Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - trade in units oflimited partnerships formed by U.S. investment dealer to certain senior managementand key employees of Canadian affiliate not subject to dealer registration andprospectus requirements of the Legislation, subject to certain conditions - the numberof units to be traded is de minimus, and most purchasers are registered under theLegislation, subsidiaries of U.S. investment dealer providing investment advice tolimited partnerships that are not registrants under the Legislation not subject to theadvisor registration requirements of the Legislation, subject to certain conditions.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c.S.5, as am., ss. 25(1)(a), 25(1)(c), 53, 74(1).

Other Statutes Cited

United States Securities Act of 1933, as amended.


IN THE MATTER OF THE SECURITIES LEGISLATION OFALBERTA, BRITISH COLUMBIA, ONTARIO AND QUEBEC

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
GOLDMAN SACHS CANADA INC., GS EMPLOYEE FUND 2000 OFFSHORE, L.P. ANDGS EMPLOYEE FUND 2000 OFFSHORE (CORPORATE), L.P.

MRRS DECISION DOCUMENT


WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of Alberta, British Columbia, Ontario and Quebec (the "Jurisdictions") hasreceived an application from Goldman Sachs Canada Inc. (the "Company"), GS EmployeeFund 2000 Offshore, L.P. (the "Partnership Fund") and GS Employee Fund 2000 Offshore(Corporate), L.P. (the "Corporate Fund", and, together with the Partnership Fund, the"Funds") for a decision under the securities legislation of the Jurisdictions (the"Legislation") that the requirements contained in the Legislation:

(i) to be registered to trade in a security and to file and obtain a receipt for apreliminary prospectus and a prospectus (the "Dealer Registration andProspectus Requirements"); and

(ii) to be registered as an adviser under the Legislation where such person orcompany engages in or holds himself, herself or itself out as engaging in thebusiness of advising others as to the investing in or the buying or selling ofsecurities (the "Adviser Registration Requirement"),

shall not apply in connection with the distribution and sale of limited partnership interests("Interests") in the Funds to certain qualified employees of the Company, subject to certainconditions;

AND WHEREAS under the Mutual Reliance Review System for Exemptive ReliefApplications (the "System"), the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS the Company and the Funds have represented to the DecisionMakers that:

1. Each of the Funds will be organized as an exempt limited partnership underCayman Islands law.

2. The Funds are not, and have no intention of becoming, reporting issuers under theLegislation.

3. The general partner (the "General Partner") of each of the Funds will be GSEmployee Funds 2000 Offshore GP, L.L.C., a wholly owned subsidiary of TheGoldman Sachs Group, Inc. ("Goldman Sachs"), a corporation organized as alimited liability company under the laws of the State of Delaware. The GeneralPartner is a newly formed entity with no other operations, and is not a reportingissuer under the Legislation nor registered in any capacity under the Legislation.

4. The manager of the General Partner is Goldman, Sachs & Co. (the "Manager"), anaffiliate of Goldman Sachs carrying on business as a registered broker-dealer andinvestment adviser in the United States. The Manager is also registered as anInternational Adviser under the Securities Act (Ontario) (the "Ontario Act").

5. The Company is a corporation formed under the laws of Ontario and its principaland executive office is located in Toronto, Ontario.

6. The Company is registered as an investment dealer under the Ontario Act and isregistered in a similar capacity under the Securities Acts of British Columbia andQuebec.

7. The Company is not a reporting issuer under the Legislation.

8. The Funds have been organized to provide certain qualified employees of affiliatesof Goldman Sachs, including qualified employees of the Company, the opportunityto co-invest in the investment opportunities of their employer group of companies.

9. In Canada, participation in each of the Funds is being offered to 15 residents ofOntario, two residents of Alberta, one resident of British Columbia and tworesidents of Quebec (the "Canadian Eligible Investors"). Each of the CanadianEligible Investors is managing director, senior officer or key employee of theCompany or an affiliate of the Company. Most of the Canadian Eligible Investorsare registered as representatives of the Company in one or more of theJurisdictions.

10. The Interests have not been and will not be registered under the Securities Act of1933, as amended (the "1933 Act"), and the Funds are not and do not intend tobecome registered under the U.S. Investment Company Act of 1940, as amended.The Interests may not be offered, sold or delivered within the United States or toU.S. Persons (as defined in the 1933 Act).

11. Each Canadian Eligible Investor may invest in only one of the Funds.

12. Each Fund will invest substantially all of its assets in two new investmentopportunities (the "Employee Funds") organized by Goldman Sachs for certainemployees of its affiliates:

a. GS Capital Partners 2000 Employee Fund, L.P. (the "Employee GSCPFund")

The investment objective of the Employee GSCP Fund is to achieve long-term capital gains through investments in equity and equity-relatedsecurities. The Employee GSCP Fund will focus on merchant bankinginvestments, telecommunications/broadband investments and technologyinvestments.

b. Goldman Sachs Direct Investment Fund 2000, L.P. (the "Employee DirectFund")

The Employee Direct Fund will invest alongside Goldman Sachs and itsaffiliated companies in certain investment opportunities in which GoldmanSachs and its affiliated companies or a private investment fund managed byGoldman Sachs invest.

13. Each of the Funds is offering four classes of limited partnership interests:

a. "Class A GSCP Interests" will invest exclusively in Class A limitedpartnership interests in the Employee GSCP Fund.

b. "Class A Direct Interests" will invest exclusively in Class A limitedpartnership interests in the Employee Direct Fund.

c. "Class B GSCP Interests" will invest exclusively in Class B limitedpartnership interests in the Employee GSCP Fund.

d. "Class B Direct Interests" will invest exclusively in Class B limitedpartnership interests in the Employee Direct Fund.

14. Each Canadian Eligible Investor must subscribe for a minimum of U.S. $10,000 (the"Minimum Contribution") and cannot exceed the maximum contribution of U.S.$2,500,000. Contributions above the Minimum Contribution must be made in U.S.$5,000 increments.

15. The subscription amount for each of the Canadian Eligible Investors will beallocated as follows: 65% to the Class B GSCP Interest and 35% to the Class BDirect Interest.

16. The General Partner will manage each of the Funds and will be responsible for thedirection of their activities and for making all investment decisions for them. TheGeneral Partner will have all powers and rights necessary, proper, convenient oradvisable to effectuate and carry out the purposes, business and objectives of theFunds. No compensation will be paid by the Funds or Goldman Sachs to theGeneral Partner for its services as General Partner. If, however, a CanadianEligible Investor's employment with an affiliate of Goldman Sachs terminates on orbefore November 29, 2002 (except for certain qualifying retirements), such investorwill pay a management fee to the Manager and such investor's interest attributableto the Employee GSCP Fund will become subject to an override. Investors in theFunds ("Limited Partners") will not participate in any investment decisions made onbehalf of the Funds.

17. The General Partner will contribute to the capital of each of the Funds an amountequal to one percent of aggregate subscriptions from investors in Class B Interests(but no more than U.S.$ 1,000,000 per Fund), for which it will receive Class BInterests.

18. No Limited Partner may sell, exchange, transfer, assign, make a gift of, donate,bequeath, devise, pledge, hypothecate or otherwise dispose of all or any portionof such Limited Partner's Interests except as provided in the limited partnershipagreements governing the Funds (the "Partnership Agreements"). Under thePartnership Agreements, a Limited Partner may, with the written consent of theGeneral Partner, transfer such Limited Partner's Interest (or a portion thereof) atany time, but only to the General Partner, another Limited Partner or a person who,at the time of the transfer, is qualified to become a Limited Partner, and then onlyin accordance with the provisions of Partnership Agreements.

19. Interests are not redeemable at the option of the holder and an investment in theFunds can be characterized as being long-term and illiquid. .

20. The Funds' termination date is December 31, 2025 or such earlier date as theGeneral Partner in its sole discretion chooses.

21. Canadian Eligible Investors will be provided with an offering memorandum and asubscription agreement describing the subscription terms, investing and redemptionterms, as well as profit and loss allocation and other aspects of the managementand operation of the Funds. Canadian Eligible Investors will also be provided witha copy of the Partnership Agreements. In addition, within 120 days after the endof each Fund's fiscal year, or as soon thereafter as practicable, the General Partnerwill send to each person who was a Limited Partner at any time during the fiscalyear then ended financial statements of that Fund audited by the accountants,including the portfolio valuation as of that date, and a report of the investmentactivities of the Fund and the underlying Employee Funds during that year.

22. Canadian Eligible Investors will participate on a voluntary basis and are not beinginduced to purchase Interests by expectation of employment or continuedemployment with the Company.

AND WHEREAS under the System, this MRRS Decision Document evidencesthe decision of each Decision Maker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test containedin the Legislation that provides the Decision Maker with the jurisdiction to make thedecision has been met;

The Decision of the Decision Makers under the Legislation is that:

A. the Dealer Registration and Prospectus Requirements of the Legislation shallnot apply to a trade in Interests made by the Funds to a Canadian EligibleInvestor, provided that:

(a) no Canadian Eligible Investor is induced to purchase Interests byexpectation of employment or continued employment and each CanadianEligible Investor participates on a voluntary basis;

(b) a copy of the offering memorandum is provided to each Canadian EligibleInvestor and delivered to the securities commissions in each of theJurisdictions; and

(c) the first trade in Interests acquired pursuant to the Decision or by anyperson or company referred to in this paragraph in a Jurisdiction shall bedeemed a distribution, unless such first trade is made to any of thefollowing:

(i) the General Partner or a Limited Partner;

(ii) an affiliate of the General Partner;

(iii) a member of the Limited Partner's immediate family;

(iv) a corporation controlled by a Limited Partner and/or any member ofhis or her immediate family where the Limited Partner is an officeror director of the corporation and where all the shares are ownedat all times by any combination of Limited Partner, member of hisor her immediate family, the children of any of them or the offspringof such children;

(v) a trust where all the beneficiaries are any combination of theLimited Partner, members of his or her immediate family, thechildren of any of them or the offspring of such children and atleast one of the trustees is the Limited Partner;

(vi) a registered retirement savings plan and/or personal holdingcompany of the Limited Partner; or

(vii) a person or company acquiring Interests by operation of law; and

B. the Adviser Registration Requirement of the Legislation shall not apply to theGeneral Partner and the Manager for the purposes of providing investmentadvice to the Funds, provided that:

(i) the Canadian Eligible Investors are the only persons to whomInterests are distributed in Canada by the Funds;

(ii) where the General Partner of the Manager acts as an adviser tothe Funds in respect of securities of Canadian issuers, such advicewill be incidental to its acting as an adviser to the Funds in respectof securities of foreign issuers; and

(iii) before any Interests are sold to the Canadian Eligible Investors,each Canadian Eligible Investor shall be notified that the Funds willbe advised by advisers who are not registered in Canada to act asan adviser.

July 31st, 2000.

"Howard I. Wetson"     "R. Stephen Paddon"