INVESTMENT MANAGEMENT AGREEMENT
This Investment Management Agreement ("Agreement") is entered into this 30th day of
December, 2008, between the Federal Reserve Bank of New York ("FRB-NY") and Goldman Sachs
Asset Management, LP. ("Manager"), with reference to the following facts:
WHEREAS, the Federal Open Market Committee ("FOMC") has approved the purchase by
the System Open Market Account ("SOMA") of Federal National Mortgage Association ("Fannie
Mae''), Federal Home Loan Mortgage Corporation ("Freddie Mac"), and Government National
Mortgage Association ("Ginnie Mae") agency fixed rate pass-through mortgage backed securities
("Agency MBS") as part of its domestic policy directive provided for the avoidance of doubt, that
Agency MBS shall not include any CMOs, Interest Only or Principal Only Strips Trusts or REMICS
that are backed by Agency MBS, or MBS derivatives ;
WHEREAS, the FRB-NY is the Reserve Bank authorized by the FOMC to carry out the
domestic policy objective through its management of SOMA;
WHEREAS, the FRB-NY, after consultation and approval by the FOMC, determined that
the purchase and management of the SOMA Agency MBS would be done through the use of one or
more investment managers;
WHEREAS, as a result of a competitive bidding process Manager has been selected as one
of several investment managers to support the FRB-NY in its implementation of the FOMC's
directive;
NOW, THEREFORE, it is agreed as follows:
1
Appointment as Manager
The FRB-NY hereby appoints the Manager to manage, supervise and direct the investment
of a portion of the SOMA account as specified by the FRB-NY ("Account") under the terms and
conditions set forth herein.
By execution of this Agreement, the Manager hereby accepts said
appointment, agrees to manage, supervise and direct the investment of the Account pursuant to the
provisions of this Agreement.
Management of Assets
Commencing on the date hereof and continuing until the date upon which this Agreement is
terminated as provided in Section 14, the Manager shall have delegated authority to manage,
supervise and direct the investment and reinvestment of assets in the Account and any additions
thereto, subject to the specific limitations made part of this Agreement including the investment
objectives and guidelines attached to the Agreement as Exhibit A.
Subject to this Agreement,
including its Exhibit A, the Manager is hereby appointed as the FRBN Y's agent in fact and shall
have full power and authority to act on behalf of the Account with respect to the purchase, sale,
exchange, conversion or other transactions in any and all stocks, bonds, other securities, or cash held
for investment subject to the Agreement.
The Manager further shall have authority to instruct the custodian bank duly appointed by
the FRB-NY (-Custodian") to:
(i) pay cash for securities and other property delivered to the
Custodian for the Account, (ii) deliver or accept delivery of, upon receipt of payment or payment
upon receipt of, securities and other property purchased or sold in the Account, and (iii) deposit
margin or collateral which shall include the transfer of money, securities or other property to the
extent necessary to meet the obligations of the Account with respect to any investments made
pursuant to the investment policies and guidelines attached hereto as Exhibit A. The Manager shall
not act as custodian of the assets held in the Account. No cash or securities due to or held for the
Account shall be paid or delivered to the Manager.
Except as expressly provided in this Agreement, the investment authority granted to the
Manager shall include the sole authority to exercise whatever powers the FRB-NY may possess with
respect to any of the assets held in the Account, including, but not limited to, the right to vote proxies,
the power to exercise rights, options, warrants, conversion privileges, and redemption privileges, and
to tender securities pursuant to a tender offer. The Manager shall not incur any liability to FRB-NY by
reason of exercising or Wing to exercise the powers set out in this paragraph in the absence of its
gross negligence, willful misconduct or bad faith.
The Manager shall review, evaluate and make a
determination with respect to such actions, in good faith, as they arise. When exercising this authority,
the Manager will be guided by this Agreement.
FRB-NY shall execute such documents, including without limitation the powers of attorney
attached hereto as Exhibit B confirming the appointment of Manager as investment manager, as may
be required to evidence the powers, duties and responsibilities delegated hereby.
In no event shall
Exhibit B be read to confer any greater authority on Manager than is set forth in the Agreement and
any amendments hereto. For the avoidance of doubt, unless otherwise agreed, the Manager shall not
execute officer certificates on behalf of the FRB-NY.
Servicing and Administration of Assets Under Management.
The Manager and its Affiliates (as defined in Rulel2b-2 promulgated under the Securities
Exchange Act of 1934, as amended) shall in no event be responsible in any way for the mechanics
of payment or collection of principal, interest, dividends or other amounts due on any assets
included in the Account. The Manager is not responsible for the servicing or administration of any
assets included in the Account.
Upon request, the Manager shall provide advice to the FRB-NY with respect to residential
loan modification and servicing policies and, if requested, will assist the FRB-NY in its efforts to
influence the residential loan modification and servicing policies of the servieers of the residential
mortgage loans backing the Agency MBS in connection with managing the Account. FRB-NY
acknowledges the foregoing provision shall not require Manager to allocate personnel beyond those
identified on Exhibit F.
Use of Affiliates and Third Parties
Except as provided in the Manager's policy with respect to management of the Account,
which policy is attached hereto as Exhibit G (the "FRB-NY Policy"), the Manager may not delegate
portfolio management or administrative duties, including back office operations or proxy voting
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services, to its Affiliates or any third party agent without the express written consent of the FRB-NY
which consent may be withheld for any reason. In addition to the requirements in Section 16, if the
FRB-NY consents to the use of an Affiliate or third party agent, the Manager shall remain liable as
if such services were provided directly.
Moreover, no additional fees shall be imposed for such
services.
Investment Guidelines
The investment guidelines established by FRB-NY as of the date of this Agreement are set
forth on Exhibit A, as such exhibit may be amended from time to time in accordance with Section
28 (the -Investment Guidelines"). The Manager is authorized on behalf of the Account to (i) enter
into agreements and execute any documents required or deemed advisable to make investments or
dispositions pursuant to the Investment Guidelines, which shall include any market and/or industry
standard documentation and the standard representations contained therein; and (ii) acknowledge
the receipt of brokers' risk disclosure statements, electronic trading disclosure statements and
similar disclosures.
The Manager shall be entitled to rely upon oral and written clarifications, supplements
guidance and modifications to the Investment Guidelines from persons designated as representatives
of the FRB-NY in Exhibit E attached hereto and make reasonable interpretations thereof. The FRB-
NY understands and agrees that the Manager does not guarantee or represent that any investment
objectives will be achieved.
The Manager shall not engage in securities lending transactions on behalf of the Account. If
the Custodian enters into securities lending transactions on behalf of the FRB-NY, the FRB-NY or
the Custodian shall be responsible for ensuring that the securities or other assets in the Account are
available for sale at all times. The Manager shall not be liable for any loss resulting from the sale by
the Manager of a security that is not available in the Account for settlement as a result of such
securities lending transactions.
The FRB-NY will establish a policy for managing counterparty credit exposure arising from
the forward settlement of Agency MBS trades undertaken for the Account, and will communicate
such policy to the Manager and the other managers providing investment management services to
the FRB-NY in respect of Agency MBS. The Manager will be responsible for adhering to the
policy, as amended from time to time by the FRB-NY, in respect of the forward settlements that it
undertakes on behalf of the Account.
The FRB-NY shall direct the Manager as to actions to
undertake in the event of a counterparty failure. The FRB-NY may direct the Manager to obtain
collateral on behalf of the Account as margin for forward exposure from time to time, and, if the
FRB-NY so directs the Manager, the FRB-NY shall specify the form of documentation and
procedures for such exercise.
Title and use of Custodian Bank
Title to all investments shall be held in the name of SOMA, provided that for convenience in
buying, selling and exchanging securities (stocks, bonds, commercial paper, etc.), title to such
securities may be held in the name of the Custodian, or its nominee.
All cash and the indicia of
ownership of all other investments shall be held by the Custodian. Sole responsibility for physical
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possession and safekeeping of the assets in the Account shall rest with the Custodian. The Manager
shall not be liable for any act or omission of the Custodian.
The Manager shall
deliver
to
the
Custodian such information,
authorizations and
documentation as the Custodian shall reasonably request in order to discharge the Custodian's
duties with respect to the Account. The FRB-NY shall instruct the Custodian to (a) provide the
Manager with periodic information concerning the status of the Account as reasonably requested by
the Manager; (b) carry out all investment transactions as may be directed, by the Manager; and (c)
confirm all completed transactions, in writing, to the Manager. Absent the consent of the FRB-NY,
to the extent that it is within the control of the Manager, the Manager shall communicate trade
instructions to the Custodian in a commercially reasonable and secure manner to the extent
otherwise used by the Manager in its business.
Use of Tradeweb, SWIFT, or Bloomberg are
acceptable means of communicating trade instructions.
7.
Use of Broker
The Manager shall only trade with brokers or dealers who are listed on Exhibit C, which
may be amended from time to time by the FRB-NY. The Manager shall not be liable for any act or
omission of any brokerage firm or firms listed on Exhibit C (in effect at the time the Manager
initiates a trade or other transaction with such brokerage firm or firms).
FRB-NY hereby delegates to the Manager sole and exclusive authority to determine through
which broker dealers on Exhibit C transactions for the Account will be made. The Manager will
determine the rate or rates, if any, to be paid for execution services. The Manager agrees that it will
seek to buy and sell assets through such intermediaries as, in the Manager's judgment, shall offer
the best execution of the brokers or dealers on Exhibit C. The Manager, in seeking to obtain best
execution of Account transactions, may consider the quality and reliability of execution services, as
well as research and investment information provided by brokers or dealers. Accordingly, the
Manager's selection of a broker or dealer for transactions may take into account all relevant factors,
including (i) price, (ii) the broker's or dealer's facilities, reliability and financial responsibility, (iii)
the broker's or dealer's ability to maintain confidentiality and avoid disruption of the marketplace,
the broker's or dealer's ability and willingness to commit capital and handle large transactions,
the level of compensation charged by the broker or dealer, (vi) the broker's or dealer's
recordkeeping capabilities and (vii) the research related to the Account provided by such broker or
dealer to the Manager (collectively, "Research"), notwithstanding that the Account may not be the
exclusive beneficiary of such Research.
8.
Access to Records and Documents
Books and Records The Manager shall maintain appropriate books of account and records
relating to services performed hereunder including appropriate documentation of issues arising
under the Manager's conflict of interest policies. The Manager shall either retain such records for
as
long as it is performing services under this Agreement or provide the records (or copies of such
records) to the FRB-NY prior to destruction of the records under the Manager's normal record
retention policy.
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Audit Rights The FRB-NY shall have the right, at any time during the term of this
Agreement, to audit the Manager's performance to determine whether the Manager is acting in
compliance with all of the requirements of this Agreement as well as its valuation methodology (as
set forth in the Manager's valuation policies). Upon five business days' prior written notice to the
Manager, the Manager shall grant access to its premises to FRB-NY's internal auditors or the
auditors selected by the FRB-NY to conduct such audit. Audits will be conducted during the
Manager's normal business hours at the FRB-NY's sole expense. The Manager will cooperate fully
in making its premises and all relevant information related to its performance pursuant to this
Agreement and personnel available to such auditors as is reasonably requested and does not interfere
with the Manager's performance of its obligations under this Agreement and the conduct of its other
business in the ordinary course. FRB-NY's board of directors or its audit committee may share
audit reports with whomever it deems appropriate.
Audit and Review Rights of Others In addition to the FRB-NY's right to audit the Manager,
the Manager agrees that, with prior notice from the FRB-NY, the FOMC, or the Board of Governors
of the Federal Reserve System, may conduct audits and ad-hoc reviews of the services provided by
the Manager under this Agreement, provided that the FRB-NY will use its best efforts to ensure that
such audits and ad-hoc reviews are made on a similar basis to the audits described in the preceding
paragraph.
Effective Internal Controls The Manager shall provide its relevant SAS-70 reports to the
Investment Committee no less than annually.
In addition, if requested by the FRB-NY, the
Manager will provide additional documentary evidence to the FRB-NY to support the assertion that
the Manager maintains effective internal controls over financial reporting; the nature of such
documentation to be agreed to by the parties at the time of the request.
9.
Reports
At such intervals as shall be mutually agreed upon between the Manager and FRB-NY, but not
less than monthly, the Manager shall furnish the FRB-NY with a written report with respect to the
Account. The first determination date for any such report shall be January 31, 2009. Each report shall
be sent not later than 15 business days following the relevant determination date, and shall set forth (so
long as the Manager has received or been given access in a timely manner to any required information
from the Custodian): (i) all Agency MBS purchased or sold since the date of the previous report with
the cost or net proceeds of such purchases and sales; (ii) a maturity distribution by product and total
holdings as of the determination date; (iii) (a) a per CUSIP estimated market value for each Agency
MBS as of the determination date, and (b) aggregated cash flows for the Agency MBS as of the
determination date. The Manager shall inform the FRB-NY as soon as practicable if the Manager is
not able to obtain the timely information from the Custodian.
The Manager shall also provide weekly market updates and trade overviews in a form agreed
to by the Manager and FRB-NY.
The Manager will provide additional reports as reasonably requested by the FRB-NY. The
Manager shall also provide additional reporting as reasonably requested to satisfy FRB-NY's internal
and external auditors. Notwithstanding the foregoing, the FRB-NY acknowledges and agrees that (i)
the Manager shall not be deemed to be the pricing or valuation agent for the Account, (ii)
none of
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the information which the Manager provides the FRB-NY hereunder shall be deemed to be the
official books and records of the Account for tax, accounting or any other purpose; and (iii) the
FRB-NY will not publish, reproduce (except for internal or archival purposes) or disseminate any
pricing information provided by the Manager without the Manager's consent. The FRB-NY or the
FRB-NY's pricing or valuation agent, not the Manager, shall be responsible for ultimately
determining the value of specific securities in the Account.
For the purposes of all reports made by the Manager to the FRB-NY, assets will be valued at
fair value as determined in good faith by the Manager; provided that the valuation methods used by
the Manager shall be described in writing to the FRB-NY. The Manager and FRB-NY agree to
cooperate, in good faith, to reach resolution to the extent that the FRB-NY has concerns about the
Manager's pricing methodology.
Each of the above referenced reports will be delivered to the FRB-NY via messenger,
registered mail or FedEx or other overnight delivery service until such time as FRB-NY and the
Manager agree on an electronic means of delivery that satisfies the information security policies of
FRB-NY.
Reconciliation
The Manager shall
reconcile transactions and cash flows daily and
calculation of net asset value monthly (so long as, in each case, the Manager has received or been
given access in a timely manner to any required information from the Custodian) with the Custodian
and shall communicate with and seek to resolve any significant discrepancies with the Custodian.
10.
Attendance at Meetings
The Manager shall initially meet at least weekly with the FRB-NY and the other investment
managers participating in this F()MC initiative to discuss strategy.
Absent agreement from the
FRB-NY, these meetings should be attended only by individuals at the Manager who are behind the
ethical wall.
The Manager will meet at least monthly with the FRB-NY to review the Account, current
market conditions and investment strategy. Upon reasonable notice, at the request of the FRB-NY,
the Manager shall also meet with one or more members of FRB-NY's board of directors or the
SOMA manager at a time mutually agreeable.
The FRB-NY may also request a meeting with the Manager to discuss matters relating to
possible modifications to the guidelines set forth in Exhibit A or to request an ad-hoc update on the
portfolio strategy review.
The Manager may attend any of the foregoing meetings telephonically. Meetings to discuss
strategy or execution issues conducted by telephone shall be conducted on recorded lines.
The
FRB-NY shall disclose the fact that the meeting is being recorded to the Managers. The
use of
periodic beeps on the recorded line shall satisfy this disclosure obligation of the FRB-NY.
1 1
.
Fees
Page 6
For the services specified in this Agreement, the FRB-NY agrees to pay fees as set forth in
Exhibit D for each calendar quarter during the term hereof commencing on the date of execution of
this Agreement, and continuing thereafter for each such calendar quarter. The FRB-NY agrees to
remit payment promptly following the end of each calendar quarter.
If Manager shall serve for less
than the whole of any quarterly period, its compensation determined as provided in Exhibit D shall
be calculated and shall be payable on a pro rata basis for the period of the calendar quarter for which
it has served as Manager under the Agreement.
The FRB-NY shall not pay any penalty or
unaccrued fees in the event this Agreement is terminated by FRB-NY or the Manager.
For the avoidance of doubt, the FRB-NY shall not pay any unapproved out of pocket or
other expenses incurred by the Manager in connection with its provision of services under this
Agreement except that the FRB-NY shall pay investment execution expenses in connection with
investments made on behalf of the Account, including third party commissions and other expenses
incurred by, or in the name of, the FRB-NY. The Manager is not authorized to obligate the FRB-
NY to pay for or incur any other expenses, including but not limited to hiring lawyers, accountants
or other experts, or the use of third party pricing and valuation services without the express written
consent of the FRB-NY.
Disputes
If FRB-NY disputes all or a portion of any invoice, FRB-NY will pay the
undisputed amount. The FRB-NY will notify the Manager in writing of the specific reason and
amount of any dispute. The Manager and the FRB-NY will work together, in good faith, to resolve
any disputes as soon as reasonably practicable, and FRB-NY will pay the amount, if any, agreed to
by the parties based on the resolution.
Additional Compensation The Manager shall not agree to accept compensation from any
entity other than the FRB-NY in connection with the services provided by the Manager to the
Account under this Agreement.
Assignment
In accordance with Sections 205(a)(2) and 205(a)(3) of the Investment Advisers Act of 1940,
no assignment (as defined under such Act) of this Agreement shall be made by the Manager without
the consent of the FRB-NY.
Notices
Any written notice required by or pertaining to this Agreement shall be personally delivered
to the party for whom it is intended, at the address stated below, or shall be sent to such party by
messenger, overnight mail, or e-mail (and more specifically secure e-mail if the notice pertains to
the assets in the Account, or the Portfolio (as defined in Exhibit A) or trading strategy). Any notices
shall be deemed given only upon actual receipt.
If to the FRB-NY:
33 Liberty Street
New York, NY 10045-0001
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or if to FRB-NY's Chief Compliance Officer:
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045-0001
with copy to:
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045-0001
Goldman Sachs Asset Management, L.P.
If to the Manager:
32 Old Slip
New York, New York 10005
with a copy to:
Goldman Sachs Asset Management, L.P.
One New York Plaza
New York, New York 10004
14.
Term
This Agreement shall be effective as of the date hereof, and shall continue until terminated.
Either party may terminate this Agreement at the end of a particular month by giving thirty (30)
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days' advance notice, in writing, to the other party.
Notwithstanding the foregoing, the FRB-NY
may terminate the authority of the Manager at any time, for any reason.
On the termination date of the Agreement or as close to such date as is reasonably
practicable, the Manager shall provide the FRB-NY with a final report containing the same
information determined as of the determination date as in the reports contemplated by Section 9.
Upon termination of the Agreement, the Manager and FRB-NY agree to cooperate to identify any
ongoing record retention requirements.
15.
Liability
Standard
of
Care
The Manager shall not be liable to the FRB-NY for:
the acts or omissions of any other fiduciary or other person respecting the Account; or
for anything done or omitted by the Manager under the terms of this Agreement;
provided that the Manager shall have acted in good faith and shall have exercised the degree
of prudence, competence and expertise customarily exhibited by managers of national standing of
institutional portfolios, and in any case, a degree of skill and attention no less than that which the
Manager exercises with respect to comparable assets that it manages for itself and others having
similar investment objectives and restrictions.
Nothing in this Agreement shall in any way
constitute a waiver or limitation of any rights which may not be so limited or waived in accordance
with applicable law. Without limiting the generality of the foregoing, the Manager will not be liable
for any indirect, special, incidental or consequential damages.
The Manager is expressly authorized to rely upon any and all
instructions, approvals
interpretations and notices given on behalf of the FRB-NY by any one or more of those persons
designated as representatives of the FRB-NY whose names, titles and specimen signatures appear in
Exhibit E attached hereto.
All such instructions, guidance, approvals and notices shall be
communicated by e-mail (and more specifically secure e-mail if the instruction, guidance, approval,
or notice pertains to the assets in the Account, or the Portfolio or trading strategy), telephone (on a
recorded line) or in writing.
The FRB-NY shall provide a Secretary Certificate, Incumbency
Certificate, or similar document indicating that the persons designated as representatives have the
authority to bind the FRB-NY. The FRB-NY may amend such Exhibit E from time to time by
written notice to the Manager. The Manager shall continue to rely upon these instructions until
notified by the FRB-NY to the contrary
Except for those individuals identified on Exhibit E, or unless specifically instructed by an
individual listed on Exhibit E, the Manager shall not knowingly communicate with any officers or
employees of the FRB-NY regarding this Agreement or the services rendered hereunder.
Such
communications may be a breach of the Manager's confidentiality obligations under Section 16.
The Manager shall not be deemed to have breached this Agreement or the Investment
Guidelines in connection with fluctuations arising from market movements and other events outside
the control of the Manager.
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Force Majeure
The Manager shall be responsible for maintaining and preserving its
operations, facilities and systems (including its computer and communication systems) in a manner
consistent with commercial and supervisory standards prevalent in its industry.
So long as the
Manager shall have complied with the foregoing maintenance or preservation requirements and
provided that any delay or failure to take such action as may be required under this Agreement could
not be prevented by the exercise of reasonable diligence by the Manager, the Manager shall not be
liable for any delay or failure to take any action as may be required under this Agreement, to the
extent that any such delay or failure is caused by an act of God or acts of declared or undeclared
war, acts of terrorism, public disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar events or the interruption or suspension of any external
communication or power systems.
The preceding sentence shall not relieve the Manager from
performing its obligations in a timely manner in accordance with the terms of this Agreement, and
the Manager shall provide the FRB-NY with written notice of any material failure or delay resulting
from force majeure, to the extent known to Manager.
Indemnity The FRB-NY shall indemnify and hold harmless the Manager, its Affiliates and
its and their respective officers, directors, employees, partners, attorneys and agents from and
against any losses, claims, damages or liabilities (including, but not limited to, reasonable attorneys'
fees and litigation-related expenses) ("Losses") incurred in connection with any threatened or
pending third party action, suit, proceeding or claim relating to, arising out of or in connection with
this Agreement, except for any Losses arising out of the Manager's breach of its standard of care as
set forth in this Section 15.
Requirements for Claiming Under the Indemnity In order to recover under this indemnity,
the Manager: (a) must provide reasonably prompt notice to the FRB-NY of any claim for which
indemnification is sought, provided that the failure to provide notice shall only limit the
indemnification provided hereby to the extent of any incremental expense or actual prejudice as a
result of such failure; and (b) must not make any admissions of liability after receiving actual notice
of the claim or agree to any settlement without the written consent of the FRB-NY, which consent
shall not be unreasonably withheld.
Rights of the FRB-NY The FRB-NY may, in its sole discretion, and at its sole expense,
control the defense of the claim including, without limitation, designating counsel for the Manager
and controlling all negotiations, litigation, arbitration, settlements, compromises and appeals of any
claim; provided that (i) the FRB-NY will inform the Manager of any settlement offers which are
made and the FRB-NY may not agree to any settlement involving any indemnified person that
contains any element other than the payment of money and complete indemnification of the
indemnified person without the prior written consent of the affected indemnified person, (ii) the
FRB-NY shall engage and pay the expenses of separate counsel for the indemnified person to the
extent that the interests of the Manager are in conflict with those of the FRB-NY, and (iii) the
indemnified person shall have the right to approve the counsel designated by the FRB-NY, which
consent shall not be unreasonably withheld.
16.
Confidential Information
FOMC Information The Manager will not ask for, and except for information provided by
an individual listed on Exhibit E, is not to be provided with confidential information regarding
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monetary policy, open market operations or the Federal Open Market Committee. In the event that
the Manager believes that an individual not listed on Exhibit E, has inadvertently disclosed such
information to the Manager, the Manager will immediately report such disclosure by telephone to
the Chief Compliance Officer of FRB-NY and will ensure that the Manager does not rely or act on
such information.
Confidential Infbrination Defined
The Manager acknowledges that all information and
material that comes into the possession or knowledge of the Manager on or after the date hereof,
whether provided directly by the FRB-NY or by another investment manager or agent of the FRB-
NY, in connection with the services provided under this Agreement, including but not limited to:
the terms and conditions of this Agreement;
information regarding the Account (or other accounts operated by another
investment manager of the FRB-NY) including the identity and amount of the
assets held in the Account (or other accounts operated by another investment
manager of the FRB-NY) and the operations and investments of SOMA;
information regarding the practices, policies, business affairs or other proprietary or
commercial information of one of the FRB-NY's other investment managers. Each
other investment manager shall be a third party beneficiary for purposes of
enforcing this confidentiality requirement with respect to the proprietary or
commercial information it provides in connection with the services provided under
this Agreement;
reports, briefing material, information and data, both written and oral, related to
this Agreement;
financial information, condition, processes and procedures of the FRB-NY or
SOMA;
material related to FRB-NY's data processing systems, applications, procedures,
policies and standards;
the physical security of FRB-NY; and
financial, statistical, strategic planning and other similar information relating to
the past, present or future activities of FRB-NY or the FOMC, which has or may
come into the possession or knowledge of the Manager in connection with this
engagement or its performance hereunder
(any and all of the above, "Confidential Information") shall be considered to be confidential and
proprietary, the disclosure of which to, or use by, third parties vill be damaging to the FRB-NY, to
another of the FRB-NY's investment managers and/or the FOMC. Subject to the Exception
paragraphs below, no such Confidential Information shall be duplicated for, used by or disclosed to
third parties without the written consent of the FRB-NY or, with respect to Confidential Information
provided by another investment manager, used to compete with any business to which the
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I
Confidential Information relates. The Manager shall use the same or greater effort to avoid
publication or dissemination of such Confidential Information as it employs with respect to its own
confidential information.
Exceptions The Manager shall have no obligation under this Agreement with respect to any
information that: (1) is, at the time of disclosure, or thereafter becomes, part of the public domain
through a source other than the Manager in violation of this Agreement; (2) is subsequently learned
from a third party that, to the knowledge of the Manager, is not under an obligation of
confidentiality to the FRB-NY; (3) was known to the Manager at the time of disclosure other than
from the FRB-NY or its provision of services under this Agreement; (4) is generated independently
by the Manager without reference to the Confidential Information; or (5) is disclosed pursuant to
applicable law, regulation, subpoena or other legal process, or in connection with the enforcement of
the Manager's rights against the FRB-NY under this Agreement.
The Manager shall notify the General Counsel of FRB-NY, or his designee, promptly if
disclosure is requested pursuant to any law, regulation, subpoena or other legal process other than
routine regulatory examinations (e.g., by the Securities and Exchange Commission or the United
Kingdom Financial Services Authority). The Manager further agrees that in thc event that disclosure
is requested under any such law, governmental or administrative rule, or regulation, it will take all
steps reasonably required to protect the confidentiality of the Confidential Information being disclosed,
including but not limited to: (i) entertaining and considering any argument that the FRB-NY wishes to
make that disclosure is not required and/or that such disclosure is in violation of the terms and
conditions of this Agreement; (ii) providing the FRB-NY, at the expense of the FRB-NY, with all
reasonable assistance in resisting or limiting disclosure; (iii) advising the recipient that the
Confidential Information is subject to the confidentiality provisions of this Agreement; and (iv) using
reasonable efforts to obtain an appropriate stipulation or order of confidentiality.
For the avoidance of doubt, the Manager shall be authorized to disclose Confidential
Information to third parties, including (subject to the limited access provision below) its Affiliates and
to the officers, directors, employees, attorneys, accountants, financial advisors and other agents of
Manager and its Affiliates, to the limited extent required for it to fulfill its obligations under this
Agreement, including in connection with: (i) effecting investment transactions or disposition and (ii)
routine regulatory examinations. Furthermore, unless prohibited under another provision of this
agreement, the Manager shall be authorized to communicate with brokers and dealers, the Custodian,
and any other third party to the extent required for it to perform its obligations under this Agreement
including, to the extent approved by the FRB-NY, for the purpose of obtaining advice or services from
third party advisors or vendors.
Limited Access
The Manager agrees to maintain Confidential Information in strictest
confidence and to limit the access to information that is the subject of this Agreement to only those of
its officers, directors, partners, and employees that are necessary to
its performance under this
Agreement and shall require all such employees, by means of a written acknowledgement (which may
be in the form of an annual certification), to keep all such information obtained by them as strictly
confidential.
Confidential Information may also be provided to the Affiliates and/or third party agents
identified in Exhibit U but only in accordance with the restrictions and limitations set forth in the
Page 12
Exhibit G and Section 4.
In addition, any such Affiliate or third party agent (other than outside
counsel) must be bound by a written confidentiality obligation substantially similar to the Manager's
confidentiality obligation under this Agreement. Manager assumes responsibility for maintaining the
confidentiality of all Confidential Information disclosed to its Affiliates and third party agents under
this Agreement. For the avoidance of doubt, this paragraph does not apply to, and does not limit,
Manager's ability to transact with the brokers and dealers listed on Exhibit C in a manner consistent
with Manager's customary practices and such brokers and dealers shall not be deemed "third party
agents" of the Manager for purposes of this paragraph.
Public Statements
The Manager agrees, until the termination of this Agreement, not to
originate
or encourage any public written or oral
statement, news release,
or other public
announcement or publication relating to this Agreement or to any Confidential Information, beyond a
statement no more detailed than any public statement by the FRB-NY, without the express prior
consent of the President, First Vice President or an Executive Vice President of the Markets Group of
FRB-NY listed as such on Exhibit E.
Unless prohibited by law or regulation, the Client shall provide reasonable advance notice to
the Manager before the Client, its agents or its employees publicly disclose, or cause to be publicly
disclosed, information regarding the Manager's role in providing services under this Agreement.
Confidential Information of the Manager The FRB-NY agrees that confidential information
and advice furnished by the Manager to the FRB-NY (including without limitation information
evidencing the Manager's expertise, investment strategies or trading activities) has been developed
by the Manager through the application of methods and standards of judgment and through the
expenditure of considerable work, time and money and is the exclusive and proprietary intellectual
property of the Manager which (i) shall be treated as confidential by the FRB-NY, (ii) shall not be
used for any purpose other than FRB-NY's or the FOMC's analysis of the performance of the
Manager, and (iii) shall not be disclosed, directly or indirectly, to third parties by the FRB-NY
except that the FRB-NY shall be permitted to share confidential information provided by the
Manager on a need to know basis with: (i) its officers, employees, Board of Directors and auditors;
(ii)
the Board of Governors of the Federal Reserve System; (iii) the FOMC, (iv) the other
investment managers hired by the FRB-NY for purposes of this initiative, to the extent such
managers are required to keep such Confidential Information confidential and (iv) any other party
with the prior written consent of the Manager or as required by law.
17.
Non-Exclusive Management
FRB-NY understands that the Manager will continue to furnish investment management and
advisory services to others and that the Manager shall at all times be free, in its discretion, to make
recommendations to others which may be the same as, or may be different from, those concerning the
Account or act with discretion for others. Subject to Section 18, FRB-NY further understands that the
Manager, its Affiliates, and any officer, director, partners, stockholder, employee or any member of
their families may or may not have a conflict of interest with the Account. In this regard, the Manager
has disclosed to FRB-NY potential conflicts, which it has identified in good faith, as well as its plan to
mitigate any such conflicts. Subject to Section 18, actions with respect to assets of the same kind or
class may be the same as or different from the action which the Manager, or any of its Affiliates, or any
Page 13
officer, director, stockholder, employee or any member of their families, or other investors may take
with respect to the Account.
18. Conflicts of Interest
General Policies The Manager agrees to abide by and has provided the FRB-NY with its
internal conflict of interest policies and procedures. Such policies and procedures are designed to,
among other things:
identify any material financial conflicts of interest between the Manager and the FRB-
NY;
require reporting of any conflicts of interest between the Manager and the FRB-NY
that develop during the course of this Agreement; and
prevent the use of Confidential Information to enter into a trade or transaction
unrelated to this Agreement.
The Manager shall disclose potential conflicts of interest to the FRB-NY as they arise and, at
the request of the FRB-NY the Manager will recuse itself from decisions relating to the management
of any portion of the Account if the FRB-NY determines that a conflict of interest exists that cannot
be adequately addressed.
Specific Prohibitions
The Manager acknowledges that it would breach its duties to FRB-NY hereunder for the
Manager or an Affiliate of the Manager to use Confidential Information obtained in the course of
this engagement to enter into a trade or other transaction unrelated to the Account except as
authorized below as part of an aggregate sale or purchase.
The Manager shall not knowingly engage in any transaction that would require the FRB-
NY's consent pursuant to Section 206(3) of the Advisers Act, as amended, and the rules and
regulations promulgated thereunder unless such transaction is approved by FRB-NY.
The Manager shall not knowingly purchase any asset for inclusion in the Account from any
account or portfolio for which the Manager or any of its Affiliates serves as investment adviser or
knowingly sell any asset in the Account to any account portfolio for which the Manager or any such
Affiliate serves as investment adviser unless such transaction is approved by the FRB-NY.
Trade Allocation Policy Absent consent of the FRB-NY, the Manager may not aggregate
sales and purchase orders of securities placed with respect to the Account with similar orders being
made simultaneously for other accounts managed by the Manager.
If the FRB-NY provides consent, the Manager may aggregate sales and purchase orders of
securities placed with respect to the Account with similar orders being made simultaneously for
other accounts managed by the Manager only if in the Manager's reasonable judgment such
aggregation would result in an overall benefit to FRB-NY, taking into consideration the availability
of purchasers or sellers, the selling or purchase price, brokerage commissions and other expenses.
It
Page 14
is the policy of the Manager that investments may not be allocated to one client account over
another based on any of the following considerations:
to favor one client account at the expense of another,
to generate higher fees paid by one client account over another or to produce greater
performance compensation to the Manager,
to develop or enhance a relationship with a client or prospective client,
to compensate a client for past services or benefits rendered to
the Manager or to induce future services or benefits to be rendered to
the Manager, or
to manage or equalize investment performance among different client accounts.
In the event that a sale or purchase of any part of the Account occurs as part of any aggregate
sales or purchase orders, (a) the objective of the Manager shall be to allocate the executions among
the accounts in a manner reasonably believed by the Manager to be fair and equitable for all
accounts involved; and (b) the Manager shall have delivered to FRB-NY its allocation policy,
which further details the Manager's policies and procedures with respect to the aggregation of sale
and purchase orders, and shall have in place oversight and review policies designed to ensure
compliance with its allocation policy.
Ethical Wall
Consistent with Section 16, the Manager's information barrier policies must
be designed at a minimum to ensure that (a) personnel assigned to the management of the Account
are adequately segregated from personnel involved with the Manager's general trading, brokerage,
sales, or other activities that might be in conflict with the duty the Manager owes to FRB-NY under
this Agreement, and (b) any information related to the management of the Account is not shared
with personnel involved in activities that might be in conflict with the Manager's duty to FRB-NY
under this Agreement without appropriate vetting and controls being put in place by the Manager's
Legal and Compliance Department.
For the avoidance of doubt, individuals who sit atop of the
ethical wall or straddle the wall must be especially vigilant to ensure that discussions with or advice,
guidance or direction given to, individuals on the other side of the wall is not based on or influenced
by Confidential Information concerning the Portfolio or trading strategy. The implementation of the
ethical wall policy of the Manager shall be reviewed by internal audit or compliance at least once
within the first six months of the engagement and thereafter in accordance with the Manager's own
review policies.
In addition to following the Manager's information barrier policies, the Manager agrees that:
) to the extent not inconsistent with this Agreement, it will comply with its FRB-NY
Policy as outlined in Exhibit G in respect of the activities of personnel assigned to this engagement
a list of each of the individuals who has been assigned to this engagement and the dates
of such assignment are maintained and can be reviewed by the FRB-NY; and
Page 15
(c) any individual identified on Exhibit F or who is otherwise involved in providing
investment or strategy advice to the FRB-NY or managing the Account while such individual has
access to Confidential Information regarding the Portfolio or trading strategy and, (x) if the
Agreement has not been terminated, for a period of at least one full FOMC meeting cycle thereafter,
(y) if the SOMA Agency MBS program has been terminated, for a period of two weeks thereafter,
or (z) a shorter period identified in writing to the Manager by the FRB-NY; shall:
be prohibited from providing (i) investment management or (ii) advisory services (in
the case of (ii), meaning providing advice that could be viewed as informed by the
Confidential Information) to anyone other than the FRB-NY in Treasury (including
Treasury futures) or agency securities or any Agency MBS; and
refrain from purchasing for him or herself Treasury or agency securities, including
Agency MBS, without prior consultation with the Chief Compliance Officer of FRB-
NY.
FRB-NY acknowledges that the persons subject to the restrictions in (c) above shall be
permitted to provide investment management or advisory services to other clients with respect to
securities other than Treasury or agency securities or any Agency MBS, including providing general
market views and market views related to securities other than Treasury or agency securities or any
Agency MBS. The period set forth in (c) above shall commence at such time as an individual no
longer has access to Confidential Information regarding the Portfolio or trading strategy.
19. Representations and Warranties
The parties agree that they shall provide prompt notice (i) of any material changes regarding
the information about itself in this Agreement, or (ii) if any of the representations or warranties in
this Section are no longer true or completely accurate in any material respects.
(a)
The FRB-NY represents, warrants and covenants, as of the date hereof, that:
the FRB-NY has the power and authority, and the legal right, to execute, deliver and
perform this Agreement and all obligations required hereunder;
the FRB-NY has taken
all
necessary organizational action to authorize this
Agreement on the terms and conditions hereof,
the execution, delivery and
performance of this Agreement and the performance of all obligations imposed upon
it hereunder;
all transactions in Agency MBS authorized by the FRB-NY in the Investment
Guidelines (collectively, "Obligations") are within the FRB-NY's power, are duly
authorized by the FOMC and, when duly entered into with a counterparty, will be
the legal, valid and binding Obligations of the FRB-NY;
the FRB-NY's execution, delivery and performance of this Agreement and all
obligations required hereunder and the transactions and agreements which the
Manager enters on behalf of the FRB-NY with a counterparty pursuant to this
Agreement will
not violate any applicable
law,
rule,
regulation, governing
document, contract or other material agreement binding upon the FRB-NY and no
Page 16
governmental or other notice or consent is
required
in connection with the
execution, delivery or performance of this Agreement by the FRB-NY or of any
agreements governing or relating to Obligations;
represents, in connection with purchasing or selling Agency MRS for the Account,
that the FRB-NY is a "qualified institutional buyer" as defined in Rule 144A under
the Securities Act of 1933, as amended.;
the FRB-NY represents that the assets of the Account do not constitute assets of (a)
an employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974 (-ERISA")), whether or not subject to Title I of
ERISA; (b) a plan described in Section 4975(e)(1) of the Internal Revenue Code; or,
(c) an entity whose underlying assets are assets of a plan described in (a) or (b) by
reason of such plan's investment in the entity; and
the assets in the Account are free from all liens and charges, and undertakes that no
liens or charges will arise from the act or omissions of the FRB-NY which may
prevent the Manager from giving a first priority lien or charge on the assets solely in
connection with the Manager's authority to direct the deposit of margin or collateral
to the extent necessary to meet the obligations of the Account with respect to any
investments made pursuant to the Investment Guidelines.
(b)
The Manager represents, warrants and covenants, as of the date hereof, that:
the Manager is a Delaware limited partnership and has the power and authority, and
the legal right, to execute, deliver and perform this Agreement and all obligations
required hereunder and the Agreement constitutes a legal, valid and binding
obligation of the Manager;
the Manager has taken all necessary organizational action to authorize this
Agreement on the terms and conditions hereof, the execution, delivery and
performance of this Agreement and the performance of all obligations imposed upon
it hereunder;
the Manager's execution, delivery and performance of this Agreement and all
obligations required hereunder will not violate any applicable law, rule, regulation,
governing document (e. g.
,
limited liability company agreement), contract or other
material agreement binding upon the Manager;
the Manager is not currently subject to any public or, to its knowledge, any non-
public investigations, existing enforcement actions, or insolvency proceedings, or
any pending enforcements actions that are material to its management of the
Account. For the avoidance of doubt, routine or sweep regulatory examinations do
not constitute investigations. Unless prohibited by law or negotiation, the Manager
shall immediately notify the FRB-NY if it becomes aware of any such investigations,
actions or proceedings; and
Page I 7
(v)
the Manager is duly registered as an investment adviser with the Securities and
Exchange Commission pursuant to the Investment Advisers Act of 1940, as
amended, and that such registration is in full force and effect.
Delivery of Part II of Form ADV
The FRB-NY acknowledges it has received, at least 48 hours prior to the execution of this
Agreement, a copy of Part II of the Manager's Form ADV, as amended.
Severable
Any term or provision of this Agreement that is invalid or unenforceable in any applicable
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms or provisions of
this Agreement in any jurisdiction.
Applicable Law and Submission to Jurisdiction
This Agreement and the rights and obligations herein shall be governed by Federal law, and
in the absence of controlling Federal law, in accordance with the laws of the State of New York,
notwithstanding New York's conflict of law rules. Any legal action, suit or proceeding arising out
of or in connection with this Agreement shall only be brought in the United States District Court for
the Southern District of New York. For these purposes, the FRB-NY and the Manager submit to the
jurisdiction of such court.
Notices and Assertions
The Manager shall inform the FRB-NY concerning any possible change in control of the
Manager as soon as such information is made available to the public.
The Manager shall certify to the FRB-NY on a quarterly basis in writing that the Manager
complies in all material respects with this Agreement, including its Investment Guidelines, or
identifies and provides a rationale for any exceptions.
Staffing and Key Personnel
Exhibit F hereto sets forth the Manager's key personnel assigned to this engagement. The
Manager agrees to consult with FRB-NY before removing any key personnel from this engagement.
In addition, the Manager shall provide to FRB-NY, and update on a regular basis, a staffing plan for
the services contemplated hereby, including detail of the employees involved and their
respon si bi I ities.
Survival
The following Sections shall survive any termination of this Agreement: 12, 13,15,16, 19,
21, 22, 25,27 -30
26, Compliance with Laws and Regulations
Page 18
The Manager shall conduct the appointment at all times in accordance with all laws and
regulations applicable to it, including anti-money laundering ("AML"), counter-terrorist financing
("CTF"), and U.S. Office of Foreign Assets Control ("OFAC") laws and regulations. The Manager
shall provide the FRB-NY on request with summaries or copies of its policies and procedures to
ensure compliance with laws, including applicable AML, CTF, and OFAC laws and regulations.
Manager shall respond to reasonable inquiries from the FRB-NY's Chief Compliance Officer with
respect to compliance with laws and regulations.
No Waiver
No failure on the part of the Manager or FRB-NY to exercise, and no course of dealing with
respect to, and no delay in exercising, any right, power, privilege or remedy hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise by the Manager or FRB-NY of any right,
power, privilege or remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power, privilege or remedy. The rights, powers, privileges and remedies herein
provided are cumulative and are not exclusive of any rights, powers, privileges and remedies
provided by law.
Amendments
This Agreement may only be amended by a written instrument executed by the Manager and
FRB-NY, except that the FRB-NY may, (a) in its sole discretion upon written notice to the
Manager, amend Exhibit C or E from time to time as it sees fit and (b) amend Exhibit A following
reasonable notice to, and consultation with, the Manager. For the avoidance of doubt, provided that
the FRB-NY satisfies the notice and consultation requirement, the FRB-NY may amend Exhibit A
as it sees fit.
Integration
The following exhibits, each as amended from time to time, form an integral part of this
Agreement as if set forth fully herein: Exhibit A, Investment Guidelines; Exhibit B, Power of
Attorney; Exhibit C, Authorized Counterparties; Exhibit D, Fee Schedule and Payment Procedures;
Exhibit E, Designated Representatives of the FRB-NY; Exhibit F, Key Personnel and Exhibit G,
FRBNY Policy.
The following shall be the order of primacy in the event of any inconsistencies:
Exhibit A, Exhibit D, Exhibit C, the body of this Agreement, Exhibit G, Exhibit B, Exhibit E, and
Exhibit F.
This Agreement constitutes the entire agreement between the parties relating to the
subject matter hereof and supersedes in its entirety all prior agreements between the parties relating
to the subject matter hereof except for the Confidentiality Agreement between the Manager and the
FRB-NY dated December 19, 2008.
Counterparts
This Agreement may be executed in counterparts, each of which shall be an original but all
of which together shall constitute one agreement
Page 19
EXECUTED on the date first above written.
GOLDMAN SACHS ASSET MA Mi
L.1'.
FEDERAL RESERVE RANK OF NEW YORK
Pn go 20
DEC-30-2008 18:38 From:
To:Goldman Sachs
Co
P.1'1
EXECUTED on the date first above written.
GOLDMAN SACHS ASSET MANAGEMENT, L.P.
FEDERAL RES
B NK OF NEW YORK
Page 20
EXECUTED on the date first above written.
FEDERAL RESERVE BANK OF NEW YORK
Page 20
Schedule of Exhibits:
Exhibit A
Investment Guidelines
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
Power of Attorney
Authorized Counterpartics
Fee Schedule and Payment Procedures
Designated Representatives of the FRB-NY
Key Personnel
FRBNY Policy
Page 2 I
EXHIBIT A
INVESTMENT GuIDELINES
1.
Policy Objective
The policy objective is to reduce the cost and increase the availability of credit for the purchase
of houses, which in turn should support housing markets and foster improved conditions in
financial markets more generally.
EXHIBIT B
POWERS OF ATTORNEY
DATE:
MANAGER
ADDRESS
RE: FEDERAL RESERVE BANK OF NEW YORK (THE "CLIENT")
ACCOUNT NUMBER:
ATTENTION: THIS IS TO CONFIRM THE APPOINTMENT OF, AND ACCEPTANCE BY, [
AS INVESTMENT MANAGER TO MANAGE, SUPERVISE AND DIRECT THE INVESTMENTS OF
AND FOR THE ABOVE CAPTIONED ACCOUNT (THE "ACCOUNT"), WHICH APPOINTMENT
INCLUDES THE AUTHORITY '10 ACT AS AGENT AND ATTORNEY-IN-FACT FOR AND ON
BEHALF OF THE ACCOUNT WITH FULL AND COMPLETE AUTHORITY (1)10 PURCHASE,
SELL, EXCHANGE, CONVERT AND OTHERWISE TRANSACT IN ANY AND ALL STOCKS,
BONDS, CASH HELD FOR INVESTMENT AND OTHER ASSETS AS [
] MAY SELECT; AND
(II) TO ESTABLISH ACCOUNTS AND EXECUTE SECURITIES TRANSACTIONS WITH ONE OR
MORE SECURITIES BROKER/DEALER FIRMS AND OTHER FINANCIAL INTERMEDIARIES AS [
] MAY SELECT. No CASH OR SECURITIES DUE '10 OR HELD FOR THE ACCOUNT SHALL BE
PAID OR DELIVERED TO [
], EXCEPT IF EXPRESSLY DIRECTED AND APPROVED BY
THE CLIENT.
IT IS FURTHER UNDERSTOOD THAT [
] MAY DELIVER TO ANY SECURITIES
BROKER/DEALER FIRM EXECUTING TRANSACTIONS ON BEHALF OF THE ACCOUNT A COPY
OF THIS DOCUMENT AS EVIDENCE OF THE AUTHORITY OF [
] TO ACT AS AGENT
AND ATTORNEY-IN-FACT FOR AND ON BEHALF OF THE ACCOUNT.
VERY TRULY YOURS,
FEDERAL RESERVE BANK OF NEW YORK
BY:
NAME:
TITLE:
EXHIBIT C
AUTHORIZED COUNTERPARTIES
PRIMARY DEALERS
BNP Paribas Securities Corp.
Banc of America Securities LLC
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Securities America Inc.
Deutsche Bank Securities Inc.
Drcsdner Kleinwort Securities LLC
Goldman, Sachs & Co.
Greenwich Capital Markets, Inc.
HSBC Securities (USA) Inc.
J. P. Morgan Securities Inc.
Merrill Lynch Government Securities Inc.
Mizuho Securities USA Inc.
Morgan Stanley & Co. Incorporated
UBS Securities LLC.
EXHIBIT D
FEE SCHEDULE AND PAYMENT PROCEDURES
December 30, 2008
The FRB-NY will pay to Manager each calendar quarter, as full compensation for services rendered,
a management fee based on the average quarterly notional value of the Agency MBS in the Portfolio
(based on the records of the Custodian) calculated monthly as of the last day of each month and
payable quarterly at the end of each such calendar quarter. The quarterly fee rate will be equal to
1/16th of the annual rate of 1.25 basis points. For purposes of this Exhibit D, notional amount shall
mean the Current Face amount of the Agency MBS, including unsettled Trades and TBA's and not
to be reduced by the unsettled Current Face sold as part of dollar roll transactions. For the
avoidance of doubt, the notional amount will be based upon the average notional amount of the
entire program, inclusive of assets from all investment managers.
EXHIBIT E
DESIGNATED REPRESENTATIVES OF THE FRB-NY
December 30, 2008
For inquiries regarding asset management and Portfolio strategy:
For inquiries concerning financial reporting issues and Account reconciliation:
For inquiries involving information security:
Other Contacts:
Any FRB-NY in-house
For a period of six months after execution of the Agreement, the following additional individuals
may have on-going contact with the Manager concerning any aspect of this Agreement:
EXHIBIT F
KEY PERSONNEL
EXHIBIT G
FRB-NY Policy
Goldman Sachs Asset Management, L.P.
Federal Reserve Bank of New York Mandate
Policies and Procedures
Terms not defined herein shall have the meanings ascribed to them in the Investment
Management Agreement between GSAM and the FRB-NY dated as of December 30, 2008.
Dedicated Portfolio Management and Trading Team
FRB-NY portfolio management and trading team will be headed by
and will include
and potentially one or more other individuals
(the "FRB-NY Team").
These individuals shall be listed on Exhibit F of the Agreement and shall be
subject to the restrictions in the Agreement applicable to individuals listed on
Exhibit F, including those under Section 18 with respect to providing
investment management or advisory services to anyone other than the FRB-
NY in Treasury (including Treasury futures) or agency securities or any
Agency MBS as further described in the Agreement.
One-Way Communications Permitted
The FRB-NY Team will be permitted to receive information from other
employees of GSAM and its affiliates, including from GSAM portfolio
management, but will not be permitted to share their views with respect to
Treasury (including Treasury futures) or agency securities or any Agency
MBS with GSAM or its affiliates. The FRB-NY Team may ask questions of
such other personnel as approved by GSAM Legal or Compliance.
Reporting
The FRB-NY Team will report into a member of senior management of the Goldman
Sachs Investment Management Division (the "FRB-NY Team Supervisor"). We
currently expect that person to be
, but the FRB-NY Team Supervisor could change
upon consultation with FRB-NY
It is not expected that the FRB-NY Team Supervisor will involved in
providing investment or strategy advice to the FRB-NY or managing the
Account.
Physical and Technology Separation
The FRB-NY Team will be physically separated from other portfolio management
personnel (currently expected to be
The FRB-NY Team trading and portfolio management systems will be segregated
from the GSAM fixed income systems so that, while there may be comm°n
databases and portfolio tools, the other GSAM portfolio managers and traders cannot
view the FRB-NY Team's trading activity.
Support Functions
o The account will be supported by the same GSAM and Goldman Sachs support
personnel that support other GSAM client accounts (personnel in these groups will
not be dedicated to the FRB-NY Account). These support and services may include
the Technology; Operations; Finance; Legal; Compliance; Internal Audit; Human
Capital Management; Risk, Strategists and Modeling; and the GSAM Fixed Income
Chief Operating Officer and other areas supported centrally within GSAM or
Goldman Sachs. GSAM will not have support employees dedicated to the Account,
and the employees undertaking support activities for the Account may not be
physically or otherwise segregated from other GSAM or Goldman Sachs personnel.
However, pursuant to existing policies, such personnel only share information on a
need-to-know basis to support the management of the Account.
o
Set forth below are the basic support groups and a general description of their roles:
Technology: Create, maintain, modify, troubleshoot and test applications and
programs.
Operations: Process, confirm and ensure accurate and timely settlement of
transactions. Perform reconciliation of cash and security positions at the
custodian.
Finance: Support with respect to valuation, performance reporting, and other
back-office functions.
Legal: Provide legal support, including with respect to contracts and guidance
on regulatory matters.
Compliance: Provide compliance support, including with respect to
monitoring FRB-NY Account compliance with guidelines and integrity with
information barriers and restrictions on use of material non-public
information.
Internal Audit: Assist management in assessing and enhancing internal
controls.
Human Capital Management: Assist with respect to personnel issues.
Risk. Strateg,ists and Modeling: Use a variety of quantitative measures such
as Value at Risk (VaR), tracking error, and active weights to provide reports
of market risk scenarios for portfolios, and where applicable uses stress tests
to focus on extreme circumstances. Assist and inform portfolio nanaers and
husiness groups h\ dc' eloping and maintaining trading. and pri:ing models
and portfolio management tools.
(..iSAM Fixed Income t_.'hict.Operatim4 Officer R:00): The GS111,1 Fixed
Income Chief Operating Officer facilitates interaction between the portfolio
management team and the various support groups, assists the support groups
with respect to OSAM Fixed Income matters, and provides general
operational support.
Third-Party Service Providers
0 GSAM ma). also utilitc third-part service providers in connection with managing
the account, which may include:
Pricing vendors
kxecution platforms
trading systems (i.e. Bloomberg, fradewcb. SWIFT)
Outside legal counsel
Other Disclosures
o
Information relating to the Account, including Confidential Information. may be
shared \vial senior management of Goldman Sachs as GSAM determines is
appropriate for management, supervisory or other purposes. or as otherwise required
under securities and other applicable laws and regulations. Any such information
shared would be on a need-to-know basis and not be used for the purposes
of transactions in proprietary or customer accounts.
Senior management referred to above does not have direct portfolio
management responsibility for proprietary or customer accounts.
Senior management that reccic,j Ggifidential Information as described
above will maintain the Conridential Information in accordance with the
Agreement.
lo the eNtent (iSAN't is uncertain about the appropriateness of sharing
information with senior management in accordance with the paragraph above,
they will consult with Legal or Compliance.
The procedures set forth above may change upon consultation with FRB-NY. Conflicts and related
procedures associated with the Manager's business generally are described in the Mangers Form
ADV Part II, as amended from time to time.
