Goldman Sachs Bank USA Coupon Basket-Linked Certificates of Deposit (Linked to an Equally-Weighted Basket Comprised of Stocks) - PDF

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Product Supplement to the Disclosure Statement dated December 19, 2011 No. 2 Goldman Sachs Bank USA Coupon Basket-Linked Certificates of Deposit (Linked to an Equally-Weighted Basket Comprised of Stocks)
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Product Supplement to the Disclosure Statement dated December 19, 2011 No. 2 Goldman Sachs Bank USA Coupon Basket-Linked Certificates of Deposit (Linked to an Equally-Weighted Basket Comprised of Stocks) Goldman Sachs Bank USA may from time to time offer and sell coupon basket-linked certificates of deposit, the payments and performance of which will be linked to the performance of an equally-weighted basket of common stocks. The accompanying disclosure statement dated December 19, 2011 and this product supplement no. 2 dated July 31, 2012 (which we refer to as this product supplement) describe terms that will apply generally to the CDs, including any CDs you purchase. This product supplement is intended to be read in conjunction with the disclosure statement described above, including as to certain terms used in this product supplement that are defined in the disclosure statement. A separate disclosure statement supplement, which we refer to as the applicable disclosure statement supplement, will describe terms that apply specifically to your CDs, including any changes to the general terms contained herein and in the disclosure statement. The CDs will not pay a fixed coupon and may pay no coupon on a coupon payment date, unless a minimum coupon rate is specified. On each coupon payment date (specified in the applicable disclosure statement supplement, subject to adjustment), you may be paid a coupon, based on the basket return. The basket return is calculated based on the arithmetic average of the stock returns of each stock in the basket (described below) for each period from the applicable trade date to and including the applicable coupon determination date (specified in the applicable disclosure statement supplement, subject to adjustment). On the stated maturity date (subject to adjustment), you will also receive, in addition to any coupon then due, an amount in cash equal to $1,000 for each $1,000 face amount of your CDs. If a maximum stock return trigger level is specified in the applicable disclosure statement supplement, the stock return of each basket stock will be calculated as follows: If the change in the value of a basket stock is greater than or equal to the maximum stock return trigger level, its stock return will be the maximum stock return. If the change in the value of a basket stock is less than the maximum stock return trigger level, its stock return will be the actual percentage change in the value of such stock, subject to the minimum stock return. If no maximum stock return trigger level is specified in the applicable disclosure statement supplement, the stock return for each basket stock will be the actual percentage change in the value of such stock, subject to the maximum stock return and minimum stock return. The maximum stock return will be a percentage specified in the applicable disclosure statement supplement and will limit the stock return for each basket stock. The minimum stock return will be -100% or a percentage specified in the applicable disclosure statement and will be the lowest stock return possible for each basket stock. The maximum stock return limits any coupon you may receive. You will only receive a coupon that corresponds to the maximum stock return on a coupon payment date if the stock return of all of the basket stocks on the corresponding coupon determination date is greater than or equal to the maximum stock return trigger level, if one is specified, or the maximum stock return, if no maximum stock return trigger level is specified. Because the maximum stock return is applied on a stock-by-stock basis, you will receive a coupon that is less than the corresponding maximum stock return if any basket stock s stock return is less than the maximum stock return. Under such circumstances the basket return may be less than the average stock performance of the basket stocks. Also, the basket return is measured against the value of the basket on the trade date, not the prior coupon determination date, if any. Therefore, the basket return may be less than the performance of the basket stocks between each coupon determination date. If the arithmetic average of the stock returns on any coupon determination date is zero or negative, you will receive no coupon on the corresponding coupon payment date, unless a minimum coupon rate is specified. Each basket will be equally weighted and will be comprised of a specified number of common stocks. The applicable disclosure statement supplement will provide a detailed description of the methodology used in selecting the applicable basket. To determine the amount you will receive on each coupon payment date, we will calculate the stock return and basket return, as set forth in the first paragraph. For each $1,000 face amount of your CDs you will receive the greater of (1) an amount in cash equal to the product of the basket return times $1,000; or (2) $0 or, if a minimum coupon rate is specified, the minimum coupon rate times $1,000. The foregoing is only a brief summary of the terms of your CDs. You should read the detailed description thereof in the applicable disclosure statement supplement and in Summary Information on page S-2 and in Specific Terms of Your Certificates of Deposit on page S-19, as well as the accompanying disclosure statement available at The CDs evidence deposit liabilities of Goldman Sachs Bank USA, and are not obligations of or guaranteed by The Goldman Sachs Group, Inc. or any other entity. The CDs are covered, with respect to the face amount and any accrued and unpaid coupon only, by federal deposit insurance, up to a maximum limit of $250,000 per depositor or $250,000 per participant in the case of certain retirement accounts. These maximum limits are the total federal deposit insurance protection available for your CDs, together with any other deposit accounts you may hold at Goldman Sachs Bank USA in the same right and capacity. In addition, the Federal Deposit Insurance Corporation (FDIC) has taken the position that any unaccrued coupon on the date on which the FDIC is appointed receiver or conservator is not insured by the FDIC in most instances. FDIC insurance is subject to further important limitations set forth on the next page. The CDs have not been nor will they be registered under the Securities Act of Goldman Sachs Bank USA may use this product supplement in the initial sale of the CDs. In addition, Goldman, Sachs & Co. or any other affiliate of Goldman Sachs Bank USA may use this product supplement in a market-making transaction in a CD after its initial sale. If the CDs are purchased from Goldman, Sachs & Co. or any other affiliate of Goldman Sachs Bank USA, this product supplement is being used in a market-making transaction, unless the purchaser is informed otherwise in the confirmation of sale. Product Supplement dated July 31, FDIC insurance may not cover the CDs if a regulatory or statutory change renders the CDs ineligible for FDIC insurance coverage. Further, if Goldman Sachs Bank USA s status as an insured depository institution is terminated or suspended by the FDIC (including as a result of our actions) or is terminated by us, during the period of temporary insurance following the termination or suspension the FDIC insurance may not cover any amounts in excess of the face amount of the CDs and any coupon accrued prior to the date of such termination or suspension. Also, FDIC insurance does not cover any losses attributable to the sale of your CDs prior to maturity and any secondary market premium paid by you above the face amount of the CDs is not insured by the FDIC. Thus, the amount of any CD that will be insured by the FDIC may be less than the full amount that would otherwise be payable on the CD at maturity. For more information about some of the limits of FDIC insurance that apply to the CDs and the ranking of the CDs relative to other obligations of Goldman Sachs Bank USA, see Status of Certificates of Deposit on page 5 of the accompanying disclosure statement and Additional Risk Factors Specific to Your Certificates of Deposit on page S-10 of this product supplement. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of the CDs or passed upon the accuracy or adequacy of this product supplement or the accompanying disclosure statement or any applicable disclosure statement supplement, which have not been filed with the SEC. Any representation to the contrary is a criminal offense. SUMMARY INFORMATION In this product supplement no. 2, when we refer to a CD or offered CDs, we mean a coupon basket-linked certificate of deposit unless the context requires otherwise. Each of the offered CDs, including your CDs, has the terms described below. Please note that in this product supplement, references to Goldman Sachs Bank USA, we, our and us refer only to Goldman Sachs Bank USA. You should read this product supplement together with the disclosure statement dated December 19, 2011 of Goldman Sachs Bank USA, which we refer to herein as the accompanying disclosure statement and the applicable disclosure statement supplement. The accompanying disclosure statement is available at mber pdf or may be obtained from us or your broker. Key Terms Issuer: Goldman Sachs Bank USA Basket: an equally-weighted basket of basket stocks specified in the applicable disclosure statement supplement Basket stocks: the common stocks listed in the applicable disclosure statement supplement; selected using the selection criteria described in the applicable disclosure statement supplement. Denomination: issued in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof Payment amount: on the stated maturity date, we will pay you (in addition to the final coupon, if any), for each $1,000 face amount of your CDs, an amount in cash equal to $1,000 Coupon: on each coupon payment date, for each $1,000 face amount of your CDs we will pay you an amount in cash equal to the greater of: (1) the product of the basket return times $1,000; or (2) $0 or, if a minimum coupon rate is specified, the minimum coupon rate times $1,000. Minimum coupon rate: none, unless otherwise specified in the applicable disclosure statement supplement Coupon payment dates: as specified in the applicable disclosure statement supplement, expected to be a specified number of business days after each coupon determination date to and including the stated maturity date, subject to adjustment as described under Specific Terms of Your Certificates of Deposit Payment of Coupon Coupon and Coupon Payment Dates on page S-20, unless otherwise specified in the applicable disclosure statement supplement Coupon determination dates (to be set on the trade date): as specified in the applicable disclosure statement supplement, subject to adjustment as described under Specific Terms of Your Certificates of Deposit Payment of Coupon Coupon Determination Dates on page S-21, unless otherwise specified in the applicable disclosure statement supplement Regular record dates: for a coupon due on a coupon payment date, the business day immediately preceding the day on which payment is to be made (as such payment date may be adjusted) Basket return: the arithmetic average of the stock returns of each basket stock on the applicable coupon determination date, which will be calculated by adding the stock returns for all basket stocks and dividing the sum by the number of basket stocks Stock return: for each of the basket stocks on each coupon determination date: If a maximum stock return trigger level is specified in the applicable disclosure statement supplement: if the stock performance is greater than or equal to the maximum stock return trigger level, the maximum stock return; or S-2 if the stock performance is less than the maximum stock return trigger level, the greater of (i) the stock performance and (ii) the minimum stock return If a maximum stock return trigger level is not specified in the applicable disclosure statement supplement: if the stock performance is greater than or equal to the maximum stock return, the maximum stock return; or if the stock performance is less than the maximum stock return, the greater of (i) the stock performance and (ii) the minimum stock return Stock performance: for each of the basket stocks on each coupon determination date, the quotient of (1) the closing price on the applicable coupon determination date minus the initial price divided by (2) the initial price, expressed as a percentage Initial price: for each of the basket stocks, expected to be the closing price of the applicable basket stock on the trade date, unless otherwise specified in the applicable disclosure statement supplement Maximum stock return: a percentage specified in the applicable disclosure statement supplement Maximum stock return trigger level: if any, a percentage specified in the applicable disclosure statement supplement Minimum stock return: %, unless otherwise is specified in the applicable disclosure statement supplement Closing price: as described under Specific Terms of Your Certificates of Deposit Special Calculation Provisions Closing Price on page S-28, except in the limited circumstances described under Specific Terms of Your Certificates of Deposit Consequences of a Market Disruption Event or a Non-Trading Day on page S-21 and subject to adjustment as provided under Specific Terms of Your Certificates of Deposit Anti-Dilution Adjustments on page S-21, unless otherwise specified in the applicable disclosure statement supplement Trade date: a date specified in the applicable disclosure statement supplement Original issue date (settlement date): a date specified in the applicable disclosure statement supplement Stated maturity date: a date specified in the applicable disclosure statement supplement that is expected to be a specified number of scheduled business days after the final coupon determination date, subject to adjustment as described under Specific Terms of Your Certificates of Deposit Payment of Coupon Stated Maturity Date on page S-20 Mandatory redemption: if our status as an insured depository institution is terminated by the FDIC or us or as a result of our actions or if a regulatory or statutory change renders the CDs ineligible for FDIC insurance coverage, to the extent permitted by law and regulation we will redeem your CDs then outstanding on the applicable mandatory redemption date, unless they mature prior to such date, as described under Specific Terms of Your Certificates of Deposit Mandatory Redemption on page S-27; your CDs are not otherwise subject to redemption at our option Mandatory redemption date: as described under Specific Terms of Your Certificates of Deposit Mandatory Redemption on page S-27 Mandatory redemption amount: as described under Specific Terms of Your Certificates of Deposit Special Calculation Provisions Mandatory Redemption Amount on page S-28 Optional redemption in the event of death or adjudication of incompetence: as described under Specific Terms of Your Certificates of Deposit Optional Redemption in the Event of Death or Adjudication of Incompetence on page S-27; your CDs are not otherwise subject to repayment at your option. If you sell your CDs in a secondary market transaction prior to maturity, you may receive significantly less than the face amount, as described under Q&A Can I Sell the CDs Prior to the Stated Maturity Date? below Calculation agent: Goldman, Sachs & Co. S-3 Business day: as described under Specific Terms of Your Certificates of Deposit Special Calculation Provisions Business Day on page S-28, unless another definition is specified in the applicable disclosure statement supplement Trading day: as described under Specific Terms of Your Certificates of Deposit Special Calculation Provisions Trading Day on page S-28, unless another definition is specified in the applicable disclosure statement supplement No listing: the offered CDs will not be listed on any securities exchange or interdealer market quotation system Legal ownership and payment: the CDs will be issued in master certificate form and payment will be made in accordance with the applicable procedures of the depositary, as discussed under Legal Ownership and Payment on page 38 of the accompanying disclosure statement ERISA: as described under Employee Retirement Income Security Act on page 55 of the accompanying disclosure statement About the Basket The basket will be an equally weighted basket of stocks. The basket stocks and their method of selection will be specified in the applicable disclosure statement supplement. S-4 Q&A How do the CDs Work? On each coupon payment date, we will pay you for each $1,000 face amount of your CDs an amount in cash, if any, based on the arithmetic average of the stock return of each of the basket stocks, as measured from the trade date to each applicable coupon determination date, subject to adjustment. The stock return will be subject to a maximum stock return specified in the applicable disclosure statement supplement and a minimum stock return. At maturity, we will pay you $1,000 for each $1,000 face amount of your CDs plus the final coupon, if any. We will determine the applicable coupon by first calculating the stock return of each basket stock based on the percentage increase or decrease in the price of each basket stock, subject to the maximum stock return and minimum stock return. We refer to the increase or decrease in a basket stock from the trade date to the relevant coupon determination date as the stock performance. If a maximum stock return trigger level is specified in the applicable disclosure statement supplement: If the stock performance for a basket stock is greater than or equal to the maximum stock return trigger level, the stock return for that basket stock will equal the maximum stock return. If the stock performance for a basket stock is less than the maximum stock return trigger level, the stock return for that basket stock will equal the greater of: (i) the stock performance for such basket stock and (ii) the minimum stock return. We will then calculate the basket return, which will equal the arithmetic average of the stock returns, which is the sum of the stock returns divided by the number of basket stocks. The basket return will never exceed the maximum stock return or be less than the minimum stock return. If no maximum stock return trigger level is specified in the applicable disclosure statement supplement: If the stock performance for a basket stock is greater than or equal to the maximum stock return, the stock return for that basket stock will equal the maximum stock return. If the stock performance for a basket stock is less than the maximum stock return, the stock return for that basket stock will equal the greater of: (i) the stock performance for such basket stock and (ii) the minimum stock return. We will then calculate the basket return, which will equal the arithmetic average of the stock returns, which is the sum of the stock returns divided by the number of basket stocks. The basket return will never exceed the maximum stock return or be less than the minimum stock return. We will calculate the applicable coupon as follows. For each $1,000 face amount of your CDs, we will pay you an amount in cash, if any, equal to the greater of: (1) an amount in cash equal to the product of the basket return times $1,000; or (2) $0 or, if a minimum coupon rate is specified, the minimum coupon rate times $1,000. If the basket return is zero or negative, you will not be paid a coupon on the applicable coupon payment date or, if a minimum coupon rate is specified, you will receive a coupon based on the minimum coupon rate, if one is specified. In addition, because of the maximum stock return, the coupon will never exceed $1,000 times the maximum stock return for each $1,000 face amount
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