Goldman Sachs Europe - European Policy for Managing Conflicts of Interest in Connection with Investment Research

The Goldman Sachs Group, Inc. (together with its affiliates, "Goldman Sachs" or the "firm") produces research within a definition of "recommendation" under the Commission Directive 2003/125/EC or "impartial research" under the FSA rule 7.16. Global Investment Research Division ("GIR") produces research with respect to equities and related products and certain fixed income securities.

This Policy Statement describes how the European offices of The Goldman Sachs Group, Inc. ("Goldman Sachs Europe" or "GS Europe") identify and manage potential conflicts in connection with the publication of research. This Policy Statement summarises more detailed policies issued to relevant Goldman Sachs Europe employees and relevant employees of affiliates involved in the production of research distributed by Goldman Sachs Europe.

This Policy Statement is in accordance with the Commission Directive 2003/125/EC of 22 December 2003. It applies only to research designed to qualify as "impartial", in relation to FSA Rule 7.16. Any research produced by GIR should be regarded as impartial for the purposes of FSA Rule 7.16, but any reports or sales commentaries produced by sales and trading personnel should not be regarded as impartial for the purposes of this rule. This Policy is not applicable to research produced within GIR that discusses macro economic trends strategy and does not make recommendations concerning specific securities.

Goldman Sachs International ("GSI") is authorised and regulated by the Financial Services Authority and approves research in connection with its distribution in the European Union and the United Kingdom. Goldman, Sachs & Co. oHG and Goldman Sachs International Zweigniederlassung Frankfurt are regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht and may also distribute research in Germany.

The firm is subject to a "Global Research Settlement" entered by a United States District Court on October 31, 2003. Whilst not required to do so, the firm has applied the terms on a global basis, subject to limited variations in response to local market practices outside the United States, although the Global Research Settlement does not apply to credit research.

Credit research is produced generally in accordance with "Guiding Principles to promote the Integrity of Fixed Income Research" ("BMA Principles") published in May 2004 by The Bond Market Association (an international trade association). Policies and procedures designed to satisfy the BMA Principles have been implemented. This Policy Statement is adopted by GS Europe and unless otherwise stated is consistent with the firm's global policies. Unless specifically indicated, this Policy Statement applies to all GIR analysts.

A. Statement of our Investment Research Principles
In 2002, GIR adopted the principles set out below:

• GIR and our entire firmwide research effort (Goldman Sachs Research) are committed to providing the highest quality fundamental research and investment opinions to its clients.
• We aspire to be thought leaders in our fields. We are committed to identifying and rigorously analyzing financial information, strategic issues and trends, both regionally and globally that affect companies, industries and markets and fundamental changes which may have a meaningful impact on future investment values.
• In order to provide informed investment opinions, we must always exercise exceptional diligence and thoroughness in our work, and have a reasoned basis for our opinions, supported by the appropriate level of independent investigation, inquiry, analysis and judgment.
• We strive for the professionalism required to create the prevailing wisdom, or where appropriate, to question it. Our stated investment opinions must always reflect the informed views of our research analysts.
• We recognise that distinguished and independent research is critical to serving our investing and issuing clients in the equity, fixed income, currency and commodities markets worldwide.
• We understand that special responsibilities inure to us in Goldman Sachs Research and to our firm as a result of the important roles we fill in the various global capital markets.
• We recognise that potential conflicts, both actual and perceived, may arise both internally within our firm as well as externally from corporate and investor clients, and that it is our responsibility to acknowledge and manage those conflicts in a way that protects our clients and our reputation.
• We understand that, individually and collectively, we are ultimately responsible for protecting the integrity of our research views and that to do otherwise would compromise the value of all that we do. Integrity, independence and trust in Goldman Sachs Research are cornerstones upon which our reputation is based.

B. Identifying Potential Conflicts
As reflected above in the Statement of our Investment Research Principles the firm identifies and manages potential conflicts arising from the publication of research. These conflicts can arise with regard to corporate clients, investor clients, the proprietary and agency trading activities of the firm, the firm's investment banking activities and the interests of the firm's officers and employees. The policies summarised in sections C) through M) describe the way in which the firm seeks to manage these conflicts.

The firm has appointed an Investment Research Ombudsman for GIR. The ombudsman is available to all members of GIR with respect to any issues regarding conflicts and perceived inappropriate influences, whether from within the firm or from external sources, such as investors who may own significant positions in covered companies or management of covered companies. The Investment Research Ombudsman reports to both the firm's CEO and the Chairman of the Audit Committee of the Board of Directors.

C. Organisation: Supervision and Management of Analysts
In 2002, GIR became a separate division of the firm, reporting to the firm's Executive Office. GSI analysts report to the Co-heads of GIR in Europe, who themselves report to the firm's Global Head of GIR based in New York.

Credit analysts are located in New York. However, some credit analysts produce research on fixed income securities of non United States issuers.

Analysts are not supervised by, and do not report to, investment banking personnel or personnel who directly supervise day-to-day sales and trading activities.

D. Segregation of Research Functions
GIR has 1) established controls designed to prevent analysts obtaining non-public or proprietary information from other areas of the firm, and 2) implemented procedures to prevent analysts' independence from being compromised by any interactions that they might have with the firm's investment bankers.

The firm has adopted policies and procedures and conducted training of analysts, such that they may receive non-public information only in accordance with clear wall-crossing procedures. These procedures include obtaining appropriate approvals of research management and compliance, logging and reviewing such approvals and imposing appropriate restrictions on the permitted activities of analysts concerned while the information remains non-public.

1.   Relationship with Investment Banking:

• Physical and systems access is limited to personnel in those groups. Analysts are physically separated from these groups and are not permitted to have access to these areas or to their computer systems.
• Under the Global Research Settlement, communications between Investment Banking and GIR are generally restricted and permitted communications between Investment Banking and GIR may only take place in the presence of a "chaperone" from the firm's Compliance Department.

2.   Relationship with Sales and Trading:

• GIR analysts are permitted physical access to the firm's trading floor and sales and marketing groups but are not located on sales and trading desks.
• GIR analysts may not be told about trading activities or information concerning the firm's current positions, i.e. information as to intended trading activity.

E. Analyst Personal Views
Analysts are required to certify in each research report that i) the views expressed in the report accurately reflect their personal views about any and all of the investments or issuers to which the report relates, and ii) no part of the analyst's remuneration was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

F. Limiting the Extent of our Analyst Involvement in Activities Other Than the Preparation of Research
Analysts interact with investing clients, providing them with informed and impartial research opinions. Analysts participate in and facilitate a continuing dialogue between investors and corporate issuers. Analysts frequently discuss their opinions with the firm's sales and trading personnel.

Analysts are not permitted to participate in sales pitches for investment banking mandates and are not permitted to make presentations or actively participate in road shows relating to an investment banking transaction.

Analysts are permitted to perform certain other roles where the firm believes that it would not compromise their independence or the appearance thereof:

• Discussing the merits of a proposed transaction with investment banking colleagues.
• Discussing industry sector trends with investment banking colleagues.
• Assisting in due diligence.
• Advising on market sentiment and pricing and structuring of securities offerings.
• Investor education relating to an investment banking transaction.
• Education of the firm's sales force relating to an investment banking transaction.
• Participation in presentations at widely-attended conferences.

Credit research analysts may attend but not participate at an investment banking transaction-related roadshow.

G. Factors used in Determining Analysts' Remuneration
GIR analysts' remuneration is determined exclusively by GIR management in conjunction with firm management. Investment banking personnel may not have any input into such decisions. Investment banking personnel are not permitted to perform or contribute to annual appraisals of analysts.

Analysts' remuneration is not directly linked to specific investment banking transactions, but may be related to the firm's overall performance which includes investment banking results.

In GIR under the Global Research Settlement, a significant portion of a senior analyst's compensation is based on the quality and accuracy of the analyst's research. GIR management employs a series of metrics and surveys in such determination.

The following are additional factors which may be taken into account by GIR management when determining an analyst's remuneration:

• the quality and accuracy of the analyst's research;
• the analyst's individual performance and productivity;
• the performance of the analyst's team;
• evaluations by investing clients and firm employees (including salespeople and trading desk and risk management personnel) other than investment banking personnel;
• the size and trading value of, the profitability of, and the potential interest of the firm's investor clients in research with respect to, the asset class covered by the analyst;
• the analyst's seniority, reputation and experience; and
• the market for hiring and retaining analysts.

H. Policies concerning Inducements Given to Analysts
Analysts are not permitted to accept any remuneration or other benefit from an issuer or any other party in respect of the publication of research.

Analysts are not permitted to accept any inducement for the production of favourable research.

These restrictions do not preclude the acceptance of reasonable corporate hospitality in accordance with the firm's general policies regarding gifts and entertainment.

I. Recording and Monitoring Analysts' Personal Interests and Personal Account Dealing
Analysts are prohibited from trading or owning securities or related derivatives of any issuer in their industry area of coverage. The analyst's industry area of coverage extends to all companies in that area, not just to those companies currently covered by the analyst. However, an analyst's industry area of coverage is generally limited to his/her geographic industry area of coverage.

Prior approval is required for investments in private companies or private funds and also for any outside business activities such as directorships, or earned income from a source other than their employment at the firm. An analyst may not perform services for remuneration for a company covered by such analyst either on behalf of the firm or in a personal capacity.

All GIR employees must obtain pre-approval from GIR Compliance to buy or sell any publicly available equity securities and equity linked securities, including convertibles and derivatives; corporate bonds; closed-end mutual funds; and any other comparable investment vehicle.

Analysts (and household members of analysts) may not serve as an officer, director, employee or advisor to a company in the analysis coverage area.

J. Fact-checking with companies
In accordance with GIR policies, analysts are permitted to prepare a separate schedule of facts from the unpublished report for fact-checking with subject companies, but not with the Investment Banking Division. Equity and credit analysts may not provide a subject company with a written draft summary, or portion of an actual or hypothetical research report prior to publication...

K. Dissemination and Termination of Coverage
Decisions on coverage are made by GIR management. In making such decisions management may consider input from various sources, including investors, managers of the firm's sales and trading areas and, to the extent permitted by the Global Research Settlement or BMA Principles as applicable, Investment Banking.

In general, the policy of GIR management is to cover companies where the firm has had a lead role in the companies' offering of securities.

GIR policy is to ensure that statements by analysts that are new and material achieve broad, global dissemination both to clients and sales/trading personnel.

Where the firm is acting in an advisory capacity in a publicly announced merger or strategic transaction involving a company, the investment rating and target price, if any, will be suspended temporarily and the security shown as "not rated".

The decision to terminate coverage of an issuer must be approved by GIR management. The firm publishes a final note stating that coverage has been terminated.

L. Disclosure of Interests
The full list of GIR disclosures with respect to equity research can be viewed at: http://www.gs.com/research/hedge.html

In respect of credit research the following disclosures, where relevant, are made:

• Goldman, Sachs & Co. or an affiliate has managed or co-managed a public offering of the securities of the covered company in the past three years.
• A director and/or employee of Goldman, Sachs & Co. is a director of the covered company.
• Goldman, Sachs & Co. and/or an affiliate has a principal investment in the securities of the covered company.
• As a result of its beneficial ownership of common stock of the covered company, Goldman, Sachs & Co. may be deemed an affiliate of the issuer(s). Goldman, Sachs & Co disclaims such status.
• Goldman, Sachs & Co. or an affiliate makes a market in fixed income securities of issuers discussed in this report and may deal as principal in these securities.

M. Offering Related Research
In accordance with common practice in Europe, from time to time, GSI publishes research (commonly termed "pre-deal" research) prior to an offering of securities where GSI also has an investment banking mandate in respect of the offering. Although not containing ratings or price targets, pre-deal research published by GSI in these circumstances will be considered impartial research for the purposes of Commission Directive 2003/125/EC of 22 December 2003 and FSA Rule 7.16. Decisions as to whether to provide pre-deal research are made by GIR management. In connection with publishing pre-deal research GS Europe has adopted procedures designed to:

• Prevent the promise of favourable coverage (and requirements that decisions on coverage should remain with GIR management).
• Ensure the factual consistency of pre-deal research with any related prospectus or selling document, including procedures allowing review for factual accuracy by investment bankers and issuers.
• Disclose GS Europe's involvement in the transaction.