any successor system, is
open for business;

- if the debt security is held through Euroclear, is also not a day on
which banking institutions in Brussels, Belgium are generally authorized
or obligated by law, regulation or executive order to close; and

- if the debt security is held through Clearstream, is also not a day on
which banking institutions in Luxembourg are generally authorized or
obligated by law, regulation or executive order to close.

HOW WE WILL MAKE PAYMENTS DUE IN U.S. DOLLARS

We will follow the practice described in this subsection when paying
amounts due in U.S. dollars. Payments of amounts due in other currencies will be
made as described in the next subsection.

PAYMENTS ON GLOBAL DEBT SECURITIES. We will make payments on a global debt
security in accordance with the applicable policies of the depositary as in
effect from time to time. Under those policies, we will pay directly to the
depositary, or its nominee, and not to any indirect owners who own beneficial
interests in the global debt security. An indirect owner's right to receive
those payments will be governed by the rules and practices of the depositary and
its participants, as described below in the section entitled "Legal Ownership
and Book-Entry Issuance -- What Is a Global Security?".

PAYMENTS ON NON-GLOBAL DEBT SECURITIES. We will make payments on a debt
security in non-global, registered form as follows. We will pay interest that is
due on an interest payment date by check mailed on the interest payment date to
the holder at his or her address shown on the trustee's records as of the close
of business on the regular record date. We will make all other payments by check
at the paying agent described below, against surrender of the debt security. All
payments by check will be made in next-day funds -- i.e., funds that become
available on the day after the check is cashed.

Alternatively, if a non-global debt security has a face amount of at least
$1,000,000 and the holder asks us to do so, we will pay any amount that becomes
due on the debt security by wire transfer of immediately available funds to an
account at a bank in New York City, on the due date. To request wire payment,
the holder must give the paying agent appropriate wire transfer instructions at
least five business days before the requested wire payment is due. In the case
of any interest payment due on an interest payment date, the instructions must
be given by the person or entity who is the holder on the relevant regular
record date. In the case of any other payment, payment will be made only after
the debt security is surrendered to the paying agent. Any wire instructions,
once properly given, will remain in effect unless and until new instructions are
given in the manner described above.

Book-entry and other indirect owners should consult their banks or brokers for
information on how they will receive payments on their debt securities.

HOW WE WILL MAKE PAYMENTS DUE IN OTHER CURRENCIES

We will follow the practice described in this subsection when paying
amounts that are due in a specified currency other than U.S. dollars.

PAYMENTS ON GLOBAL DEBT SECURITIES. We will make payments on a global debt
security in the applicable specified currency in accordance with the applicable
policies as in effect from time to time of the depositary, which will be DTC,
Euroclear or Clearstream. Unless we specify otherwise in the applicable
prospectus supplement, The Depository Trust Company, New York, New York, known
as DTC, will be the depositary for all debt securities in global form.

Indirect owners of a global debt security denominated in a currency other than
U.S. dollars should consult their banks or brokers for information on how to
request payment in the specified currency in cases where holders have a right to
do so.

PAYMENTS ON NON-GLOBAL DEBT SECURITIES. Except as described in the last
paragraph under this heading, we will make payments on debt securities in
non-global form in the applicable specified currency. We will make these
payments by wire transfer of immediately available funds to any account that is
maintained in the applicable specified currency at a bank designated by the
holder and is acceptable to us and the trustee. To designate an account for wire
payment, the holder must give the paying agent appropriate wire instructions at
least five business days before the requested wire payment is due. In the case
of any interest payment due on an interest payment date, the instructions must
be given by the person or entity who is the holder on the regular record date.
In the case of any other payment, the payment will be made only after the debt
security is surrendered to the paying agent. Any instructions, once properly
given, will remain in effect unless and until new instructions are properly
given in the manner described above.

If a holder fails to give instructions as described above, we will notify
the holder at the address in the trustee's records and will make the payment
within five business days after the holder provides appropriate instructions.
Any late payment made in these circumstances will be treated under the
applicable indenture as if made on the due date, and no interest will accrue on
the late payment from the due date to the date paid.

Although a payment on a debt security in non-global form may be due in a
specified currency other than U.S. dollars, we will make the payment in U.S.
dollars if your prospectus supplement specifies that holders may ask us to do so
and you make such a request. To request U.S. dollar payment in these
circumstances, the holder must provide appropriate written notice to the trustee
at least five business days before the next due date for which payment in U.S.
dollars is requested. In the case of any interest payment due on an interest
payment date, the request must be made by the person or entity who is the holder
on the regular record date. Any request, once properly made, will remain in
effect unless and until revoked by notice properly given in the manner described
above.

Book-entry and other indirect owners of a debt security with a specified
currency other than U.S. dollars should contact their banks or brokers for
information about how to receive payments in the specified currency or in U.S.
dollars.

CONVERSION TO U.S. DOLLARS. Unless otherwise indicated in your prospectus
supplement, holders are not entitled to receive payments in U.S. dollars of an
amount due in another currency, either on a global debt security or a non-global
debt security.

If your prospectus supplement specifies that holders may request that we
make payments in U.S. dollars of an amount due in another currency, the exchange
rate agent described below will calculate the U.S. dollar amount the holder
receives in the exchange rate agent's discretion. A holder that requests payment
in U.S. dollars will bear all associated currency exchange costs, which will be
deducted from the payment.

WHEN THE SPECIFIED CURRENCY IS NOT AVAILABLE. If we are obligated to make
any payment in a specified currency other than U.S. dollars, and the specified
currency or any successor currency is not available to us due to circumstances
beyond our control -- such as the imposition of exchange controls or a
disruption in the currency markets -- we will be entitled to satisfy our
obligation to make the payment in that specified currency by making the payment
in U.S. dollars, on the basis of the exchange rate determined by the exchange
rate agent described below, in its discretion.

The foregoing will apply to any debt security, whether in global or
non-global form, and to any payment, including a payment at maturity. Any
payment made under the circumstances and in a manner described above will not
result in a default under any debt security or the applicable indenture.

EXCHANGE RATE AGENT. If we issue a debt security in a specified currency
other than U.S. dollars, we will appoint a financial institution to act as the
exchange rate agent and will name the institution initially appointed when the
debt security is originally issued in the applicable prospectus supplement. We
may select Goldman, Sachs & Co. or another of our affiliates to

perform this role. We may change the exchange rate agent from time to time after
the original issue date of the debt security without your consent and without
notifying you of the change.

All determinations made by the exchange rate agent will be in its sole
discretion unless we state in the applicable prospectus supplement that any
determination requires our approval. In the absence of manifest error, those
determinations will be conclusive for all purposes and binding on you and us,
without any liability on the part of the exchange rate agent.

PAYMENT WHEN OFFICES ARE CLOSED

If any payment is due on a debt security on a day that is not a business
day, we will make the payment on the next day that is a business day. Payments
postponed to the next business day in this situation will be treated under the
applicable indenture as if they were made on the original due date. Postponement
of this kind will not result in a default under any debt security or the
applicable indenture, and no interest will accrue on the postponed amount from
the original due date to the next day that is a business day. The term business
day has a special meaning, which we describe above under "-- Payment and Record
Dates for Interest".

PAYING AGENT

We may appoint one or more financial institutions to act as our paying
agents, at whose designated offices debt securities in non-global entry form may
be surrendered for payment at their maturity. We call each of those offices a
paying agent. We may add, replace or terminate paying agents from time to time.
We may also choose to act as our own paying agent. Initially, we have appointed
the trustee, at its corporate trust office in New York City, as the paying
agent. We must notify the trustee of changes in the paying agents.

UNCLAIMED PAYMENTS

Regardless of who acts as paying agent, all money paid by us to a paying
agent that remains unclaimed at the end of two years after the amount is due to
a holder will be repaid to us. After that two-year period, the holder may look
only to us for payment and not to the trustee, any other paying agent or anyone
else.

NOTICES

Notices to be given to holders of a global debt security will be given only
to the depositary, in accordance with its applicable policies as in effect from
time to time. Notices to be given to holders of debt securities not in global
form will be sent by mail to the respective addresses of the holders as they
appear in the trustee's records, and will be deemed given when mailed. Neither
the failure to give any notice to a particular holder, nor any defect in a
notice given to a particular holder, will affect the sufficiency of any notice
given to another holder.

Book-entry and other indirect owners should consult their banks or brokers for
information on how they will receive notices.

OUR RELATIONSHIP WITH THE TRUSTEE

The Bank of New York has provided commercial banking and other services for
us and our affiliates in the past and may do so in the future. Among other
things, The Bank of New York provides us with a line of credit, holds debt
securities issued by us and serves as trustee or agent with regard to other debt
obligations and warrants of The Goldman Sachs Group, Inc. or its subsidiaries.

The Bank of New York is initially serving as the trustee for our senior
debt securities and subordinated debt securities and the warrants issued under
our warrant indenture. Consequently, if an actual or potential event of default
occurs with respect to any of these securities, the trustee may be considered to
have a conflicting interest for purposes of the Trust Indenture Act of 1939. In
that case, the trustee may be required to resign under one or more of the
indentures, and we would be required to appoint a successor trustee. For this
purpose, a "potential" event of default means an event that would be an event of
default if the requirements for giving us default notice or for the default
having to exist for a specific period of time were disregarded.

DESCRIPTION OF WARRANTS WE MAY OFFER

Please note that in this section entitled "Description of Warrants We May
Offer", references to The Goldman Sachs Group, Inc., "we", "our" and "us" refer
only to The Goldman Sachs Group, Inc. and not to its consolidated subsidiaries.
Also, in this section, references to "holders" mean those who own warrants
registered in their own names, on the books that we or the applicable trustee or
warrant agent maintain for this purpose, and not those who own beneficial
interests in warrants registered in street name or in warrants issued in
book-entry form through one or more depositaries. Owners of beneficial interests
in the warrants should read the section below entitled "Legal Ownership and
Book-Entry Issuance".

WE MAY ISSUE MANY SERIES OF WARRANTS

We may issue warrants that are debt warrants or universal warrants. We may
offer warrants separately or together with our debt securities. We may also
offer warrants together with other warrants, purchase contracts and debt
securities in the form of units, as summarized below in "Description of Units We
May Offer".

We may issue warrants in such amounts or in as many distinct series as we
wish. We will issue each series of warrants under either a warrant indenture or
a warrant agreement. This section summarizes terms of the warrant indenture and
warrant agreements and terms of the warrants that apply generally to the
warrants. We describe most of the financial and other specific terms of your
warrant in the prospectus supplement accompanying this prospectus. Those terms
may vary from the terms described here.

As you read this section, please remember that the specific terms of your
warrant as described in your prospectus supplement will supplement and, if
applicable, may modify or replace the general terms described in this section.
If there are differences between your prospectus supplement and this prospectus,
your prospectus supplement will control. Thus, the statements we make in this
section may not apply to your warrant.

When we refer to a series of warrants, we mean all warrants issued as part
of the same series under the applicable indenture or warrant agreement. When we
refer to your prospectus supplement, we mean the prospectus supplement
describing the specific terms of the warrant you purchase. The terms used in
your prospectus supplement will have the meanings described in this prospectus,
unless otherwise specified.

DEBT WARRANTS

We may issue warrants for the purchase of our debt securities on terms to
be determined at the time of sale. We refer to this type of warrant as a "debt
warrant".

UNIVERSAL WARRANTS

We may also issue warrants, on terms to be determined at the time of sale,
for the purchase or sale of, or whose cash value is determined by reference to
the performance, level or value of, one or more of the following:

- securities of one or more issuers, including our common or preferred
stock or other securities described in this prospectus or debt or equity
securities of third parties;

- one or more currencies;

- one or more commodities;

- any other financial, economic or other measure or instrument, including
the occurrence or non-occurrence of any event or circumstance; and

- one or more indices or baskets of the items described above.

We refer to this type of warrant as a "universal warrant". We refer to each
property described above as a "warrant property".

We may satisfy our obligations, if any, and the holder of a universal
warrant may satisfy its obligations, if any, with respect to any universal
warrants by delivering:

- the warrant property;

- the cash value of the warrant property; or

- the cash value of the warrants determined by reference to the
performance, level or value of the warrant property.

The applicable prospectus supplement will describe what we may deliver to
satisfy our obligations, if any, and what the holder of a universal warrant may
deliver to satisfy its obligations, if any, with respect to any universal
warrants.

GENERAL TERMS OF WARRANTS

Your prospectus supplement may contain, where applicable, the following
information about your warrants:

- the specific designation and aggregate number of, and the price at which
we will issue, the warrants;

- the currency with which the warrants may be purchased;

- the indenture or warrant agreement under which we will issue the
warrants;

- the date on which the right to exercise the warrants will begin and the
date on which that right will expire or, if you may not continuously
exercise the warrants throughout that period, the specific date or dates
on which you may exercise the warrants;

- whether the warrants will be issued in fully registered form or bearer
form, in global or non-global form or in any combination of these forms,
although, in any case, the form of a warrant included in a unit will
correspond to the form of the unit and of any debt security or purchase
contract included in that unit;

- the identities of the trustee or warrant agent, any depositaries and any
paying, transfer, calculation or other agents for the warrants;

- any securities exchange or quotation system on which the warrants or any
securities deliverable upon exercise of the warrants may be listed;

- whether the warrants are to be sold separately or with other securities,
as part of units or otherwise; and

- any other terms of the warrants.

If we issue warrants as part of a unit, the accompanying prospectus
supplement will specify whether the warrants will be separable from the other
securities in the unit before the warrants' expiration date. A warrant issued in
a unit in the United States may not be so separated before the 91st day after
the unit is issued.

No holder of a warrant will have any rights of a holder of the warrant
property deliverable under the warrant.

An investment in a warrant may involve special risks, including risks
associated with indexed securities and currency-related risks if the warrant or
the warrant property is linked to an index or is payable in or otherwise linked
to a non-U.S. dollar currency. We describe some of these risks below under
"Considerations Relating to Indexed Securities" and "Considerations Relating to
Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency".

Because we are a holding company, our ability to perform our obligations on
the warrants will depend in part on our ability to participate in distributions
of assets from our subsidiaries. We discuss these matters above under
"Description of Debt Securities We May Offer -- We Are a Holding Company".

Our affiliates may resell warrants in market-making transactions after
their initial issuance. We discuss these transactions above under "Description
of Debt Securities We May Offer -- Information in the Prospectus
Supplement -- Market-Making Transactions".

ADDITIONAL TERMS OF WARRANTS

DEBT WARRANTS

If you purchase debt warrants, your prospectus supplement may contain,
where applicable, the following additional information about your warrants:

- the designation, aggregate principal amount, currency and terms of the
debt securities that may be purchased upon exercise of the debt warrants;

- the exercise price and whether the exercise price may be paid in cash, by
the exchange of any debt warrants or other securities or both and the
method of exercising the debt warrants; and

- the designation, terms and amount of debt securities, if any, to be
issued together with each of the debt warrants and the date, if any,
after which the debt warrants and debt securities will be separately
transferable.

UNIVERSAL WARRANTS

If you purchase universal warrants, your prospectus supplement may contain,
where applicable, the following additional information about your warrants:

- whether the universal warrants are put warrants or call warrants,
including in either case warrants that may be settled by means of net
cash settlement or cashless exercise, or any other type of warrants;

- the money or warrant property, and the amount or method of determining
the amount of money or warrant property, payable or deliverable upon
exercise of each universal warrant;

- the price at which and the currency with which the warrant property may
be purchased or sold by or on behalf of the holder of each universal
warrant upon the exercise of that warrant, or the method of determining
that price;

- whether the exercise price may be paid in cash, by the exchange of any
universal warrants or other securities or both, and the method of
exercising the universal warrants; and

- whether the exercise of the universal warrants is to be settled in cash
or by delivery of the warrant property or both and whether settlement
will occur on a net basis or a gross basis.

GENERAL PROVISIONS OF WARRANT INDENTURE

We may issue universal warrants under the warrant indenture. Warrants of
this kind will not be secured by any property or assets of The Goldman Sachs
Group, Inc. or its subsidiaries. Thus, by owning a warrant issued under the
indenture, you hold one of our unsecured obligations.

The warrants issued under the indenture will be contractual obligations of
The Goldman Sachs Group, Inc. and will rank equally with all of our other
unsecured contractual obligations and unsecured and unsubordinated debt. The
indenture does not limit our ability to incur additional contractual obligations
or debt.

The indenture is a contract between us and The Bank of New York, which will
initially act as trustee. The trustee has two main roles:

- Second, the trustee performs administrative duties for us, such as
sending you payments and notices.

See "-- Our Relationship With the Trustee" below for more information about the
trustee.

WE MAY ISSUE MANY SERIES OF WARRANTS UNDER THE INDENTURE

We may issue as many distinct series of warrants under the warrant
indenture as we wish. This section summarizes terms of the warrants that apply
generally to all series. The provisions of the indenture allow us not only to
issue warrants with terms different from those of warrants previously issued
under the indenture, but also to "reopen" a previously issued series of warrants
and issue additional warrants of that series.

AMOUNTS THAT WE MAY ISSUE

The warrant indenture does not limit the aggregate number of warrants that
we may issue or the number of series or the aggregate amount of any particular
series. We may issue warrants and other securities in amounts that exceed the
total amount specified on the cover of this prospectus at any time without your
consent and without notifying you.

The indenture and the warrants do not limit our ability to incur other
contractual obligations or indebtedness or to issue other securities. Also, the
terms of the warrants do not impose financial or similar restrictions on us
except as described below under "-- Restriction on Liens".

EXPIRATION DATE AND PAYMENT OR SETTLEMENT DATE

The term "expiration date" with respect to any warrant means the date on
which the right to exercise the warrant expires. The term "payment or settlement
date" with respect to any warrant means the date when any money or warrant
property with respect to that warrant becomes payable or deliverable upon
exercise or redemption of that warrant in accordance with its terms.

THIS SECTION IS ONLY A SUMMARY

The warrant indenture and its associated documents, including your warrant,
contain the full legal text of the matters described in this section and your
prospectus supplement. We have filed
35

a copy of the indenture with the SEC as an exhibit to our registration
statements. See "Available Information" above for information on how to obtain a
copy of it.

This section and your prospectus supplement summarize all the material
terms of the indenture and your warrant. They do not, however, describe every
aspect of the indenture and your warrant. For example, in this section and your
prospectus supplement, we use terms that have been given special meaning in the
indenture, but we describe the meaning for only the more important of those
terms.

GOVERNING LAW

The warrant indenture and the warrants will be governed by New York law.

CURRENCY OF WARRANTS

Amounts that become due and payable on your warrant may be payable in a
currency, composite currency, basket of currencies or currency unit or units
specified in your prospectus supplement. We refer to this currency, composite
currency, basket of currencies or currency unit or units as a "specified
currency". The specified currency for your warrant will be U.S. dollars, unless
your prospectus supplement states otherwise. You will have to pay for your
warrant by delivering the requisite amount of the specified currency to Goldman,
Sachs & Co. or another firm that we name in your prospectus supplement, unless
other arrangements have been made between you and us or you and that firm. We
will make payments on your warrants in the specified currency, except as
described below in "-- Payment Mechanics for Warrants". See "Considerations
Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar
Currency" below for more information about risks of investing in warrants of
this kind.

MERGERS AND SIMILAR TRANSACTIONS

We are generally permitted to merge or consolidate with another corporation
or other entity. We are also permitted to sell our assets substantially as an
entirety to another corporation or other entity. With regard to any warrant,
however, we may not take any of these actions unless all the following
conditions are met:

- If the successor entity in the transaction is not The Goldman Sachs
Group, Inc., the successor entity must be organized as a corporation,
partnership or trust and must expressly assume our obligations under that
warrant and the indenture. The successor entity may be organized under
the laws of any jurisdiction, whether in the United States or elsewhere.

- Immediately after the transaction, no default under the warrant has
occurred and is continuing. For this purpose, "default under the warrant"
means an event of default with respect to that warrant or any event that
would be an event of default with respect to that warrant if the
requirements for giving us default notice and for our default having to
continue for a specific period of time were disregarded. We describe
these matters below under "-- Default, Remedies and Waiver of Default".

If the conditions described above are satisfied with respect to any
warrant, we will not need to obtain the approval of the holder of that warrant
in order to merge or consolidate or to sell our assets. Also, these conditions
will apply only if we wish to merge or consolidate with another entity or sell
our assets substantially as an entirety to another entity. We will not need to
satisfy these conditions if we enter into other types of transactions, including
any transaction in which we acquire the stock or assets of another entity, any
transaction that involves a change of control of The Goldman Sachs Group, Inc.
but in which we do not merge or consolidate and any transaction in which we sell
less than substantially all our assets.

RESTRICTION ON LIENS

In the warrant indenture, we promise, with respect to each series of
warrants, not to create or guarantee any debt for borrowed money that is secured
by a lien on the voting or profit participating equity ownership interests that
we or any of our subsidiaries own in Goldman, Sachs & Co., or in any subsidiary
that beneficially owns or holds, directly or indirectly, those interests in
Goldman, Sachs & Co., unless we also secure the warrants of that series on an
equal or priority basis with the secured debt. Our promise, however, is subject
to an important exception: we may secure debt for borrowed money with liens on
those interests without securing the warrants of any series if our board of
directors determines that the liens do not materially detract from or interfere
with the value or control of those interests as of the date of the
determination.

Except as noted above, the indenture does not restrict our ability to put
liens on our interests in our subsidiaries other than Goldman, Sachs & Co., nor
does the indenture restrict our ability to sell or otherwise dispose of our
interests in any of our subsidiaries, including Goldman, Sachs & Co. In
addition, the restriction on liens in the indenture applies only to liens that
secure debt for borrowed money. For example, liens imposed by operation of law,
such as liens to secure statutory obligations for taxes or workers' compensation
benefits, or liens we create to secure obligations to pay legal judgments or
surety bonds, would not be covered by this restriction.

DEFAULT, REMEDIES AND WAIVER OF DEFAULT

You will have special rights if an event of default with respect to your
warrant occurs and is continuing, as described in this subsection.

EVENTS OF DEFAULT. Unless your prospectus supplement says otherwise, when
we refer to an event of default with respect to any warrant, we mean that, upon
satisfaction by the holder of the warrant of all conditions precedent to our
relevant obligation or covenant to be satisfied by the holder, any of the
following occurs:

- We do not pay any money or deliver any warrant property with respect to
that warrant on the payment or settlement date in accordance with the
terms of that warrant;

- We remain in breach of our covenant described above under "-- Restriction
on Liens", or any other covenant we make in the indenture for the benefit
of the holder of that warrant for 60 days after we receive a notice of
default stating that we are in breach and requiring us to remedy the
breach. The notice must be sent by the trustee or the holders of at least
10% in number of the relevant series of warrants;

- If the applicable prospectus supplement states that any additional event
of default applies to the series, that event of default occurs.

If we do not pay any money or deliver any warrant property when due with respect
to a particular warrant of a series, as described in the first bullet point
above, that failure to make a payment or

delivery will not constitute an event of default with respect to any other
warrant of the same series or any other series.

REMEDIES IF AN EVENT OF DEFAULT OCCURS. If an event of default occurs, the
trustee will have special duties. In that situation, the trustee will be
obligated to use those of its rights and powers under the indenture, and to use
the same degree of care and skill in doing so, that a prudent person would use
in that situation in conducting his or her own affairs.

Except as described in the prior paragraph, the trustee is not required to
take any action under the indenture at the request of any holders unless the
holders offer the trustee reasonable protection from expenses and liability.
This is called an indemnity. If the trustee is provided with an indemnity
reasonably satisfactory to it, the holders of a majority in number of all
warrants of the relevant series may direct the time, method and place of
conducting any lawsuit or other formal legal action seeking any remedy available
to the trustee with respect to that series. These majority holders may also
direct the trustee in performing any other action under the indenture with
respect to the warrants of that series.

Before you bypass the trustee and bring your own lawsuit or other formal
legal action or take other steps to enforce your rights or protect your
interests relating to any warrant, all of the following must occur:

- The holder of your warrant must give the trustee written notice that an
event of default has occurred, and the event of default must not have
been cured or waived;

- The holders of not less than 25% in number of all warrants of your series
must make a written request that the trustee take action because of the
default, and they or other holders must offer to the trustee indemnity
reasonably satisfactory to the trustee against the cost and other
liabilities of taking that action;

- The trustee must not have taken action for 60 days after the above steps
have been taken; and

- During those 60 days, the holders of a majority in number of the warrants
of your series must not have given the trustee directions that are
inconsistent with the written request of the holders of not less than 25%
in number of the warrants of your series.

You are entitled at any time to bring a lawsuit for the payment of any
money or delivery of any warrant property due on your warrant on or after its
payment or settlement date.

WAIVER OF DEFAULT. The holders of not less than a majority in number of
the warrants of any series may waive a default for all warrants of that series.
If this happens, the default will be treated as if it has not occurred. No one
can waive a default in payment of any money or delivery of any warrant property
due on any warrant, however, without the approval of the particular holder of
that warrant.

WE WILL GIVE THE TRUSTEE INFORMATION ABOUT DEFAULTS ANNUALLY. We will
furnish to the trustee every year a written statement of two of our officers
certifying that to their knowledge we are in compliance with the indenture and
the warrants issued under it, or else specifying any default under the
indenture.

Book-entry and other indirect owners should consult their banks or brokers for
information on how to give notice or direction to or make a request of the
trustee. Book-entry and other indirect owners are described below under "Legal
Ownership and Book-Entry Issuance".

MODIFICATION OF THE WARRANT INDENTURE AND WAIVER OF COVENANTS

There are three types of changes we can make to the warrant indenture and
the warrants of any series issued under that indenture.

CHANGES REQUIRING EACH HOLDER'S APPROVAL. First, there are changes that
cannot be made without the approval of each holder of a warrant affected by the
change. Here is a list of those types of changes:

- change the exercise price of the warrant;

- change the terms of any warrant with respect to the payment or settlement
date of the warrant;

- reduce the amount of money payable or reduce the amount or change the
kind of warrant property deliverable upon the exercise of the warrant or
any premium payable upon redemption of the warrant;

- change the currency of any payment on a warrant;

- change the place of payment on a warrant;

- permit redemption of a warrant if not previously permitted;

- impair a holder's right to exercise its warrant, or sue for payment of
any money payable or delivery of any warrant property deliverable with
respect to its warrant on or after the payment or settlement date or, in
the case of redemption, the redemption date;

- if any warrant provides that the holder may require us to repurchase the
warrant, impair the holder's right to require repurchase of the warrant;

- reduce the percentage in number of the warrants of any one or more
affected series, taken separately or together, as applicable, the
approval of whose holders is needed to change the indenture or those
warrants;

- reduce the percentage in number of the warrants of any one or more
affected series, taken separately or together, as applicable, the consent
of whose holders is needed to waive our compliance with the indenture or
to waive defaults; and

- change the provisions of the indenture dealing with modification and
waiver in any other respect, except to increase any required percentage
referred to above or to add to the provisions that cannot be changed or
waived without approval of the holder of each affected warrant.

CHANGES NOT REQUIRING APPROVAL. The second type of change does not require
any approval by holders of the warrants of an affected series. These changes are
limited to clarifications and changes that would not adversely affect the
warrants of that series in any material respect. Nor do we need any approval to
make changes that affect only warrants to be issued under the indenture after
the changes take effect.

We may also make changes or obtain waivers that do not adversely affect a
particular warrant, even if they affect other warrants. In those cases, we do
not need to obtain the approval of the holder of that warrant; we need only
obtain any required approvals from the holders of the affected warrants.

CHANGES REQUIRING MAJORITY APPROVAL. Any other change to the indenture and
the warrants issued under the indenture would require the following approval:

- If the change affects only the warrants of a particular series, it must
be approved by the holders of a majority in number of the warrants of
that series.

- If the change affects the warrants of more than one series issued under
the indenture, it must be approved by the holders of a majority in number
of all series affected by the change, with the warrants of all the
affected series voting together as one class for this purpose.

In each case, the required approval must be given by written consent.

The same majority approval would be required for us to obtain a waiver of
any of our covenants in the indenture. Our covenants include the promises we
make about merging and putting liens on our interests in Goldman, Sachs & Co.,
which we describe above under "-- Mergers and Similar Transactions" and "--
Restriction on Liens". If the holders approve a waiver of a covenant, we will
not have to comply with it. The holders, however, cannot approve a waiver of any
provision in a particular warrant, or in the indenture as it affects that
warrant, that we cannot change without the approval of the holder of that
warrant as described above in "-- Changes Requiring Each Holder's Approval",
unless that holder approves the waiver.

Book-entry and other indirect owners should consult their banks or brokers for
information on how approval may be granted or denied if we seek to change the
warrant indenture or any warrants or request a waiver.

SPECIAL RULES FOR ACTION BY HOLDERS

When holders take any action under the warrant indenture, such as giving a
notice of default, approving any change or waiver or giving the trustee an
instruction, we will apply the following rules.

ONLY OUTSTANDING WARRANTS ARE ELIGIBLE. Only holders of outstanding
warrants of the applicable series will be eligible to participate in any action
by holders of warrants of that series. Also, we will count only outstanding
warrants in determining whether the various percentage requirements for taking
action have been met. For these purposes, a warrant will not be "outstanding":

- if it has been surrendered for cancellation;

- if it has been called for redemption;

- if we have deposited or set aside, in trust for its holder, money or
warrant property for its payment or settlement; or

- if we or one of our affiliates, such as Goldman, Sachs & Co., is the
owner.

DETERMINING RECORD DATES FOR ACTION BY HOLDERS. We will generally be
entitled to set any day as a record date for the purpose of determining the
holders that are entitled to take action under the indenture. In certain limited
circumstances, only the trustee will be entitled to set a record date for action
by holders. If we or the trustee set a record date for an approval or other
action to be taken by holders, that vote or action may be taken only by persons
or entities who are holders on the record date and must be taken during the
period that we specify for this purpose, or that the trustee specifies if it
sets the record date. We or the trustee, as applicable, may shorten or lengthen
this period from time to time. This period, however, may not extend beyond the
180th day after the record date for the action. In addition, record dates for
any global warrant may be set in accordance with procedures established by the
depositary from time to time. Accordingly, record dates for global warrants may
differ from those for other warrants.

REDEMPTION

We will not be entitled to redeem your warrant before its expiration date
unless your prospectus supplement specifies a redemption commencement date.

If your prospectus supplement specifies a redemption commencement date, it
will also specify one or more redemption prices. It may also specify one or more
redemption periods during which the redemption prices relating to a redemption
of warrants during those periods will apply.

If your prospectus supplement specifies a redemption commencement date,
your warrant will be redeemable at our option at any time on or after that date
or at a specified time or times. If we redeem your warrant, we will do so at the
specified redemption price. If different prices are specified for different
redemption periods, the price we pay will be the price that applies to the
redemption period during which your warrant is redeemed.

If we exercise an option to redeem any warrant, we will give to the holder
written notice of the redemption price of the warrant to be redeemed, not less
than 30 days nor more than 60 days before the applicable redemption date or
within any other period before the applicable redemption date specified in the
applicable prospectus supplement. We will give the notice in the manner
described below in "-- Notices".

We or our affiliates may purchase warrants from investors who are willing
to sell from time to time, either in the open market at prevailing prices or in
private transactions at negotiated prices. Warrants that we or they purchase
may, at our discretion, be held, resold or canceled.

FORM, EXCHANGE AND TRANSFER OF WARRANTS

We will issue each warrant in global -- i.e., book-entry -- form only,
unless we say otherwise in the applicable prospectus supplement. Warrants in
book-entry form will be represented by a global security registered in the name
of a depositary, which will be the holder of all the warrants represented by the
global security. Those who own beneficial interests in a global warrant will do
so through participants in the depositary's system, and the rights of these
indirect owners will be governed solely by the applicable procedures of the
depositary and its participants. We describe book-entry securities below under
"Legal Ownership and Book-Entry Issuance".

If a warrant is issued as a registered global warrant, only the
depositary -- e.g., DTC, Euroclear and Clearstream -- will be entitled to
transfer and exchange the warrant as described in this subsection, since the
depositary will be the sole holder of the warrant.

If any warrants cease to be issued in registered global form, they will be
issued:

- only in fully registered form; and

- only in the denominations specified in your prospectus supplement.

Holders may exchange their warrants for warrants of smaller denominations
or combined into fewer warrants of larger denominations, as long as the total
number of warrants is not changed.

Holders may exchange or transfer their warrants at the office of the
trustee. They may also replace lost, stolen, destroyed or mutilated warrants at
that office. We have appointed the trustee to act as our agent for registering
warrants in the names of holders and transferring and replacing warrants. We may
appoint another entity to perform these functions or perform them ourselves.

Holders will not be required to pay a service charge to transfer or
exchange their warrants, but they may be required to pay for any tax or other
governmental charge associated with the transfer or exchange. The transfer or
exchange, and any replacement, will be made only if our

transfer agent is satisfied with the holder's proof of legal ownership. The
transfer agent may require an indemnity before replacing any warrants.

If we have the right to redeem, accelerate or settle any warrants before
their expiration, and we exercise our right as to less than all those warrants,
we may block the transfer or exchange of those warrants during the period
beginning 15 days before the day we mail the notice of exercise and ending on
the day of that mailing or during any other period specified in the applicable
prospectus supplement, in order to freeze the list of holders to prepare the
mailing. We may also refuse to register transfers of or exchange any warrant
selected for early settlement, except that we will continue to permit transfers
and exchanges of the unsettled portion of any warrant being partially settled.

If we have designated additional transfer agents for your warrant, they
will be named in your prospectus supplement. We may appoint additional transfer
agents or cancel the appointment of any particular transfer agent. We may also
approve a change in the office through which any transfer agent acts.

The rules for exchange described above apply to exchange of warrants for
other warrants of the same series and kind. If a warrant is exercisable for a
different kind of security, such as one that we have not issued, or for other
property, the rules governing that type of exercise will be described in the
applicable prospectus supplement.

PAYMENT MECHANICS FOR WARRANTS

WHO RECEIVES PAYMENT? If money is due on a warrant at its payment or
settlement date, we will pay the amount to the holder of the warrant against
surrender of the warrant at a proper place of payment or, in the case of a
global warrant, in accordance with the applicable policies of the depositary,
Euroclear and Clearstream, as applicable.

HOW WE WILL MAKE PAYMENTS DUE IN U.S. DOLLARS. We will follow the practice
described in this subsection when paying amounts due in U.S. dollars. Payments
of amounts due in other currencies will be made as described in the next
subsection.

- PAYMENTS ON GLOBAL WARRANTS. We will make payments on a global warrant
in accordance with the applicable policies of the depositary as in effect
from time to time. Under those policies, we will pay directly to the
depositary, or its nominee, and not to any indirect owners who own
beneficial interests in the global warrant. An indirect owner's right to
receive those payments will be governed by the rules and practices of the
depositary and its participants, as described in the section entitled
"Legal Ownership and Book-Entry Issuance -- What Is a Global Security?".

- PAYMENTS ON NON-GLOBAL WARRANTS. We will make payments on a warrant in
non-global, registered form as follows. We will make all payments by
check at the paying agent described below, against surrender of the
warrant. All payments by check will be made in next-day funds -- i.e.,
funds that become available on the day after the check is cashed.

Alternatively, if a non-global warrant has an original issue price of at
least $1,000,000 and the holder asks us to do so, we will pay any amount
that becomes due on the warrant by wire transfer of immediately available
funds to an account at a bank in New York City, on the payment or
settlement date. To request wire payment, the holder must give the paying
agent appropriate wire transfer instructions at least five business days
before the requested wire payment is due. Payment will be made only after
the warrant is surrendered to the paying agent.

Book-entry and other indirect owners should consult their banks or brokers for
information on how they will receive payments on their warrants.

HOW WE WILL MAKE PAYMENTS DUE IN OTHER CURRENCIES. We will follow the
practice described in this subsection when paying amounts that are due in a
specified currency other than U.S. dollars.

PAYMENTS ON GLOBAL WARRANTS. We will make payments on a global warrant in
the applicable specified currency in accordance with the applicable policies as
in effect from time to time of the depositary, which may be DTC, Euroclear or
Clearstream. Unless we specify otherwise in the applicable prospectus
supplement, The Depository Trust Company, New York, New York, known as DTC, will
be the depositary for all warrants in global form.

Indirect owners of a global warrant denominated in a currency other than U.S.
dollars should consult their banks or brokers for information on how to request
payment in the specified currency in cases where holders have a right to do
so.

PAYMENTS ON NON-GLOBAL WARRANTS. Except as described in the last paragraph
under this heading, we will make payments on warrants in non-global form in the
applicable specified currency. We will make these payments by wire transfer of
immediately available funds to any account that is maintained in the applicable
specified currency at a bank designated by the holder and is acceptable to us
and the trustee. To designate an account for wire payment, the holder must give
the paying agent appropriate wire instructions at least five business days
before the requested wire payment is due. The payment will be made only after
the warrant is surrendered to the paying agent.

If a holder fails to give instructions as described above, we will notify
the holder at the address in the trustee's records and will make the payment
within five business days after the holder provides appropriate instructions.
Any late payment made in these circumstances will be treated under the indenture
as if made on the payment or settlement date, and no interest will accrue on the
late payment from the payment or settlement date to the date paid.

Although a payment on a warrant in non-global form may be due in a
specified currency other than U.S. dollars, we will make the payment in U.S.
dollars if your prospectus supplement specifies that holders may ask us to do so
and you make such a request. To request U.S. dollar payment in these
circumstances, the holder must provide appropriate written notice to the trustee
at least five business days before the payment or settlement date for which
payment in U.S. dollars is requested.

Book-entry and other indirect owners of a warrant with a specified currency
other than U.S. dollars should contact their banks or brokers for information
about how to receive payments in the specified currency or in U.S. dollars.

holder that requests payment in U.S. dollars will bear all associated currency
exchange costs, which will be deducted from the payment.

The foregoing will apply to any warrant, whether in global or non-global
form, and to any payment, including a payment at the payment or settlement date.
Any payment made under the circumstances and in a manner described above will
not result in a default under any warrant or the indenture.

EXCHANGE RATE AGENT. If we issue a warrant in a specified currency other
than U.S. dollars, we will appoint a financial institution to act as the
exchange rate agent and will name the institution initially appointed when the
warrant is originally issued in the applicable prospectus supplement. We may
select Goldman, Sachs & Co. or another of our affiliates to perform this role.
We may change the exchange rate agent from time to time after the original issue
date of the warrant without your consent and without notifying you of the
change.

PAYMENT WHEN OFFICES ARE CLOSED. If any payment or delivery of warrant
property is due on a warrant on a day that is not a business day, we will make
the payment or delivery on the next day that is a business day. Payments or
deliveries postponed to the next business day in this situation will be treated
under the indenture as if they were made on the original payment or settlement
date. Postponement of this kind will not result in a default under any warrant
or the indenture, and no interest will accrue on the postponed amount from the
original payment or settlement date to the next day that is a business day.

The term "business day" means, for any warrant, a day that meets all the
following applicable requirements:

- for all warrants, is a Monday, Tuesday, Wednesday, Thursday or Friday
that is not a day on which banking institutions in New York City are
authorized or obligated by law or executive order to close and that
satisfies any other criteria specified in your prospectus supplement;

- if the warrant has a specified currency other than U.S. dollars or euros,
is also a day on which banking institutions are not authorized or
obligated by law, regulation or executive order to close in the principal
financial center of the country issuing the specified currency;

- if the warrant is held through Euroclear, is also not a day on which
banking institutions in Brussels, Belgium are generally authorized or
obligated by law, regulation or executive order to close; and

- if the warrant is held through Clearstream, is also not a day on which
banking institutions in Luxembourg are generally authorized or obligated
by law, regulation or executive order to close.

PAYING AGENT. We may appoint one or more financial institutions to act as
our paying agents, at whose designated offices warrants in non-global form may
be surrendered for

payment at their payment or settlement date. We call each of those offices a
paying agent. We may add, replace or terminate paying agents from time to time.
We may also choose to act as our own paying agent. Initially, we have appointed
the trustee, at its corporate trust office in New York City, as the paying
agent. We must notify the trustee of changes in the paying agents.

UNCLAIMED PAYMENTS. Regardless of who acts as paying agent, all money paid
or warrant property delivered by us to a paying agent that remains unclaimed at
the end of two years after the amount is due to a holder will be repaid or
redelivered to us. After that two-year period, the holder may look only to us
for payment of any money or delivery of any warrant property, and not to the
trustee, any other paying agent or anyone else.

NOTICES

Notices to be given to holders of a global warrant will be given only to
the depositary, in accordance with its applicable policies as in effect from
time to time. Notices to be given to holders of warrants not in global form will
be sent by mail to the respective addresses of the holders as they appear in the
trustee's records, and will be deemed given when mailed. Neither the failure to
give any notice to a particular holder, nor any defect in a notice given to a
particular holder, will affect the sufficiency of any notice given to another
holder.

Book-entry and other indirect owners should consult their banks or brokers for
information on how they will receive notices.

OUR RELATIONSHIP WITH THE TRUSTEE

The Bank of New York has provided commercial banking and other services for
us and our affiliates in the past and may do so in the future. Among other
things, The Bank of New York provides us with a line of credit, holds debt
securities issued by us and serves as trustee or agent with regard to other
warrants and debt obligations of The Goldman Sachs Group, Inc. or its
subsidiaries.

The Bank of New York is initially serving as the trustee for the warrants
issued under the warrant indenture and for our senior debt securities and
subordinated debt securities. Consequently, if an actual or potential event of
default occurs with respect to any of these securities, the trustee may be
considered to have a conflicting interest for purposes of the Trust Indenture
Act of 1939. In that case, the trustee may be required to resign under one or
more of the indentures, and we would be required to appoint a successor trustee.
For this purpose, a "potential" event of default means an event that would be an
event of default if the requirements for giving us default notice or for the
default having to exist for a specific period of time were disregarded.

GENERAL PROVISIONS OF WARRANT AGREEMENTS

We may issue debt warrants and some universal warrants in one or more
series under one or more warrant agreements, each to be entered into between us
and a bank, trust company or other financial institution as warrant agent. We
may add, replace or terminate warrant agents from time to time. We may also
choose to act as our own warrant agent. We will describe the warrant agreement
under which we issue any warrants in the applicable prospectus supplement, and
we will file that agreement with the SEC, either as an exhibit to an amendment
to the registration statements of which this prospectus is a part or as an
exhibit to a current report on Form 8-K. See "Available Information" above for
information on how to obtain a copy of a warrant agreement when it is filed.

We may also issue universal warrants under the warrant indenture. For these
warrants, the applicable provisions of the warrant indenture described above
would apply instead of the provisions described in this section.

ENFORCEMENT OF RIGHTS

The warrant agent under a warrant agreement will act solely as our agent in
connection with the warrants issued under that agreement. The warrant agent will
not assume any obligation or relationship of agency or trust for or with any
holders of those warrants. Any holder of warrants may, without the consent of
any other person, enforce by appropriate legal action, on its own behalf, its
right to exercise those warrants in accordance with their terms. No holder of
any warrant will be entitled to any rights of a holder of the debt securities or
warrant property purchasable upon exercise of the warrant, including any right
to receive payments on those debt securities or warrant property or to enforce
any covenants or rights in the relevant indenture or any other agreement.

MODIFICATIONS WITHOUT CONSENT OF HOLDERS

We and the applicable warrant agent may amend any warrant or warrant
agreement without the consent of any holder:

- to cure any ambiguity;

- to cure, correct or supplement any defective or inconsistent provision;
or

- to make any other change that we believe is necessary or desirable and
will not adversely affect the interests of the affected holders in any
material respect.

We do not need any approval to make changes that affect only warrants to be
issued after the changes take effect. We may also make changes that do not
adversely affect a particular warrant in any material respect, even if they
adversely affect other warrants in a material respect. In those cases, we do not
need to obtain the approval of the holder of the unaffected warrant; we need
only obtain any required approvals from the holders of the affected warrants.

MODIFICATIONS WITH CONSENT OF HOLDERS

We may not amend any particular warrant or a warrant agreement with respect
to any particular warrant unless we obtain the consent of the holder of that
warrant, if the amendment would:

- change the exercise price of the warrant;

- change the kind or reduce the amount of the warrant property or other
consideration receivable upon exercise, cancellation or expiration of the
warrant;

- shorten, advance or defer the period of time during which the holder may
exercise the warrant or otherwise impair the holder's right to exercise
the warrant; or

- reduce the percentage of outstanding, unexpired warrants of any series or
class the consent of whose holders is required to amend the series or
class, or the applicable warrant agreement with regard to that series or
class, as described below.

Any other change to a particular warrant agreement and the warrants issued
under that agreement would require the following approval:

- If the change affects only the warrants of a particular series issued
under that agreement, the change must be approved by the holders of a
majority of the outstanding, unexpired warrants of that series.

- If the change affects the warrants of more than one series issued under
that agreement, the change must be approved by the holders of a majority
of all outstanding, unexpired warrants of all series affected by the
change, with the warrants of all the affected series voting together as
one class for this purpose.

In each case, the required approval must be given in writing.

WARRANT AGREEMENT WILL NOT BE QUALIFIED UNDER TRUST INDENTURE ACT

No warrant agreement will be qualified as an indenture, and no warrant
agent will be required to qualify as a trustee, under the Trust Indenture Act.
Therefore, holders of warrants issued under a warrant agreement will not have
the protection of the Trust Indenture Act with respect to their warrants.

MERGERS AND SIMILAR TRANSACTIONS PERMITTED; NO RESTRICTIVE COVENANTS OR EVENTS
OF DEFAULT

The warrant agreements and any warrants issued under the warrant agreements
will not restrict our ability to merge or consolidate with, or sell our assets
to, another corporation or other entity or to engage in any other transactions.
If at any time we merge or consolidate with, or sell our assets substantially as
an entirety to, another corporation or other entity, the successor entity will
succeed to and assume our obligations under the warrants and warrant agreements.
We will then be relieved of any further obligation under the warrants and
warrant agreements.

The warrant agreements and any warrants issued under the warrant agreements
will not include any restrictions on our ability to put liens on our assets,
including our interests in our subsidiaries, nor will they restrict our ability
to sell our assets. The warrant agreements and any warrants issued under the
warrant agreements also will not provide for any events of default or remedies
upon the occurrence of any events of default.

GOVERNING LAW

Each warrant agreement and any warrants issued under the warrant agreements
will be governed by New York law.

FORM, EXCHANGE AND TRANSFER

We will issue each warrant in global -- i.e., book-entry -- form only,
unless we specify otherwise in the applicable prospectus supplement. Warrants in
book-entry form will be represented by a global security registered in the name
of a depositary, which will be the holder of all the warrants represented by the
global security. Those who own beneficial interests in a global warrant will do
so through participants in the depositary's system, and the rights of these
indirect owners will be governed solely by the applicable procedures of the
depositary and its participants. We describe book-entry securities under "Legal
Ownership and Book-Entry Issuance".

In addition, we will issue each warrant in registered form, unless we say
otherwise in the applicable prospectus supplement. Bearer securities would be
subject to special provisions, as we describe below under "Considerations
Relating to Securities Issued in Bearer Form".

If any warrants are issued in non-global form, the following will apply to
them:

The warrants will be issued in fully registered form in denominations
stated in the applicable prospectus supplement. Holders may exchange their
warrants for warrants of smaller denominations or combined into fewer warrants
of larger denominations, as long as the total number of warrants is not changed.

Holders may exchange or transfer their warrants at the office of the
warrant agent. They may also replace lost, stolen, destroyed or mutilated
warrants at that office. We may appoint another entity to perform these
functions or perform them ourselves.

Holders will not be required to pay a service charge to transfer or
exchange their warrants, but they may be required to pay any tax or other
governmental charge associated with the transfer or exchange. The transfer or
exchange, and any replacement, will be made only if our transfer agent is
satisfied with the holder's proof of legal ownership. The transfer agent may
also require an indemnity before replacing any warrants.

If we have the right to redeem, accelerate or settle any warrants before
their expiration, and we exercise our right as to less than all those warrants,
we may block the transfer or exchange of those warrants during the period
beginning 15 days before the day we mail the notice of exercise and ending on
the day of that mailing, in order to freeze the list of holders to prepare the
mailing. We may also refuse to register transfers of or exchange any warrant
selected for early settlement, except that we will continue to permit transfers
and exchanges of the unsettled portion of any warrant being partially settled.

Only the depositary will be entitled to transfer or exchange a warrant in
global form, since it will be the sole holder of the warrant.

PAYMENTS AND NOTICES

In making payments and giving notices with respect to our warrants issued
under warrant agreements, we will follow the procedures we plan to use with
respect to our warrants issued under the warrant indenture, where applicable. We
describe these procedures above under "-- General Provisions of Warrant
Indenture -- Payment Mechanics for Warrants" and "-- Notices".

CALCULATION AGENT

Calculations relating to warrants will be made by the calculation agent, an
institution that we appoint as our agent for this purpose. That institution may
include any affiliate of ours, such as Goldman, Sachs & Co. The prospectus
supplement for a particular warrant will name the institution that we have
appointed to act as the calculation agent for that warrant as of its original
issue date. We may appoint a different institution to serve as calculation agent
from time to time after the original issue date of the warrant without your
consent and without notifying you of the change.

The calculation agent's determination of any amount of money payable or
warrant property deliverable with respect to a warrant will be final and binding
in the absence of manifest error.

All percentages resulting from any calculation relating to a warrant will
be rounded upward or downward, as appropriate, to the next higher or lower one
hundred-thousandth of a percentage point, e.g., 9.876541% (or .09876541) being
rounded down to 9.87654% (or .0987654) and 9.876545% (or .09876545) being
rounded up to 9.87655% (or .0987655). All amounts used in or resulting from any
calculation relating to a warrant will be rounded upward or downward, as
appropriate, to the nearest cent, in the case of U.S. dollars, or to the nearest
corresponding hundredth of a unit, in the case of a currency other than U.S.
dollars, with one-half cent or one-half of a corresponding hundredth of a unit
or more being rounded upward.

DESCRIPTION OF PURCHASE CONTRACTS WE MAY OFFER

Please note that in this section entitled "Description of Purchase Contracts We
May Offer", references to The Goldman Sachs Group, Inc., "we", "our" and "us"
refer only to The Goldman Sachs Group, Inc. and not to its consolidated
subsidiaries. Also, in this section, references to "holders" mean those who own
purchase contracts registered in their own names, on the books that we or our
agent maintain for this purpose, and not those who own beneficial interests in
purchase contracts registered in street name or in purchase contracts issued in
book-entry form through one or more depositaries. Owners of beneficial interests
in the purchase contracts should read the section below entitled "Legal
Ownership and Book-Entry Issuance".

PURCHASE CONTRACT PROPERTY

We may issue purchase contracts for the purchase or sale of, or whose cash
value is determined by reference or linked to the performance, level or value
of, one or more of the following:

- securities of one or more issuers, including our common or preferred
stock or other securities described in this prospectus or debt or equity
securities of third parties;

- one or more currencies;

- one or more commodities;

- any other financial, economic or other measure or instrument, including
the occurrence or non-occurrence of any event or circumstance; and

- one or more indices or baskets of the items described above.

We refer to each property described above as a "purchase contract property".
Each purchase contract will obligate:

- the holder to purchase or sell, and obligate us to sell or purchase, on
specified dates, one or more purchase contract properties at a specified
price or prices; or

- the holder or us to settle the purchase contract by reference to the
value, performance or level of one or more purchase contract properties,
on specified dates and at a specified price or prices.

Some purchase contracts may include multiple obligations to purchase or sell
different purchase contract properties, and both we and the holder may be
sellers or buyers under the same purchase contract. No holder of a purchase
contract will have any rights of a holder of the purchase contract property
purchasable under the contract, including any right to receive payments on that
property.

An investment in purchase contracts may involve special risks, including
risks associated with indexed securities and currency-related risks if the
purchase contract or purchase contract property is linked to an index or is
payable in or otherwise linked to a non-U.S. dollar currency. We describe some
of these risks below under "Considerations Relating to Indexed Securities" and
"Considerations Relating to Securities Denominated or Payable in or Linked to a
Non-U.S. Dollar Currency".

Because we are a holding company, our ability to perform our obligations on
the purchase contracts will depend in part on our ability to participate in
distributions of assets from our subsidiaries. We discuss these matters above
under "Description of Debt Securities We May Offer -- We Are a Holding Company".

Our affiliates may resell purchase contracts after their initial issuance
in market-making transactions. We describe these transactions above under
"Description of Debt Securities We May Offer -- Information in the Prospectus
Supplement -- Market-Making Transactions".

WE MAY ISSUE MANY SERIES OF PURCHASE CONTRACTS

We may issue purchase contracts in such amounts and in as many distinct
series as we wish. We may also "reopen" a previously issued series of purchase
contracts and issue additional purchase contracts of that series. In addition,
we may issue a purchase contract separately or as part of a unit, as described
below under "Description of Units We May Offer".

This section summarizes terms of the purchase contracts that apply
generally to all purchase contracts. We describe most of the financial and other
specific terms of your purchase contract in the prospectus supplement
accompanying this prospectus. Those terms may vary from the terms described
here.

As you read this section, please remember that the specific terms of your
purchase contract as described in your prospectus supplement will supplement
and, if applicable, may modify or replace the general terms described in this
section. If there are differences between your prospectus supplement and this
prospectus, your prospectus supplement will control. Thus, the statements we
make in this section may not apply to your purchase contract.

When we refer to a series of purchase contracts, we mean all the purchase
contracts issued as part of the same series under the applicable governing
instrument. When we refer to your prospectus supplement, we mean the prospectus
supplement describing the specific terms of the purchase contract you purchase.
The terms used in your prospectus supplement will have the meanings described in
this prospectus, unless otherwise specified.

PREPAID PURCHASE CONTRACTS; APPLICABILITY OF DEBT INDENTURE

Some purchase contracts may require the holders to satisfy their
obligations under the contracts at the time the contracts are issued. We refer
to those contracts as "prepaid purchase contracts". Our obligation to settle a
prepaid purchase contract on the relevant settlement date will be one of our
senior debt securities or subordinated debt securities, which are described
above under "Description of Debt Securities We May Offer". Prepaid purchase
contracts will be issued under the applicable debt indenture, and the provisions
of that indenture will govern those contracts.

NON-PREPAID PURCHASE CONTRACTS; NO TRUST INDENTURE ACT PROTECTION

Some purchase contracts do not require the holders to satisfy their
obligations under the contracts until settlement. We refer to those contracts as
"non-prepaid purchase contracts". The holder of a non-prepaid purchase contract
may remain obligated to perform under the contract for a substantial period of
time.

Non-prepaid purchase contracts will be issued under a unit agreement, if
they are issued in units, or under some other document, if they are not. We
describe unit agreements generally under "Description of Units We May Offer"
below. We will describe the particular governing document that applies to your
non-prepaid purchase contracts in the applicable prospectus supplement.

Non-prepaid purchase contracts will not be senior debt securities or
subordinated debt securities and will not be issued under one of our indentures,
unless we say otherwise in the

applicable prospectus supplement. Consequently, no governing documents for
non-prepaid purchase contracts will be qualified as indentures, and no third
party will be required to qualify as a trustee with regard to those contracts,
under the Trust Indenture Act. Holders of non-prepaid purchase contracts will
not have the protection of the Trust Indenture Act with respect to those
contracts.

GENERAL TERMS OF PURCHASE CONTRACTS

Your prospectus supplement may contain, where applicable, the following
information about your purchase contract:

- whether the purchase contract obligates the holder to purchase or sell,
or both purchase and sell, one or more purchase contract properties and
the nature and amount of each of those properties, or the method of
determining those amounts;

- whether the purchase contract is to be prepaid or not and the governing
document for the contract;

- whether the purchase contract is to be settled by delivery, or by
reference or linkage to the value, performance or level of, the purchase
contract properties;

- any acceleration, cancellation, termination or other provisions relating
to the settlement of the purchase contract;

- whether the purchase contract will be issued as part of a unit and, if
so, the other securities comprising the unit and whether any unit
securities will be subject to a security interest in our favor as
described below; and

- whether the purchase contract will be issued in fully registered or
bearer form and in global or non-global form.

If we issue a purchase contract as part of a unit, the accompanying
prospectus supplement will state whether the contract will be separable from the
other securities in the unit before the contract settlement date. A purchase
contract issued in a unit in the United States may not be so separated before
the 91st day after the unit is issued.

ADDITIONAL TERMS OF NON-PREPAID PURCHASE CONTRACTS

In addition to the general terms described above, a non-prepaid purchase
contract may include the following additional terms.

PLEDGE BY HOLDERS TO SECURE PERFORMANCE

If we say so in the applicable prospectus supplement, the holder's
obligations under the purchase contract and governing document will be secured
by collateral. In that case, the holder, acting through the unit agent as its
attorney-in-fact, if applicable, will pledge the items described below to a
collateral agent named in the prospectus supplement, which will hold them, for
our benefit, as collateral to secure the holder's obligations. We refer to this
as the "pledge" and all the items described below as the "pledged items". The
pledge will create a security interest in the holder's entire interest in and
to:

- any other securities included in the unit, if the purchase contract is
part of a unit, or any other property specified in the applicable
prospectus supplement;

- all additions to and substitutions for the pledged items;

- all income, proceeds and collections received in respect of the pledged
items; and

- all powers and rights owned or acquired later with respect to the pledged
items.

The collateral agent will forward all payments from the pledged items to us,
unless the payments have been released from the pledge in accordance with the
purchase contract and the governing document. We will use the payments from the
pledged items to satisfy the holder's obligations under the purchase contract.

SETTLEMENT OF PURCHASE CONTRACTS THAT ARE PART OF UNITS

The following will apply to a non-prepaid purchase contract that is issued
together with any of our debt securities as part of a unit. If the holder fails
to satisfy its obligations under the purchase contract, the unit agent may apply
the principal payments on the debt securities to satisfy those obligations as
provided in the governing document. If the holder is permitted to settle its
obligations by cash payment, the holder may be permitted to do so by delivering
the debt securities in the unit to the unit agent as provided in the governing
document.

Book-entry and other indirect owners should consult their banks or brokers for
information on how to settle their purchase contracts.

FAILURE OF HOLDER TO PERFORM OBLIGATIONS

If the holder fails to settle its obligations under a non-prepaid purchase
contract as required, the holder will not receive the purchase contract property
or other consideration to be delivered at settlement. Holders that fail to make
timely settlement may also be obligated to pay interest or other amounts.

ASSUMPTION OF OBLIGATIONS BY TRANSFEREE

When the holder of a non-prepaid purchase contract transfers the purchase
contract to a new holder, the new holder will assume the obligations of the
prior holder with respect to the purchase contract, and the prior holder will be
released from those obligations. Under the non-prepaid purchase contract, we
will consent to the transfer of the purchase contract, to the assumption of
those obligations by the new holder and to the release of the prior holder, if
the transfer is made in accordance with the provisions of the purchase contract.

MERGERS AND SIMILAR TRANSACTIONS PERMITTED; NO RESTRICTIVE COVENANTS OR EVENTS
OF DEFAULT

Purchase contracts that are not prepaid will not restrict our ability to
merge or consolidate with, or sell our assets to, another corporation or other
entity or to engage in any other transactions. If at any time we merge or
consolidate with, or sell our assets substantially as an entirety to, another
corporation or other entity, the successor entity will succeed to and assume our
obligations under these purchase contracts. We will then be relieved of any
further obligation under these purchase contracts.

Purchase contracts that are not prepaid will not include any restrictions
on our ability to put liens on our assets, including our interests in our
subsidiaries, nor will they restrict our ability to sell our assets. These
purchase contracts also will not provide for any events of default or remedies
upon the occurrence of any events of default.

GOVERNING LAW

The purchase contracts and any governing documents will be governed by New
York law.

FORM, EXCHANGE AND TRANSFER

We will issue each purchase contract in global -- i.e., book-entry -- form
only, unless we specify otherwise in the applicable prospectus supplement.
Purchase contracts in book-entry form will be represented by a global security
registered in the name of a depositary, which will be the holder of all the
purchase contracts represented by the global security. Those who own beneficial
interests in a purchase contract will do so through participants in the
depositary's system, and the rights of these indirect owners will be governed
solely by the applicable procedures of the depositary and its participants. We
describe book-entry securities under "Legal Ownership and Book-Entry Issuance".

In addition, we will issue each purchase contract in registered form,
unless we say otherwise in the applicable prospectus supplement. Bearer
securities would be subject to special provisions, as we describe below under
"Considerations Relating to Securities Issued in Bearer Form".

If any purchase contracts are issued in non-global form, the following will
apply to them:

- The purchase contracts will be issued in fully registered form in
denominations stated in the applicable prospectus supplement. Holders may
exchange their purchase contracts for contracts of smaller denominations
or combined into fewer contracts of larger denominations, as long as the
total amount is not changed.

- Holders may exchange or transfer their purchase contracts at the office
of the trustee, unit agent or other agent we name in the applicable
prospectus supplement. Holders may also replace lost, stolen, destroyed
or mutilated purchase contracts at that office. We may appoint another
entity to perform these functions or perform them ourselves.

- Holders will not be required to pay a service charge to transfer or
exchange their purchase contracts, but they may be required to pay for
any tax or other governmental charge associated with the transfer or
exchange. The transfer or exchange, and any replacement, will be made
only if our transfer agent is satisfied with the holder's proof of legal
ownership. The transfer agent may also require an indemnity before
replacing any purchase contracts.

- If we have the right to redeem, accelerate or settle any purchase
contracts before their maturity, and we exercise our right as to less
than all those purchase contracts, we may block the transfer or exchange
of those purchase contracts during the period beginning 15 days before
the day we mail the notice of exercise and ending on the day of that
mailing, in order to freeze the list of holders to prepare the mailing.
We may also refuse to register transfers of or exchange any purchase
contract selected for early settlement, except that we will continue to
permit transfers and exchanges of the unsettled portion of any purchase
contract being partially settled.

Only the depositary will be entitled to transfer or exchange a purchase
contract in global form, since it will be the sole holder of the purchase
contract.

PAYMENTS AND NOTICES

In making payments and giving notices with respect to purchase contracts,
we will follow the procedures we plan to use with respect to our debt
securities, when applicable. We describe these procedures above under
"Description of Debt Securities We May Offer -- Payment Mechanics for Debt
Securities" and "-- Notices."

DESCRIPTION OF UNITS WE MAY OFFER

Please note that in this section entitled "Description of Units We May Offer",
references to The Goldman Sachs Group, Inc., "we", "our" and "us" refer only to
The Goldman Sachs Group, Inc. and not to its consolidated subsidiaries. Also, in
this section, references to "holders" mean those who own units registered in
their own names, on the books that we or our agent maintain for this purpose,
and not those who own beneficial interests in units registered in street name or
in units issued in book-entry form through one or more depositaries. Owners of
beneficial interests in the units should read the section below entitled "Legal
Ownership and Book-Entry Issuance".

We may issue units comprised of one or more debt securities, warrants and
purchase contracts in any combination. Each unit will be issued so that the
holder of the unit is also the holder of each security included in the unit.
Thus, the holder of a unit will have the rights and obligations of a holder of
each included security. The unit agreement under which a unit is issued may
provide that the securities included in the unit may not be held or transferred
separately, at any time or at any time before a specified date.

The applicable prospectus supplement may describe:

- the designation and terms of the units and of the securities comprising
the units, including whether and under what circumstances those
securities may be held or transferred separately;

- any provisions of the governing unit agreement that differ from those
described below; and

- any provisions for the issuance, payment, settlement, transfer or
exchange of the units or of the securities comprising the units.

The applicable provisions described in this section, as well as those described
under "Description of Debt Securities We May Offer", "Description of Warrants We
May Offer" and "Description of Purchase Contracts We May Offer", will apply to
each unit and to any debt security, warrant or purchase contract included in
each unit, respectively.

An investment in units may involve special risks, including risks
associated with indexed securities and currency-related risks if the securities
comprising the units are linked to an index or are payable in or otherwise
linked to a non-U.S. dollar currency. We describe some of these risks below
under "Considerations Relating to Indexed Securities" and "Considerations
Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar
Currency".

Our affiliates may resell units after their initial issuance in
market-making transactions. We discuss these transactions above under
"Description of Debt Securities We May Offer -- Information in the Prospectus
Supplement -- Market-Making Transactions".

WE MAY ISSUE MANY SERIES OF UNITS

We may issue units in such amounts and in as many distinct series as we
wish. We may also "reopen" a previously issued series of units and issue
additional units of that series. This section summarizes terms of the units that
apply generally to all series. We describe most of the financial and other
specific terms of your series in the prospectus supplement accompanying this
prospectus. Those terms may vary from the terms described here.

As you read this section, please remember that the specific terms of your unit
as described in your prospectus supplement will supplement and, if applicable,
may modify or replace the general terms described in this section. If there are
differences between your prospectus supplement and this prospectus, your
prospectus supplement will control. Thus, the statements we make in this section
may not apply to your unit.

When we refer to a series of units, we mean all units issued as part of the
same series under the applicable unit agreement. We will identify the series of
which your units are a part in your prospectus supplement. When we refer to your
prospectus supplement, we mean the prospectus supplement describing the specific
terms of the units you purchase. The terms used in your prospectus supplement
will have the meanings described in this prospectus, unless otherwise specified.

UNIT AGREEMENTS: PREPAID, NON-PREPAID AND OTHER

We will issue the units under one or more unit agreements to be entered
into between us and a bank or other financial institution, as unit agent. We may
add, replace or terminate unit agents from time to time. We may also choose to
act as our own unit agent. We will identify the unit agreement under which your
units will be issued and the unit agent under that agreement in your prospectus
supplement.

If a unit includes one or more purchase contracts and all those purchase
contracts are prepaid purchase contracts, we will issue the unit under a
"prepaid unit agreement". Prepaid unit agreements will reflect the fact that the
holders of the related units have no further obligations under the purchase
contracts included in their units. If a unit includes one or more non-prepaid
purchase contracts, we will issue the unit under a "non-prepaid unit agreement".
Non-prepaid unit agreements will reflect the fact that the holders have payment
or other obligations under one or more of the purchase contracts comprising
their units. We may also issue units under other kinds of unit agreements, which
we will describe in the applicable prospectus supplement. In some cases, we may
issue units under one of our indentures.

A unit agreement may also serve as the governing document for a security
included in a unit. For example, a non-prepaid purchase contract that is part of
a unit may be issued under and governed by the relevant unit agreement.

In this prospectus, we refer to prepaid unit agreements, non-prepaid unit
agreements and other unit agreements, generally, as "unit agreements". We will
file the unit agreement under which we issue your units with the SEC, either as
an exhibit to an amendment to the registration statements of which this
prospectus is a part or as an exhibit to a current report on Form 8-K. See
"Available Information" above for information on how to obtain a copy of a unit
agreement when it is filed.

GENERAL PROVISIONS OF A UNIT AGREEMENT

This following provisions will generally apply to all unit agreements
unless otherwise stated in the applicable prospectus supplement.

ENFORCEMENT OF RIGHTS

The unit agent under a unit agreement will act solely as our agent in
connection with the units issued under that agreement. The unit agent will not
assume any obligation or relationship of agency or trust for or with any holders
of those units or of the securities comprising those

units. The unit agent will not be obligated to take any action on behalf of
those holders to enforce or protect their rights under the units or the included
securities.

Except as described in the next paragraph, a holder of a unit may, without
the consent of the unit agent or any other holder, enforce its rights as holder
under any security included in the unit, in accordance with the terms of that
security and the indenture, warrant agreement or unit agreement under which that
security is issued. Those terms are described elsewhere in this prospectus under
the sections relating to debt securities, warrants and purchase contracts.

Notwithstanding the foregoing, a unit agreement may limit or otherwise
affect the ability of a holder of units issued under that agreement to enforce
its rights, including any right to bring a legal action, with respect to those
units or any securities, other than debt securities, prepaid purchase contracts
and warrants issued under the warrant indenture, that are included in those
units. Limitations of this kind will be described in the applicable prospectus
supplement.

MODIFICATION WITHOUT CONSENT OF HOLDERS

We and the applicable unit agent may amend any unit or unit agreement
without the consent of any holder:

- to cure any ambiguity;

- to correct or supplement any defective or inconsistent provision; or

- to make any other change that we believe is necessary or desirable and
will not adversely affect the interests of the affected holders in any
material respect.

We do not need any approval to make changes that affect only units to be issued
after the changes take effect. We may also make changes that do not adversely
affect a particular unit in any material respect, even if they adversely affect
other units in a material respect. In those cases, we do not need to obtain the
approval of the holder of the unaffected unit; we need only obtain any required
approvals from the holders of the affected units.

The foregoing applies also to any security issued under a unit agreement,
as the governing document.

MODIFICATION WITH CONSENT OF HOLDERS

We may not amend any particular unit or a unit agreement with respect to
any particular unit unless we obtain the consent of the holder of that unit, if
the amendment would:

- impair any right of the holder to exercise or enforce any right under a
security included in the unit if the terms of that security require the
consent of the holder to any changes that would impair the exercise or
enforcement of that right;

- impair the right of the holder to purchase or sell, as the case may be,
the purchase contract property under any non-prepaid purchase contract
issued under the unit agreement, or to require delivery of or payment for
that property when due; or

- reduce the percentage of outstanding units of any series or class the
consent of whose holders is required to amend that series or class, or
the applicable unit agreement with respect to that series or class, as
described below.

Any other change to a particular unit agreement and the units issued under
that agreement would require the following approval:

- If the change affects only the units of a particular series issued under
that agreement, the change must be approved by the holders of a majority
of the outstanding units of that series.

- If the change affects the units of more than one series issued under that
agreement, it must be approved by the holders of a majority of all
outstanding units of all series affected by the change, with the units of
all the affected series voting together as one class for this purpose.

These provisions regarding changes with majority approval also apply to changes
affecting any securities issued under a unit agreement, as the governing
document.

In each case, the required approval must be given by written consent.

UNIT AGREEMENTS WILL NOT BE QUALIFIED UNDER TRUST INDENTURE ACT

No unit agreement will be qualified as an indenture, and no unit agent will
be required to qualify as a trustee, under the Trust Indenture Act. Therefore,
holders of units issued under unit agreements will not have the protections of
the Trust Indenture Act with respect to their units.

ADDITIONAL PROVISIONS OF A NON-PREPAID UNIT AGREEMENT

In addition to the provisions described above, a non-prepaid unit agreement
will include the following provisions.

OBLIGATIONS OF UNIT HOLDER

Each holder of units issued under a non-prepaid unit agreement will:

- be bound by the terms of each non-prepaid purchase contract included in
the holder's units and by the terms of the unit agreement with respect to
those contracts; and

- appoint the unit agent as its authorized agent to execute, deliver and
perform on the holder's behalf each non-prepaid purchase contract
included in the holder's units.

The unit agreement for a unit that includes a non-prepaid purchase contract will
also include provisions regarding the holder's pledge of collateral and special
settlement provisions. These are described above under "Description of Purchase
Contracts We May Offer -- Additional Terms of Non-Prepaid Purchase Contracts".

FAILURE OF HOLDER TO PERFORM OBLIGATIONS

If the holder fails to settle its obligations under a non-prepaid purchase
contract included in a unit as required, the holder will not receive the
purchase contract property or other consideration to be delivered at settlement
of the purchase contract. Holders that fail to make timely settlement may also
be obligated to pay interest or other amounts.

ASSUMPTION OF OBLIGATIONS BY TRANSFEREE

When the holder of a unit issued under a non-prepaid unit agreement
transfers the unit to a new holder, the new holder will assume the obligations
of the prior holder with respect to each non-prepaid purchase contract included
in the unit, and the prior holder will be released from those obligations. Under
the non-prepaid unit agreement, we will consent to the transfer of the unit, to
the assumption of those obligations by the new holder and to the release of the
prior holder, if the transfer is made in accordance with the provisions of that
agreement.

MERGERS AND SIMILAR TRANSACTIONS PERMITTED; NO RESTRICTIVE COVENANTS OR EVENTS
OF DEFAULT

The unit agreements will not restrict our ability to merge or consolidate
with, or sell our assets to, another corporation or other entity or to engage in
any other transactions. If at any time we merge or consolidate with, or sell our
assets substantially as an entirety to, another

corporation or other entity, the successor entity will succeed to and assume our
obligations under the unit agreements. We will then be relieved of any further
obligation under these agreements.

The unit agreements will not include any restrictions on our ability to put
liens on our assets, including our interests in our subsidiaries, nor will they
restrict our ability to sell our assets. The unit agreements also will not
provide for any events of default or remedies upon the occurrence of any events
of default.

GOVERNING LAW

The unit agreements and the units will be governed by New York law.

FORM, EXCHANGE AND TRANSFER

We will issue each unit in global -- i.e., book-entry -- form only. Units
in book-entry form will be represented by a global security registered in the
name of a depositary, which will be the holder of all the units represented by
the global security. Those who own beneficial interests in a unit will do so
through participants in the depositary's system, and the rights of these
indirect owners will be governed solely by the applicable procedures of the
depositary and its participants. We describe book-entry securities below under
"Legal Ownership and Book-Entry Issuance".

In addition, we will issue each unit in registered form, unless we say
otherwise in the applicable prospectus supplement. Bearer securities would be
subject to special provisions, as we describe below under "Considerations
Relating to Securities Issued in Bearer Form".

Each unit and all securities comprising the unit will be issued in the same
form.

If we issue any units in registered, non-global form, the following will
apply to them.

The units will be issued in the denominations stated in the applicable
prospectus supplement. Holders may exchange their units for units of smaller
denominations or combined into fewer units of larger denominations, as long as
the total amount is not changed.

- Holders may exchange or transfer their units at the office of the unit
agent. Holders may also replace lost, stolen, destroyed or mutilated
units at that office. We may appoint another entity to perform these
functions or perform them ourselves.

- Holders will not be required to pay a service charge to transfer or
exchange their units, but they may be required to pay for any tax or
other governmental charge associated with the transfer or exchange. The
transfer or exchange, and any replacement, will be made only if our
transfer agent is satisfied with the holder's proof of legal ownership.
The transfer agent may also require an indemnity before replacing any
units.

- If we have the right to redeem, accelerate or settle any units before
their maturity, and we exercise our right as to less than all those units
or other securities, we may block the exchange or transfer of those units
during the period beginning 15 days before the day we mail the notice of
exercise and ending on the day of that mailing, in order to freeze the
list of holders to prepare the mailing. We may also refuse to register
transfers of or exchange any unit selected for early settlement, except
that we will continue to permit transfers and exchanges of the unsettled
portion of any unit being partially settled. We may also block the
transfer or exchange of any unit in this manner if the unit includes
securities that are or may be selected for early settlement.

Only the depositary will be entitled to transfer or exchange a unit in
global form, since it will be the sole holder of the unit.

PAYMENTS AND NOTICES

In making payments and giving notices with respect to our units, we will
follow the procedures we plan to use with respect to our debt securities, where
applicable. We describe those procedures above under "Descriptions of Debt
Securities We May Offer -- Payment Mechanics for Debt Securities" and
"-- Notices".

DESCRIPTION OF PREFERRED STOCK WE MAY OFFER

Please note that in this section entitled "Description of Preferred Stock We May
Offer", references to The Goldman Sachs Group, Inc., "we", "our" and "us" refer
only to The Goldman Sachs Group, Inc. and not to its consolidated subsidiaries.
Also, in this section, references to "holders" mean those who own shares of
preferred stock or depositary shares, as the case may be, registered in their
own names, on the books that the registrar or we maintain for this purpose, and
not those who own beneficial interests in shares registered in street name or in
shares issued in book-entry form through one or more depositaries. Owners of
beneficial interests in shares of preferred stock or depositary shares should
read the section below entitled "Legal Ownership and Book-Entry Issuance".

We may issue our preferred stock in one or more series, as described below.
We may also "reopen" a previously issued series of preferred stock and issue
additional preferred stock of that series. This section summarizes terms of the
preferred stock that apply generally to all series. We describe most of the
financial and other specific terms of your series in the prospectus supplement
accompanying this prospectus. Those terms may vary from the terms described
here.

As you read this section, please remember that the specific terms of your series
of preferred stock and any related depositary shares as described in your
prospectus supplement will supplement and, if applicable, may modify or replace
the general terms described in this section. If there are differences between
your prospectus supplement and this prospectus, your prospectus supplement will
control. Thus, the statements we make in this section may not apply to your
series of preferred stock or any related depositary shares.

When we refer to a series of preferred stock, we mean all of the shares of
preferred stock issued as part of the same series under a certificate of
designations filed as part of our certificate of incorporation. When we refer to
your prospectus supplement, we mean the prospectus supplement describing the
specific terms of the preferred stock and any related depositary shares you
purchase. The terms used in your prospectus supplement will have the meanings
described in this prospectus, unless otherwise specified.

Our affiliates may resell preferred stock and depositary shares after their
initial issuance in market-making transactions. We describe these transactions
above under "Description of Debt Securities We May Offer -- Information in the
Prospectus Supplement -- Market-Making Transactions."

OUR AUTHORIZED PREFERRED STOCK

Our authorized capital stock includes 150,000,000 shares of preferred
stock, par value $0.01 per share. We do not have any preferred stock outstanding
as of the date of this prospectus; the prospectus supplement with respect to any
offered preferred stock will describe any preferred stock that may be
outstanding as of the date of the prospectus supplement.

PREFERRED STOCK ISSUED IN SEPARATE SERIES

Our board of directors is authorized to divide the preferred stock into
series and, with respect to each series, to determine the designations, the
powers, preferences and rights and the qualifications, limitations and
restrictions of the series, including:

- dividend rights;

- conversion or exchange rights;

- voting rights;

- redemption rights and terms;

- liquidation preferences;

- sinking fund provisions;

- the serial designation of the series; and

- the number of shares constituting the series.

Subject to the rights of the holders of any series of preferred stock, the
number of authorized shares of any series of preferred stock may be increased or
decreased, but not below the number of shares of that series then outstanding,
by resolution adopted by our board of directors and approved by the affirmative
vote of the holders of a majority of the voting power of all outstanding shares
of capital stock entitled to vote on the matter, voting together as a single
class. No separate vote of the holders of any series of preferred stock is
required for an increase or decrease in the number of authorized shares of that
series.

Before we issue any series of preferred stock, our board of directors, or a
committee of our board authorized to do so by our board, will adopt resolutions
creating and designating the series and will file a certificate of designations
stating the terms of the series with the Secretary of State of the State of
Delaware. None of our stockholders will need to approve that amendment.

In addition, as described below under "-- Fractional or Multiple Shares of
Preferred Stock Issued as Depositary Shares", we may, at our option, instead of
offering whole individual shares of any series of preferred stock, offer
depositary shares evidenced by depositary receipts, each representing a fraction
of a share or some multiple of shares of the particular series of preferred
stock issued and deposited with a depositary. The fraction of a share or
multiple of shares of preferred stock which each depositary share represents
will be stated in the prospectus supplement relating to any series of preferred
stock offered through depositary shares.

The rights of holders of preferred stock may be adversely affected by the
rights of holders of preferred stock that may be issued in the future. Our board
of directors may cause shares of preferred stock to be issued in public or
private transactions for any proper corporate purpose. Examples of proper
corporate purposes include issuances to obtain additional financing for
acquisitions and issuances to officers, directors and employees under their
respective benefit plans. Shares of preferred stock we issue may have the effect
of discouraging or making more difficult an acquisition of The Goldman Sachs
Group, Inc. We may choose to issue preferred stock, together with our other
securities described in this prospectus, in units.

Preferred stock will be fully paid and nonassessable when issued, which
means that its holders will have paid their purchase price in full and that we
may not ask them to surrender additional funds. Holders of preferred stock will
not have preemptive or subscription rights to acquire more stock of The Goldman
Sachs Group, Inc.

The transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of each series of preferred stock will be named in the
prospectus supplement relating to that series.

RANK

Shares of each series of preferred stock will rank equally with each other
series of preferred stock and senior to our common stock with respect to
dividends and distributions of assets. In addition, we will generally be able to
pay dividends and distributions of assets to holders of our preferred stock only
if we have satisfied our obligations on our indebtedness then due and payable.

DIVIDENDS

Holders of each series of preferred stock will be entitled to receive cash
dividends when, as and if declared by our board of directors, from funds legally
available for the payment of dividends. The rates and dates of payment of
dividends for each series of preferred stock will be stated in the applicable
prospectus supplement. Dividends will be payable to holders of record of
preferred stock as they appear on our books on the record dates fixed by our
board of directors. Dividends on any series of preferred stock may be cumulative
or noncumulative, as set forth in the applicable prospectus supplement.

REDEMPTION

If specified in an applicable prospectus supplement, a series of preferred
stock may be redeemable at any time, in whole or in part, at our option or the
holder's, and may be redeemed mandatorily.

Any restriction on the repurchase or redemption by us of our preferred
stock while there is an arrearage in the payment of dividends will be described
in the applicable prospectus supplement.

Any partial redemptions of preferred stock will be made in a way that our
board of directors decides is equitable.

Unless we default in the payment of the redemption price, dividends will
cease to accrue after the redemption date on shares of preferred stock called
for redemption and all rights of holders of these shares will terminate except
for the right to receive the redemption price.

CONVERSION OR EXCHANGE RIGHTS

The prospectus supplement relating to any series of preferred stock that is
convertible, exercisable or exchangeable will state the terms on which shares of
that series are convertible into or exercisable or exchangeable for shares of
common stock, another series of preferred stock or other securities of The
Goldman Sachs Group, Inc. or debt or equity securities of third parties.

LIQUIDATION PREFERENCE

Upon any voluntary or involuntary liquidation, dissolution or winding up of
The Goldman Sachs Group, Inc., holders of each series of preferred stock will be
entitled to receive distributions upon liquidation in the amount described in
the applicable prospectus supplement, plus an amount equal to any accrued and
unpaid dividends. These distributions will be made before any distribution is
made on any securities ranking junior to the preferred stock with respect to
liquidation, including our common stock. If the liquidation amounts payable
relating to the preferred stock of any series and any other securities ranking
on a parity regarding liquidation rights are not paid in full, the holders of
the preferred stock of that series and the other securities will share in any
distribution of our available assets on a ratable basis in proportion to the
full liquidation preferences of each security. Holders of our preferred stock
will not be entitled to any other amounts from us after they have received their
full liquidation preference.
62

VOTING RIGHTS

The holders of preferred stock of each series will have no voting rights,
except:

- as stated in the applicable prospectus supplement and in the certificate
of designations establishing the series; or

- as required by applicable law.

MERGERS AND SIMILAR TRANSACTIONS PERMITTED; NO RESTRICTIVE COVENANTS

The terms of the preferred stock will not include any restrictions on our
ability to merge or consolidate with, or sell our assets to, another corporation
or other entity or to engage in any other transactions. The terms of the
preferred stock also will not include any restrictions on our ability to put
liens on our assets, including our interests in our subsidiaries.

Because we are a holding company, our ability to make payments on the
preferred stock will depend in part on our ability to participate in
distributions of assets from our subsidiaries. We discuss these matters above
under "Description of Debt Securities We May Offer -- We Are a Holding Company".

GOVERNING LAW

The preferred stock will be governed by Delaware law.

FRACTIONAL OR MULTIPLE SHARES OF PREFERRED STOCK ISSUED AS DEPOSITARY SHARES

We may choose to offer fractional shares or some multiple of shares of our
preferred stock, rather than whole individual shares. If we decide to do so, we
will issue the preferred stock in the form of depositary shares. Each depositary
share would represent a fraction or multiple of a share of the preferred stock
and would be evidenced by a depositary receipt. We will issue depositary shares
under a deposit agreement between a depositary, which we will appoint in our
discretion, and us.

DEPOSIT AGREEMENT

We will deposit the shares of preferred stock to be represented by
depositary shares under a deposit agreement. The parties to the deposit
agreement will be:

- The Goldman Sachs Group, Inc.;

- a bank or other financial institution selected by us and named in the
applicable prospectus supplement, as preferred stock depositary; and

- the holders from time to time of depositary receipts issued under that
depositary agreement.

Each holder of a depositary share will be entitled to all the rights and
preferences of the underlying preferred stock, including, where applicable,
dividend, voting, redemption, conversion and liquidation rights, in proportion
to the applicable fraction or multiple of a share of preferred stock represented
by the depositary share. The depositary shares will be evidenced by depositary
receipts issued under the deposit agreement. The depositary receipts will be
distributed to those persons purchasing the fractional or multiple shares of
preferred stock. A depositary receipt may evidence any number of whole
depositary shares.

We will file the deposit agreement, including the form of depositary
receipt, with the SEC, either as an exhibit to an amendment to the registration
statements of which this prospectus

forms a part or as an exhibit to a current report on Form 8-K. See "Available
Information" above for information on how to obtain a copy of the form of
deposit agreement.

DIVIDENDS AND OTHER DISTRIBUTIONS

The preferred stock depositary will distribute any cash dividends or other
cash distributions received in respect of the deposited preferred stock to the
record holders of depositary shares relating to the underlying preferred stock
in proportion to the number of depositary shares owned by the holders. The
preferred stock depositary will distribute any property received by it other
than cash to the record holders of depositary shares entitled to those
distributions, unless it determines that the distribution cannot be made
proportionally among those holders or that it is not feasible to make a
distribution. In that event, the preferred stock depositary may, with our
approval, sell the property and distribute the net proceeds from the sale to the
holders of the depositary shares in proportion to the number of depositary
shares they own.

The amounts distributed to holders of depositary shares will be reduced by
any amounts required to be withheld by the preferred stock depositary or by us
on account of taxes or other governmental charges.

REDEMPTION OF PREFERRED STOCK

If we redeem preferred stock represented by depositary shares, the
preferred stock depositary will redeem the depositary shares from the proceeds
it receives from the redemption, in whole or in part, of the preferred stock.
The preferred stock depositary will redeem the depositary shares at a price per
share equal to the applicable fraction or multiple of the redemption price per
share of preferred stock. Whenever we redeem shares of preferred stock held by
the preferred stock depositary, the preferred stock depositary will redeem as of
the same date the number of depositary shares representing the redeemed shares
of preferred stock. If fewer than all the depositary shares are to be redeemed,
the preferred stock depositary will select the depositary shares to be redeemed
by lot or ratably or by any other equitable method it chooses.

After the date fixed for redemption, the depositary shares called for
redemption will no longer be deemed to be outstanding, and all rights of the
holders of those shares will cease, except the right to receive the amount
payable and any other property to which the holders were entitled upon the
redemption. To receive this amount or other property, the holders must surrender
the depositary receipts evidencing their depositary shares to the preferred
stock depositary. Any funds that we deposit with the preferred stock depositary
for any depositary shares that the holders fail to redeem will be returned to us
after a period of two years from the date we deposit the funds.

WITHDRAWAL OF PREFERRED STOCK

Unless the related depositary shares have previously been called for
redemption, any holder of depositary shares may receive the number of whole
shares of the related series of preferred stock and any money or other property
represented by those depositary receipts after surrendering the depositary
receipts at the corporate trust office of the preferred stock depositary, paying
any taxes, charges and fees provided for in the deposit agreement and complying
with any other requirement of the deposit agreement. Holders of depositary
shares making these withdrawals will be entitled to receive whole shares of
preferred stock, but holders of whole shares of preferred stock will not be
entitled to deposit that preferred stock under the deposit agreement or to
receive depositary receipts for that preferred stock after withdrawal. If the
depositary shares surrendered by the holder in connection with withdrawal exceed
the number of depositary shares that represent the number of whole shares of
preferred stock to be

withdrawn, the preferred stock depositary will deliver to that holder at the
same time a new depositary receipt evidencing the excess number of depositary
shares.

VOTING DEPOSITED PREFERRED STOCK

When the preferred stock depositary receives notice of any meeting at which
the holders of any series of deposited preferred stock are entitled to vote, the
preferred stock depositary will mail the information contained in the notice to
the record holders of the depositary shares relating to the applicable series of
preferred stock. Each record holder of the depositary shares on the record date,
which will be the same date as the record date for the preferred stock, may
instruct the preferred stock depositary to vote the amount of the preferred
stock represented by the holder's depositary shares. To the extent possible, the
preferred stock depositary will vote the amount of the series of preferred stock
represented by depositary shares in accordance with the instructions it
receives. We will agree to take all reasonable actions that the preferred stock
depositary determines are necessary to enable the preferred stock depositary to
vote as instructed. If the preferred stock depositary does not receive specific
instructions from the holders of any depositary shares representing a series of
preferred stock, it will vote all shares of that series held by it
proportionately with instructions received.

CONVERSION OF PREFERRED STOCK

If the prospectus supplement relating to the depositary shares says that
the deposited preferred stock is convertible into or exercisable or exchangeable
for common stock, preferred stock of another series or other securities of The
Goldman Sachs Group, Inc. or debt or equity securities of one or more third
parties, the following will apply. The depositary shares, as such, will not be
convertible into or exercisable or exchangeable for any securities of The
Goldman Sachs Group, Inc. or any third party. Rather, any holder of the
depositary shares may surrender the related depositary receipts to the preferred
stock depositary with written instructions to instruct us to cause conversion,
exercise or exchange of the preferred stock represented by the depositary shares
into or for whole shares of common stock, shares of another series of preferred
stock or other securities of The Goldman Sachs Group, Inc. or debt or equity
securities of the relevant third party, as applicable. Upon receipt of those
instructions and any amounts payable by the holder in connection with the
conversion, exercise or exchange, we will cause the conversion, exercise or
exchange using the same procedures as those provided for conversion, exercise or
exchange of the deposited preferred stock. If only some of the depositary shares
are to be converted, exercised or exchanged, a new depositary receipt or
receipts will be issued for any depositary shares not to be converted, exercised
or exchanged.

AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT

We may amend the form of depositary receipt evidencing the depositary
shares and any provision of the deposit agreement at any time and from time to
time by agreement with the preferred stock depositary. However, any amendment
that imposes additional charges or materially and adversely alters any
substantial existing right of the holders of depositary shares will not be
effective unless the holders of at least a majority of the affected depositary
shares then outstanding approve the amendment. We will make no amendment that
impairs the right of any holder of depositary shares, as described above under
"-- Withdrawal of Preferred Stock", to receive shares of the related series of
preferred stock and any money or other property represented by those depositary
shares, except in order to comply with mandatory provisions of applicable law.
Holders who retain or acquire their depositary receipts after an amendment
becomes effective will be deemed to have agreed to the amendment and will be
bound by the amended deposit agreement.

The deposit agreement will automatically terminate if:

- all outstanding depositary shares have been redeemed or converted or
exchanged for any other securities into which they or the underlying
preferred stock are convertible or exchangeable; or

- a final distribution in respect of the preferred stock has been made to
the holders of depositary shares in connection with any liquidation,
dissolution or winding up of The Goldman Sachs Group, Inc.

We may terminate the deposit agreement at any time, and the preferred stock
depositary will give notice of that termination to the recordholders of all
outstanding depositary receipts not less than 30 days before the termination
date. In that event, the preferred stock depositary will deliver or make
available for delivery to holders of depositary shares, upon surrender of the
depositary receipts evidencing the depositary shares, the number of whole or
fractional shares of the related series of preferred stock as are represented by
those depositary shares.

CHARGES OF PREFERRED STOCK DEPOSITARY; TAXES AND OTHER GOVERNMENTAL CHARGES

We will pay the fees, charges and expenses of the preferred stock
depositary provided in the deposit agreement to be payable by us. Holders of
depositary receipts will pay any taxes and governmental charges and any charges
provided in the deposit agreement to be payable by them, including a fee for the
withdrawal of shares of preferred stock upon surrender of depositary receipts.
If the preferred stock depositary incurs fees, charges or expenses for which it
is not otherwise liable at the election of a holder of a depositary receipt or
other person, that holder or other person will be liable for those fees, charges
and expenses.

RESIGNATION AND REMOVAL OF DEPOSITARY

The preferred stock depositary may resign at any time by giving us notice,
and we may remove or replace the preferred stock depositary at any time.

REPORTS TO HOLDERS

We will deliver all required reports and communications to holders of the
preferred stock to the preferred stock depositary. It will forward those reports
and communications to the holders of depositary shares.

LIMITATION ON LIABILITY OF THE PREFERRED STOCK DEPOSITARY

The preferred stock depositary will not be liable if it is prevented or
delayed by law or any circumstances beyond its control in performing its
obligations under the deposit agreement. The obligations of the preferred stock
depositary under the deposit agreement will be limited to performance in good
faith of its duties under the agreement, and it will not be obligated to
prosecute or defend any legal proceeding in respect of any depositary shares,
depositary receipts or shares of preferred stock unless satisfactory and
reasonable protection from expenses and liability is furnished. This is called
an indemnity. The preferred stock depositary may rely upon written advice of
counsel or accountants, upon information provided by holders of depositary
receipts or other persons believed to be competent and upon documents believed
to be genuine.

FORM OF PREFERRED STOCK AND DEPOSITARY SHARES

We may issue preferred stock in book-entry form. Preferred stock in
book-entry form will be represented by a global security registered in the name
of a depositary, which will be the holder of all the shares of preferred stock
represented by the global security. Those who own beneficial

interests in shares of preferred stock will do so through participants in the
depositary's system, and the rights of these indirect owners will be governed
solely by the applicable procedures of the depositary and its participants.
However, beneficial owners of any preferred stock in book-entry form will have
the right to obtain their shares in non-global form. We describe book-entry
securities below under "Legal Ownership and Book-Entry Issuance". All preferred
stock will be issued in registered form.

We will issue depositary shares in book-entry form, to the same extent as
we describe above for preferred stock. Depositary shares will be issued in
registered form.

DESCRIPTION OF CAPITAL STOCK

Pursuant to our amended and restated certificate of incorporation, our
authorized capital stock consists of 4,350,000,000 shares, each with a par value
of $0.01 per share, of which:

- 150,000,000 shares are designated as preferred stock, none of which are
outstanding;

- 4,000,000,000 shares are designated as common stock, 469,585,628 shares
of which were outstanding as of April 4, 2003; and

- 200,000,000 shares are designated as nonvoting common stock, none of
which are outstanding.

All outstanding shares of common stock are validly issued, fully paid and
nonassessable.

The shareholders' agreement containing provisions relating to the voting
and disposition of certain shares of common stock is described in our Annual
Report on 10-K for the fiscal year ended November 29, 2002 which is incorporated
by reference in this prospectus.

PREFERRED STOCK

Our authorized capital stock includes 150,000,000 shares of preferred
stock. Our board of directors is authorized to divide the preferred stock into
series and, with respect to each series, to determine the designations and the
powers, preferences and rights, and the qualifications, limitations and
restrictions thereof, including the dividend rights, conversion or exchange
rights, voting rights, redemption rights and terms, liquidation preferences,
sinking fund provisions and the number of shares constituting the series. Our
board of directors could, without shareholder approval, issue preferred stock
with voting and other rights that could adversely affect the voting power of the
holders of common stock and which could have certain anti-takeover effects.

COMMON STOCK

Each holder of common stock is entitled to one vote for each share owned of
record on all matters submitted to a vote of shareholders. There are no
cumulative voting rights. Accordingly, the holders of a plurality of the shares
of common stock voting for the election of directors can elect all the directors
if they choose to do so, subject to any voting rights of holders of preferred
stock to elect directors.

Subject to the preferential rights of any holders of any outstanding series
of preferred stock, the holders of common stock, together with the holders of
the nonvoting common stock, are entitled to such dividends and distributions,
whether payable in cash or otherwise, as may be declared from time to time by
our board of directors from legally available funds. Subject to the preferential
rights of holders of any outstanding series of preferred stock, upon our
liquidation, dissolution or winding-up and after payment of all prior claims,
the holders of common stock, with the shares of the common stock and the
nonvoting common stock being considered as a single class for this purpose, will
be entitled to receive pro rata all our assets. Other than the shareholder
protection rights discussed below, holders of common stock have no redemption or
conversion rights or preemptive rights to purchase or subscribe for securities
of Goldman Sachs.

NONVOTING COMMON STOCK

The nonvoting common stock has the same rights and privileges as, ranks
equally and shares proportionately with, and is identical in all respects as to
all matters to, the common stock, except that the nonvoting common stock has no
voting rights other than those voting rights required by law.

SHAREHOLDER PROTECTION RIGHTS

Each share of common stock has attached to it a shareholder protection
right. The shareholder protection rights are currently represented only by the
certificates for the shares and will not trade separately from the shares unless
and until:

- it is announced by Goldman Sachs that a person or group has become the
beneficial owner of 15% or more of the outstanding common stock (other
than persons deemed to beneficially own common stock solely because they
are parties to the shareholders' agreement, members of the shareholders'
committee or certain other persons) (an "acquiring person"); or

- ten business days (or such later date as our board of directors may fix
by resolution) after the date a person or group commences a tender or
exchange offer that would result in such person or group becoming an
acquiring person.

If and when the shareholder protection rights separate and prior to the date of
the announcement by Goldman Sachs that any person has become an acquiring
person, each shareholder protection right will entitle the holder to purchase
1/100 of a share of Series A participating preferred stock for an exercise price
of $250. Each 1/100 of a share of Series A participating preferred stock would
have economic and voting terms equivalent to one share of common stock.

Upon the date of the announcement by Goldman Sachs that any person or group
has become an acquiring person, each shareholder protection right (other than
shareholder protection rights beneficially owned by the acquiring person or
their transferees, which shareholder protection rights become void) will entitle
its holder to purchase, for the exercise price, a number of shares of common
stock having a market value of twice the exercise price. Also, if, after the
date of the announcement by Goldman Sachs that any person has become an
acquiring person, the acquiring person controls our board of directors and:

- Goldman Sachs is involved in a merger or similar form of business
combination and (i) any term of the transaction provides for different
treatment of the shares of capital stock held by the acquiring person as
compared to the shares of capital stock held by all other shareholders or
(ii) the person with whom such transaction occurs is the acquiring person
or an affiliate thereof; or

- Goldman Sachs sells or transfers assets representing more than 50% of its
assets or generating more than 50% of its operating income or cash flow
to any person other than Goldman Sachs or its wholly owned subsidiaries,

then each shareholder protection right will entitle its holder to purchase, for
the exercise price, a number of shares of capital stock with the greatest voting
power in respect of the election of directors of either the acquiring person or
the other party to such transaction, depending on the circumstances of the
transaction, having a market value of twice the exercise price. If any person or
group acquires from 15% to and including 50% of the common stock, our board of
directors may, at its option, exchange each outstanding shareholder protection
right, except for those held by an acquiring person or their transferees, for
one share of common stock.

The shareholder protection rights may be redeemed by our board of directors
for $0.01 per shareholder protection right prior to the date of the announcement
by Goldman Sachs that any person has become an acquiring person. Our charter
permits this redemption right to be exercised by our board of directors (or
certain directors specified or qualified by the terms of the instrument
governing the shareholder protection rights).

The shareholder protection rights will not prevent a takeover of Goldman
Sachs. However, these rights may cause substantial dilution to a person or group
that acquires 15% or more of

the common stock unless the shareholder protection rights are first redeemed by
our board of directors.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

Our charter provides that a director of Goldman Sachs will not be liable to
Goldman Sachs or its shareholders for monetary damages for breach of fiduciary
duty as a director, except in certain cases where liability is mandated by the
Delaware General Corporation Law. Our by-laws provide for indemnification, to
the fullest extent permitted by law, of any person made or threatened to be made
a party to any action, suit or proceeding by reason of the fact that such person
is or was a director or officer of Goldman Sachs, or is or was a director of a
subsidiary of Goldman Sachs, or is or was a member of the shareholders'
committee acting under the shareholders' agreement or, at the request of Goldman
Sachs, serves or served as a director or officer of or in any other capacity
for, or in relation to, any other enterprise, against all expenses, liabilities,
losses and claims actually incurred or suffered by such person in connection
with the action, suit or proceeding. Our by-laws also provide that, to the
extent authorized from time to time by our board of directors, Goldman Sachs may
provide to any one or more employees and other agents of Goldman Sachs or any
subsidiary or other enterprise, rights of indemnification and to receive payment
or reimbursement of expenses, including attorneys' fees, that are similar to the
rights conferred by the by-laws on directors and officers of Goldman Sachs or
any subsidiary or other enterprise.

CHARTER PROVISIONS APPROVING CERTAIN ACTIONS

Our charter provides that our board of directors may determine to take the
following actions, in its sole discretion, and Goldman Sachs and each
shareholder of Goldman Sachs will, to the fullest extent permitted by law, be
deemed to have approved and ratified, and waived any claim relating to, the
taking of any of these actions:

- causing Goldman Sachs to register with the SEC for resale shares of
common stock held by our directors, employees and former directors and
employees and our subsidiaries and affiliates and former partners and
employees of The Goldman Sachs Group, L.P. and its subsidiaries and
affiliates; and

- making payments to, and other arrangements with, certain former limited
partners of Goldman Sachs, including managing directors who were profit
participating limited partners, in order to compensate them for, or to
prevent, significantly disproportionate adverse tax or other consequences
arising out of our incorporation.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

Goldman Sachs is subject to the provisions of Section 203 of the Delaware
General Corporation Law. In general, Section 203 prohibits a publicly held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. A "business
combination" includes a merger, asset sale or a transaction resulting in a
financial benefit to the interested stockholder. An "interested stockholder" is
a person who, together with affiliates and associates, owns (or, in certain
cases, within the preceding three years, did own) 15% or more of the
corporation's outstanding voting stock. Under Section 203, a business
combination between

Goldman Sachs and an interested stockholder is prohibited unless it satisfies
one of the following conditions:

- prior to the stockholder became an interested stockholder, the board of
directors of Goldman Sachs must have previously approved either the
business combination or the transaction that resulted in the stockholder
becoming an interested stockholder;

- on consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of Goldman Sachs outstanding at the time
the transaction commenced, excluding, for purposes of determining the
number of shares outstanding, shares owned by persons who are directors
and officers; or

- the business combination is approved by the board of directors of Goldman
Sachs and authorized at an annual or special meeting of the stockholders
by the affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder.

Our board of directors has adopted a resolution providing that the
shareholders' agreement will not create an "interested stockholder".

CERTAIN ANTI-TAKEOVER MATTERS

Our charter and by-laws include a number of provisions that may have the
effect of encouraging persons considering unsolicited tender offers or other
unilateral takeover proposals to negotiate with our board of directors rather
than pursue non-negotiated takeover attempts. These provisions include:

CLASSIFIED BOARD OF DIRECTORS

Our charter provides for a board of directors divided into three classes,
with one class to be elected each year to serve for a three-year term. As a
result, at least two annual meetings of shareholders may be required for the
shareholders to change a majority of our board of directors. In addition, the
shareholders of Goldman Sachs can only remove directors for cause by the
affirmative vote of the holders of not less than 80% of the outstanding shares
of capital stock of Goldman Sachs entitled to vote in the election of directors.
Vacancies on our board of directors may be filled only by our board of
directors. The classification of directors and the inability of shareholders to
remove directors without cause or to fill vacancies on the board of directors
make it more difficult to change the composition of our board of directors, but
promote a continuity of existing management.

CONSTITUENCY PROVISION

In accordance with our charter, a director of Goldman Sachs may (but is not
required to) in taking any action (including an action that may involve or
relate to a change or potential change in control of Goldman Sachs), consider,
among other things, the effects that Goldman Sachs' actions may have on other
interests or persons (including its employees, former partners of The Goldman
Sachs Group, L.P. and the community) in addition to our shareholders.

ADVANCE NOTICE REQUIREMENTS

Our by-laws establish advance notice procedures with regard to shareholder
proposals relating to the nomination of candidates for election as directors or
new business to be brought before meetings of shareholders of Goldman Sachs.
These procedures provide that notice of such shareholder proposals must be
timely given in writing to the Secretary of Goldman Sachs prior to the meeting
at which the action is to be taken. Generally, to be timely, notice must be

received at the principal executive offices of Goldman Sachs not less than 90
days nor more than 120 days prior to the anniversary date of the annual meeting
for the preceding year. The notice must contain certain information specified in
the by-laws.

NO ABILITY OF SHAREHOLDERS TO CALL SPECIAL MEETINGS

Our charter and by-laws deny shareholders the right to call a special
meeting of shareholders. Our charter and by-laws provide that special meetings
of the shareholders may be called only by a majority of the board of directors.

NO WRITTEN CONSENT OF SHAREHOLDERS

Our charter requires all shareholder actions to be taken by a vote of the
shareholders at an annual or special meeting, and does not permit our
shareholders to act by written consent without a meeting.

MAJORITY VOTE NEEDED FOR SHAREHOLDER PROPOSALS

Our by-laws require that any shareholder proposal be approved by a majority
of all of the outstanding shares of common stock and not by only a majority of
the shares present at the meeting and entitled to vote. This requirement may
make it more difficult to approve shareholder resolutions.

AMENDMENT OF BY-LAWS AND CHARTER

Our charter requires the approval of not less than 80% of the voting power
of all outstanding shares of Goldman Sachs' capital stock entitled to vote to
amend any by-law by shareholder action or the charter provisions described in
this section. Those provisions make it more difficult to dilute the
anti-takeover effects of our by-laws and our charter.

BLANK CHECK PREFERRED STOCK

Our charter provides for 150,000,000 authorized shares of preferred stock.
The existence of authorized but unissued shares of preferred stock may enable
the board of directors to render more difficult or to discourage an attempt to
obtain control of Goldman Sachs by means of a merger, tender offer, proxy
contest or otherwise. For example, if in the due exercise of its fiduciary
obligations, the board of directors were to determine that a takeover proposal
is not in the best interests of Goldman Sachs, the board of directors could
cause shares of preferred stock to be issued without shareholder approval in one
or more private offerings or other transactions that might dilute the voting or
other rights of the proposed acquiror or insurgent shareholder or shareholder
group. In this regard, the charter grants our board of directors broad power to
establish the rights and preferences of authorized and unissued shares of
preferred stock. The issuance of shares of preferred stock could decrease the
amount of earnings and assets available for distribution to holders of shares of
common stock. The issuance may also adversely affect the rights and powers,
including voting rights, of such holders and may have the effect of delaying,
deterring or preventing a change in control of Goldman Sachs.

LISTING

The common stock is listed on the NYSE under the symbol "GS".

TRANSFER AGENT

The transfer agent for the common stock is Mellon Investor Services LLC.

LEGAL OWNERSHIP AND BOOK-ENTRY ISSUANCE

In this section, we describe special considerations that will apply to
registered securities issued in global -- i.e., book-entry -- form. First we
describe the difference between legal ownership and indirect ownership of
registered securities. Then we describe special provisions that apply to global
securities.

WHO IS THE LEGAL OWNER OF A REGISTERED SECURITY?

Each debt security, warrant, purchase contract, unit, share of preferred
stock and depositary share in registered form will be represented either by a
certificate issued in definitive form to a particular investor or by one or more
global securities representing the entire issuance of securities. We refer to
those who have securities registered in their own names, on the books that we or
the trustee, warrant agent or other agent maintain for this purpose, as the
"holders" of those securities. These persons are the legal holders of the
securities. We refer to those who, indirectly through others, own beneficial
interests in securities that are not registered in their own names as indirect
owners of those securities. As we discuss below, indirect owners are not legal
holders, and investors in securities issued in book-entry form or in street name
will be indirect owners.

BOOK-ENTRY OWNERS

We will issue each security in book-entry form only. This means securities
will be represented by one or more global securities registered in the name of a
financial institution that holds them as depositary on behalf of other financial
institutions that participate in the depositary's book-entry system. These
participating institutions, in turn, hold beneficial interests in the securities
on behalf of themselves or their customers.

Under each indenture, only the person in whose name a security is
registered is recognized as the holder of that security. Consequently, for
securities issued in global form, we will recognize only the depositary as the
holder of the securities and we will make all payments on the securities,
including deliveries of any property other than cash, to the depositary. The
depositary passes along the payments it receives to its participants, which in
turn pass the payments along to their customers who are the beneficial owners.
The depositary and its participants do so under agreements they have made with
one another or with their customers; they are not obligated to do so under the
terms of the securities.

As a result, investors will not own securities directly. Instead, they will
own beneficial interests in a global security, through a bank, broker or other
financial institution that participates in the depositary's book-entry system or
holds an interest through a participant. As long as the securities are issued in
global form, investors will be indirect owners, and not holders, of the
securities.

STREET NAME OWNERS

In the future we may terminate a global security or issue securities
initially in non-global form. In these cases, investors may choose to hold their
securities in their own names or in street name. Securities held by an investor
in street name would be registered in the name of a bank, broker or other
financial institution that the investor chooses, and the investor would hold
only a beneficial interest in those securities through an account he or she
maintains at that institution.

For securities held in street name, we will recognize only the intermediary
banks, brokers and other financial institutions in whose names the securities
are registered as the holders of those securities and we will make all payments
on those securities, including deliveries of any property other than cash, to
them. These institutions pass along the payments they receive to
73

their customers who are the beneficial owners, but only because they agree to do
so in their customer agreements or because they are legally required to do so.
Investors who hold securities in street name will be indirect owners, not
holders, of those securities.

LEGAL HOLDERS

Our obligations, as well as the obligations of the trustee under any
indenture and the obligations, if any, of any warrant agents and unit agents and
any other third parties employed by us, the trustee or any of those agents, run
only to the holders of the securities. We do not have obligations to investors
who hold beneficial interests in global securities, in street name or by any
other indirect means. This will be the case whether an investor chooses to be an
indirect owner of a security or has no choice because we are issuing the
securities only in global form.

For example, once we make a payment or give a notice to the holder, we have
no further responsibility for that payment or notice even if that holder is
required, under agreements with depositary participants or customers or by law,
to pass it along to the indirect owners but does not do so. Similarly, if we
want to obtain the approval of the holders for any purpose -- e.g., to amend the
indenture for a series of debt securities or warrants or the warrant agreement
for a series of warrants or to relieve us of the consequences of a default or of
our obligation to comply with a particular provision of an indenture -- we would
seek the approval only from the holders, and not the indirect owners, of the
relevant securities. Whether and how the holders contact the indirect owners is
up to the holders.

When we refer to "you" in this prospectus, we mean those who invest in the
securities being offered by this prospectus, whether they are the holders or
only indirect owners of those securities. When we refer to "your securities" in
this prospectus, we mean the securities in which you will hold a direct or
indirect interest.

SPECIAL CONSIDERATIONS FOR INDIRECT OWNERS

If you hold securities through a bank, broker or other financial
institution, either in book-entry form or in street name, you should check with
your own institution to find out:

- how it handles securities payments and notices;

- whether it imposes fees or charges;

- whether and how you can instruct it to exercise any rights to purchase or
sell warrant property under a warrant or purchase contract property under
a purchase contract or to exchange or convert a security for or into
other property;

- how it would handle a request for the holders' consent, if ever required;

- whether and how you can instruct it to send you securities registered in
your own name so you can be a holder, if that is permitted in the future;

- how it would exercise rights under the securities if there were a default
or other event triggering the need for holders to act to protect their
interests; and

- if the securities are in book-entry form, how the depositary's rules and
procedures will affect these matters.

WHAT IS A GLOBAL SECURITY?

We will issue each security in book-entry form only. Each security issued
in book-entry form will be represented by a global security that we deposit with
and register in the name of one or more financial institutions or clearing
systems, or their nominees, which we select. A financial institution or clearing
system that we select for any security for this purpose is called the

"depositary" for that security. A security will usually have only one depositary
but it may have more.

Each series of securities will have one or more of the following as the
depositaries:

- The Depository Trust Company, New York, New York, which is known as
"DTC";

- a financial institution holding the securities on behalf of Euroclear
Bank S.A./N.V., as operator of the Euroclear system, which is known as
"Euroclear";

- a financial institution holding the securities on behalf of Clearstream
Banking, societe anonyme, Luxembourg, which is known as "Clearstream";
and

- any other clearing system or financial institution named in the
applicable prospectus supplement.

The depositaries named above may also be participants in one another's systems.
Thus, for example, if DTC is the depositary for a global security, investors may
hold beneficial interests in that security through Euroclear or Clearstream, as
DTC participants. The depositary or depositaries for your securities will be
named in your prospectus supplement; if none is named, the depositary will be
DTC.

A global security may represent one or any other number of individual
securities. Generally, all securities represented by the same global security
will have the same terms. We may, however, issue a global security that
represents multiple securities of the same kind, such as debt securities, that
have different terms and are issued at different times. We call this kind of
global security a master global security. Your prospectus supplement will not
indicate whether your securities are represented by a master global security.

A global security may not be transferred to or registered in the name of
anyone other than the depositary or its nominee, unless special termination
situations arise. We describe those situations below under "-- Holder's Option
to Obtain a Non-Global Security; Special Situations When a Global Security Will
Be Terminated". As a result of these arrangements, the depositary, or its
nominee, will be the sole registered owner and holder of all securities
represented by a global security, and investors will be permitted to own only
indirect interests in a global security. Indirect interests must be held by
means of an account with a broker, bank or other financial institution that in
turn has an account with the depositary or with another institution that does.
Thus, an investor whose security is represented by a global security will not be
a holder of the security, but only an indirect owner of an interest in the
global security.

If the prospectus supplement for a particular security indicates that the
security will be issued in global form only, then the security will be
represented by a global security at all times unless and until the global
security is terminated. We describe the situations in which this can occur below
under "-- Holder's Option to Obtain a Non-Global Security; Special Situations
When a Global Security Will Be Terminated". If termination occurs, we may issue
the securities through another book-entry clearing system or decide that the
securities may no longer be held through any book-entry clearing system.

SPECIAL CONSIDERATIONS FOR GLOBAL SECURITIES

As an indirect owner, an investor's rights relating to a global security
will be governed by the account rules of the depositary and those of the
investor's financial institution or other intermediary through which it holds
its interest (e.g., Euroclear or Clearstream, if DTC is the depositary), as well
as general laws relating to securities transfers. We do not recognize this type
of investor or any intermediary as a holder of securities and instead deal only
with the depositary that holds the global security.

If securities are issued only in the form of a global security, an investor
should be aware of the following:

- An investor cannot cause the securities to be registered in his or her
own name, and cannot obtain non-global certificates for his or her
interest in the securities, except in the special situations we describe
below;

- An investor will be an indirect holder and must look to his or her own
bank or broker for payments on the securities and protection of his or
her legal rights relating to the securities, as we describe above under
"-- Who Is the Legal Owner of a Registered Security?";

- An investor may not be able to sell interests in the securities to some
insurance companies and other institutions that are required by law to
own their securities in non-book-entry form;

- An investor may not be able to pledge his or her interest in a global
security in circumstances where certificates representing the securities
must be delivered to the lender or other beneficiary of the pledge in
order for the pledge to be effective;

- The depositary's policies will govern payments, deliveries, transfers,
exchanges, notices and other matters relating to an investor's interest
in a global security, and those policies may change from time to time.
We, the trustee and any warrant agents and unit agents will have no
responsibility for any aspect of the depositary's policies, actions or
records of ownership interests in a global security. We, the trustee and
any warrant agents and unit agents also do not supervise the depositary
in any way;

- The depositary will require that those who purchase and sell interests in
a global security within its book-entry system use immediately available
funds and your broker or bank may require you to do so as well; and

- Financial institutions that participate in the depositary's book-entry
system and through which an investor holds its interest in the global
securities, directly or indirectly, may also have their own policies
affecting payments, deliveries, transfers, exchanges, notices and other
matters relating to the securities, and those policies may change from
time to time. For example, if you hold an interest in a global security
through Euroclear or Clearstream, when DTC is the depositary, Euroclear
or Clearstream, as applicable, will require those who purchase and sell
interests in that security through them to use immediately available
funds and comply with other policies and procedures, including deadlines
for giving instructions as to transactions that are to be effected on a
particular day. There may be more than one financial intermediary in the
chain of ownership for an investor. We do not monitor and are not
responsible for the policies or actions or records of ownership interests
of any of those intermediaries.

HOLDER'S OPTION TO OBTAIN A NON-GLOBAL SECURITY; SPECIAL SITUATIONS WHEN A
GLOBAL SECURITY WILL BE TERMINATED

If we issue any series of securities in book-entry form but we choose to
give the beneficial owners of that series the right to obtain non-global
securities, any beneficial owner entitled to obtain non-global securities may do
so by following the applicable procedures of the depositary, any transfer agent
or registrar for that series and that owner's bank, broker or other financial
institution through which that owner holds its beneficial interest in the
securities. For example, in the case of a global security representing preferred
stock or depositary shares, a beneficial owner will be entitled to obtain a
non-global security representing its interest by making a written request to the
transfer agent or other agent designated by us. If you are entitled to request a
non-global certificate and wish to do so, you will need to allow sufficient lead
time to enable us or our agent to prepare the requested certificate.
76

In addition, in a few special situations described below, a global security
will be terminated and interests in it will be exchanged for certificates in
non-global form representing the securities it represented. After that exchange,
the choice of whether to hold the securities directly or in street name will be
up to the investor. Investors must consult their own banks or brokers to find
out how to have their interests in a global security transferred on termination
to their own names, so that they will be holders. We have described the rights
of holders and street name investors above under "-- Who Is the Legal Owner of a
Registered Security?".

The special situations for termination of a global security are as follows:

- if the depositary notifies us that it is unwilling, unable or no longer
qualified to continue as depositary for that global security and we do
not appoint another institution to act as depositary within 60 days;

- if we notify the trustee, warrant agent or unit agent, as applicable,
that we wish to terminate that global security; or

- in the case of a global security representing debt securities or warrants
issued under an indenture, if an event of default has occurred with
regard to these debt securities and has not been cured or waived.

If a global security is terminated, only the depositary, and not we, the
trustee for any debt securities, the warrant agent for any warrants or the unit
agent for any units, is responsible for deciding the names of the institutions
in whose names the securities represented by the global security will be
registered and, therefore, who will be the holders of those securities.

CONSIDERATIONS RELATING TO EUROCLEAR AND CLEARSTREAM

Euroclear and Clearstream are securities clearance systems in Europe. Both
systems clear and settle securities transactions between their participants
through electronic, book-entry delivery of securities against payment.

Euroclear and Clearstream may be depositaries for a global security. In
addition, if DTC is the depositary for a global security, Euroclear and
Clearstream may hold interests in the global security as participants in DTC.

As long as any global security is held by Euroclear or Clearstream, as
depositary, you may hold an interest in the global security only through an
organization that participates, directly or indirectly, in Euroclear or
Clearstream. If Euroclear or Clearstream is the depositary for a global security
and there is no depositary in the United States, you will not be able to hold
interests in that global security through any securities clearance system in the
United States.

Payments, deliveries, transfers, exchanges, notices and other matters
relating to the securities made through Euroclear or Clearstream must comply
with the rules and procedures of those systems. Those systems could change their
rules and procedures at any time. We have no control over those systems or their
participants and we take no responsibility for their activities. Transactions
between participants in Euroclear or Clearstream, on one hand, and participants
in DTC, on the other hand, when DTC is the depositary, would also be subject to
DTC's rules and procedures.

SPECIAL TIMING CONSIDERATIONS FOR TRANSACTIONS IN EUROCLEAR AND CLEARSTREAM

Investors will be able to make and receive through Euroclear and
Clearstream payments, deliveries, transfers, exchanges, notices and other
transactions involving any securities held through those systems only on days
when those systems are open for business. Those systems may not be open for
business on days when banks, brokers and other institutions are open for
business in the United States.

In addition, because of time-zone differences, U.S. investors who hold
their interests in the securities through these systems and wish to transfer
their interests, or to receive or make a payment or delivery or exercise any
other right with respect to their interests, on a particular day may find that
the transaction will not be effected until the next business day in Luxembourg
or Brussels, as applicable. Thus, investors who wish to exercise rights that
expire on a particular day may need to act before the expiration date. In
addition, investors who hold their interests through both DTC and Euroclear or
Clearstream may need to make special arrangements to finance any purchases or
sales of their interests between the U.S. and European clearing systems, and
those transactions may settle later than would be the case for transactions
within one clearing system.

CONSIDERATIONS RELATING TO SECURITIES ISSUED IN BEARER FORM

If we issue securities in bearer, rather than registered, form, those
securities will be subject to special provisions described in this section. This
section primarily describes provisions relating to debt securities issued in
bearer form. Other provisions may apply to securities of other kinds issued in
bearer form. To the extent the provisions described in this section are
inconsistent with those described elsewhere in this prospectus, they supersede
those described elsewhere with regard to any bearer securities. Otherwise, the
relevant provisions described elsewhere in this prospectus will apply to bearer
securities.

TEMPORARY AND PERMANENT BEARER GLOBAL SECURITIES

If we issue securities in bearer form, all securities of the same series
and kind will initially be represented by a temporary bearer global security,
which we will deposit with a common depositary for Euroclear and Clearstream.
Euroclear and Clearstream will credit the account of each of their subscribers
with the amount of securities the subscriber purchases. We will promise to
exchange the temporary bearer global security for a permanent bearer global
security, which we will deliver to the common depositary upon the later of the
following two dates:

- the date that is 40 days after the later of (a) the completion of the
distribution of the securities as determined by the underwriter, dealer
or agent and (b) the closing date for the sale of the securities by us;
we may extend this date as described below under "-- Extensions for
Further Issuances"; and

- the date on which Euroclear and Clearstream provide us or our agent with
the necessary tax certificates described below under "-- U.S. Tax
Certificate Required".

Unless we say otherwise in the applicable prospectus supplement, owners of
beneficial interests in a permanent bearer global security will be able to
exchange those interests at their option, in whole but not in part, for:

- non-global securities in bearer form with interest coupons attached, if
applicable; or

- non-global securities in registered form without coupons attached.

A beneficial owner will be able to make this exchange by giving us or our
designated agent 60 days' prior written notice in accordance with the terms of
the securities.

EXTENSIONS FOR FURTHER ISSUANCES

Without the consent of the trustee, any holders or any other person, we may
issue additional securities identical to a prior issue from time to time. If we
issue additional securities before the date on which we would otherwise be
required to exchange the temporary bearer global security representing the prior
issue for a permanent bearer global security as described above, that date will
be extended until the 40th day after the completion of the distribution and the
closing, whichever is later, for the additional securities. Extensions of this
kind may be repeated if we sell additional identical securities. As a result of
these extensions, beneficial interests in the temporary bearer global security
may not be exchanged for interests in a permanent bearer global security until
the 40th day after the additional securities have been distributed and sold.

U.S. TAX CERTIFICATE REQUIRED

We will not pay or deliver interest or other amounts in respect of any
portion of a temporary bearer global security unless and until Euroclear or
Clearstream delivers to us or our agent a tax certificate with regard to the
owners of the beneficial interests in that portion of the global security. Also,
we will not exchange any portion of a temporary bearer global security for a
permanent bearer global security unless and until we receive from Euroclear or
Clearstream a tax
79

certificate with regard to the owners of the beneficial interests in the portion
to be exchanged. In each case, this tax certificate must state that each of the
relevant owners:

- is not a United States person, as defined below under "-- Limitations on
Issuance of Bearer Securities";

- is a foreign branch of a United States financial institution purchasing
for its own account or for resale, or is a United States person who
acquired the security through a financial institution of this kind and
who holds the security through that financial institution on the date of
certification, provided in either case that the financial institution
provides a certificate to us or the distributor selling the security to
it stating that it agrees to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the U.S. Internal Revenue Code and the U.S.
Treasury Regulations under that Section; or

- is a financial institution holding for purposes of resale during the
"restricted period", as defined in U.S. Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7). A financial institution of this kind, whether or
not it is also described in either of the two preceding bullet points,
must certify that it has not acquired the security for purposes of resale
directly or indirectly to a United States person or to a person within
the United States or its possessions.

The tax certificate must be signed by an authorized person satisfactory to us.

No one who owns an interest in a temporary bearer global security will receive
payment or delivery of any amount or property in respect of its interest, and
will not be permitted to exchange its interest for an interest in a permanent
bearer global security or a security in any other form, unless we or our agent
have received the required tax certificate on its behalf.

Special requirements and restrictions imposed by United States federal tax
laws and regulations will apply to bearer debt securities. We describe these
below under "-- Limitations on Issuance of Bearer Debt Securities".

LEGAL OWNERSHIP OF BEARER SECURITIES

Securities in bearer form are not registered in any name. Whoever is the
bearer of the certificate representing a security in bearer form is the legal
owner of that security. Legal title and ownership of bearer securities will pass
by delivery of the certificates representing the securities. Thus, when we use
the term "holder" in this prospectus with regard to bearer securities, we mean
the bearer of those securities.

The common depositary for Euroclear and Clearstream will be the bearer, and
thus the holder and legal owner, of both the temporary and permanent bearer
global securities described above. Investors in those securities will own
beneficial interests in the securities represented by those global securities;
they will be only indirect owners, not holders or legal owners, of the
securities.

As long as the common depositary is the bearer of any bearer security in
global form, the common depositary will be considered the sole legal owner and
holder of the securities represented by the bearer security in global form.
Ownership of beneficial interests in any bearer security in global form will be
shown on records maintained by Euroclear or Clearstream, as applicable, or by
the common depositary on their behalf, and by the direct and indirect
participants in their systems, and ownership interests can be held and
transferred only through those records. We will pay any amounts owing with
respect to a bearer global security only to the common depositary.

Neither we, the trustee nor any agent will recognize any owner of indirect
interests as a holder or legal owner. Nor will we, the trustee or any agent have
any responsibility for the ownership records or practices of Euroclear or
Clearstream, the common depositary or any direct or indirect participants in
those systems or for any payments, transfers, deliveries, notices or other
transactions within those systems, all of which will be subject to the rules and
procedures of those systems and participants. If you own an indirect interest in
a bearer global security, you must look only to the common depositary for
Euroclear or Clearstream, and to their direct and indirect participants through
which you hold your interest, for your ownership rights. You should read the
section above entitled "Legal Ownership and Book-Entry Issuance" for more
information about holding interests through Euroclear and Clearstream.

PAYMENT AND EXCHANGE OF NON-GLOBAL BEARER SECURITIES

Payments and deliveries owing on non-global bearer securities will be made,
in the case of interest payments, only to the holder of the relevant coupon
after the coupon is surrendered to the paying agent. In all other cases,
payments and deliveries will be made only to the holder of the certificate
representing the relevant security after the certificate is surrendered to the
paying agent.

Non-global bearer securities, with all unmatured coupons relating to the
securities, if any, may be exchanged for a like aggregate amount of non-global
bearer or registered securities of like kind. Non-global registered securities
may be exchanged for a like aggregate amount of non-global registered securities
of like kind, as described above in the sections on the different types of
securities we may offer. However, we will not issue bearer securities in
exchange for any registered securities.

Replacement certificates and coupons for non-global bearer securities will
not be issued in lieu of any lost, stolen or destroyed certificates and coupons
unless we and our transfer agent receive evidence of the loss, theft or
destruction, and an indemnity against liabilities, satisfactory to us and our
agent. Upon redemption or any other settlement before the stated maturity or
expiration, as well as upon any exchange, of a non-global bearer security, the
holder will be required to surrender all unmatured coupons to us or our
designated agent. If any unmatured coupons are not surrendered, we or our agent
may deduct the amount of interest relating to those coupons from the amount
otherwise payable or deliverable or we or our agent may demand an indemnity
against liabilities satisfactory to us and our agent.

We may make payments, deliveries and exchanges in respect of bearer
securities in global form in any manner acceptable to us and the depositary.

NOTICES

If we are required to give notice to the holders of bearer securities, we
will do so by publication in a daily newspaper of general circulation in a city
in Western Europe. The term "daily newspaper" means a newspaper that is
published on each day, other than a Saturday, Sunday or holiday, in the relevant
city. If these bearer securities are listed on the Luxembourg Stock Exchange and
its rules so require, that city will be Luxembourg and we expect that newspaper
to be the Luxemburger Wort. If publication in Luxembourg is impractical, the
publication will be made elsewhere in Western Europe. A notice of this kind will
be presumed to have been received on the date it is first published. If we
cannot give notice as described in this paragraph because the publication of any
newspaper is suspended or it is otherwise impractical to publish the notice,
then we will give notice in another form. That alternate form of notice will be
deemed to be sufficient notice to each holder. Neither the failure to give
notice to a particular holder, nor any defect in a notice given to a particular
holder, will affect the sufficiency of any notice given to another holder.

We may give any required notice with regard to bearer securities in global
form to the common depositary for the securities, in accordance with its
applicable procedures. If these provisions do not require that notice be given
by publication in a newspaper, we may omit giving notice by publication.

LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES

In compliance with United States federal income tax laws and regulations,
bearer debt securities, including bearer debt securities in global form, will
not be offered, sold, resold or delivered, directly or indirectly, in the United
States or its possessions or to United States persons, as defined below, except
as otherwise permitted by U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D).
Any underwriters, dealers or agents participating in the offerings of bearer
debt securities, directly or indirectly, must agree that they will not, in
connection with the original issuance of any bearer debt securities or during
the restricted period applicable under the Treasury Regulations cited earlier,
offer, sell, resell or deliver, directly or indirectly, any bearer debt
securities in the United States or its possessions or to United States persons,
other than as permitted by the applicable Treasury Regulations described above.

In addition, any underwriters, dealers or agents must have procedures
reasonably designed to ensure that their employees or agents who are directly
engaged in selling bearer debt securities are aware of the above restrictions on
the offering, sale, resale or delivery of bearer debt securities.

We will make payments on bearer debt securities only outside the United
States and its possessions except as permitted by the applicable Treasury
Regulations described above.

Bearer debt securities and any coupons will bear the following legend:

"Any United States person who holds this obligation will be subject to
limitations under the United States income tax laws, including the limitations
provided in sections 165(j) and 1287(a) of the Internal Revenue Code."

The sections referred to in this legend provide that, with exceptions, a
United States person will not be permitted to deduct any loss, and will not be
eligible for capital gain treatment with respect to any gain, realized on the
sale, exchange or redemption of that bearer debt security or coupon.

As used in this subsection entitled "-- Limitations on Issuance of Bearer
Debt Securities", the term "bearer debt securities" includes bearer debt
securities that are part of units. As used in this section entitled
"Considerations Relating to Securities Issued in Bearer Form", "United States
person" means:

- a citizen or resident of the United States;

- a corporation or partnership, including an entity treated as a
corporation or partnership for United States federal income tax purposes,
created or organized in or under the laws of the United States, any state
of the United States or the District of Columbia;

- an estate the income of which is subject to United States federal income
taxation regardless of its source; or

- a trust if a court within the United States is able to exercise primary
supervision of the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of
the trust.

"United States" means the United States of America, including the States
and the District of Columbia, and "possessions" of the United States include
Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands. In addition, some trusts treated as United States
persons before August 20, 1996 may elect to continue to be so treated to the
extent provided in the Treasury Regulations.
82

CONSIDERATIONS RELATING TO INDEXED SECURITIES

We use the term "indexed securities" to mean debt securities, warrants and
purchase contracts whose value is linked to an underlying property or index, as
well as units that include any debt security, warrant or purchase contract of
this kind. Indexed securities may present a high level of risk, and investors in
some indexed securities may lose their entire investment. In addition, the
treatment of indexed securities for U.S. federal income tax purposes is often
unclear due to the absence of any authority specifically addressing the issues
presented by any particular indexed security. Thus, if you propose to invest in
indexed securities, you should independently evaluate the federal income tax
consequences of purchasing an indexed security that apply in your particular
circumstances. You should also read "United States Taxation" for a discussion of
U.S. tax matters.

INVESTORS IN INDEXED SECURITIES COULD LOSE THEIR INVESTMENT

The amount of principal and/or interest payable on an indexed debt
security, the cash value or physical settlement value of a physically settled
debt security and the cash value or physical settlement value of an indexed
warrant or purchase contract will be determined by reference to the price, value
or level of one or more securities, currencies, commodities or other properties,
any other financial, economic or other measure or instrument, including the
occurrence or non-occurrence of any event or circumstance, and/or one or more
indices or baskets of any of these items. We refer to each of these as an
"index". The direction and magnitude of the change in the price, value or level
of the relevant index will determine the amount of principal and/or interest
payable on an indexed debt security, the cash value or physical settlement value
of a physically settled debt security and the cash value or physical settlement
value of an indexed warrant or purchase contract. The terms of a particular
indexed debt security may or may not include a guaranteed return of a percentage
of the face amount at maturity or a minimum interest rate. An indexed warrant or
purchase contract generally will not provide for any guaranteed minimum
settlement value. Thus, if you purchase an indexed security, you may lose all or
a portion of the principal or other amount you invest and may receive no
interest on your investment.

THE ISSUER OF A SECURITY OR CURRENCY THAT SERVES AS AN INDEX COULD TAKE ACTIONS
THAT MAY ADVERSELY AFFECT AN INDEXED SECURITY

The issuer of a security that serves as an index or part of an index for an
indexed security will have no involvement in the offer and sale of the indexed
security and no obligations to the holder of the indexed security. The issuer
may take actions, such as a merger or sale of assets, without regard to the
interests of the holder. Any of these actions could adversely affect the value
of a security indexed to that security or to an index of which that security is
a component.

If the index for an indexed security includes a non-U.S. dollar currency or
other asset denominated in a non-U.S. dollar currency, the government that
issues that currency will also have no involvement in the offer and sale of the
indexed security and no obligations to the holder of the indexed security. That
government may take actions that could adversely affect the value of the
security. See "Considerations Relating to Securities Denominated or Payable in
or Linked to a Non-U.S. Dollar Currency -- Government Policy Can Adversely
Affect Currency Exchange Rates and an Investment in a Non-U.S. Dollar Security"
below for more information about these kinds of government actions.

AN INDEXED SECURITY MAY BE LINKED TO A VOLATILE INDEX, WHICH COULD HURT YOUR
INVESTMENT

Some indices are highly volatile, which means that their value may change
significantly, up or down, over a short period of time. The amount of principal
or interest that can be expected to become payable on an indexed debt security
or the expected settlement value of an indexed warrant or purchase contract may
vary substantially from time to time. Because the amounts

payable with respect to an indexed security are generally calculated based on
the value or level of the relevant index on a specified date or over a limited
period of time, volatility in the index increases the risk that the return on
the indexed security may be adversely affected by a fluctuation in the level of
the relevant index.

The volatility of an index may be affected by political or economic events,
including governmental actions, or by the activities of participants in the
relevant markets. Any of these events or activities could adversely affect the
value of an indexed security.

AN INDEX TO WHICH A SECURITY IS LINKED COULD BE CHANGED OR BECOME UNAVAILABLE

Some indices compiled by us or our affiliates or third parties may consist
of or refer to several or many different securities, commodities or currencies
or other instruments or measures. The compiler of such an index typically
reserves the right to alter the composition of the index and the manner in which
the value or level of the index is calculated. An alteration may result in a
decrease in the value of or return on an indexed security that is linked to the
index. The indices for our indexed securities may include published indices of
this kind or customized indices developed by us or our affiliates in connection
with particular issues of indexed securities.

A published index may become unavailable, or a customized index may become
impossible to calculate in the normal manner, due to events such as war, natural
disasters, cessation of publication of the index or a suspension or disruption
of trading in one or more securities, commodities or currencies or other
instruments or measures on which the index is based. If an index becomes
unavailable or impossible to calculate in the normal manner, the terms of a
particular indexed security may allow us to delay determining the amount payable
as principal or interest on an indexed debt security or the settlement value of
an indexed warrant or purchase contract, or we may use an alternative method to
determine the value of the unavailable index. Alternative methods of valuation
are generally intended to produce a value similar to the value resulting from
reference to the relevant index. However, it is unlikely that any alternative
method of valuation we use will produce a value identical to the value that the
actual index would produce. If we use an alternative method of valuation for a
security linked to an index of this kind, the value of the security, or the rate
of return on it, may be lower than it otherwise would be.

Some indexed securities are linked to indices that are not commonly used or
that have been developed only recently. The lack of a trading history may make
it difficult to anticipate the volatility or other risks associated with an
indexed security of this kind. In addition, trading in these indices or their
underlying stocks, commodities or currencies or other instruments or measures,
or options or futures contracts on these stocks, commodities or currencies or
other instruments or measures, may be limited, which could increase their
volatility and decrease the value of the related indexed securities or the rates
of return on them.

WE MAY ENGAGE IN HEDGING ACTIVITIES THAT COULD ADVERSELY AFFECT AN INDEXED
SECURITY

In order to hedge an exposure on a particular indexed security, we may,
directly or through our affiliates, enter into transactions involving the
securities, commodities or currencies or other instruments or measures that
underlie the index for that security, or derivative instruments, such as swaps,
options or futures, on the index or any of its component items. By engaging in
transactions of this kind, we could adversely affect the value of an indexed
security. It is possible that we could achieve substantial returns from our
hedging transactions while the value of the indexed security may decline.

INFORMATION ABOUT INDICES MAY NOT BE INDICATIVE OF FUTURE PERFORMANCE

If we issue an indexed security, we may include historical information
about the relevant index in the applicable prospectus supplement. Any
information about indices that we may
84

provide will be furnished as a matter of information only, and you should not
regard the information as indicative of the range of, or trends in, fluctuations
in the relevant index that may occur in the future.

WE MAY HAVE CONFLICTS OF INTEREST REGARDING AN INDEXED SECURITY

Goldman, Sachs & Co. and our other affiliates may have conflicts of
interest with respect to some indexed securities. Goldman, Sachs & Co. and our
other affiliates may engage in trading, including trading for hedging purposes,
for their proprietary accounts or for other accounts under their management, in
indexed securities and in the securities, commodities or currencies or other
instruments or measures on which the index is based or in other derivative
instruments related to the index or its component items. These trading
activities could adversely affect the value of indexed securities. We and our
affiliates may also issue or underwrite securities or derivative instruments
that are linked to the same index as one or more indexed securities. By
introducing competing products into the marketplace in this manner, we could
adversely affect the value of an indexed security.

Goldman, Sachs & Co. or another of our affiliates may serve as calculation
agent for the indexed securities and may have considerable discretion in
calculating the amounts payable in respect of the securities. To the extent that
Goldman, Sachs & Co. or another of our affiliates calculates or compiles a
particular index, it may also have considerable discretion in performing the
calculation or compilation of the index. Exercising discretion in this manner
could adversely affect the value of an indexed security based on the index or
the rate of return on the security.

CONSIDERATIONS RELATING TO SECURITIES DENOMINATED OR
PAYABLE IN OR LINKED TO A NON-U.S. DOLLAR CURRENCY

If you intend to invest in a non-U.S. dollar security -- e.g., a security
whose principal and/or interest is payable in a currency other than U.S. dollars
or that may be settled by delivery of or reference to a non-U.S. dollar currency
or property denominated in or otherwise linked to a non-U.S. dollar
currency -- you should consult your own financial and legal advisors as to the
currency risks entailed by your investment. Securities of this kind may not be
an appropriate investment for investors who are unsophisticated with respect to
non-U.S. dollar currency transactions.

The information in this prospectus is directed primarily to investors who
are U.S. residents. Investors who are not U.S. residents should consult their
own financial and legal advisors about currency-related risks particular to
their investment.

AN INVESTMENT IN A NON-U.S. DOLLAR SECURITY INVOLVES CURRENCY-RELATED RISKS

An investment in a non-U.S. dollar security entails significant risks that
are not associated with a similar investment in a security that is payable
solely in U.S. dollars and where settlement value is not otherwise based on a
non-U.S. dollar currency. These risks include the possibility of significant
changes in rates of exchange between the U.S. dollar and the various non-U.S.
dollar currencies or composite currencies and the possibility of the imposition
or modification of foreign exchange controls or other conditions by either the
United States or non-U.S. governments. These risks generally depend on factors
over which we have no control, such as economic and political events and the
supply of and demand for the relevant currencies in the global markets.

CHANGES IN CURRENCY EXCHANGE RATES CAN BE VOLATILE AND UNPREDICTABLE

Rates of exchange between the U.S. dollar and many other currencies have
been highly volatile, and this volatility may continue and perhaps spread to
other currencies in the future. Fluctuations in currency exchange rates could
adversely affect an investment in a security denominated in, or whose value is
otherwise linked to, a specified currency other than U.S. dollars. Depreciation
of the specified currency against the U.S. dollar could result in a decrease in
the U.S. dollar-equivalent value of payments on the security, including the
principal payable at maturity or settlement value payable upon exercise. That in
turn could cause the market value of the security to fall. Depreciation of the
specified currency against the U.S. dollar could result in a loss to the
investor on a U.S. dollar basis.

GOVERNMENT POLICY CAN ADVERSELY AFFECT CURRENCY EXCHANGE RATES AND AN INVESTMENT
IN A NON-U.S. DOLLAR SECURITY

Currency exchange rates can either float or be fixed by sovereign
governments. From time to time, governments use a variety of techniques, such as
intervention by a country's central bank or imposition of regulatory controls or
taxes, to affect the exchange rate of their currencies. Governments may also
issue a new currency to replace an existing currency or alter the exchange rate
or exchange characteristics by devaluation or revaluation of a currency. Thus, a
special risk in purchasing non-U.S. dollar securities is that their yields or
payouts could be significantly and unpredictably affected by governmental
actions. Even in the absence of governmental action directly affecting currency
exchange rates, political or economic developments in the country issuing the
specified currency for a non-U.S. dollar security or elsewhere could lead to
significant and sudden changes in the exchange rate between the U.S. dollar and
the specified currency. These changes could affect the value of the security as
participants in the global currency markets move to buy or sell the specified
currency or U.S. dollars in reaction to these developments.

Governments have imposed from time to time and may in the future impose
exchange controls or other conditions, including taxes, with respect to the
exchange or transfer of a specified currency that could affect exchange rates as
well as the availability of a specified currency for a security at its maturity
or on any other payment date. In addition, the ability of a holder to move
currency freely out of the country in which payment in the currency is received
or to convert the currency at a freely determined market rate could be limited
by governmental actions.

NON-U.S. DOLLAR SECURITIES MAY PERMIT US TO MAKE PAYMENTS IN U.S. DOLLARS OR
DELAY PAYMENT IF WE ARE UNABLE TO OBTAIN THE SPECIFIED CURRENCY

Securities payable in a currency other than U.S. dollars may provide that,
if the other currency is subject to convertibility, transferability, market
disruption or other conditions affecting its availability at or about the time
when a payment on the securities comes due because of circumstances beyond our
control, we will be entitled to make the payment in U.S. dollars or delay making
the payment. These circumstances could include the imposition of exchange
controls or our inability to obtain the other currency because of a disruption
in the currency markets. If we made payment in U.S. dollars, the exchange rate
we would use would be determined in the manner described above under
"Description of Debt Securities We May Offer -- Payment Mechanics for Debt
Securities -- How We Will Make Payments Due in Other Currencies -- When the
Specified Currency Is Not Available". A determination of this kind may be based
on limited information and would involve significant discretion on the part of
our foreign exchange agent. As a result, the value of the payment in U.S.
dollars an investor would receive on the payment date may be less than the value
of the payment the investor would have received in the other currency if it had
been available, or may be zero. In addition, a government may impose
extraordinary taxes on transfers of a currency. If that happens we will be
entitled to deduct these taxes from any payment on securities payable in that
currency.

WE WILL NOT ADJUST NON-U.S. DOLLAR SECURITIES TO COMPENSATE FOR CHANGES IN
CURRENCY EXCHANGE RATES

Except as described above, we will not make any adjustment or change in the
terms of a non-U.S. dollar security in the event of any change in exchange rates
for the relevant currency, whether in the event of any devaluation, revaluation
or imposition of exchange or other regulatory controls or taxes or in the event
of other developments affecting that currency, the U.S. dollar or any other
currency. Consequently, investors in non-U.S. dollar securities will bear the
risk that their investment may be adversely affected by these types of events.

IN A LAWSUIT FOR PAYMENT ON A NON-U.S. DOLLAR SECURITY, AN INVESTOR MAY BEAR
CURRENCY EXCHANGE RISK

Our debt securities, warrants, purchase contracts and units will be
governed by New York law. Under Section 27 of the New York Judiciary Law, a
state court in the State of New York rendering a judgment on a security
denominated in a currency other than U.S. dollars would be required to render
the judgment in the specified currency; however, the judgment would be converted
into U.S. dollars at the exchange rate prevailing on the date of entry of the
judgment. Consequently, in a lawsuit for payment on a security denominated in a
currency other than U.S. dollars, investors would bear currency exchange risk
until judgment is entered, which could be a long time.

In courts outside of New York, investors may not be able to obtain judgment
in a specified currency other than U.S. dollars. For example, a judgment for
money in an action based on a non-U.S. dollar security in many other U.S.
federal or state courts ordinarily would be enforced in the United States only
in U.S. dollars. The date used to determine the rate of conversion of the

currency in which any particular security is denominated into U.S. dollars will
depend upon various factors, including which court renders the judgment.

INFORMATION ABOUT EXCHANGE RATES MAY NOT BE INDICATIVE OF FUTURE PERFORMANCE

If we issue a non-U.S. dollar security, we may include in the applicable
prospectus supplement a currency supplement that provides information about
historical exchange rates for the relevant non-U.S. dollar currency or
currencies. Any information about exchange rates that we may provide will be
furnished as a matter of information only, and you should not regard the
information as indicative of the range of, or trends in, fluctuations in
currency exchange rates that may occur in the future. That rate will likely
differ from the exchange rate used under the terms that apply to a particular
security.

DETERMINATIONS MADE BY THE EXCHANGE RATE AGENT

All determinations made by the Exchange Rate Agent will be made in its sole
discretion (except to the extent expressly provided in this prospectus or in the
applicable prospectus supplement that any determination is subject to approval
by Goldman Sachs). In the absence of manifest error, its determinations will be
conclusive for all purposes and will bind all holders and us. The Exchange Rate
Agent will not have any liability for its determinations.

UNITED STATES TAXATION

This section describes the material United States federal income tax
consequences of owning certain of the debt securities, preferred stock and
depositary shares we are offering. The material United States federal income tax
consequences of owning the debt securities described below under "-- Taxation of
Debt Securities -- United States Holders -- Indexed and Other Debt Securities",
of owning preferred stock that may be convertible into or exercisable or
exchangeable for securities or other property or of owning warrants, purchase
contracts and units will be described in the applicable prospectus supplement.
This section is the opinion of Sullivan & Cromwell LLP, United States tax
counsel to The Goldman Sachs Group, Inc. It applies to you only if you hold your
securities as capital assets for tax purposes. This section does not apply to
you if you are a member of a class of holders subject to special rules, such as:

- a dealer in securities or currencies;

- a trader in securities that elects to use a mark-to-market method of
accounting for your securities holdings;

- a bank;

- a life insurance company;

- a tax-exempt organization;

- a person that owns debt securities that are a hedge or that are hedged
against interest rate or currency risks;

- a person that owns debt securities as part of a straddle or conversion
transaction for tax purposes; or

- a person whose functional currency for tax purposes is not the U.S.
dollar.

This section is based on the U.S. Internal Revenue Code of 1986, as amended, its
legislative history, existing and proposed regulations under the Internal
Revenue Code, published rulings and court decisions, all as currently in effect.
These laws are subject to change, possibly on a retroactive basis.

Please consult your own tax advisor concerning the consequences of owning these
securities in your particular circumstances under the Internal Revenue Code and
the laws of any other taxing jurisdiction.

TAXATION OF DEBT SECURITIES

This subsection describes the material United States federal income tax
consequences of owning, selling and disposing of the debt securities we are
offering, other than the debt securities described below under "-- United States
Holders -- Indexed and Other Debt Securities", which will be described in the
applicable prospectus supplement. It deals only with debt securities that are
due to mature 30 years or less from the date on which they are issued. The
United States federal income tax consequences of owning debt securities that are
due to mature more than 30 years from their date of issue will be discussed in
the applicable prospectus supplement.

UNITED STATES HOLDERS

This subsection describes the tax consequences to a United States holder.
You are a United States holder if you are a beneficial owner of a debt security
and you are:

- a citizen or resident of the United States;

- a domestic corporation;
89

- an estate whose income is subject to United States federal income tax
regardless of its source; or

- a trust if a United States court can exercise primary supervision over
the trust's administration and one or more United States persons are
authorized to control all substantial decisions of the trust.

If you are not a United States holder, this section does not apply to you and
you should refer to "-- United States Alien Holders" below.

PAYMENTS OF INTEREST. Except as described below in the case of interest on
an original issue discount debt security that is not qualified stated interest,
each as defined below under "-- United States Holders -- Original Issue
Discount", you will be taxed on any interest on your debt security, whether
payable in U.S. dollars or a non-U.S. dollar currency, including a composite
currency or basket of currencies other than U.S. dollars, as ordinary income at
the time you receive the interest or when it accrues, depending on your method
of accounting for tax purposes.

CASH BASIS TAXPAYERS

If you are a taxpayer that uses the cash receipts and disbursements method
of accounting for tax purposes and you receive an interest payment that is
denominated in, or determined by reference to, a non-U.S. dollar currency, you
must recognize income equal to the U.S. dollar value of the interest payment,
based on the exchange rate in effect on the date of receipt, regardless of
whether you actually convert the payment into U.S. dollars.

ACCRUAL BASIS TAXPAYERS

If you are a taxpayer that uses an accrual method of accounting for tax
purposes, you may determine the amount of income that you recognize with respect
to an interest payment denominated in, or determined by reference to, a non-U.S.
dollar currency by using one of two methods. Under the first method, you will
determine the amount of income accrued based on the average exchange rate in
effect during the interest accrual period or, with respect to an accrual period
that spans two taxable years, that part of the period within the taxable year.

If you elect the second method, you would determine the amount of income
accrued on the basis of the exchange rate in effect on the last day of the
accrual period, or, in the case of an accrual period that spans two taxable
years, the exchange rate in effect on the last day of the part of the period
within the taxable year. Additionally, under this second method, if you receive
a payment of interest within five business days of the last day of your accrual
period or taxable year, you may instead translate the interest accrued into U.S.
dollars at the exchange rate in effect on the day that you actually receive the
interest payment. If you elect the second method, it will apply to all debt
instruments that you hold at the beginning of the first taxable year to which
the election applies and to all debt instruments that you subsequently acquire.
You may not revoke this election without the consent of the United States
Internal Revenue Service.

When you actually receive an interest payment, including a payment
attributable to accrued but unpaid interest upon the sale or retirement of your
debt security, denominated in, or determined by reference to, a non-U.S. dollar
currency for which you accrued an amount of income, you will recognize ordinary
income or loss measured by the difference, if any, between the exchange rate
that you used to accrue interest income and the exchange rate in effect on the
date of receipt, regardless of whether you actually convert the payment into
U.S. dollars.

ORIGINAL ISSUE DISCOUNT. If you own a debt security, other than a
short-term debt security with a term of one year or less, it will be treated as
an original issue discount debt security if the amount by which the debt
security's stated redemption price at maturity exceeds its issue price is more
than a de minimis amount. Generally, a debt security's issue price will be the
first price
90

at which a substantial amount of debt securities included in the issue of which
the debt security is a part is sold to persons other than bond houses, brokers,
or similar persons or organizations acting in the capacity of underwriters,
placement agents, or wholesalers. A debt security's stated redemption price at
maturity is the total of all payments provided by the debt security that are not
payments of qualified stated interest. Generally, an interest payment on a debt
security is qualified stated interest if it is one of a series of stated
interest payments on a debt security that are unconditionally payable at least
annually at a single fixed rate, with certain exceptions for lower rates paid
during some periods, applied to the outstanding principal amount of the debt
security. There are special rules for variable rate debt securities that are
discussed below under "-- Variable Rate Debt Securities".

In general, your debt security is not an original issue discount debt
security if the amount by which its stated redemption price at maturity exceeds
its issue price is less than the de minimis amount of 0.25 percent of its stated
redemption price at maturity multiplied by the number of complete years to its
maturity. Your debt security will have de minimis original issue discount if the
amount of the excess is less than the de minimis amount. If your debt security
has de minimis original issue discount, you must include the de minimis amount
in income as stated principal payments are made on the debt security, unless you
make the election described below under "-- Election to Treat All Interest as
Original Issue Discount". You can determine the includible amount with respect
to each such payment by multiplying the total amount of your debt security's de
minimis original issue discount by a fraction equal to:

- the amount of the principal payment made

divided by:

- the stated principal amount of the debt security.

Generally, if your original issue discount debt security matures more than
one year from its date of issue, you must include original issue discount in
income before you receive cash attributable to that income. The amount of
original issue discount that you must include in income is calculated using a
constant-yield method, and generally you will include increasingly greater
amounts of original issue discount in income over the life of your debt
security. More specifically, you can calculate the amount of original issue
discount that you must include in income by adding the daily portions of
original issue discount with respect to your original issue discount debt
security for each day during the taxable year or portion of the taxable year
that you hold your original issue discount debt security. You can determine the
daily portion by allocating to each day in any accrual period a pro rata portion
of the original issue discount allocable to that accrual period. You may select
an accrual period of any length with respect to your original issue discount
debt security and you may vary the length of each accrual period over the term
of your original issue discount debt security. However, no accrual period may be
longer than one year and each scheduled payment of interest or principal on the
original issue discount debt security must occur on either the first or final
day of an accrual period.

You can determine the amount of original issue discount allocable to an
accrual period by:

- multiplying your original issue discount debt security's adjusted issue
price at the beginning of the accrual period by your debt security's
yield to maturity; and then

- subtracting from this figure the sum of the payments of qualified stated
interest on your debt security allocable to the accrual period.

You must determine the original issue discount debt security's yield to maturity
on the basis of compounding at the close of each accrual period and adjusting
for the length of each accrual period. Further, you determine your original
issue discount debt security's adjusted issue price at the beginning of any
accrual period by:

- adding your original issue discount debt security's issue price and any
accrued original issue discount for each prior accrual period; and then

- subtracting any payments previously made on your original issue discount
debt security that were not qualified stated interest payments.

If an interval between payments of qualified stated interest on your
original issue discount debt security contains more than one accrual period,
then, when you determine the amount of original issue discount allocable to an
accrual period, you must allocate the amount of qualified stated interest
payable at the end of the interval, including any qualified stated interest that
is payable on the first day of the accrual period immediately following the
interval, pro rata to each accrual period in the interval based on their
relative lengths. In addition, you must increase the adjusted issue price at the
beginning of each accrual period in the interval by the amount of any qualified
stated interest that has accrued prior to the first day of the accrual period
but that is not payable until the end of the interval. You may compute the
amount of original issue discount allocable to an initial short accrual period
by using any reasonable method if all other accrual periods, other than a final
short accrual period, are of equal length.

The amount of original issue discount allocable to the final accrual period
is equal to the difference between:

- the amount payable at the maturity of your debt security, other than any
payment of qualified stated interest; and

- your debt security's adjusted issue price as of the beginning of the
final accrual period.

ACQUISITION PREMIUM

If you purchase your debt security for an amount that is less than or equal
to the sum of all amounts, other than qualified stated interest, payable on your
debt security after the purchase date but is greater than the amount of your
debt security's adjusted issue price, as determined above, the excess is
acquisition premium. If you do not make the election described below under "--
Election to Treat All Interest as Original Issue Discount", then you must reduce
the daily portions of original issue discount by a fraction equal to:

- the excess of your adjusted basis in the debt security immediately after
purchase over the adjusted issue price of the debt security

divided by:

- the excess of the sum of all amounts payable, other than qualified stated
interest, on the debt security after the purchase date over the debt
security's adjusted issue price.

PRE-ISSUANCE ACCRUED INTEREST

An election may be made to decrease the issue price of your debt security
by the amount of pre-issuance accrued interest if:

- a portion of the initial purchase price of your debt security is
attributable to pre-issuance accrued interest;

- the first stated interest payment on your debt security is to be made
within one year of your debt security's issue date; and

- the payment will equal or exceed the amount of pre-issuance accrued
interest.

If this election is made, a portion of the first stated interest payment
will be treated as a return of the excluded pre-issuance accrued interest and
not as an amount payable on your debt security.

DEBT SECURITIES SUBJECT TO CONTINGENCIES INCLUDING OPTIONAL REDEMPTION

Your debt security is subject to a contingency if it provides for an
alternative payment schedule or schedules applicable upon the occurrence of a
contingency or contingencies, other than a remote or incidental contingency,
whether such contingency relates to payments of interest or of principal. In
such a case, you must determine the yield and maturity of your debt security by
assuming that the payments will be made according to the payment schedule most
likely to occur if:

- the timing and amounts of the payments that comprise each payment
schedule are known as of the issue date; and

- one of such schedules is significantly more likely than not to occur.

If there is no single payment schedule that is significantly more likely
than not to occur, other than because of a mandatory sinking fund, you must
include income on your debt security in accordance with the general rules that
govern contingent payment obligations. These rules will be discussed in the
applicable prospectus supplement.

Notwithstanding the general rules for determining yield and maturity, if
your debt security is subject to contingencies, and either you or we have an
unconditional option or options that, if exercised, would require payments to be
made on the debt security under an alternative payment schedule or schedules,
then:

- in the case of an option or options that we may exercise, we will be
deemed to exercise or not exercise an option or combination of options in
the manner that minimizes the yield on your debt security; and

- in the case of an option or options that you may exercise, you will be
deemed to exercise or not exercise an option or combination of options in
the manner that maximizes the yield on your debt security.

If both you and we hold options described in the preceding sentence, those rules
will apply to each option in the order in which they may be exercised. You may
determine the yield on your debt security for the purposes of those calculations
by using any date on which your debt security may be redeemed or repurchased as
the maturity date and the amount payable on the date that you chose in
accordance with the terms of your debt security as the principal amount payable
at maturity.

If a contingency, including the exercise of an option, actually occurs or
does not occur contrary to an assumption made according to the above rules then,
except to the extent that a portion of your debt security is repaid as a result
of this change in circumstances and solely to determine the amount and accrual
of original issue discount, you must redetermine the yield and maturity of your
debt security by treating your debt security as having been retired and reissued
on the date of the change in circumstances for an amount equal to your debt
security's adjusted issue price on that date.

ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT

You may elect to include in gross income all interest that accrues on your
debt security using the constant-yield method described above, with the
modifications described below. For purposes of this election, interest will
include stated interest, original issue discount, de minimis original issue
discount, market discount, de minimis market discount and unstated interest, as
adjusted by any amortizable bond premium, described below under "-- United
States Holders -- Debt Securities Purchased at a Premium", or acquisition
premium.

If you make this election for your debt security, then, when you apply the
constant-yield method:

- the issue price of your debt security will equal your cost;

- the issue date of your debt security will be the date you acquired it;
and

- no payments on your debt security will be treated as payments of
qualified stated interest.

Generally, this election will apply only to the debt security for which you
make it; however, if the debt security has amortizable bond premium, you will be
deemed to have made an election to apply amortizable bond premium against
interest for all debt instruments with amortizable bond premium, other than debt
instruments the interest on which is excludible from gross income, that you hold
as of the beginning of the taxable year to which the election applies or any
taxable year thereafter. Additionally, if you make this election for a market
discount debt security, you will be treated as having made the election
discussed below under "-- United States Holders -- Market Discount" to include
market discount in income currently over the life of all debt instruments that
you currently own or later acquire. You may not revoke any election to apply the
constant-yield method to all interest on a debt security or the deemed elections
with respect to amortizable bond premium or market discount debt securities
without the consent of the United States Internal Revenue Service.

VARIABLE RATE DEBT SECURITIES

Your debt security will be a variable rate debt security if:

- your debt security's issue price does not exceed the total noncontingent
principal payments by more than the lesser of:

1. .015 multiplied by the product of the total noncontingent principal
payments and the number of complete years to maturity from the issue
date; or

2. 15 percent of the total noncontingent principal payments; and

- your debt security provides for stated interest, compounded or paid at
least annually, only at:

1. one or more qualified floating rates;

2. a single fixed rate and one or more qualified floating rates;

3. a single objective rate; or

4. a single fixed rate and a single objective rate that is a qualified
inverse floating rate.

Your debt security will have a variable rate that is a qualified floating
rate if:

- variations in the value of the rate can reasonably be expected to measure
contemporaneous variations in the cost of newly borrowed funds in the
currency in which your debt security is denominated; or

- the rate is equal to such a rate multiplied by either:

1. a fixed multiple that is greater than 0.65 but not more than 1.35; or

2. a fixed multiple greater than 0.65 but not more than 1.35, increased or
decreased by a fixed rate; and

- the value of the rate on any date during the term of your debt security
is set no earlier than three months prior to the first day on which that
value is in effect and no later than one year following that first day.

If your debt security provides for two or more qualified floating rates
that are within 0.25 percentage points of each other on the issue date or can
reasonably be expected to have approximately the same values throughout the term
of the debt security, the qualified floating rates together constitute a single
qualified floating rate.

Your debt security will not have a qualified floating rate, however, if the
rate is subject to certain restrictions (including caps, floors, governors, or
other similar restrictions) unless such restrictions are fixed throughout the
term of the debt security or are not reasonably expected to significantly affect
the yield on the debt security.

Your debt security will have a variable rate that is a single objective
rate if:

- the rate is not a qualified floating rate;

- the rate is determined using a single, fixed formula that is based on
objective financial or economic information that is not within the
control of or unique to the circumstances of the issuer or a related
party; and

Your debt security will not have a variable rate that is an objective rate,
however, if it is reasonably expected that the average value of the rate during
the first half of your debt security's term will be either significantly less
than or significantly greater than the average value of the rate during the
final half of your debt security's term.

An objective rate as described above is a qualified inverse floating rate
if:

- the rate is equal to a fixed rate minus a qualified floating rate and

- the variations in the rate can reasonably be expected to inversely
reflect contemporaneous variations in the cost of newly borrowed funds.

Your debt security will also have a single qualified floating rate or an
objective rate if interest on your debt security is stated at a fixed rate for
an initial period of one year or less followed by either a qualified floating
rate or an objective rate for a subsequent period, and either:

- the fixed rate and the qualified floating rate or objective rate have
values on the issue date of the debt security that do not differ by more
than 0.25 percentage points; or

- the value of the qualified floating rate or objective rate is intended to
approximate the fixed rate.

In general, if your variable rate debt security provides for stated
interest at a single qualified floating rate or objective rate, or one of those
rates after a single fixed rate for an initial period, all stated interest on
your debt security is qualified stated interest. In this case, the amount of
original issue discount, if any, is determined by using, in the case of a
qualified floating rate or qualified inverse floating rate, the value as of the
issue date of the qualified floating rate or qualified inverse floating rate,
or, for any other objective rate, a fixed rate that reflects the yield
reasonably expected for your debt security.

If your variable rate debt security does not provide for stated interest at
a single qualified floating rate or a single objective rate, and also does not
provide for interest payable at a fixed rate other than a single fixed rate for
an initial period, you generally must determine the interest and original issue
discount accruals on your debt security by:

- determining a fixed rate substitute for each variable rate provided under
your variable rate debt security;

- constructing the equivalent fixed rate debt instrument, using the fixed
rate substitute described above;

- determining the amount of qualified stated interest and original issue
discount with respect to the equivalent fixed rate debt instrument; and

- adjusting for actual variable rates during the applicable accrual period.

When you determine the fixed rate substitute for each variable rate provided
under the variable rate debt security, you generally will use the value of each
variable rate as of the issue date or, for an objective rate that is not a
qualified inverse floating rate, a rate that reflects the reasonably expected
yield on your debt security.

If your variable rate debt security provides for stated interest either at
one or more qualified floating rates or at a qualified inverse floating rate,
and also provides for stated interest at a single fixed rate other than at a
single fixed rate for an initial period, you generally must determine interest
and original issue discount accruals by using the method described in the
previous paragraph. However, your variable rate debt security will be treated,
for purposes of the first three steps of the determination, as if your debt
security had provided for a qualified floating rate, or a qualified inverse
floating rate, rather than the fixed rate. The qualified floating rate, or
qualified inverse floating rate, that replaces the fixed rate must be such that
the fair market value of your variable rate debt security as of the issue date
approximates the fair market value of an otherwise identical debt instrument
that provides for the qualified floating rate, or qualified inverse floating
rate, rather than the fixed rate.

SHORT-TERM DEBT SECURITIES

In general, if you are an individual or other cash basis United States
holder of a short-term debt security, you are not required to accrue original
issue discount, as specially defined below for the purposes of this paragraph,
for United States federal income tax purposes unless you elect to do so
(although it is possible that you may be required to include any stated interest
in income as you receive it). If you are an accrual basis taxpayer, a taxpayer
in a special class, including, but not limited to, a regulated investment
company, common trust fund, or a certain type of pass-through entity, or a cash
basis taxpayer who so elects, you will be required to accrue original issue
discount on short-term debt securities on either a straight-line basis or under
the constant-yield method, based on daily compounding. If you are not required
and do not elect to include original issue discount in income currently, any
gain you realize on the sale or retirement of your short-term debt security will
be ordinary income to the extent of the accrued original issue discount, which
will be determined on a straight-line basis unless you make an election to
accrue the original issue discount under the constant-yield method, through the
date of sale or retirement. However, if you are not required and do not elect to
accrue original issue discount on your short-term debt securities, you will be
required to defer deductions for interest on borrowings allocable to your
short-term debt securities in an amount not exceeding the deferred income until
the deferred income is realized.

When you determine the amount of original issue discount subject to these
rules, you must include all interest payments on your short-term debt security,
including stated interest, in your short-term debt security's stated redemption
price at maturity.

NON-U.S. DOLLAR CURRENCY ORIGINAL ISSUE DISCOUNT DEBT SECURITIES

If your original issue discount debt security is denominated in, or
determined by reference to, a non-U.S. dollar currency, you must determine
original issue discount for any accrual period on your original issue discount
debt security in the non-U.S. dollar currency and then translate the amount of
original issue discount into U.S. dollars in the same manner as stated interest
accrued by an accrual basis United States holder, as described above under
"-- United States Holders --

Payments of Interest". You may recognize ordinary income or loss when you
receive an amount attributable to original issue discount in connection with a
payment of interest or the sale or retirement of your debt security.

MARKET DISCOUNT

You will be treated as if you purchased your debt security, other than a
short-term debt security, at a market discount, and your debt security will be a
market discount debt security if:

- you purchase your debt security for less than its issue price as
determined above; and

- the difference between the debt security's stated redemption price at
maturity or, in the case of an original issue discount debt security, the
debt security's revised issue price, and the price you paid for your debt
security is equal to or greater than 0.25 percent of your debt security's
stated redemption price at maturity or revised issue price, respectively,
multiplied by the number of complete years to the debt security's
maturity. To determine the revised issue price of your debt security for
these purposes, you generally add any original issue discount that has
accrued on your debt security to its issue price.

If your debt security's stated redemption price at maturity or, in the case
of an original issue discount debt security, its revised issue price, exceeds
the price you paid for the debt security by less than 0.25 percent multiplied by
the number of complete years to the debt security's maturity, the excess
constitutes de minimis market discount, and the rules discussed below are not
applicable to you.

You must treat any gain you recognize on the maturity or disposition of
your market discount debt security as ordinary income to the extent of the
accrued market discount on your debt security. Alternatively, you may elect to
include market discount in income currently over the life of your debt security.
If you make this election, it will apply to all debt instruments with market
discount that you acquire on or after the first day of the first taxable year to
which the election applies. You may not revoke this election without the consent
of the United States Internal Revenue Service. If you own a market discount debt
security and do not make this election, you will generally be required to defer
deductions for interest on borrowings allocable to your debt security in an
amount not exceeding the accrued market discount on your debt security until the
maturity or disposition of your debt security.

You will accrue market discount on your market discount debt security on a
straight-line basis unless you elect to accrue market discount using a
constant-yield method. If you make this election, it will apply only to the debt
security with respect to which it is made and you may not revoke it.

DEBT SECURITIES PURCHASED AT A PREMIUM. If you purchase your debt security
for an amount in excess of its principal amount, you may elect to treat the
excess as amortizable bond premium. If you make this election, you will reduce
the amount required to be included in your income each year with respect to
interest on your debt security by the amount of amortizable bond premium
allocable to that year, based on your debt security's yield to maturity. If your
debt security is denominated in, or determined by reference to, a non-U.S.
dollar currency, you will compute your amortizable bond premium in units of the
non-U.S. dollar currency and your amortizable bond premium will reduce your
interest income in units of the non-U.S. dollar currency. Gain or loss
recognized that is attributable to changes in exchange rates between the time
your amortized bond premium offsets interest income and the time of the
acquisition of your debt security is generally taxable as ordinary income or
loss. If you make an election to amortize bond premium, it will apply to all
debt instruments, other than debt instruments the interest on which is
excludible from gross income, that you hold at the beginning of the first
taxable year to which the election applies or that you thereafter acquire, and
you may not revoke it without the

consent of the United States Internal Revenue Service. See also "-- United
States Holders -- Original Issue Discount -- Election to Treat All Interest as
Original Issue Discount".

PURCHASE, SALE AND RETIREMENT OF THE DEBT SECURITIES. Your tax basis in
your debt security will generally be the U.S. dollar cost, as defined below, of
your debt security, adjusted by:

- adding any original issue discount, market discount, de minimis original
issue discount and de minimis market discount previously included in
income with respect to your debt security; and then

- subtracting any payments on your debt security that are not qualified
stated interest payments and any amortizable bond premium applied to
reduce interest on your debt security.

If you purchase your debt security with non-U.S. dollar currency, the U.S.
dollar cost of your debt security will generally be the U.S. dollar value of the
purchase price on the date of purchase. However, if you are a cash basis
taxpayer, or an accrual basis taxpayer if you so elect, and your debt security
is traded on an established securities market, as defined in the applicable U.S.
Treasury regulations, the U.S. dollar cost of your debt security will be the
U.S. dollar value of the purchase price on the settlement date of your purchase.

You will generally recognize gain or loss on the sale or retirement of your
debt security equal to the difference between the amount you realize on the sale
or retirement and your tax basis in your debt security. If your debt security is
sold or retired for an amount in non-U.S. dollar currency, the amount you
realize will be the U.S. dollar value of such amount on:

- the date payment is received, if you are a cash basis taxpayer and the
debt securities are not traded on an established securities market, as
defined in the applicable U.S. Treasury regulations;

- the date of disposition, if you are an accrual basis taxpayer; or

- the settlement date for the sale, if you are a cash basis taxpayer, or an
accrual basis taxpayer that so elects, and the debt securities are traded
on an established securities market, as defined in the applicable U.S.
Treasury regulations.

You will recognize capital gain or loss when you sell or retire your debt
security, except to the extent:

- described above under "-- United States Holders -- Original Issue
Discount -- Short-Term Debt Securities" or "-- Market Discount";

- attributable to accrued but unpaid interest;

- the rules governing contingent payment obligations apply; or

- attributable to changes in exchange rates as described below.

Capital gain of a noncorporate United States holder is generally taxed at a
maximum rate of 20% where the property is held more than one year and 18% where
the property is held more than five years. Under a recent legislative proposal,
the maximum tax rate on capital gains would be reduced to 15% where the property
is held more than one year. It is not clear whether and in what form this
legislation will be enacted, to which shareholders it might apply, or what the
effective date of this legislation might be.

You must treat any portion of the gain or loss that you recognize on the
sale or retirement of a debt security as ordinary income or loss to the extent
attributable to changes in exchange rates. However, you take exchange gain or
loss into account only to the extent of the total gain or loss you realize on
the transaction.

EXCHANGE OF AMOUNTS IN OTHER THAN U.S. DOLLARS. If you receive non-U.S.
dollar currency as interest on your debt security or on the sale or retirement
of your debt security, your tax basis in the non-U.S. dollar currency will equal
its U.S. dollar value when the interest is received or at the time of the sale
or retirement. If you purchase non-U.S. dollar currency, you generally will have
a tax basis equal to the U.S. dollar value of the non-U.S. dollar currency on
the date of your purchase. If you sell or dispose of a non-U.S. dollar currency,
including if you use it to purchase debt securities or exchange it for U.S.
dollars, any gain or loss recognized generally will be ordinary income or loss.

INDEXED AND OTHER DEBT SECURITIES. The applicable prospectus supplement
will discuss the material United States federal income tax rules with respect to
contingent non-U.S. dollar currency debt securities, debt securities that may be
convertible into or exercisable or exchangeable for common or preferred stock or
other securities of Goldman Sachs or debt or equity securities of one or more
third parties, debt securities the payments on which are determined by reference
to any index and other debt securities that are subject to the rules governing
contingent payment obligations which are not subject to the rules governing
variable rate debt securities, any renewable and extendible debt securities and
any debt securities providing for the periodic payment of principal over the
life of the debt security.

UNITED STATES ALIEN HOLDERS

This subsection describes the tax consequences to a United States alien
holder. You are a United States alien holder if you are the beneficial owner of
a debt security and are, for United States federal income tax purposes:

- a nonresident alien individual;

- a foreign corporation;

- a foreign partnership; or

- an estate or trust that in either case is not subject to United States
federal income tax on a net income basis on income or gain from a debt
security.

If you are a United States holder, this section does not apply to you.

This discussion assumes that the debt security or coupon is not subject to
the rules of Section 871(h)(4)(A) of the Internal Revenue Code, relating to
interest payments that are determined by reference to the income, profits,
changes in the value of property or other attributes of the debtor or a related
party.

Under United States federal income and estate tax law, and subject to the
discussion of backup withholding below, if you are a United States alien holder
of a debt security or coupon:

- we and other U.S. payors generally will not be required to deduct United
States withholding tax from payments of principal, premium, if any, and
interest, including original issue discount, to you if, in the case of
payments of interest:

1. you do not actually or constructively own 10% or more of the total
combined voting power of all classes of our stock entitled to vote;

2. you are not a controlled foreign corporation that is related to us
through stock ownership;

3. you are not a bank receiving interest on an extension of credit made
pursuant to a loan agreement entered into in the ordinary course of
your trade or business;

4. in the case of a debt security other than a bearer debt security, the
U.S. payor does not have actual knowledge or reason to know that you
are a United States person and:

a. you have furnished to the U.S. payor an Internal Revenue Service
Form W-8BEN or an acceptable substitute form upon which you
certify, under penalties of perjury, that you are not a United
States person;

b. in the case of payments made outside the United States to you at an
offshore account (generally, an account maintained by you at a bank
or other financial institution at any location outside the United
States), you have furnished to the U.S. payor documentation that
establishes your identity and your status as a person who is not a
United States person;

c. the U.S. payor has received a withholding certificate (furnished on
an appropriate Internal Revenue Service Form W-8 or an acceptable
substitute form) from a person claiming to be:

i. a withholding foreign partnership (generally a foreign
partnership that has entered into an agreement with the
Internal Revenue Service to assume primary withholding
responsibility with respect to distributions and guaranteed
payments it makes to its partners);

ii. a qualified intermediary (generally a non-United States
financial institution or clearing organization or a non-United
States branch or office of a United States financial
institution or clearing organization that is a party to a
withholding agreement with the Internal Revenue Service); or

iii. a U.S. branch of a non-United States bank or of a non-United
States insurance company; and the withholding foreign
partnership, qualified intermediary or U.S. branch has
received documentation upon which it may rely to treat the
payment as made to a person who is not a United States person
in accordance with U.S. Treasury regulations (or, in the case
of a qualified intermediary, in accordance with its agreement
with the Internal Revenue Service);

d. the U.S. payor receives a statement from a securities clearing
organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or
business:

i. certifying to the U.S. payor under penalties of perjury that an
Internal Revenue Service Form W-8BEN or an acceptable
substitute form has been received from you by it or by a
similar financial institution between it and you; and

ii. to which is attached a copy of the Internal Revenue Service
Form W-8BEN or acceptable substitute form; or

e. the U.S. payor otherwise possesses documentation upon which it may
rely to treat the payment as made to a person who is not a United
States person in accordance with U.S. Treasury regulations; and

5. in the case of a bearer debt security, the debt security is offered,
sold and delivered in compliance with the restrictions described above
under "Considerations Relating to Securities Issued in Bearer Form"
and payments on the debt security are made in accordance with the
procedures described above under that section; and

- no deduction for any United States federal withholding tax will be made
from any gain that you realize on the sale or exchange of your debt
security or coupon.

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Further, a debt security or coupon held by an individual who at death is not a
citizen or resident of the United States will not be includible in the
individual's gross estate for United States federal estate tax purposes if:

- the decedent did not actually or constructively own 10% or more of the
total combined voting power of all classes of our stock entitled to vote
at the time of death; and

- the income on the debt security would not have been effectively connected
with a U.S. trade or business of the decedent at the same time.

BACKUP WITHHOLDING AND INFORMATION REPORTING

UNITED STATES HOLDERS. In general, if you are a noncorporate United States
holder, we and other payors are required to report to the United States Internal
Revenue Service all payments of principal, any premium and interest on your debt
security, and the accrual of original issue discount on an original issue
discount debt security. In addition, we and other payors are required to report
to the United States Internal Revenue Service any payment of proceeds of the
sale of your debt security before maturity within the United States.
Additionally, backup withholding will apply to any payments, including payments
of original issue discount, if you fail to provide an accurate taxpayer
identification number, or you are notified by the United States Internal Revenue
Service that you have failed to report all interest and dividends required to be
shown on your federal income tax returns.

UNITED STATES ALIEN HOLDERS. In general, if you are a United States alien
holder, payments of principal, premium or interest, including original issue
discount, made by us and other payors to you will not be subject to backup
withholding and information reporting, provided that the certification
requirements described above under "-- United States Alien Holders" are
satisfied or you otherwise establish an exemption. However, we and other payors
are required to report payments of interest on your notes on Internal Revenue
Service Form 1042-S even if the payments are not otherwise subject to
information reporting requirements. In addition, payment of the proceeds from
the sale of notes effected at a United States office of a broker will not be
subject to backup withholding and information reporting provided that:

- the broker does not have actual knowledge or reason to know that you are
a United States person and you have furnished to the broker:

1. an appropriate Internal Revenue Service Form W-8 or an acceptable
substitute form upon which you certify, under penalties of perjury,
that you are not a United States person; or

2. other documentation upon which it may rely to treat the payment as
made to a person who is not a United States person in accordance with
U.S. Treasury regulations; or

- you otherwise establish an exemption.

If you fail to establish an exemption and the broker does not possess adequate
documentation of your status as a person who is not a United States person, the
payments may be subject to information reporting and backup withholding.
However, backup withholding will not apply with respect to payments made outside
the United States to an offshore account maintained by you unless the broker has
actual knowledge that you are a United States person.

In general, payment of the proceeds from the sale of notes effected at a
foreign office of a broker will not be subject to information reporting or
backup withholding. However, a sale

101

effected at a foreign office of a broker will be subject to information
reporting and backup withholding if:

- the proceeds are transferred to an account maintained by you in the
United States;

- the payment of proceeds or the confirmation of the sale is mailed to you
at a United States address; or

- the sale has some other specified connection with the United States as
provided in U.S. Treasury regulations;

In addition, payment of the proceeds from the sale of notes effected at a
foreign office of a broker will be subject to information reporting if the
broker is:

- a United States person;

- a controlled foreign corporation for United States tax purposes;

- a foreign person 50% or more of whose gross income is effectively
connected with the conduct of a United States trade or business for a
specified three-year period; or

- a foreign partnership, if at any time during its tax year:

1. one or more of its partners are "U.S. persons", as defined in U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interest in the partnership; or

2. such foreign partnership is engaged in the conduct of a United States
trade or business;

unless the broker does not have actual knowledge or reason to know that you are
a United States person and the documentation requirements described above
(relating to a sale of notes effected at a United States office of a broker) are
met or you otherwise establish an exemption. Backup withholding will apply if
the sale is subject to information reporting and the broker has actual knowledge
that you are a United States person.

TAXATION OF PREFERRED STOCK AND DEPOSITARY SHARES

This subsection describes the material United States federal income tax
consequences of owning, selling and disposing of the preferred stock and
depositary shares that we may offer other than preferred stock that may be
convertible into or exercisable or exchangeable for securities or other
property, which will be described in the applicable prospectus supplement. When
we refer to preferred stock in this subsection, we mean both preferred stock and
depositary shares.

UNITED STATES HOLDERS

This subsection describes the tax consequences to a United States holder.
You are a United States holder if you are a beneficial owner of a share of
preferred stock and you are:

- a citizen or resident of the United States;

- a domestic corporation;

- an estate whose income is subject to United States federal income tax
regardless of its source; or

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If you are not a United States holder, this subsection does not apply to you and
you should refer to "-- United States Alien Holders" below.

DISTRIBUTIONS ON PREFERRED STOCK. You will be taxed on distributions on
preferred stock as ordinary dividend income to the extent paid out of our
current or accumulated earnings and profits for United States federal income tax
purposes. If you are taxed as a corporation, except as described in the next
subsection, dividends would be eligible for the 70% dividends-received
deduction.

Under recently proposed legislation, holders would be permitted to fully or
partially exclude from gross income any dividends that were previously taxed
when earned by a corporation. Under a different proposal, the tax rate on
dividends may be reduced. It is not clear whether or in what form this
legislation will be enacted or what the effective date of this legislation might
be.

You generally will not be taxed on any portion of a distribution not paid
out of our current or accumulated earnings and profits if your tax basis in the
preferred stock is greater than or equal to the amount of the distribution.
However, you would be required to reduce your tax basis (but not below zero) in
the preferred stock by the amount of the distribution, and would recognize
capital gain to the extent that the distribution exceeds your tax basis in the
preferred stock. Further, if you are a corporation, you would not be entitled to
a dividends-received deduction on this portion of a distribution.

LIMITATIONS ON DIVIDENDS-RECEIVED DEDUCTION

Corporate shareholders may not be entitled to take the 70%
dividends-received deduction in all circumstances. Prospective corporate
investors in preferred stock should consider the effect of:

- Section 246A of the Internal Revenue Code, which reduces the
dividends-received deduction allowed to a corporate shareholder that has
incurred indebtedness that is "directly attributable" to an investment in
portfolio stock such as preferred stock;

- Section 246(c) of the Internal Revenue Code, which, among other things,
disallows the dividends-received deduction in respect of any dividend on
a share of stock that is held for less than the minimum holding period
(generally at least 46 days during the 90 day period beginning on the
date which is 45 days before the date on which such share becomes ex-
dividend with respect to such dividend); and

- Section 1059 of the Internal Revenue Code, which, under certain
circumstances, reduces the basis of stock for purposes of calculating
gain or loss in a subsequent disposition by the portion of any
"extraordinary dividend" (as defined below) that is eligible for the
dividends-received deduction.

EXTRAORDINARY DIVIDENDS

If you are a corporate shareholder, you will be required to reduce your tax
basis (but not below zero) in the preferred stock by the nontaxed portion of any
"extraordinary dividend" if you have not held your stock for more than two years
before the earliest of the date such dividend is declared, announced, or agreed.
Generally, the nontaxed portion of an extraordinary dividend is

103

the amount excluded from income by operation of the dividends-received
deduction. An extraordinary dividend on the preferred stock generally would be a
dividend that:

- equals or exceeds 5% of the corporate shareholder's adjusted tax basis in
the preferred stock, treating all dividends having ex-dividend dates
within an 85 day period as one dividend; or

- exceeds 20% of the corporate shareholder's adjusted tax basis in the
preferred stock, treating all dividends having ex-dividend dates within a
365 day period as one dividend.

In determining whether a dividend paid on the preferred stock is an
extraordinary dividend, a corporate shareholder may elect to substitute the fair
market value of the stock for its tax basis for purposes of applying these tests
if the fair market value as of the day before the ex-dividend date is
established to the satisfaction of the Secretary of the Treasury. An
extraordinary dividend also includes any amount treated as a dividend in the
case of a redemption that is either non-pro rata as to all stockholders or in
partial liquidation of the company, regardless of the stockholder's holding
period and regardless of the size of the dividend. Any part of the nontaxed
portion of an extraordinary dividend that is not applied to reduce the corporate
shareholder's tax basis as a result of the limitation on reducing its basis
below zero would be treated as capital gain and would be recognized in the
taxable year in which the extraordinary dividend is received.

If you are a corporate shareholder, please consult your tax advisor with respect
to the possible application of the extraordinary dividend provisions of the
federal income tax law to your ownership or disposition of preferred stock in
your particular circumstances.

REDEMPTION PREMIUM

If we may redeem your preferred stock at a redemption price in excess of
its issue price, the entire amount of the excess may constitute an unreasonable
redemption premium which will be treated as a constructive dividend. You
generally must take this constructive dividend into account each year in the
same manner as original issue discount would be taken into account if the
preferred stock were treated as an original issue discount debt security for
United States federal income tax purposes. See "-- Taxation of Debt
Securities -- United States Holders -- Original Issue Discount" above for a
discussion of the special tax rules for original issue discount. A corporate
shareholder would be entitled to a dividends-received deduction for any
constructive dividends unless the special rules denying a dividends-received
deduction described above in "-- Limitations on Dividends-Received Deduction"
apply. A corporate shareholder would also be required to take these constructive
dividends into account when applying the extraordinary dividend rules described
above. Thus, a corporate shareholder's receipt of a constructive dividend may
cause some or all stated dividends to be treated as extraordinary dividends. The
applicable prospectus supplement for preferred stock that is redeemable at a
price in excess of its issue price will indicate whether tax counsel believes
that a shareholder must include any redemption premium in income.

SALE OR EXCHANGE OF PREFERRED STOCK OTHER THAN BY REDEMPTION. If you sell
or otherwise dispose of your preferred stock (other than by redemption), you
will generally recognize capital gain or loss equal to the difference between
the amount realized upon the disposition and your adjusted tax basis of the
preferred stock. Capital gain of a noncorporate United States holder is
generally taxed at a maximum rate of 20% where the property is held more than
one year and 18% where the property is held more than five years. Under a recent
legislative proposal, the maximum tax rate on capital gains would be reduced to
15% where the property is held more than one year. It is not clear whether and
in what form this legislation will be enacted, to which shareholders it might
apply, or what the effective date of this legislation might be.

104

REDEMPTION OF PREFERRED STOCK. If we are permitted to and redeem your
preferred stock, it generally would be a taxable event. You would be treated as
if you had sold your preferred stock if the redemption:

- results in a complete termination of your stock interest in us;

- is substantially disproportionate with respect to you; or

- is not essentially equivalent to a dividend with respect to you.

In determining whether any of these tests has been met, shares of stock
considered to be owned by you by reason of certain constructive ownership rules
set forth in Section 318 of the Internal Revenue Code, as well as shares
actually owned, must be taken into account.

If we redeem your preferred stock in a redemption that meets one of the
tests described above, you generally would recognize taxable gain or loss equal
to the sum of the amount of cash and fair market value of property (other than
stock of us or a successor to us) received by you less your tax basis in the
preferred stock redeemed. This gain or loss would be long-term capital gain or
capital loss if you have held the preferred stock for more than one year.

If a redemption does not meet any of the tests described above, you
generally would be taxed on the cash and fair market value of the property you
receive as a dividend to the extent paid out of our current and accumulated
earnings and profits. Any amount in excess of our current or accumulated
earnings and profits would first reduce your tax basis in the preferred stock
and thereafter would be treated as capital gain. If a redemption of the
preferred stock is treated as a distribution that is taxable as a dividend, your
basis in the redeemed preferred stock would be transferred to the remaining
shares of our stock that you own, if any.

Special rules apply if we redeem preferred stock for our debt securities.
We will discuss these rules in an applicable prospectus supplement if we have
the option to redeem your preferred stock for our debt securities.

UNITED STATES ALIEN HOLDERS

This section summarizes certain United States federal income and estate tax
consequences of the ownership and disposition of preferred stock by a United
States alien holder. You are a United States alien holder if you are, for United
States federal income tax purposes:

- a nonresident alien individual;

- a foreign corporation;

- a foreign partnership; or

- an estate or trust that in either case is not subject to United States
federal income tax on a net income basis on income or gain from preferred
stock.

DIVIDENDS. Except as described below, if you are a United States alien
holder of preferred stock, dividends paid to you are subject to withholding of
United States federal income tax at a 30% rate or at a lower rate if you are
eligible for the benefits of an income tax treaty that provides for a lower
rate. Even if you are eligible for a lower treaty rate, we and other payors will
generally be required to withhold at a 30% rate (rather than the lower treaty
rate) on dividend payments to you, unless you have furnished to us or another
payor:

- a valid Internal Revenue Service Form W-8BEN or an acceptable substitute
form upon which you certify, under penalties of perjury, your status as a
person who is not a United States person and your entitlement to the
lower treaty rate with respect to such payments; or

105

- in the case of payments made outside the United States to an offshore
account (generally, an account maintained by you at an office or branch
of a bank or other financial institution at any location outside the
United States), other documentary evidence establishing your entitlement
to the lower treaty rate in accordance with U.S. Treasury regulations.

If you are eligible for a reduced rate of United States withholding tax
under a tax treaty, you may obtain a refund of any amounts withheld in excess of
that rate by filing a refund claim with the United States Internal Revenue
Service.

If dividends paid to you are "effectively connected" with your conduct of a
trade or business within the United States, and, if required by a tax treaty,
the dividends are attributable to a permanent establishment that you maintain in
the United States, we and other payors generally are not required to withhold
tax from the dividends, provided that you have furnished to us or another payor
a valid Internal Revenue Service Form W-8ECI or an acceptable substitute form
upon which you represent, under penalties of perjury, that:

- you are not a United States person; and

- the dividends are effectively connected with your conduct of a trade or
business within the United States and are includible in your gross
income.

"Effectively connected" dividends are taxed at rates applicable to United States
citizens, resident aliens and domestic United States corporations.

If you are a corporate United States alien holder, "effectively connected"
dividends that you receive may, under certain circumstances, be subject to an
additional "branch profits tax" at a 30% rate or at a lower rate if you are
eligible for the benefits of an income tax treaty that provides for a lower
rate.

GAIN ON DISPOSITION OF PREFERRED STOCK. If you are a United States alien
holder, you generally will not be subject to United States federal income tax on
gain that you recognize on a disposition of preferred stock unless:

- the gain is "effectively connected" with your conduct of a trade or
business in the United States, and the gain is attributable to a
permanent establishment that you maintain in the United States, if that
is required by an applicable income tax treaty as a condition for
subjecting you to United States taxation on a net income basis;

- you are an individual, you hold the preferred stock as a capital asset,
you are present in the United States for 183 or more days in the taxable
year of the sale and certain other conditions exist; or

- we are or have been a United States real property holding corporation for
federal income tax purposes and you held, directly or indirectly, at any
time during the five-year period ending on the date of disposition, more
than 5% of your class of preferred stock and you are not eligible for any
treaty exemption.

If you are a corporate United States alien holder, "effectively connected"
gains that you recognize may also, under certain circumstances, be subject to an
additional "branch profits tax" at a 30% rate or at a lower rate if you are
eligible for the benefits of an income tax treaty that provides for a lower
rate.

We have not been, are not and do not anticipate becoming a United States
real property holding corporation for United States federal income tax purposes.

FEDERAL ESTATE TAXES. Preferred stock held by a United States alien holder
at the time of death will be included in the holder's gross estate for United
States federal estate tax purposes, unless an applicable estate tax treaty
provides otherwise.

106

BACKUP WITHHOLDING AND INFORMATION REPORTING

UNITED STATES HOLDERS. In general, dividend payments, or other taxable
distributions, made within the United States to you will be subject to
information reporting requirements and backup withholding tax if you are a
non-corporate United States person and you:

- fail to provide an accurate taxpayer identification number;

- are notified by the United States Internal Revenue Service that you have
failed to report all interest or dividends required to be shown on your
federal income tax returns; or

- in certain circumstances, fail to comply with applicable certification
requirements.

If you sell your preferred stock outside the United States through a
non-U.S. office of a non-U.S. broker, and the sales proceeds are paid to you
outside the United States, then U.S. backup withholding and information
reporting requirements generally will not apply to that payment. However, U.S.
information reporting, but not backup withholding, will apply to a payment of
sales proceeds, even if that payment is made outside the United States, if you
sell your preferred stock through a non-U.S. office of a broker that is:

- a United States person;

- a controlled foreign corporation for United States tax purposes;

- a foreign person 50% or more of whose gross income is effectively
connected with the conduct of a United States trade or business for a
specified three-year period; or

- a foreign partnership, if at any time during its tax year:

1. one or more of its partners are "U.S. persons", as defined in U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interest in the partnership; or

2. such foreign partnership is engaged in the conduct of a United States
trade or business.

You generally may obtain a refund of any amounts withheld under the U.S.
backup withholding rules that exceed your income tax liability by filing a
refund claim with the United States Internal Revenue Service.

UNITED STATES ALIEN HOLDERS. If you are a United States alien holder, you
are generally exempt from backup withholding and information reporting
requirements with respect to:

- dividend payments; and

- the payment of the proceeds from the sale of preferred stock effected at
a United States office of a broker;

as long as the income associated with such payments is otherwise exempt from
United States federal income tax, and:

- the payor or broker does not have actual knowledge or reason to know that
you are a United States person and you have furnished to the payor or
broker:

1. a valid Internal Revenue Service Form W-8BEN or an acceptable
substitute form upon which you certify, under penalties of perjury,
that you are not a United States person; or

2. other documentation upon which it may rely to treat the payments as
made to a non-United States person in accordance with U.S. Treasury
regulations; or

- you otherwise establish an exemption.

107

Payment of the proceeds from the sale of preferred stock effected at a
foreign office of a broker generally will not be subject to information
reporting or backup withholding. However, a sale of preferred stock that is
effected at a foreign office of a broker will be subject to information
reporting and backup withholding if:

- the proceeds are transferred to an account maintained by you in the
United States;

- the payment of proceeds or the confirmation of the sale is mailed to you
at a United States address; or

- the sale has some other specified connection with the United States as
provided in U.S. Treasury regulations;

In addition, a sale of preferred stock will be subject to information
reporting if it is effected at a foreign office of a broker that is:

- a United States person;

- a controlled foreign corporation for United States tax purposes;

- a foreign person 50% or more of whose gross income is effectively
connected with the conduct of a United States trade or business for a
specified three-year period; or

- a foreign partnership, if at any time during its tax year:

1. one or more of its partners are "U.S. persons", as defined in U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interest in the partnership; or

2. such foreign partnership is engaged in the conduct of a United States
trade or business;

unless the broker does not have actual knowledge or reason to know that you are
a United States person and the documentation requirements described above are
met or you otherwise establish an exemption. Backup withholding will apply if
the sale is subject to information reporting and the broker has actual knowledge
that you are a United States person.

You generally may obtain a refund of any amounts withheld under the backup
withholding rules that exceed your income tax liability by filing a refund claim
with the Internal Revenue Service.

108

PLAN OF DISTRIBUTION

INITIAL OFFERING AND SALE OF SECURITIES

We may sell the securities from time to time in their initial offering as
follows:

- through agents;

- to dealers or underwriters for resale;

- directly to purchasers; or

- through a combination of any of these methods of sale.

In addition, we may issue the securities as a dividend or distribution or
in a subscription rights offering to our existing security holders. In some
cases, we or dealers acting with us or on our behalf may also purchase
securities and reoffer them to the public by one or more of the methods
described above. This prospectus may be used in connection with any offering of
our securities through any of these methods or other methods described in the
applicable prospectus supplement.

The securities we distribute by any of these methods may be sold to the
public, in one or more transactions, either:

- at a fixed price or prices, which may be changed;

- at market prices prevailing at the time of sale;

- at prices related to prevailing market prices; or

- at negotiated prices.

We may solicit offers to purchase securities directly from the public from
time to time. We may also designate agents from time to time to solicit offers
to purchase securities from the public on our behalf. The prospectus supplement
relating to any particular offering of securities will name any agents
designated to solicit offers, and will include information about any commissions
we may pay the agents, in that offering. Agents may be deemed to be
"underwriters" as that term is defined in the Securities Act.

From time to time, we may sell securities to one or more dealers acting as
principals. The dealers, who may be deemed to be "underwriters" as that term is
defined in the Securities Act, may then resell those securities to the public.

We may sell securities from time to time to one or more underwriters, who
would purchase the securities as principal for resale to the public, either on a
firm-commitment or best-efforts basis. If we sell securities to underwriters, we
may execute an underwriting agreement with them at the time of sale and will
name them in the applicable prospectus supplement. In connection with those
sales, underwriters may be deemed to have received compensation from us in the
form of underwriting discounts or commissions and may also receive commissions
from purchasers of the securities for whom they may act as agents. Underwriters
may resell the securities to or through dealers, and those dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from purchasers for whom they may act as agents.
The applicable prospectus supplement will include any required information about
underwriting compensation we pay to underwriters, and any discounts, concessions
or commissions underwriters allow to participating dealers, in connection with
an offering of securities.

If we offer securities in a subscription rights offering to our existing
security holders, we may enter into a standby underwriting agreement with
dealers, acting as standby underwriters. We may pay the standby underwriters a
commitment fee for the securities they commit to purchase

109

on a standby basis. If we do not enter into a standby underwriting arrangement,
we may retain a dealer-manager to manage a subscription rights offering for us.

We may authorize underwriters, dealers and agents to solicit from third
parties offers to purchase securities under contracts providing for payment and
delivery on future dates. The applicable prospectus supplement will describe the
material terms of these contracts, including any conditions to the purchasers'
obligations, and will include any required information about commissions we may
pay for soliciting these contracts.

Underwriters, dealers, agents and other persons may be entitled, under
agreements that they may enter into with us, to indemnification by us against
certain liabilities, including liabilities under the Securities Act.

In connection with an offering, the underwriters may purchase and sell
securities in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
securities than they are required to purchase in an offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the securities while an
offering is in progress.

The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the underwriters have repurchased securities
sold by or for the account of that underwriter in stabilizing or short-covering
transactions.

These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the securities. As a result, the price of the
securities may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
underwriters at any time. These transactions may be effected on an exchange or
automated quotation system, if the securities are listed on that exchange or
admitted for trading on that automated quotation system, or in the
over-the-counter market or otherwise.

The underwriters, dealers and agents, as well as their associates, may be
customers of or lenders to, and may engage in transactions with and perform
services for, The Goldman Sachs Group, Inc. and its subsidiaries in the ordinary
course of business. In addition, we expect to offer the securities to or through
our affiliates, as underwriters, dealers or agents. Among our affiliates,
Goldman, Sachs & Co. may offer the securities for sale in the United States and
Goldman Sachs International and Goldman Sachs (Asia) L.L.C. may offer the
securities for sale outside the United States. Our affiliates may also offer the
securities in other markets through one or more selling agents, including one
another.

Goldman, Sachs & Co. is a subsidiary of The Goldman Sachs Group, Inc. and
The Goldman Sachs Group, Inc. is the parent of Goldman, Sachs & Co. Rule 2720 of
the Conduct Rules of the National Association of Securities Dealers, Inc.
imposes certain requirements when an NASD member, such as Goldman, Sachs & Co.,
distributes an affiliated company's securities. Goldman, Sachs & Co. has advised
The Goldman Sachs Group, Inc. that each particular offering of securities in
which it participates will comply with the applicable requirements of Rule 2720.

Goldman, Sachs & Co. is not permitted to sell securities in an offering to
an account over which it exercises discretionary authority without the prior
written approval of the customer to which the account relates.

MARKET-MAKING RESALES BY AFFILIATES

This prospectus may be used by Goldman, Sachs & Co. in connection with
offers and sales of the securities in market-making transactions. In a
market-making transaction, Goldman, Sachs
110

& Co. may resell a security it acquires from other holders, after the original
offering and sale of the security. Resales of this kind may occur in the open
market or may be privately negotiated, at prevailing market prices at the time
of resale or at related or negotiated prices. In these transactions, Goldman,
Sachs & Co. may act as principal or agent, including as agent for the
counterparty in a transaction in which Goldman, Sachs & Co. acts as principal,
or as agent for both counterparties in a transaction in which Goldman, Sachs &
Co. does not act as principal. Goldman, Sachs & Co. may receive compensation in
the form of discounts and commissions, including from both counterparties in
some cases. Other affiliates of The Goldman Sachs Group, Inc. may also engage in
transactions of this kind and may use this prospectus for this purpose. These
affiliates may include, among others, Goldman Sachs International and Goldman
Sachs (Asia) L.L.C.

The aggregate initial offering price specified on the cover of this
prospectus relates to the initial offering of the securities not yet issued as
of the date of this prospectus. This amount does not include the securities to
be sold in market-making transactions. The latter include securities to be
issued after the date of this prospectus, as well as securities previously
issued.

The Goldman Sachs Group, Inc. does not expect to receive any proceeds from
market-making transactions. The Goldman Sachs Group, Inc. does not expect that
Goldman, Sachs & Co. or any other affiliate that engages in these transactions
will pay any proceeds from its market-making resales to The Goldman Sachs Group,
Inc.

Information about the trade and settlement dates, as well as the purchase
price, for a market-making transaction will be provided to the purchaser in a
separate confirmation of sale.

Unless The Goldman Sachs Group, Inc. or an agent informs you in your
confirmation of sale that your security is being purchased in its original
offering and sale, you may assume that you are purchasing your security in a
market-making transaction.

MATTERS RELATING TO INITIAL OFFERING AND MARKET-MAKING RESALES

Each series of securities will be a new issue, and there will be no
established trading market for any security prior to its original issue date. We
may not list any particular series of securities on a securities exchange or
quotation system. We have been advised by Goldman, Sachs & Co. that it intends
to make a market in the securities, and any underwriters to whom we sell
securities for public offering may also make a market in those securities.
However, neither Goldman, Sachs & Co. nor any underwriter that makes a market is
obligated to do so, and any of them may stop doing so at any time without
notice. No assurance can be given as to the liquidity or trading market for any
of the securities.

Unless otherwise indicated in the applicable prospectus supplement or
confirmation of sale, the purchase price of the securities will be required to
be paid in immediately available funds in New York City.

In this prospectus, the terms "this offering" means the initial offering of
the securities made in connection with their original issuance. This term does
not refer to any subsequent resales of securities in market-making transactions.

111

EMPLOYEE RETIREMENT INCOME SECURITY ACT

This section is only relevant to you if you are an insurance company or the
fiduciary of a pension plan or an employee benefit plan proposing to invest in
the securities.

The Goldman Sachs Group, Inc. and certain of its affiliates may each be
considered a "party in interest" within the meaning of the U.S. Employee
Retirement Income Security Act of 1974, as amended, which we call "ERISA", or a
"disqualified person" within the meaning of the U.S. Internal Revenue Code of
1986, as amended, with respect to many employee benefit plans. Prohibited
transactions within the meaning of ERISA or the Internal Revenue Code may arise,
for example, if the debt securities, warrants or purchase contracts, or any
units including debt securities, warrants and/or purchase contracts, are
acquired by or with the assets of a pension or other employee benefit plan for
which The Goldman Sachs Group, Inc. or any of its affiliates is a service
provider, unless those securities are acquired under an exemption for
transactions effected on behalf of that plan by a "qualified professional asset
manager" or an "in-house asset manager" or under any other available exemption.
The assets of a pension or other employee benefit plan may include assets held
in the general account of an insurance company that are deemed to be "plan
assets" under ERISA.

If you are an insurance company or the fiduciary of a pension plan or an
employee benefit plan and propose to invest in the securities described in this
prospectus, you should consult your legal counsel.

VALIDITY OF THE SECURITIES

In connection with particular offerings of the securities in the future,
and if stated in the applicable prospectus supplements, the validity of those
securities may be passed upon for The Goldman Sachs Group, Inc. by Sullivan &
Cromwell LLP and for any underwriters or agents by Sullivan & Cromwell LLP or
other counsel named in the applicable prospectus supplement.

Sullivan & Cromwell LLP has in the past represented and continues to
represent Goldman Sachs on a regular basis and in a variety of matters,
including offerings of our common stock and debt securities. Sullivan & Cromwell
LLP also performed services for The Goldman Sachs Group, Inc. in connection with
the offering of the securities described in this prospectus.

EXPERTS

The financial statements of Goldman Sachs as of November 29, 2002 and
November 30, 2001 and for each of the three years in the period ended November
29, 2002 incorporated by reference in this prospectus and the financial
statement schedule incorporated by reference in the registration statement have
been included in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

The historical income statement, balance sheet and common share data set
forth in "Selected Consolidated Financial Data" for each of the five fiscal
years in the period ended November 29, 2002 incorporated by reference in this
prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

With respect to the unaudited condensed consolidated financial statements
of Goldman Sachs as of and for the three months ended February 28, 2003 and for
the three months ended February 22, 2002 incorporated by reference in this
prospectus, PricewaterhouseCoopers LLP reported that they have applied limited
procedures in accordance with professional standards for
112

a review of such information. However, their report dated April 9, 2003
incorporated by reference herein states that they did not audit and they do not
express an opinion on the unaudited condensed consolidated financial statements.
Accordingly, the degree of reliance on their report on such information should
be restricted in light of the limited nature of the review procedures applied.
PricewaterhouseCoopers LLP is not subject to the liability provisions of Section
11 of the Securities Act of 1933 for their report on the unaudited condensed
consolidated financial statements because this report is not a "report" or a
"part" of the registration statements prepared or certified by
PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the
Securities Act of 1933.

CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

We have included or incorporated by reference in this prospectus statements
that may constitute "forward-looking statements" within the meaning of the safe
harbor provisions of The Private Securities Litigation Reform Act of 1995. These
forward-looking statements are not historical facts but instead represent only
our belief regarding future events, many of which, by their nature, are
inherently uncertain and outside of our control. It is possible that our actual
results may differ, possibly materially, from the anticipated results indicated
in these forward-looking statements.

Information regarding important factors that could cause actual results to
differ, perhaps materially, from those in our forward-looking statements is
contained under the caption "Item 1: Business -- Certain Factors That May Affect
Our Business" in our Annual Report on Form 10-K for the fiscal year ended
November 29, 2002, which is incorporated in this prospectus by reference (and in
any of our annual reports for a subsequent fiscal year that are so
incorporated). See "Available Information" above for information about how to
obtain a copy of this annual report.

113

- -------------------------------------------------------
- -------------------------------------------------------

No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the securities it describes, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.

----------------------

TABLE OF CONTENTS

<Table>

Available Information.................. 2
Prospectus Summary..................... 4
Ratio of Earnings to Fixed Charges..... 8
Use of Proceeds........................ 8
Description of Debt Securities We May
Offer................................ 9
Description of Warrants We May Offer... 32
Description of Purchase Contracts We
May Offer............................ 49
Description of Units We May Offer...... 54
Description of Preferred Stock We May
Offer................................ 60
Description of Capital Stock........... 68
Legal Ownership and Book-Entry
Issuance............................. 73
Considerations Relating to Securities
Issued in Bearer Form................ 79
Considerations Relating to Indexed
Securities........................... 83
Considerations Relating to Securities
Denominated or Payable in or Linked
to a Non-U.S. Dollar Currency........ 86
United States Taxation................. 89
Plan of Distribution................... 109
Employee Retirement Income Security
Act.................................. 112
Validity of the Securities............. 112
Experts................................ 112
Cautionary Statement Pursuant to the
Private Securities Litigation Reform
Act of 1995.......................... 113
</Table>

- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------

$25,000,000,000
THE GOLDMAN SACHS
GROUP, INC.
Debt Securities
Warrants
Purchase Contracts
Units
Preferred Stock
Depositary Shares

----------------------

[GOLDMAN SACHS LOGO]

----------------------

GOLDMAN, SACHS & CO.

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-------------------------------------------------------

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following is a statement of the expenses (all of which are estimated
other than the SEC registration fee and NASD fees) to be incurred by the
Registrant in connection with the distribution of the securities registered
under this registration statement:

<Table>
<Caption>
AMOUNT
TO BE PAID
----------

SEC registration fee........................................ $1,360,344
NASD fees................................................... 30,500
Legal fees and expenses..................................... 500,000
Fees and expenses of qualification under state securities
laws (including legal fees)............................... 10,000
Accounting fees and expenses................................ 400,000
Printing fees............................................... 1,500,000
Rating agency fees.......................................... 650,000
Trustee's fees and expenses................................. 275,000
Miscellaneous............................................... 36,166
----------
Total............................................. $4,762,000
==========
</Table>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee of or agent to the Registrant. The
statute provides that it is not exclusive of other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise. Section 6.4 of the
Registrant's by-laws provides for indemnification by the Registrant of any
director or officer (as such term is defined in the by-laws) of the Registrant
who is or was a director of any of its subsidiaries, is or was a member of the
Shareholders' Committee acting pursuant to the Shareholders' Agreement (as
described in our Annual Report on Form 10-K for the fiscal year ended November
29, 2002 incorporated by reference in this registration statement) or, at the
request of the Registrant, is or was serving as a director or officer of, or in
any other capacity for, any other enterprise, to the fullest extent permitted by
law. The by-laws also provide that the Registrant shall advance expenses to a
director or officer and, if reimbursement of such expenses is demanded in
advance of the final disposition of the matter with respect to which such demand
is being made, upon receipt of an undertaking by or on behalf of such director
or officer to repay such amount if it is ultimately determined that the director
or officer is not entitled to be indemnified by the Registrant. To the extent
authorized from time to time by the board of directors of the Registrant, the
Registrant may provide to any one or more employees of the Registrant, one or
more officers, employees and other agents of any subsidiary or one or more
directors, officers, employees and other agents of any other enterprise, rights
of indemnification and to receive payment or reimbursement of expenses,
including attorneys' fees, that are similar to the rights conferred in the
by-laws of the Registrant on directors and officers of the Registrant or any
subsidiary or other enterprise. The by-laws do not limit the power of the
Registrant or its board of directors to provide other indemnification and
expense reimbursement rights to directors, officers, employees, agents and other
persons otherwise than pursuant to the by-laws. The Registrant has entered into
agreements with certain
II-1

directors, officers and employees who are asked to serve in specified capacities
at subsidiaries and other entities.

The Registrant has entered into an agreement that provides indemnification
to its directors and officers and to the directors and certain officers of the
general partner of The Goldman Sachs Group, L.P., members of its Management
Committee or its Partnership Committee or the former Executive Committee of The
Goldman Sachs Group, L.P. and all other persons requested or authorized by the
Registrant's board of directors or the board of directors of the general partner
of The Goldman Sachs Group, L.P. to take actions on behalf of the Registrant,
The Goldman Sachs Group, L.P. or the general partner of The Goldman Sachs Group,
L.P. in connection with the plan of incorporation and certain registration
statements for all losses, damages, costs and expenses incurred by the
indemnified person arising out of the relevant registration statements or the
transactions contemplated by the plan of incorporation. The Registrant has also
entered into a similar indemnification agreement with its directors, some of its
officers and all other persons requested or authorized by the Registrant's board
of directors or any committee thereof to take actions on behalf of the
Registrant or as an attorney-in-fact in connection with this registration
statement, certain other registration statements and certain unregistered
offerings of securities. These agreements are in addition to the Registrant's
indemnification obligations under its by-laws.

Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
payments of unlawful dividends or unlawful stock repurchases or redemptions, or
(iv) for any transaction from which the director derived an improper personal
benefit. The Registrant's amended and restated certificate of incorporation
provides for such limitation of liability.

Policies of insurance are maintained by the Registrant under which its
directors and officers are insured, within the limits and subject to the
limitations of the policies, against certain expenses in connection with the
defense of, and certain liabilities which might be imposed as a result of,
actions, suits or proceedings to which they are parties by reason of being or
having been such directors or officers.

ITEM 16. EXHIBITS

<Table>

II-2

<Table>

2.3 Agreement and Plan of Merger of The Goldman Sachs Group, L.P. into The Goldman Sachs Group, Inc.***
2.4 Amended and Restated Agreement and Plan of Merger, dated as of September 10, 2000, and amended and
restated as of October 31, 2000, among The Goldman Sachs Group, Inc., SLK LLC and SLK Acquisition
L.L.C.****
4.1 Specimen of certificate representing The Goldman Sachs Group, Inc.'s common stock, par value $0.01 per
share.*****
4.2 Stockholder Protection Rights Agreement, dated as of April 5, 1999, between The Goldman Sachs Group, Inc.
and Mellon Investor Services LLC (successor to ChaseMellon Shareholder Services, L.L.C.), as Rights
Agent.******
4.3 Indenture, dated as of May 19, 1999, between The Goldman Sachs Group, Inc. and The Bank of New York, as
trustee, with respect to senior debt securities of The Goldman Sachs Group, Inc.******
4.4 Form of Subordinated Indenture between The Goldman Sachs Group, Inc. and The Bank of New York, as trustee,
with respect to subordinated debt securities of The Goldman Sachs Group, Inc.*******
4.5 Form of Warrant Indenture between The Goldman Sachs Group, Inc. and The Bank of New York, as
trustee.********
4.6 Form of senior debt securities of The Goldman Sachs Group, Inc. (included in Exhibit 4.3).
4.7 Form of subordinated debt securities of The Goldman Sachs Group, Inc. (included in Exhibit 4.4).
4.8 Form of Floating Rate Medium-Term Note.*********
4.9 Form of Fixed Rate Medium-Term Note.*********
4.10 Form of Mandatory Exchangeable Note.*********
4.11 Form of Exchangeable Note.*********
4.12 Form of Debt Warrant Agreement for warrants sold attached to debt securities.*
4.13 Form of Debt Warrant Agreement for warrants sold alone.*
4.14 Form of Warrant Agreement for universal warrants.*
4.15 Form of put warrant (included in Exhibit 4.5).
4.16 Form of call warrant (included in Exhibit 4.5).
4.17 Form of Deposit Agreement, including form of depositary receipt.*
4.18 Form of Unit Agreement, including form of unit certificate.*
4.19 Form of Unit Agreement Without Holders' Obligation.*
4.20 Form of Prepaid Purchase Contract.*
4.21 Form of Non-Prepaid Purchase Contract (Issuer Sale) (to be included in Exhibit 4.18).
4.22 Form of Non-Prepaid Purchase Contract (Issuer Purchase) (to be included in Exhibit 4.18).
5.1 Opinion of Sullivan & Cromwell LLP.
8.1 Tax Opinion of Sullivan & Cromwell LLP.
12.1 Statement re computation of ratios of earnings to fixed charges.**********
15.1 Letter re Unaudited Interim Financial Information.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consents of Sullivan & Cromwell LLP (included in Exhibits 5.1 and 8.1 above).
24.1 Power of Attorney (included on signature page).
</Table>

II-3

<Table>

25.1 Statement of Eligibility of senior debt trustee.
25.2 Statement of Eligibility of subordinated debt trustee.
25.3 Statement of Eligibility of warrant trustee.
</Table>

- ---------------

* To be filed as an exhibit to a Current Report on Form 8-K and
incorporated herein by reference.

** Incorporated by reference to the corresponding exhibit to
Amendment No. 2 to the Registrant's registration statement on Form
S-1 (No. 333-74449), filed on April 30, 1999.

*** Incorporated by reference to the corresponding exhibit to Amendment
No. 2 to the Registrant's registration statement on Form S-1 (No.
333-75213), filed on May 10, 1999.

**** Incorporated by reference to Exhibit 2.1 to the Registrant's
Current Report on Form 8-K (File No. 001-14965), dated October 31,
2000 and filed on November 15, 2000.

***** Incorporated by reference to the corresponding exhibit to the
Registrant's registration statement on Form S-1 (No. 333-74449),
filed on March 16, 1999.

****** Incorporated by reference to the corresponding exhibit to the
Registrant's registration statement on Form 8-A (File No.
001-14965), filed on June 29, 1999.

******* Incorporated by reference to the corresponding exhibit to the
Registrant's registration statement on Form S-3 (No. 333-36178),
filed on May 3, 2000.

******** Incorporated by reference to the corresponding exhibit to the
Registrant's registration statement on Form S-3 (No. 333-63082),
filed on June 15, 2001.

********* Incorporated by reference to the corresponding exhibit to the
Registrant's registration statement on Form S-1 (No. 333-75321),
filed on March 31, 1999.

********** Incorporated by reference to Exhibit 12.1 to the Registrant's Annual
Report on Form 10-K (File No. 001-14965) for the fiscal year ended
November 29, 2002, and to Exhibit 12.1 of the Registrant's Quarterly
Report on Form 10-Q (File No. 001-14965) for the period ended
February 28, 2003.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

(a)(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any fact or events arising after the
effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement; notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and

II-4

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the Registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in this registration statement.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

II-5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, New York, on the 14th day of May, 2003.

THE GOLDMAN SACHS GROUP, INC.

By: /s/ DAVID A. VINIAR
------------------------------------
Name: David A. Viniar
Title: Executive Vice President
and
Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John A. Thain, Gregory K. Palm, David A.
Viniar and Esta E. Stecher, and each of them severally, his or her true and
lawful attorney-in-fact with power of substitution and resubstitution to sign in
his or her name, place and stead, in any and all capacities, to do any and all
things and execute any and all instruments that such attorney deems necessary or
advisable under the U.S. Securities Act of 1933 (the "Securities Act") and any
rules, regulations and requirements of the U.S. Securities and Exchange
Commission (the "Commission") in connection with the registration under the
Securities Act, from time to time, of (i) senior debt securities and
subordinated debt securities of The Goldman Sachs Group, Inc. (the "Registrant")
with any maturity, in one or more series, which may be convertible into or
exercisable or exchangeable for shares of common or preferred stock or other
securities of the Registrant or debt or equity securities of third parties,
and/or depositary shares representing such shares of preferred stock, (ii)
warrants, purchase contracts and/or other securities of the Registrant to
purchase or sell, or whose cash value is determined by reference to or is linked
to the performance or level of, one or more of the following: (a) debt or equity
securities of the Registrant or third parties, (b) one or more currencies, (c)
one or more commodities, (d) one or more indices or baskets of securities,
currencies, commodities or other financial, economic or other measures or
instruments (including the occurrence or non-occurrence of any event or
circumstance) and/or (e) any other financial, economic or other measure or
instrument (including the occurrence or non-occurrence of any event or
circumstance), (iii) shares of preferred stock of the Registrant in one or more
series, which may be convertible into or exercisable or exchangeable for shares
of common stock, other shares of preferred stock or other securities of the
Registrant or debt or equity securities of third parties, and/or depositary
shares representing such shares of preferred stock, (iv) common securities
and/or preferred securities or other similar securities of one or more business
trusts, partnerships, corporations or other entities that may be formed from
time to time by the Registrant, (v) any other security, or any security or
non-security-based swap agreement, that ranks on a parity with unsecured,
unsubordinated debt securities of the Registrant, (vi) guarantees of the
Registrant with respect to any of the above-referenced securities and/or (vii)
units comprised of any combination of the securities referred to above (all the
securities contemplated in clauses (i) through (vi) above, including any
securities of the Registrant into or for which any such securities may be
converted, exercised or exchanged, the "Securities"), which Securities shall
have an initial aggregate offering price (or the equivalent thereof in any other
currency, currencies or currency units) of up to $25,000,000,000, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign his or her name in his or her respective capacity as a
member of the Board of Directors or officer of the Registrant to this
Registration Statement and/or such other form or forms as may be appropriate to
be filed with the Commission as any of them

II-6

deems appropriate in respect of the Securities, to any and all amendments
(including post-effective amendments) to this Registration Statement, to any
related Rule 462(b) Registration Statement and to any other documents filed with
the Commission, as fully for all intents and purposes as he or she might or
could do in person, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, and his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 14th day of May, 2003.

<Table>
<Caption>
TITLE SIGNATURE
----- ---------

Director, Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer) /s/ HENRY M. PAULSON, JR.
----------------------------------------------
Henry M. Paulson, Jr.

Director, President and Co-Chief
Operating Officer /s/ JOHN A. THAIN
----------------------------------------------
John A. Thain

Director and Vice Chairman of
Goldman Sachs /s/ LLOYD C. BLANKFEIN
----------------------------------------------
Lloyd C. Blankfein

Director /s/ LORD BROWNE OF MADINGLEY
----------------------------------------------
Lord Browne of Madingley

Director /s/ JOHN H. BRYAN
----------------------------------------------
John H. Bryan

Director /s/ WILLIAM W. GEORGE
----------------------------------------------
William W. George

Director /s/ JAMES A. JOHNSON
----------------------------------------------
James A. Johnson

Director /s/ RUTH J. SIMMONS
----------------------------------------------
Ruth J. Simmons

Chief Financial Officer (Principal Financial Officer) /s/ DAVID A. VINIAR
----------------------------------------------
David A. Viniar

Principal Accounting Officer /s/ SARAH E. SMITH
----------------------------------------------
Sarah E. Smith
</Table>

II-7

INDEX TO EXHIBITS

<Table>
<Caption>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- ------------------------------------------------------------ ------------

1.1 Form of Distribution Agreement for Medium-Term Notes of The
Goldman Sachs Group, Inc.
1.2 Form of Underwriting Agreement for senior debt securities of
The Goldman Sachs Group, Inc.
1.3 Form of Underwriting Agreement for subordinated debt
securities of The Goldman Sachs Group, Inc.*
1.4 Form of Underwriting Agreement for warrants of The Goldman
Sachs Group, Inc.*
1.5 Form of Underwriting Agreement for purchase contracts of The
Goldman Sachs Group, Inc.*
1.6 Form of Underwriting Agreement for units of The Goldman
Sachs Group, Inc.*
1.7 Form of Underwriting Agreement for preferred stock and
depositary shares of The Goldman Sachs Group, Inc.*
2.1 Plan of Incorporation.**
2.2 Agreement and Plan of Merger of The Goldman Sachs
Corporation into The Goldman Sachs Group, Inc.***
2.3 Agreement and Plan of Merger of The Goldman Sachs Group,
L.P. into The Goldman Sachs Group, Inc.***
2.4 Amended and Restated Agreement and Plan of Merger, dated as
of September 10, 2000, and amended and restated as of
October 31, 2000, among The Goldman Sachs Group, Inc., SLK
LLC and SLK Acquisition L.L.C.****
4.1 Specimen of certificate representing The Goldman Sachs
Group, Inc.'s common stock, par value $0.01 per share.*****
4.2 Stockholder Protection Rights Agreement, dated as of April
5, 1999, between The Goldman Sachs Group, Inc. and Mellon
Investor Services LLC (successor to ChaseMellon Shareholder
Services, L.L.C.), as Rights Agent.******
4.3 Indenture, dated as of May 19, 1999, between The Goldman
Sachs Group, Inc. and The Bank of New York, as trustee, with
respect to senior debt securities of The Goldman Sachs
Group, Inc.******
4.4 Form of Subordinated Indenture between The Goldman Sachs
Group, Inc. and The Bank of New York, as trustee, with
respect to subordinated debt securities of The Goldman Sachs
Group, Inc.*******
4.5 Form of Warrant Indenture between The Goldman Sachs Group,
Inc. and The Bank of New York, as trustee.********
4.6 Form of senior debt securities of The Goldman Sachs Group,
Inc. (included in Exhibit 4.3).
4.7 Form of subordinated debt securities of The Goldman Sachs
Group, Inc. (included in Exhibit 4.4).
4.8 Form of Floating Rate Medium-Term Note.*********
4.9 Form of Fixed Rate Medium-Term Note.*********
4.10 Form of Mandatory Exchangeable Note.*********
4.11 Form of Exchangeable Note. *********
4.12 Form of Debt Warrant Agreement for warrants sold attached to
debt securities.*
4.13 Form of Debt Warrant Agreement for warrants sold alone.*
</Table>

<Table>
<Caption>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- ------------------------------------------------------------ ------------

4.14 Form of Warrant Agreement for universal warrants.*
4.15 Form of put warrant (included in Exhibit 4.5).
4.16 Form of call warrant (included in Exhibit 4.5).
4.17 Form of Deposit Agreement, including form of depositary
receipt.*
4.18 Form of Unit Agreement, including form of unit certificate.*
4.19 Form of Unit Agreement Without Holders' Obligation.*
4.20 Form of Prepaid Purchase Contract.*
4.21 Form of Non-Prepaid Purchase Contract (Issuer Sale) (to be
included in Exhibit 4.18).
4.22 Form of Non-Prepaid Purchase Contract (Issuer Purchase) (to
be included in Exhibit 4.18).
5.1 Opinion of Sullivan & Cromwell LLP.
8.1 Tax Opinion of Sullivan & Cromwell LLP.
12.1 Statement re computation of ratios of earnings to fixed
charges.**********
15.1 Letter re Unaudited Interim Financial Information.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consents of Sullivan & Cromwell LLP (included in Exhibits
5.1 and 8.1 above).
24.1 Power of Attorney (included on signature page).
25.1 Statement of Eligibility of senior debt trustee.
25.2 Statement of Eligibility of subordinated debt trustee.
25.3 Statement of Eligibility of warrant trustee.
</Table>