Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-219206
General Terms Supplement No. 7,016 to the Prospectus and the Prospectus Supplement, each as may be amended from time to time, that form a part of Registration Statement No. 333-219206
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GS Finance Corp. Medium-Term Notes, Series E guaranteed by The Goldman Sachs Group, Inc. |
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General Terms Supplement
Notes Linked to the Performance
of One or More Indices or Exchange-Traded Funds
GS Finance Corp. may from time to time offer and sell notes (which we refer to as the notes or the securities), the payments and performance of which will be linked to the performance of one or more indices (which we refer to as the underlying index(es) or the underlying(s)) or exchange-traded funds (which we refer to as the underlying ETF(s) or the underlying(s)). Specifically, the payments and performance of the notes may be linked to a single underlying, a basket of underlyings or the worst performing of two or more underlyings.
The accompanying prospectus and the accompanying prospectus supplement, each as may be amended from time to time, that form a part of Registration Statement No. 333-219206, and this general terms supplement no. 7,016 describe some of the terms that may apply generally to the notes, including any notes you purchase. A separate pricing supplement, which we refer to as the applicable pricing supplement, will describe additional terms that apply to your notes and will identify one or more underlying(s) to be used to calculate a return on your notes. Further, if specified in the applicable pricing supplement, a separate product supplement, which we refer to as the applicable product supplement, will describe additional terms that apply to your notes and a separate underlier supplement, which we refer to as the applicable underlier supplement, will describe the specified underlying(s). The applicable pricing supplement and the applicable product supplement, if any, may each also describe any additions or changes to the terms of the notes set forth in this general terms supplement no. 7,016.
This general terms supplement no. 7,016 contains the following:
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Certain risks applicable to the notes. You should read these risks in conjunction with the risks described in the applicable pricing supplement, the applicable product supplement, if any, the applicable underlier supplement, if any, the accompanying prospectus supplement and the accompanying prospectus. |
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Certain terms that may relate to your notes in addition to the description of the notes contained in the applicable pricing supplement and the applicable product supplement, if any. |
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Descriptions of certain dates that may relate to your notes, including the valuation date (the final date on which a calculation is made to determine the amount payable on the notes, which may be the final averaging date, if averaging dates are applicable to your notes), any call observation date (a date on which a calculation is made to determine if the notes will be automatically called on an applicable call payment date) and any coupon observation date (a date on which a calculation is made to determine the amount of any coupon, if any, that will be paid on an applicable coupon payment date). If your notes are linked to a basket of underlyings or the worst performing of two or more underlyings, the applicable dates set forth above, which are dates on which calculations are made, may differ from the dates on which the values or prices, as applicable, of one or more basket underlyings, potential worst performing underlyings or exchange rates, as applicable, are determined for the purposes of such calculations. |
Your investment in the notes involves certain risks. See “Additional Risk Factors Specific to the Notes” beginning on page S-4 to read about investment risks relating to the notes.
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this general terms supplement no. 7,016, the applicable pricing supplement, the applicable product supplement, if any, the applicable underlier supplement, if any, the accompanying prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
The notes are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency, nor are they obligations of, or guaranteed by, a bank.
GS Finance Corp. may use this general terms supplement no. 7,016 in the initial sale of the notes. In addition, Goldman Sachs & Co. LLC (GS&Co.), or any other affiliate of GS Finance Corp., may use this general terms supplement no. 7,016 in a market-making transaction in a note after its initial sale. Unless GS Finance Corp. or its agent informs the purchaser otherwise in the confirmation of sale, this general terms supplement no. 7,016 is being used in a market-making transaction.
Goldman Sachs & Co. LLC
General Terms Supplement No. 7,016 dated November 22, 2019.
The Notes Are Part of a Series
The notes are part of a series of debt securities, entitled “Medium-Term Notes, Series E”, that we may issue under our indenture from time to time. The notes are “indexed debt securities”, as defined in the accompanying prospectus. The notes will be fully and unconditionally guaranteed by The Goldman Sachs Group, Inc. This general terms supplement no. 7,016 describes certain terms that may apply to the notes. The applicable pricing supplement will identify the underlying(s) to be used to calculate a return on your notes and may also describe any additions or changes to the terms of the notes. We describe terms that apply generally to all Series E medium-term notes in “Description of Notes We May Offer” and “Description of Debt Securities We May Offer” in the accompanying prospectus supplement for Series E medium-term notes and the accompanying prospectus, respectively. The terms described herein supplement those described in the accompanying prospectus and the accompanying prospectus supplement and, if the terms described herein are inconsistent with those described therein, the terms described herein are controlling.
Please note that the information about the settlement or pricing dates, issue price, underwriting discounts or commissions and net proceeds to us in the applicable pricing supplement relates only to the initial issuances and sales of your notes. If you have purchased your notes in a market-making transaction after any initial issuance and sale, any such relevant information about the sale to you will be provided in a separate confirmation of sale.
Specific Terms Will Be Described in the Applicable Pricing Supplement and the Applicable Product Supplement, If Any
The specific terms of your notes will be described in the applicable pricing supplement and the applicable product supplement, if any, accompanying this general terms supplement no. 7,016. We may also prepare free writing prospectuses that describe particular notes. For purposes of this general terms supplement no. 7,016, any reference to an applicable pricing supplement may also refer to a free writing prospectus, unless the context otherwise requires. The terms described in the applicable pricing supplement and the applicable product supplement, if any, are in addition to those described herein and
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in the accompanying prospectus and the accompanying prospectus supplement. If the terms described in the applicable pricing supplement are inconsistent with those described herein or in the applicable product supplement, if any, accompanying prospectus or accompanying prospectus supplement, the terms in the applicable pricing supplement are controlling. If the applicable pricing supplement specifies a different meaning for any term described herein, that modified definition will be deemed to apply to this general terms supplement no. 7,016 for all purposes with respect to your notes. If the applicable product supplement, if any, specifies different terms for your notes or a different meaning for any term described herein, the meaning or term contained in the applicable product supplement, if any, will control unless the applicable pricing supplement provides a different meaning, in which case the applicable pricing supplement will control.
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Additional Risk Factors Specific to the NOTES
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An investment in your notes is subject to the risks described below as well as the risks and considerations described in the applicable pricing supplement, the applicable product supplement, if any, the applicable underlier supplement, if any, the accompanying prospectus supplement and the accompanying prospectus. Your notes are a riskier investment than ordinary debt securities. Also, your notes are not equivalent to investing directly in the underlying stocks, i.e., with respect to an underlying to which your notes are linked, the stocks comprising such underlying. You should carefully consider whether the offered notes are suited to your particular circumstances. |
The Estimated Value of Your Notes At the Time the Terms of Your Notes Are Set On the Pricing Date (as Determined By Reference to Pricing Models Used By GS&Co.) Is Less Than the Original Issue Price Of Your Notes
The original issue price for your notes exceeds the estimated value of your notes as of the time the terms of your notes are set on the pricing date, as determined by reference to GS&Co.’s pricing models and taking into account our credit spreads. Such estimated value on the pricing date will be set forth under “Estimated Value of Your Notes” in the applicable pricing supplement; after the pricing date, the estimated value as determined by reference to these models will be affected by changes in market conditions, the creditworthiness of GS Finance Corp., as issuer, the creditworthiness of The Goldman Sachs Group, Inc., as guarantor, and other relevant factors. If specified in the applicable pricing supplement, the price at which GS&Co. would initially buy or sell your notes (if GS&Co. makes a market, which it is not obligated to do), and the value that GS&Co. will initially use for account statements and otherwise, also exceeds the estimated value of your notes as determined by reference to these models. If specified in the applicable pricing supplement, as agreed by GS&Co. and the distribution participants, this excess (i.e., the additional amount described under “Estimated Value of Your Notes” in the applicable pricing supplement) will decline to zero on a straight line basis over the period from the date thereof through the applicable date set forth under “Estimated Value of Your Notes” in the applicable pricing supplement. Thereafter, if GS&Co. buys or sells your notes it will do so at prices that reflect the estimated value determined by reference to such pricing models at that time. The price at which GS&Co. will buy or sell your notes at any time also will reflect its then current bid and ask spread for similar sized trades of structured notes.
In estimating the value of your notes as of the time the terms of your notes are set on the pricing date, as disclosed under “Estimated Value of Your Notes” in the applicable pricing supplement, GS&Co.’s pricing models consider certain variables, including principally our credit spreads, interest rates (forecasted, current and historical rates), volatility, price-sensitivity analysis and the time to maturity of the notes. These pricing models are proprietary and rely in part on certain assumptions about future events, which may prove to be incorrect. As a result, the actual value you would receive if you sold your notes in the secondary market, if any, to others may differ, perhaps materially, from the estimated value of your notes determined by reference to our models due to, among other things, any differences in pricing models or assumptions used by others. See “— The Market Value of Your Notes May Be Influenced by Many Unpredictable Factors” below.
The difference between the estimated value of your notes as of the time the terms of your notes are set on the pricing date and the original issue price is a result of certain factors, including principally the underwriting discount and commissions, the expenses incurred in creating, documenting and marketing the notes, and an estimate of the difference between the amounts we pay to GS&Co. and the amounts GS&Co. pays to us in connection with your notes. We pay to GS&Co. amounts based on what we would pay to holders of a non-structured note with a similar maturity. In return for such payment, GS&Co. pays to us the amounts we owe under your notes.
In addition to the factors discussed above, the value and quoted price of your notes at any time will reflect many factors and cannot be predicted. If GS&Co. makes a market in the notes, the price quoted by GS&Co. would reflect any changes in market conditions and other relevant factors, including any deterioration in our creditworthiness or perceived creditworthiness or the creditworthiness or perceived creditworthiness of The Goldman Sachs Group, Inc. These changes may adversely affect the value of
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your notes, including the price you may receive for your notes in any market making transaction. To the extent that GS&Co. makes a market in the notes, the quoted price will reflect the estimated value determined by reference to GS&Co.’s pricing models at that time, plus or minus its then current bid and ask spread for similar sized trades of structured notes (and, if applicable, subject to the declining excess amount described above).
Furthermore, if you sell your notes, you will likely be charged a commission for secondary market transactions, or the price will likely reflect a dealer discount. This commission or discount will further reduce the proceeds you would receive for your notes in a secondary market sale.
There is no assurance that GS&Co. or any other party will be willing to purchase your notes at any price and, in this regard, GS&Co. is not obligated to make a market in the notes. See “— Your Notes May Not Have an Active Trading Market” below.
You May Lose Your Entire Investment in the Notes
You can lose all or substantially all of your investment in the notes. The cash payment on your notes on the stated maturity date will be based on the performance of the applicable underlying or underlyings.
Also, the market price of your notes prior to the stated maturity date may be significantly lower than the purchase price you pay for your notes. Consequently, if you sell your notes before the stated maturity date, you may receive far less than the amount of your investment in the notes.
Your Notes May Pay a Coupon at a Low Rate or They May Pay No Coupon At All
The applicable pricing supplement will state whether your notes pay a coupon. Therefore, your notes may pay no coupon at all. If your notes do pay a coupon, they may do so at a rate that is below the prevailing market rate for our debt securities that are not linked to the performance of one or more indices or exchange-traded funds. Consequently, unless the amount payable on your notes on the stated maturity date substantially exceeds the amount you paid for your notes, the overall return you earn on your notes could be less than what you would have earned by investing in non-indexed debt securities that bear interest at prevailing market rates.
The Notes Are Subject to the Credit Risk of GS Finance Corp., as Issuer, and the Credit Risk of The Goldman Sachs Group, Inc., as Guarantor
Although the return on the notes will be based on the performance of one or more underlyings, the payment of any amount due on the notes is subject to the credit risk of GS Finance Corp., as issuer of the notes, and the credit risk of The Goldman Sachs Group, Inc., as guarantor of the notes. The notes are our unsecured obligations. Investors are dependent on our ability to pay all amounts due on the notes, and therefore investors are subject to our credit risk and to changes in the market’s view of our creditworthiness. Similarly, investors are dependent on the ability of The Goldman Sachs Group, Inc., as guarantor of the notes, to pay all amounts due on the notes, and therefore are also subject to its credit risk and to changes in the market’s view of its creditworthiness. See “Description of Notes We May Offer — Information About Our Medium-Term Notes, Series E Program — How the Notes Rank Against Other Debt” on page S-4 of the accompanying prospectus supplement and “Description of Debt Securities We May Offer—Guarantee by The Goldman Sachs Group, Inc.” on page 42 of the accompanying prospectus.
The Market Value of Your Notes May Be Influenced by Many Unpredictable Factors
The following factors, among others, many of which are beyond our control, may influence the market value of your notes:
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the volatility — i.e., the frequency and magnitude of changes — of the values of the underlying or underlyings; |
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whether your notes are linked to a single underlying, a basket of underlyings or the worst performing of two or more underlyings; |
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the value of the underlying or underlyings to which your notes are linked; |
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the dividend rates of the underlying stocks; |
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interest rates and yield rates in the market; |
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the time remaining until your notes mature; and |
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our creditworthiness and the creditworthiness of The Goldman Sachs Group, Inc., whether actual or perceived, and including actual or anticipated upgrades or downgrades in our credit ratings or the credit ratings of The Goldman Sachs Group, Inc. or changes in other credit measures. |
These factors may influence the market value of your notes if you sell your notes before maturity, including the price you may receive for your notes in any market making transaction. If you sell your notes prior to maturity, you may receive less than the principal amount of your notes. You cannot predict the future performance of the applicable underlying or underlyings based on their historical performance.
If the Value of an Underlying Changes, the Market Value of Your Notes May Not Change in the Same Manner
Your notes may trade quite differently from the performance of the applicable underlying or underlyings. Changes in the values of the underlying or underlyings may not result in a comparable change in the market value of your notes. We discuss some of the reasons for this disparity under “ — The Market Value of Your Notes May Be Influenced by Many Unpredictable Factors” above.
The Return on Your Notes Will Not Reflect Any Dividends Paid on Any Underlying, or Any Underlying Stock, as Applicable
If the underlying is an index, the value of which the underlying publisher calculates by reference to the prices of its underlying stocks without taking account of the value of dividends paid on those underlying stocks, the return on your notes will not reflect the return you would realize if you actually owned the underlying stocks and received the dividends paid on those underlying stocks. In addition, if the underlying is an exchange-traded fund, the return on your notes will not reflect the return you would realize if you actually owned the exchange-traded fund and received the distributions paid on the shares of such exchange-traded fund. You will not receive any dividends that may be paid on any of the underlying stocks by the underlying stock issuers or, in case of an underlying that is an exchange-traded fund, on the shares of such exchange-traded fund. See “—You Have No Shareholder Rights or Rights to Receive Any Shares of an Underlying or Any Underlying Stock, as Applicable” below for additional information.
You Have No Shareholder Rights or Rights to Receive Any Shares of an Underlying or Any Underlying Stock, as Applicable
Investing in your notes will not make you a holder of any shares of an underlying or the underlying stocks, as applicable. Neither you nor any other holder or owner of your notes will have any rights with respect to the underlying or the underlying stocks, including any voting rights, any rights to receive dividends or other distributions, any rights to make a claim against the underlying or the underlying stocks or any other rights of a holder of any shares of an underlying or the underlying stocks, as applicable. Your notes will be paid in cash, and you will have no right to receive delivery of any shares of the underlying or the underlying stocks, as applicable.
Other Investors in the Notes May Not Have the Same Interests as You
Other investors in the notes are not required to take into account the interests of any other investor in exercising remedies or voting or other rights in their capacity as securityholders or in making requests or recommendations to Goldman Sachs as to the establishment of other transaction terms. The interests of other investors may, in some circumstances, be adverse to your interests. For example, certain investors may take short positions (directly or indirectly through derivative transactions) on assets that are the same or similar to your notes, underlying or underlyings or constituent indices or underlying stocks thereof or other similar securities, which may adversely impact the market for or value of your notes.
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Anticipated Hedging Activities by Goldman Sachs or Our Distributors May Negatively Impact Investors in the Notes and Cause Our Interests and Those of Our Clients and Counterparties to be Contrary to Those of Investors in the Notes
As we describe in the applicable pricing supplement and the applicable product supplement, if any, Goldman Sachs expects to hedge our obligations under the notes by purchasing futures and/or other instruments linked to the underlying or underlyings or constituent indices or underlying stocks thereof, or, if applicable, the currencies in which underlyings are denominated, as applicable. Goldman Sachs also expects to adjust the hedge by, among other things, purchasing or selling any of the foregoing, and perhaps other instruments linked to the underlying or underlyings, the constituent indices or underlying stocks thereof, as applicable, at any time and from time to time, and to unwind the hedge by selling any of the foregoing on or before the valuation date for your notes. Alternatively, Goldman Sachs may hedge all or part of our obligations under the notes with unaffiliated distributors of the notes which we expect will undertake similar market activity. Goldman Sachs may also enter into, adjust and unwind hedging transactions relating to other underlying-linked notes whose returns are linked to changes in the value of the underlying or underlyings, the constituent indices or underlying stocks thereof, as applicable.
In addition to entering into such transactions itself, or distributors entering into such transactions, Goldman Sachs may structure such transactions for its clients or counterparties, or otherwise advise or assist clients or counterparties in entering into such transactions. These activities may be undertaken to achieve a variety of objectives, including: permitting other purchasers of the notes or other securities to hedge their investment in whole or in part; facilitating transactions for other clients or counterparties that may have business objectives or investment strategies that are inconsistent with or contrary to those of investors in the notes; hedging the exposure of Goldman Sachs to the notes including any interest in the notes that it reacquires or retains as part of the offering process, through its market-making activities or otherwise; enabling Goldman Sachs to comply with its internal risk limits or otherwise manage firmwide, business unit or product risk; and/or enabling Goldman Sachs to take directional views as to relevant markets on behalf of itself or its clients or counterparties that are inconsistent with or contrary to the views and objectives of the investors in the notes.
Any of these hedging or other activities may adversely affect the values of the underlying or underlyings — directly or indirectly by affecting the price of the underlying stocks or the values of the constituent indices, if applicable — and therefore the market value of your notes and the amount we will pay on your notes, if any. In addition, you should expect that these transactions will cause Goldman Sachs or its clients, counterparties or distributors to have economic interests and incentives that do not align with, and that may be directly contrary to, those of an investor in the notes. Neither Goldman Sachs nor any distributor will have any obligation to take, refrain from taking or cease taking any action with respect to these transactions based on the potential effect on an investor in the notes, and may receive substantial returns on hedging or other activities while the value of your notes declines. In addition, if the distributor from which you purchase notes is to conduct hedging activities in connection with the notes, that distributor may otherwise profit in connection with such hedging activities and such profit, if any, will be in addition to the compensation that the distributor receives for the sale of the notes to you. You should be aware that the potential to earn fees in connection with hedging activities may create a further incentive for the distributor to sell the notes to you in addition to the compensation they would receive for the sale of the notes. See the applicable pricing supplement and the applicable product supplement, if any, for a further discussion of transactions in which Goldman Sachs may engage.
Goldman Sachs’ Trading and Investment Activities for its Own Account or for its Clients Could Negatively Impact Investors in the Notes
Goldman Sachs is a global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and individuals. As such, it acts as an investor, investment banker, research provider, investment manager, investment advisor, market maker, trader, prime broker and lender. In those and other capacities, Goldman Sachs purchases, sells or holds a broad array of investments, actively trades securities, derivatives, loans, commodities, currencies, credit default swaps, indices, baskets and other financial instruments and products for its own account or for the accounts of its customers, and will have other direct or indirect interests, in the global fixed income, currency,
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commodity, equity, bank loan and other markets. Any of Goldman Sachs’ financial market activities may, individually or in the aggregate, have an adverse effect on the market for your notes, and you should expect that the interests of Goldman Sachs or its clients or counterparties will at times be adverse to those of investors in the notes.
Goldman Sachs regularly offers a wide array of securities, financial instruments and other products into the marketplace, including existing or new products that are similar to your notes, or similar or linked to the underlying or underlyings or constituent indices or underlying stocks thereof, as applicable. Investors in the notes should expect that Goldman Sachs will offer securities, financial instruments, and other products that will compete with the notes for liquidity, research coverage or otherwise.
Goldman Sachs’ Market-Making Activities Could Negatively Impact Investors in the Notes
Goldman Sachs actively makes markets in and trades financial instruments for its own account and for the accounts of customers. These financial instruments include debt and equity securities, currencies, commodities, bank loans, indices, baskets and other products. Goldman Sachs’ activities include, among other things, executing large block trades and taking long and short positions directly and indirectly, through derivative instruments or otherwise. The securities and instruments in which Goldman Sachs takes positions, or expects to take positions, include securities and instruments of the underlying or underlyings or constituent indices or underlying stocks thereof, as applicable, securities and instruments similar to or linked to the foregoing or the currencies in which they are denominated. Market making is an activity where Goldman Sachs buys and sells on behalf of customers, or for its own account, to satisfy the expected demand of customers. By its nature, market making involves facilitating transactions among market participants that have differing views of securities and instruments. As a result, you should expect that Goldman Sachs will take positions that are inconsistent with, or adverse to, the investment objectives of investors in the notes.
If Goldman Sachs becomes a holder of any securities of the underlying or underlyings or constituent indices or underlying stocks thereof, as applicable, in its capacity as a market-maker or otherwise, any actions that it takes in its capacity as securityholder, including voting or provision of consents, will not necessarily be aligned with, and may be inconsistent with, the interests of investors in the notes.
You Should Expect That Goldman Sachs Personnel Will Take Research Positions, or Otherwise Make Recommendations, Provide Investment Advice or Market Color or Encourage Trading Strategies That Might Negatively Impact Investors in the Notes
Goldman Sachs and its personnel, including its sales and trading, investment research and investment management personnel, regularly make investment recommendations, provide market color or trading ideas, or publish or express independent views in respect of a wide range of markets, issuers, securities and instruments. They regularly implement, or recommend to clients that they implement, various investment strategies relating to these markets, issuers, securities and instruments. These strategies include, for example, buying or selling credit protection against a default or other event involving an issuer or financial instrument. Any of these recommendations and views may be negative with respect to the underlying or underlyings or constituent indices or underlying stocks thereof, as applicable, or other securities or instruments similar to or linked to the foregoing or result in trading strategies that have a negative impact on the market for any such securities or instruments, particularly in illiquid markets. In addition, you should expect that personnel in the trading and investing businesses of Goldman Sachs will have or develop independent views of the underlying or underlyings or constituent indices or underlying stocks thereof, as applicable, the relevant industry or other market trends, which may not be aligned with the views and objectives of investors in the notes.
Goldman Sachs Regularly Provides Services to, or Otherwise Has Business Relationships with, a Broad Client Base, Which May Include the Publishers of the Underlying or Underlyings or Constituent Indices, As Applicable, or the Issuers of the Underlying Stocks or Other Entities That Are Involved in the Transaction
Goldman Sachs regularly provides financial advisory, investment advisory and transactional services to a substantial and diversified client base, and you should assume that Goldman Sachs will, at present or in
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the future, provide such services or otherwise engage in transactions with, among others, the publishers of the underlying or underlyings or constituent indices, as applicable, or the issuers of the underlying stocks, or transact in securities or instruments or with parties that are directly or indirectly related to the foregoing. These services could include making loans to or equity investments in those companies, providing financial advisory or other investment banking services, or issuing research reports. You should expect that Goldman Sachs, in providing such services, engaging in such transactions, or acting for its own account, may take actions that have direct or indirect effects on the underlying or underlyings or constituent indices or underlying stocks thereof, as applicable, and that such actions could be adverse to the interests of investors in the notes. In addition, in connection with these activities, certain Goldman Sachs personnel may have access to confidential material non-public information about these parties that would not be disclosed to Goldman Sachs employees that were not working on such transactions as Goldman Sachs has established internal information barriers that are designed to preserve the confidentiality of non-public information. Therefore, any such confidential material non-public information would not be shared with Goldman Sachs employees involved in structuring, selling or making markets in the notes or with investors in the notes.
In this offering, as well as in all other circumstances in which Goldman Sachs receives any fees or other compensation in any form relating to services provided to or transactions with any other party, no accounting, offset or payment in respect of the notes will be required or made; Goldman Sachs will be entitled to retain all such fees and other amounts, and no fees or other compensation payable by any party or indirectly by holders of the notes will be reduced by reason of receipt by Goldman Sachs of any such other fees or other amounts.
The Offering of the Notes May Reduce an Existing Exposure of Goldman Sachs or Facilitate a Transaction or Position That Serves the Objectives of Goldman Sachs or Other Parties
A completed offering may reduce Goldman Sachs’ existing exposure to the underlying or underlyings or constituent indices or underlying stocks thereof, as applicable, securities and instruments similar to or linked to the foregoing or the currencies in which they are denominated, including exposure gained through hedging transactions in anticipation of this offering. An offering of notes will effectively transfer a portion of Goldman Sachs’ exposure (and indirectly transfer the exposure of Goldman Sachs’ hedging or other counterparties) to investors in the notes.
The terms of the offering (including the selection of the underlying or underlyings, constituent indices, underlying stocks and currencies, as applicable, and the establishment of other transaction terms) may have been selected in order to serve the investment or other objectives of Goldman Sachs or another client or counterparty of Goldman Sachs. In such a case, Goldman Sachs would typically receive the input of other parties that are involved in or otherwise have an interest in the offering, transactions hedged by the offering, or related transactions. The incentives of these other parties would normally differ from and in many cases be contrary to those of investors in the notes.
Past Performance is No Guide to Future Performance
The actual performance of the underlying or underlyings over the life of the notes, as well as the amount payable on your notes, may bear little relation to the historical closing values of the underlying or underlyings set forth in the applicable pricing supplement or to the hypothetical return examples set forth in the applicable product supplement, if any, and the applicable pricing supplement. We cannot predict the future performance of the underlying or underlyings.
Your Notes May Not Have an Active Trading Market
Your notes will not be listed or displayed on any securities exchange or included in any interdealer market quotation system, and there may be little or no secondary market for your notes. Even if a secondary market for your notes develops, it may not provide significant liquidity and we expect that transaction costs in any secondary market would be high. As a result, the difference between bid and asked prices for your notes in any secondary market could be substantial.
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The Calculation Agent Will Have the Authority to Make Determinations That Could Affect the Market Value of Your Notes, When Your Notes Mature and the Amount,
If Any, Payable on Your Notes
As of the date of this general terms supplement no. 7,016, we have appointed GS&Co. as the calculation agent for the notes. As calculation agent for your notes, GS&Co. will make all determinations with respect to the notes as specified in the applicable pricing supplement or the applicable product supplement, if any, including whether a market disruption event has occurred and in some cases the values of the underlying or underlyings. The calculation agent also has discretion in making certain adjustments relating to a discontinuation or modification of an underlying. The exercise of this discretion by GS&Co. could adversely affect the value of your notes and may present GS&Co. with a conflict of interest. We may change the calculation agent at any time without notice, and GS&Co. may resign as calculation agent at any time upon 60 days’ written notice to GS Finance Corp.
The Policies of an Underlying Publisher, if Applicable, and Changes that Affect an Underlying to Which Your Notes are Linked, or the Constituent Indices or Underlying Stocks Comprising Such Underlying, Could Affect the Amount Payable on Your Notes and Their Market Value
The policies of the applicable underlying publisher concerning the calculation of the value of an underlying to which your notes are linked, additions, deletions or substitutions of the constituent indices, if applicable, and/or the underlying stocks comprising such underlying, and the manner in which changes affecting the underlying stocks or their issuers, such as stock dividends, reorganizations or mergers, are reflected in the underlying value, could affect the value of the applicable underlying and, therefore, the amount payable on your notes and the market value of your notes. The amount payable on your notes and their market value could also be affected if the applicable underlying publisher changes these policies, for example, by changing the manner in which it calculates the underlying value or, in the case of an index, the method by which it constructs the underlying, or if any underlying publisher discontinues or suspends calculation or publication of the underlying value, in which case it may become difficult to determine the market value of your notes. If events such as these occur, the calculation agent — which initially will be GS&Co., our affiliate — may determine the underlying value— and thus the amount payable on your notes — in a manner it considers appropriate, in its sole discretion. We describe the discretion that the calculation agent will have in determining an underlying value on any underlying business day and the amount payable on your notes more fully under “Supplemental Terms of the Notes — Discontinuance or Modification of an Underlying” below and in any applicable product supplement or applicable pricing supplement.
The Calculation Agent Can Postpone the Valuation Date, Averaging Date, Call Observation Date or Coupon Observation Date If a Market Disruption Event or Non-Underlying Business Day Occurs or Is Continuing
Unless otherwise specified in the applicable pricing supplement, in the case of notes linked to a single underlying, if the calculation agent determines that, on the valuation date or any averaging date, call observation date or coupon observation date, as applicable, a market disruption event has occurred or is continuing with respect to such underlying or that day is not an underlying business day, the valuation date, the applicable averaging date and each succeeding averaging date, if applicable, the call observation date, or the coupon observation date, as applicable, will be postponed as described under “Supplemental Terms of the Notes — Valuation Date”, “Supplemental Terms of the Notes — Averaging Dates”, “Supplemental Terms of the Notes — Call Observation Dates” or “Supplemental Terms of the Notes — Coupon Observation Dates” below, as the case may be. If the valuation date or any averaging date, call observation date or coupon observation date, as applicable, is postponed to the last possible day and a market disruption event occurs or is continuing on such last possible day or such day is not an underlying business day, such date will nevertheless be the valuation date, averaging date, call observation date or coupon observation date, as applicable.
Unless otherwise specified in the applicable pricing supplement, in the case of notes linked to a basket of underlyings, if the calculation agent determines that, on the valuation date or any averaging date, call observation date or coupon observation date, as applicable, a market disruption event has occurred or is continuing with respect to a basket underlying or that day is not an underlying business day with respect to a basket underlying, the valuation date or any averaging date, call observation date or coupon
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observation date, as applicable, will be postponed as described under “Supplemental Terms of the Notes — Valuation Date”, “Supplemental Terms of the Notes — Averaging Dates”, “Supplemental Terms of the Notes — Call Observation Dates” or “Supplemental Terms of the Notes — Coupon Observation Dates” below, as the case may be. If the valuation date or any averaging date, call observation date or coupon observation date, as applicable, is postponed to the last possible day and a market disruption event occurs or is continuing with respect to any basket underlying on such last possible day or such day is not an underlying business day with respect to such basket underlying, such date will nevertheless be the valuation date or the applicable averaging date, call observation date or coupon observation date, as applicable.
Unless otherwise specified in the applicable pricing supplement, in the case of notes linked to the worst performing of two or more underlyings, if the calculation agent determines that, on the valuation date or any averaging date, call observation date or coupon observation date, as applicable, a market disruption event has occurred or is continuing with respect to a potential worst performing underlying or that day is not an underlying business day with respect to a potential worst performing underlying, the valuation date or any averaging date, call observation date or coupon observation date, as applicable, will be postponed as described under “Supplemental Terms of the Notes — Valuation Date”, “Supplemental Terms of the Notes — Averaging Dates”, “Supplemental Terms of the Notes — Call Observation Dates” or “Supplemental Terms of the Notes — Coupon Observation Dates” below, as the case may be. If the valuation date or any averaging date, call observation date or coupon observation date, as applicable, is postponed to the last possible day and a market disruption event occurs or is continuing with respect to any potential worst performing underlying on such last possible day or such day is not an underlying business day with respect to such potential worst performing underlying, such date will nevertheless be the valuation date or the applicable averaging date, call observation date or coupon observation date, as applicable.
As a result of any of the foregoing, the stated maturity date, call payment date or coupon payment date, as applicable, for your notes may also be postponed, as described under “Supplemental Terms of the Notes — Stated Maturity Date”, “Supplemental Terms of the Notes — Call Payment Dates”, or “Supplemental Terms of the Notes — Coupon Payments — Coupon Payment Dates” as applicable, below. In such a case, you may not receive the cash payment, if any, that we are obligated to deliver on the stated maturity date, call payment date or coupon payment date, as applicable, until several days after the originally scheduled stated maturity date, call payment date or coupon payment date, as applicable. Moreover, if the closing value (or adjusted closing value, if applicable) of an underlying is not available on the valuation date or any averaging date, call observation date or coupon observation date, as applicable, because of a market disruption event, a non-underlying business day or for any other reason (except as described under “Supplemental Terms of the Notes — Discontinuance or Modification of an Underlying” below), in certain circumstances the calculation agent will determine such underlying value based on its assessment, made in its sole discretion, of the values of the applicable underlying as described under “Supplemental Terms of the Notes — Consequences of a Market Disruption Event or a Non-Underlying Business Day” below.
Except to the Extent That We or Our Affiliates May Currently or in the Future Own Securities of, or Engage in Business With, the Applicable Underlying Publisher or the Underlying Stock Issuers, There Is No Affiliation Between the Underlying Stock Issuers or Any Underlying Publisher and Us
We or our affiliates may currently or from time to time in the future own securities of, or engage in business with, the applicable underlying publisher or the underlying stock issuers. Unless otherwise disclosed in the applicable pricing supplement, we are not otherwise affiliated with the issuers of the underlying stocks or the underlying publishers. Neither we nor any of our affiliates have participated in the preparation of any publicly available information or made any “due diligence” investigation or inquiry with respect to any other underlying or underlying stock issuer. You, as an investor in your notes, should make your own investigation into the underlyings and the underlying stock issuers. See “The Underlyings” below for additional information about certain underlyings to which your notes may be linked.
Neither the underlying publishers nor the other underlying stock issuers are involved in the offering of your notes in any way and none of them have any obligation of any sort with respect to your notes. Thus, neither the underlying publishers nor the underlying stock issuers have any obligation to take your
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interests into consideration for any reason, including in taking any corporate actions that might affect the market value of your notes.
There are Small-Capitalization Stock Risks Associated with Certain Underlyings Such as the Russell 2000® Index
Certain underlyings, such as the Russell 2000® Index, are comprised of underlying stocks of companies that may be considered small capitalization companies. These companies often have greater stock price volatility, lower trading volume and less liquidity than large capitalization companies and therefore such underlyings may be more volatile than an underlying in which a greater percentage of the constituent stocks are issued by large-capitalization companies.
Certain Considerations for Insurance Companies and Employee Benefit Plans
Any insurance company or fiduciary of a pension plan or other employee benefit plan that is subject to the prohibited transaction rules of the Employee Retirement Income Security Act of 1974, as amended, which we call “ERISA”, or the Internal Revenue Code of 1986, as amended, including an IRA or a Keogh plan (or a governmental plan to which similar prohibitions apply), and that is considering purchasing the notes with the assets of the insurance company or the assets of such a plan, should consult with its counsel regarding whether the purchase or holding of the notes could become a “prohibited transaction” under ERISA, the Internal Revenue Code or any substantially similar prohibition in light of the representations a purchaser or holder in any of the above categories is deemed to make by purchasing and holding the notes. This is discussed in more detail under “Employee Retirement Income Security Act” below.
The tax consequences of an investment in your notes are uncertain, both as to the timing and character of any inclusion in income in respect of your notes. We discuss these matters under “Supplemental Discussion of Federal Income Tax Consequences” below. Pursuant to the terms of the notes, GS Finance Corp. and you agree (in the absence of a change in law, an administrative determination or a judicial ruling to the contrary) to characterize each of your notes for all purposes as a pre-paid forward contract or a pre‑paid derivative contract (which is an income-bearing pre-paid forward contract or pre-paid derivative contract if the notes pay a coupon) in respect of the underlyings or basket of underlyings, as specified in the applicable pricing supplement. If your notes are so treated, it would be reasonable for you to treat any gain or loss you recognize upon the sale, exchange, redemption or maturity of your notes (excluding amounts attributable to a coupon payment) as capital gain or loss in an amount equal to the difference between the amount you receive upon the sale, exchange or redemption of your notes or on the stated maturity date and the amount you paid for your notes. Such gain or loss generally would be long-term capital gain or loss if you held your notes for more than one year. If you are a United States alien holder (as defined in “Supplemental Discussion of U.S. Federal Income Tax Consequences” below), and your notes pay coupons, we intend to withhold on the coupon payments on your notes at a 30% rate. Please also consult your tax advisor concerning the U.S. federal income tax and any other applicable tax consequences to you of owning your notes in your particular circumstances.
The Internal Revenue Service announced on December 7, 2007 that it is actively considering the proper federal tax treatment of financial instruments such as the notes and it is possible that any future guidance could adversely affect the tax treatment and the value of the notes. Except to the extent otherwise provided by law, GS Finance Corp. intends to continue treating the notes for U.S. federal income tax purposes in accordance with the treatment set forth in “Supplemental Discussion of U.S. Federal Income Tax Consequences” below unless and until such time as Congress, the Treasury Department or the Internal Revenue Service determine that some other treatment is more appropriate.
In addition, legislation was introduced in Congress in 2007, that, if enacted, would have required holders that acquired instruments such as the notes after the bill is enacted to accrue interest income over the term of such instruments even if there may be no coupon payments over the term of such instruments. It is not possible to predict whether a similar or an identical bill will be enacted in the future and whether any such bill would affect the tax treatment of your notes.
The tax discussion herein addresses certain tax consequences that are generally expected to be applicable to the notes issued off of this general terms supplement no. 7,016 but it does not address the tax treatment of any particular note. Accordingly, tax consequences different than those described herein
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may be applicable to any particular note. The tax consequences for a particular note will be discussed in the applicable pricing supplement.
If you are a non-U.S. investor, please also read the section of this general terms supplement no. 7,016 called “Supplemental Discussion of Federal Income Tax Consequences.”
You are urged to consult your tax advisor regarding all aspects of the U.S. federal income tax consequences of investing in the notes as well as any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.
Foreign Account Tax Compliance Act (FATCA) Withholding May Apply to Payments on Your Notes, Including as a Result of the Failure of the Bank or Broker Through Which You Hold the Notes to Provide Information to Tax Authorities
Please see the discussion under “United States Taxation — Taxation of Debt Securities — Foreign Account Tax Compliance Act (FATCA) Withholding” in the accompanying prospectus for a description of the applicability of FATCA to payments made on your notes. The discussion in that section is hereby modified to reflect regulations proposed by the Treasury Department indicating its intent to eliminate the requirements under FATCA of withholding on gross proceeds from the sale, exchange, maturity or other disposition of relevant financial instruments. The Treasury Department has indicated that taxpayers may rely on these proposed regulations pending their finalization.
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Supplemental Terms of the Notes
The terms below are in addition to the general terms of the notes specified in the accompanying prospectus and the accompanying prospectus supplement. These supplemental terms address, among other things, adjustments made as a result of the occurrence of a market disruption event or non-underlying business day or the change or discontinuation of an underlying. Any term indicated below that may be specified in the applicable pricing supplement may alternatively, or in addition, be specified in the applicable product supplement, if any. If the term is specified in the applicable pricing supplement and the applicable product supplement, if any, the term specified in the applicable pricing supplement will control in the event of conflict.
Specified Currency
Unless otherwise specified in the applicable pricing supplement, all payments of principal and coupons or interest, if any, will be made in U.S. dollars (“$” or “USD”).
Form and Denomination
The notes will be issued only in global form through DTC. Unless otherwise specified in the applicable pricing supplement, the denomination of each note will be an amount equal to $10 or an integral multiple of $10 in excess thereof.
No Listing
Unless otherwise specified in the applicable pricing supplement, your notes will not be listed or displayed on any securities exchange or included in any interdealer market quotation system.
Stated Maturity Date
The stated maturity date for your notes will be the date specified in the applicable pricing supplement, unless that date is not a business day, in which case the stated maturity date will be postponed to the next following business day.
The stated maturity date will also be postponed if the originally scheduled stated maturity date for your notes as specified in the applicable pricing supplement is equal to or less than 5 scheduled business days following the originally scheduled valuation date for your notes and the valuation date is postponed as described under “— Valuation Date” below. In such a case, the stated maturity date will be postponed by the same number of business day(s) from but excluding the originally scheduled valuation date to and including the actual valuation date. If, however, the originally scheduled stated maturity date for your notes is greater than 5 scheduled business days following the originally scheduled valuation date for your notes, any postponement of the valuation date will not postpone the stated maturity date.
The call payment date or set of call payment dates for your notes will be the date or dates specified in the applicable pricing supplement, unless any such date is not a business day, in which case such call payment date will be postponed to the next following business day.
A call payment date will also be postponed if the applicable originally scheduled call payment date as specified in the applicable pricing supplement is equal to or less than 5 scheduled business days following the originally scheduled call observation date related to such call payment date and such call observation date is postponed as described under “— Call Observation Dates” below. In such a case, such call payment date will be postponed by the same number of business day(s) from but excluding the applicable originally scheduled call observation date to and including the actual call observation date. If, however, the applicable originally scheduled call payment date for your notes is greater than 5 scheduled business days following the applicable originally scheduled call observation date for your notes, any postponement of the call observation date will not postpone the applicable call payment date.
Valuation Date
The following rules will apply unless otherwise specified in the applicable pricing supplement. For the consequences of a market disruption event or non-underlying business day, please see “—
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Consequences of a Market Disruption Event or a Non-Underlying Business Day” in this general terms supplement no. 7,016.
Notes Linked to a Single Underlying. The valuation date for your notes in this case will be the date specified in the applicable pricing supplement, unless the calculation agent determines that a market disruption event occurs or is continuing on such day or such day is not an underlying business day. In that event, the valuation date will be the first following underlying business day on which the calculation agent determines that a market disruption event does not occur and is not continuing. If the originally scheduled stated maturity date for your notes is equal to or less than 5 scheduled business days following the originally scheduled valuation date for your notes, however, the valuation date will not be postponed to a date later than the originally scheduled stated maturity date or, if the originally scheduled stated maturity date is not a business day, later than the first business day after the originally scheduled stated maturity date. However, if the originally scheduled stated maturity date for your notes is greater than 5 scheduled business days following the originally scheduled valuation date for your notes, the valuation date will not be postponed by more than five scheduled underlying business days. If a market disruption event occurs or is continuing on the day that is the last possible valuation date or such last possible day is not an underlying business day, that day will nevertheless be the valuation date. Notwithstanding the foregoing, if the applicable pricing supplement specifies averaging dates for your notes, the valuation date will occur on the last averaging date.
Notes Linked to a Basket of Underlyings. The valuation date for your notes in this case will be the date specified in the applicable pricing supplement, unless the calculation agent determines that a market disruption event with respect to a basket underlying occurs or is continuing on such day or such day is not an underlying business day with respect to a basket underlying. In that event, the valuation date will be the first following underlying business day on which the calculation agent determines that, on or subsequent to such originally scheduled valuation date, each basket underlying has had at least one underlying business day on which no market disruption event has occurred or is continuing and the closing value (or adjusted closing value, if applicable) of each of the basket underlyings will be determined on or prior to the postponed valuation date as set forth under “— Consequences of a Market Disruption Event or a Non-Underlying Business Day — Notes Linked to a Basket of Underlyings” below. (In such case, the valuation date may differ from the dates on which the values of one or more basket underlyings are determined for the purpose of the calculations to be performed on the valuation date.) If the originally scheduled stated maturity date for your notes is equal to or less than 5 scheduled business days following the originally scheduled valuation date for your notes, however, the valuation date will not be postponed to a date later than the originally scheduled stated maturity date or, if the originally scheduled stated maturity date is not a business day, later than the first business day after the originally scheduled stated maturity date. However, if the originally scheduled stated maturity date for your notes is greater than 5 scheduled business days following the originally scheduled valuation date for your notes, the valuation date will not be postponed by more than five scheduled underlying business days. On such last possible valuation date, if a market disruption event occurs or is continuing with respect to a basket underlying that has not yet had such an underlying business day on which no market disruption event has occurred or is continuing or if such last possible day is not an underlying business day with respect to such basket underlying, that day will nevertheless be the valuation date. Notwithstanding the foregoing, if the applicable pricing supplement specifies averaging dates for your notes, the valuation date for your notes will occur on the last averaging date.
Notes Linked to the Worst Performing of Two or More Underlyings. The valuation date for your notes in this case will be the date specified in the applicable pricing supplement, unless the calculation agent determines that a market disruption event with respect to a potential worst performing underlying occurs or is continuing on such day or such day is not an underlying business day with respect to any potential worst performing underlying. In the event the originally scheduled valuation date is a non-underlying business day with respect to any potential worst performing underlying, the valuation date will be the first day thereafter that is an underlying business day for all potential worst performing underlyings (the “first qualified underlying business day”) provided that no market disruption event occurs or is continuing with respect to a potential worst performing underlying on that day. If a market disruption event with respect to a potential worst performing underlying occurs or is continuing on the originally scheduled valuation date or the first qualified underlying business day, the valuation date will be the first following underlying
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business day on which the calculation agent determines that each potential worst performing underlying has had at least one underlying business day (from and including the originally scheduled valuation date or the first qualified underlying business day, as applicable) on which no market disruption event has occurred or is continuing and the closing value (or adjusted closing value, if applicable) of each potential worst performing underlying will be determined on or prior to the postponed valuation date as set forth under “— Consequences of a Market Disruption Event or a Non-Underlying Business Day — Notes Linked to the Worst Performing of Two or More Underlyings” below. (In such case, the valuation date may differ from the dates on which the values of one or more potential worst performing underlyings are determined for the purpose of the calculations to be performed on the valuation date.) If the originally scheduled stated maturity date for your notes is equal to or less than 5 scheduled business days following the originally scheduled valuation date for your notes, however, the valuation date will not be postponed to a date later than the originally scheduled stated maturity date or, if the originally scheduled stated maturity date is not a business day, later than the first business day after the originally scheduled stated maturity date, either due to the occurrence of serial non-underlying business days or due to the occurrence of one or more market disruption events. However, if the originally scheduled stated maturity date for your notes is greater than 5 scheduled business days following the originally scheduled valuation date for your notes, the valuation date will not be postponed by more than five scheduled underlying business days, either due to the occurrence of serial non-underlying business days or due to the occurrence of one or more market disruption events. On such last possible valuation date, if a market disruption event occurs or is continuing with respect to a potential worst performing underlying that has not yet had such an underlying business day on which no market disruption event has occurred or is continuing or if such last possible day is not an underlying business day with respect to such potential worst performing underlying, that day will nevertheless be the valuation date. Notwithstanding the foregoing, if the applicable pricing supplement specifies averaging dates for your notes, the valuation date for your notes will occur on the last averaging date.
The applicable pricing supplement may specify that averaging dates will apply to your notes. In such case, the following rules will apply unless otherwise specified in the applicable pricing supplement. For the consequences of a market disruption event or non-underlying business day, please see “— Consequences of a Market Disruption Event or a Non-Underlying Business Day” in this general terms supplement no. 7,016.
Notes Linked to a Single Underlying. If a market disruption event occurs or is continuing on any day that would otherwise be an averaging date or such day is not an underlying business day, such averaging date and each succeeding averaging date, if any, will be postponed to the next underlying business day(s) on which the calculation agent determines that no market disruption event occurs or is continuing. If the originally scheduled stated maturity date for your notes is equal to or less than 5 scheduled business days following the originally scheduled last averaging date for your notes, however, no averaging date will be later than the originally scheduled stated maturity date or, if the originally scheduled stated maturity date is not a business day, later than the first business day after the originally scheduled stated maturity date. However, if the originally scheduled stated maturity date for your notes is greater than 5 scheduled business days following the originally scheduled last averaging date for your notes, no averaging date will be postponed later than the date that is five scheduled underlying business days after the originally scheduled last averaging date. If a market disruption event occurs or is continuing on such last possible averaging date or such last possible day is not an underlying business day, that day will nevertheless be the last averaging date. In such cases, more than one averaging date may occur simultaneously on such last possible day.
Notes Linked to a Basket of Underlyings. If a market disruption event occurs or is continuing with respect to a basket underlying on any day that would otherwise be an averaging date or such day is not an underlying business day with respect to a basket underlying, such averaging date will be postponed to the next underlying business day on which the calculation agent determines that, on or subsequent to such originally scheduled averaging date, each basket underlying has had at least one underlying business day on which no market disruption event has occurred or is continuing and the closing value (or adjusted closing value, if applicable) of each of the basket underlyings for that averaging date will be determined on or prior to the postponed averaging date as set forth under “— Consequences of a Market
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Disruption Event or a Non-Underlying Business Day — Notes Linked to a Basket of Underlyings” below. (In such case, the averaging date may differ from the dates on which the values of one or more basket underlyings are determined for the purpose of the calculations to be performed on the averaging date.) If an averaging date is postponed, each subsequent averaging date will be postponed by the same number of scheduled underlying business days, subject to the limitation described below. If the originally scheduled stated maturity date for your notes is equal to or less than 5 scheduled business days following the originally scheduled last averaging date for your notes, however, no averaging date will be later than the originally scheduled stated maturity date or, if the originally scheduled stated maturity date is not a business day, later than the first business day after the originally scheduled stated maturity date. However, if the originally scheduled stated maturity date for your notes is greater than 5 scheduled business days following the originally scheduled last averaging date for your notes, no averaging date will be postponed later than the date that is five scheduled underlying business days after the originally scheduled last averaging date. On such last possible averaging date, if a market disruption event occurs or is continuing with respect to a basket underlying that has not yet had such an underlying business day on which no market disruption event has occurred or is continuing or if such last possible day is not an underlying business day with respect to such basket underlying, that day will nevertheless be the last averaging date. In such cases, more than one averaging date may occur simultaneously on such last possible day.
Notes Linked to the Worst Performing of Two or More Underlyings. If a market disruption event occurs or is continuing with respect to a potential worst performing underlying on any day that would otherwise be an averaging date or such day is not an underlying business day with respect to any potential worst performing underlying, such averaging date will be postponed as follows. In the event the originally scheduled averaging date is a non-underlying business day with respect to any potential worst performing underlying, such averaging date will be the first day thereafter that is an underlying business day for all underlyings (the “first qualified averaging underlying business day”) provided that no market disruption event occurs or is continuing with respect to a potential worst performing underlying on that day. If a market disruption event with respect to a potential worst performing underlying occurs or is continuing on the originally scheduled averaging date or the first qualified averaging underlying business day, such averaging date will be the first following underlying business day on which the calculation agent determines that each potential worst performing underlying has had at least one underlying business day (from and including the originally scheduled averaging date or the first qualified averaging underlying business day, as applicable) on which no market disruption event has occurred or is continuing and the closing value (or adjusted closing value, if applicable) of each potential worst performing underlying will be determined on or prior to the postponed averaging date as set forth under “— Consequences of a Market Disruption Event or a Non-Underlying Business Day — Notes Linked to the Worst Performing of Two or More Underlyings” below. (In such case, the applicable averaging date may differ from the dates on which the values of one or more potential worst performing underlyings are determined for the purpose of the calculations to be performed on such averaging date.) If an averaging date is postponed, each subsequent averaging date will be postponed by the same number of scheduled underlying business days, subject to the limitation described below. If the originally scheduled stated maturity date for your notes is equal to or less than 5 scheduled business days following the originally scheduled last averaging date for your notes, however, no averaging date will be later than the originally scheduled stated maturity date or, if the originally scheduled stated maturity date is not a business day, later than the first business day after the originally scheduled stated maturity date, either due to the occurrence of serial non-underlying business days or due to the occurrence of one or more market disruption events. However, if the originally scheduled stated maturity date for your notes is greater than 5 scheduled business days following the originally scheduled last averaging date for your notes, no averaging date will be postponed later than the date that is five scheduled underlying business days after the originally scheduled last averaging date, either due to the occurrence of serial non-underlying business days or due to the occurrence of one or more market disruption events. On such last possible averaging date, if a market disruption event occurs or is continuing with respect to a potential worst performing underlying that has not yet had such an underlying business day on which no market disruption event has occurred or is continuing or if such last possible day is not an underlying business day with respect to such potential worst performing underlying, that day will nevertheless be the last averaging date. In such cases, more than one averaging date may occur simultaneously on such last possible day.
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The applicable pricing supplement may specify that call observation dates will apply to your notes. In such case, the following rules will apply unless otherwise specified in the applicable pricing supplement. For the consequences of a market disruption event or non-underlying business day, please see “— Consequences of a Market Disruption Event or a Non-Underlying Business Day” in this general terms supplement no. 7,016.
Notes Linked to a Single Underlying. The call observation date or dates for your notes in this case will be the date or dates specified in the applicable pricing supplement, unless the calculation agent determines that a market disruption event occurs or is continuing on such day or dates or such day or dates are not underlying business days. In that event, such call observation date will be the first following underlying business day on which the calculation agent determines that a market disruption event does not occur and is not continuing. If an originally scheduled call payment date for your notes is equal to or less than 5 scheduled business days following the applicable originally scheduled call observation date for your notes, however, such call observation date will not be postponed to a date later than the applicable originally scheduled call payment date or, if such originally scheduled call payment date is not a business day, later than the first business day after the applicable originally scheduled call payment date. However, if an originally scheduled call payment date for your notes is greater than 5 scheduled business days following the applicable originally scheduled call observation date for your notes, such call observation date will not be postponed by more than five scheduled underlying business days. If a market disruption event occurs or is continuing on the day that is the last possible call observation date applicable to the relevant call payment date or such last possible day is not an underlying business day, that day will nevertheless be the call observation date.
Notes Linked to a Basket of Underlyings. The call observation date or dates for your notes will be the date or dates specified in the applicable pricing supplement, unless the calculation agent determines that a market disruption event with respect to a basket underlying occurs or is continuing on such day or such day is not an underlying business day with respect to a basket underlying. In that event, the call observation date will be the first following underlying business day on which the calculation agent determines that, on or subsequent to such originally scheduled call observation date, each basket underlying has had at least one underlying business day on which no market disruption event has occurred or is continuing and the closing value (or adjusted closing value, if applicable) of each of the basket underlyings for that call observation date will be determined on or prior to the postponed call observation date as set forth under “— Consequences of a Market Disruption Event or a Non-Underlying Business Day — Notes Linked to a Basket of Underlyings” below. (In such case, the call observation date may differ from the dates on which the values of one or more basket underlyings are determined for the purpose of the calculations to be performed on the call observation date.) If an originally scheduled call payment date for your notes is equal to or less than 5 scheduled business days following the applicable originally scheduled call observation date for your notes, however, such call observation date will not be postponed to a date later than the applicable originally scheduled call payment date or, if such originally scheduled call payment date is not a business day, later than the first business day after the applicable originally scheduled call payment date. However, if an originally scheduled call payment date for your notes is greater than 5 scheduled business days following the applicable originally scheduled call observation date for your notes, such call observation date will not be postponed by more than five scheduled underlying business days. On such last possible call observation date applicable to the relevant call payment date, if a market disruption event occurs or is continuing with respect to a basket underlying that has not yet had such an underlying business day on which no market disruption event has occurred or is continuing or if such last possible day is not an underlying business day with respect to such basket underlying, that day will nevertheless be a call observation date.
Notes Linked to the Worst Performing of Two or More Underlyings. The call observation date or dates for your notes will be the date or dates specified in the applicable pricing supplement, unless the calculation agent determines that a market disruption event with respect to a potential worst performing underlying occurs or is continuing on such day or such day is not an underlying business day with respect to any potential worst performing underlying. In the event the originally scheduled call observation date is a non-underlying business day with respect to any potential worst performing underlying, the call observation date will be the first day thereafter that is an underlying business day for all potential worst
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performing underlyings (the “first qualified call underlying business day”) provided that no market disruption event occurs or is continuing with respect to a potential worst performing underlying on that day. If a market disruption event with respect to a potential worst performing underlying occurs or is continuing on the originally scheduled call observation date or the first qualified call underlying business day, the call observation date will be the first following underlying business day on which the calculation agent determines that each potential worst performing underlying has had at least one underlying business day (from and including the originally scheduled call observation date or the first qualified call underlying business day, as applicable) on which no market disruption event has occurred or is continuing and the closing value (or adjusted closing value, if applicable) of each potential worst performing underlying will be determined on or prior to the postponed call observation date as set forth under “— Consequences of a Market Disruption Event or a Non-Underlying Business Day — Notes Linked to the Worst Performing of Two or More Underlyings” below. (In such case, the call observation date may differ from the dates on which the values of one or more potential worst performing underlyings are determined for the purpose of the calculations to be performed on the call observation date.) If an originally scheduled call payment date for your notes is equal to or less than 5 scheduled business days following the applicable originally scheduled call observation date for your notes, however, such call observation date will not be postponed to a date later than the applicable originally scheduled call payment date or, if such originally scheduled call payment date is not a business day, later than the first business day after the applicable originally scheduled call payment date, either due to the occurrence of serial non-underlying business days or due to the occurrence of one or more market disruption events. However, if an originally scheduled call payment date for your notes is greater than 5 scheduled business days following the applicable originally scheduled call observation date for your notes, such call observation date will not be postponed by more than five scheduled underlying business days, either due to the occurrence of serial non-underlying business days or due to the occurrence of one or more market disruption events. On such last possible call observation date applicable to the relevant call payment date, if a market disruption event occurs or is continuing with respect to a potential worst performing underlying that has not yet had such an underlying business day on which no market disruption event has occurred or is continuing or if such last possible day is not an underlying business day with respect to such potential worst performing underlying, that day will nevertheless be a call observation date.
Measurement Periods
The applicable pricing supplement may specify a measurement period. In such case, the following rules will apply unless otherwise specified in the applicable pricing supplement. For the consequences of a market disruption event or non-underlying business day, please see “—Consequences of a Market Disruption Event or a Non-Underlying Business Day” in this general terms supplement no. 7,016.
Notes Linked to a Single Underlying. If the applicable pricing supplement specifies a measurement period, the applicable measurement period or measurement periods for your notes in this case will be the date or dates specified in the applicable pricing supplement, excluding any date or dates on which the calculation agent determines that a market disruption event occurs or is continuing or that the calculation agent determines is not an underlying business day with respect to the underlying, unless, with respect to the measurement period, if any, for which the last day of such measurement period is the valuation date, the calculation agent determines that a market disruption event occurs or is continuing on the valuation date or the valuation date is not an underlying business day. In that event, the last day of such measurement period will be postponed as described under “— Valuation Date — Notes Linked to a Single Underlying” above. If the originally scheduled stated maturity date for your notes is equal to or less than 5 scheduled business days following the corresponding originally scheduled last day of such measurement period for your notes, however, the last day of such measurement period will not be postponed to a date later than the corresponding originally scheduled stated maturity date or, if the corresponding originally scheduled stated maturity date is not a business day, later than the first business day after the originally scheduled stated maturity date. However, if the originally scheduled stated maturity date for your notes is greater than 5 scheduled business days following the corresponding originally scheduled last day of such measurement period for your notes, the last day of such measurement period will not be postponed by more than five scheduled underlying business days. If a market disruption event occurs or is continuing on the day that is the last possible day of such
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measurement period or such last possible day is not an underlying business day, that day will nevertheless be the last day of such measurement period.
Notes Linked to a Basket of Underlyings. If the applicable pricing supplement specifies a measurement period, the applicable measurement period or measurement periods for your notes in this case will be the date or dates specified in the applicable pricing supplement, excluding any date or dates on which the calculation agent determines that a market disruption event with respect to any basket underlying occurs or is continuing or that the calculation agent determines is not an underlying business day with respect to any basket underlying unless, with respect to the measurement period, if any, for which the last day of such measurement period is the valuation date, the calculation agent determines that a market disruption event with respect to a basket underlying occurs or is continuing on the valuation date or the valuation date is not an underlying business day with respect to a basket underlying. In that event, the last day of such measurement period will be postponed as described under “— Valuation Date — Notes Linked to a Basket of Underlyings” above. If the originally scheduled stated maturity date for your notes is equal to or less than 5 scheduled business days following the corresponding originally scheduled last day of such measurement period for your notes, however, the last day of such measurement period with respect to any basket underlying will not be postponed to a date later than the corresponding originally scheduled stated maturity date or, if the corresponding originally scheduled stated maturity date is not a business day, later than the first business day after the originally scheduled stated maturity date. However, if the originally scheduled stated maturity date for your notes is greater than 5 scheduled business days following the corresponding originally scheduled last day of such measurement period for your notes, the last day of such measurement period with respect to any basket underlying will not be postponed by more than five scheduled underlying business days. If a market disruption event occurs or is continuing with respect to a basket underlying that has not yet had such an underlying business day on which no market disruption event has occurred or is continuing on the day that is the last possible day of such measurement period applicable to such basket underlying or if such last possible day is not an underlying business day with respect to such basket underlying, that day will nevertheless be the last day of such measurement period with respect to such basket underlying.
Notes Linked to the Worst Performing of Two or More Underlyings. If the applicable pricing supplement specifies a measurement period, the applicable measurement period or measurement periods for your notes in this case will be the date or dates specified in the applicable pricing supplement, excluding any date or dates on which the calculation agent determines that a market disruption event with respect to any potential worst performing underlying occurs or is continuing or that the calculation agent determines is not an underlying business day with respect to any potential worst performing underlying unless, with respect to the measurement period, if any, for which the last day of such measurement period is the valuation date, the calculation agent determines that a market disruption event with respect to a potential worst performing underlying occurs or is continuing on the valuation date or the valuation date is not an underlying business day with respect to any potential worst performing underlying. In that event, the last day of such measurement period will be postponed as described under “— Valuation Date — Notes Linked to the Worst Performing of Two or More Underlyings” above. If the originally scheduled stated maturity date for your notes is equal to or less than 5 scheduled business days following the corresponding originally scheduled last day of such measurement period for your notes, however, the last day of such measurement period with respect to any potential worst performing underlying will not be postponed to a date later than the corresponding originally scheduled stated maturity date or, if the corresponding originally scheduled stated maturity date is not a business day, later than the first business day after the originally scheduled stated maturity date. However, if the originally scheduled stated maturity date for your notes is greater than 5 scheduled business days following the corresponding originally scheduled last day of such measurement period for your notes, the last day of such measurement period with respect to any potential worst performing underlying will not be postponed by more than five scheduled underlying business days. If a market disruption event occurs or is continuing with respect to a potential worst performing underlying that has not yet had such an underlying business day on which no market disruption event has occurred or is continuing on the day that is the last possible day of such measurement period applicable to such potential worst performing underlying or if such last possible day is not an underlying business day with respect to such potential worst performing underlying, that day will nevertheless be the last day of such measurement period with respect to such potential worst performing underlying.
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Consequences of a Market Disruption Event or a Non-Underlying Business Day
Notes Linked to a Single Underlying. If a market disruption event occurs or is continuing on a day that would otherwise be the valuation date or any averaging date, call observation date or coupon observation date, if any, or such day is not an underlying business day, then the valuation date, the applicable averaging date and each succeeding averaging date, if applicable, the call observation date or the coupon observation date, if any, as applicable, will be postponed, as described under “— Valuation Date — Notes Linked to a Single Underlying”, “— Averaging Dates — Notes Linked to a Single Underlying” and “— Call Observation Dates — Notes Linked to a Single Underlying” above, and “— Coupon Observation Dates — Notes Linked to a Single Underlying” below. As a result of any of the foregoing, the stated maturity date, call payment date or coupon payment date, as applicable, for your notes may also be postponed, as described under “ — Stated Maturity Date” or — Call Payment Dates” above or “— Coupon Payment Dates” below, as applicable. If the closing value (or adjusted closing value, if applicable) of the underlying that must be used to determine the payment at maturity or the coupon is not available on the last possible valuation date or any last possible averaging date, call observation date or coupon observation date, as applicable, because of a market disruption event, or, in the case of a non-U.S. dollar denominated underlying that the calculation agent adjusts to its U.S. dollar equivalent, the exchange rate that must be used to determine the payment at maturity is not available, or the occurrence of a non-underlying business day or for any other reason (other than as described under “— Discontinuance or Modification of an Underlying” below), then the calculation agent will nevertheless determine the closing value (or adjusted closing value, if applicable) of the underlying, based on its assessment, made in its sole discretion, of the value of the underlying on that day; provided that, in the case of a non-U.S. dollar denominated underlying that the calculation agent adjusts to its U.S. dollar equivalent, the calculation agent will determine the adjusted closing value of the underlying based on (i) the closing value of the underlying or the exchange rate that is not affected by the market disruption event or non-underlying business day, if any, on the originally scheduled valuation date, averaging date, call observation date or coupon observation date, if the closing value or the exchange rate was available on such date, (ii) the closing value of the underlying or the exchange rate, as applicable, that is affected by the market disruption event or non-underlying business day on the first underlying business day following the originally scheduled valuation date, averaging date, call observation date, or coupon observation date, as applicable, on which no market disruption event exists; and (iii) the calculation agent’s assessment, made in its sole discretion, of the value of the underlying or the exchange rate if a market disruption event or non-underlying business day continues through the last possible day.
Notes Linked to a Basket of Underlyings. If a market disruption event with respect to any basket underlying occurs or is continuing on a day that would otherwise be the valuation date or any averaging date, call observation date or coupon observation date, if any, or such day is not an underlying business day, then the valuation date, the applicable averaging date and each succeeding averaging date, if applicable, the call observation date or the coupon observation date, if any, as applicable, will be postponed as described under “— Valuation Date — Notes Linked to a Basket of Underlyings”, “— Averaging Dates — Notes Linked to a Basket of Underlyings” and “— Call Observation Dates — Notes Linked to a Basket of Underlyings” above and “— Coupon Observation Dates — Notes Linked to a Basket of Underlyings” below. As a result of any of the foregoing, the stated maturity date, call payment date or coupon payment date, as applicable, for your notes may also be postponed, as described under “ — Stated Maturity Date” or “— Call Payment Dates” above or “Coupon Payments — Coupon Payment Dates” below. If the valuation date or any averaging date, call observation date or coupon observation date is postponed due to a market disruption event or non-underlying business day with respect to one or more of the basket underlyings, the basket closing value for the postponed valuation date or any postponed averaging date, call observation date or coupon observation date, as applicable, will be calculated based on (i) the closing value (or adjusted closing value, if applicable) and the applicable exchange rate, if any, of each of the basket underlyings that is not affected by the market disruption event or non-underlying business day, if any, on the originally scheduled valuation date or the applicable originally scheduled averaging date, call observation date or coupon observation date, as applicable, (ii) the closing value and the exchange rate, if applicable, of each of the basket underlyings that is affected by the market disruption event or non-underlying business day on the first underlying business day following the originally scheduled valuation date or the applicable originally scheduled averaging date, call observation date or coupon observation date, as applicable, on which no market disruption
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event exists for that basket underlying (provided that, in the case of a basket underlying for which an adjusted closing value is applicable, if the unadjusted closing value or the applicable exchange rate was available on the originally scheduled valuation date, averaging date, call observation date or coupon observation date, the closing value or exchange rate that was so available shall be used for purposes of calculating the adjusted closing value), and (iii) the calculation agent’s assessment, in its sole discretion, of the closing value of each basket underlying (and the exchange rate, if applicable) on the last possible postponed valuation date, averaging date, call observation date or coupon observation date, as the case may be, with respect to each basket underlying as to which a market disruption event or non-underlying business day continues through the last possible postponed valuation date, averaging date, call observation date or coupon observation date. As a result, this could result in the closing value and the applicable exchange rate, if any, of differing basket underlyings being determined on different calendar dates. For the avoidance of doubt, once the closing value (or adjusted closing value, if applicable) and the applicable exchange rate, if any, for one or more basket underlyings is determined for a valuation date, averaging date, call observation date or coupon observation date, the occurrence of a later market disruption event or non-underlying business day will not alter such calculation.
Notes Linked to the Worst Performing of Two or More Underlyings. If a market disruption event with respect to any potential worst performing underlying occurs or is continuing on a day that would otherwise be the valuation date or any averaging date, call observation date or coupon observation date, if any, or such day is not an underlying business day, then the valuation date, the applicable averaging date, the call observation date or the coupon observation date, if any, as applicable, will be postponed as described under “— Valuation Date — Notes Linked to the Worst Performing of Two or More Underlyings”, “— Averaging Dates — Notes Linked to the Worst Performing of Two or More Underlyings” and “— Call Observation Dates — Notes Linked to the Worst Performing of Two or More Underlyings” above and “— Coupon Observation Dates — Notes Linked to the Worst Performing of Two or More Underlyings” below. As a result of any of the foregoing, the stated maturity date, call payment date or coupon payment date, as applicable, for your notes may also be postponed, as described under “ — Stated Maturity Date” or “— Call Payment Dates” above or “Coupon Payments — Coupon Payment Dates” below. If the valuation date or any averaging date, call observation date or coupon observation date is postponed to the last possible date due to the occurrence of serial non-underlying business days, the level of each potential worst performing underlying will be the calculation agent’s assessment of such level, in its sole discretion, on such last possible valuation date, averaging date, call observation date or coupon observation date, as applicable.
If the valuation date or any averaging date, call observation date or coupon observation date is postponed due to a market disruption event with respect to any potential worst performing underlying, the closing value of each potential worst performing underlying with respect to such averaging date, call observation date or coupon observation date or the final underlying value with respect to the valuation date, as applicable, will be calculated based on (i) for any potential worst performing underlying that is not affected by a market disruption event on (A) the applicable originally scheduled averaging date, call observation date or coupon observation date or the first qualified averaging underlying business day, first qualified call underlying business day or first qualified coupon underlying business day, as applicable, thereafter (if applicable) or (B) the originally scheduled valuation date or the first qualified underlying business day thereafter (if applicable), the closing value (or adjusted closing value, if applicable) and the applicable exchange rate, if any, of the potential worst performing underlying on that date, (ii) for any potential worst performing underlying that is affected by a market disruption event on (A) the applicable originally scheduled averaging date, call observation date or coupon observation date or the first qualified averaging underlying business day, first qualified call underlying business day or first qualified coupon underlying business day, as applicable, thereafter (if applicable) or (B) the originally scheduled valuation date or the first qualified underlying business day thereafter (if applicable), the closing value of the potential worst performing underlying on the first following underlying business day on which no market disruption event exists for such potential worst performing underlying (provided that, in the case of a potential worst performing underlying for which an adjusted closing value is applicable, if the unadjusted closing value or the applicable exchange rate was available on the originally scheduled valuation date, averaging date, call observation date or coupon observation date, the closing value or exchange rate that was so available shall be used for purposes of calculating the adjusted closing value), and (iii) the calculation agent’s assessment, in its sole discretion, of the value of any potential worst performing
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underlying (and the exchange rate, if applicable) on the last possible postponed valuation date, averaging date, call observation date or coupon observation date, as applicable, with respect to such potential worst performing underlying as to which a market disruption event continues through the last possible postponed valuation date, averaging date, call observation date or coupon observation date. As a result, this could result in the closing value and the applicable exchange rate, if any, of differing potential worst performing underlyings being determined on different calendar dates. For the avoidance of doubt, once the closing value (or adjusted closing value, if applicable) and the applicable exchange rate, if any, for one or more potential worst performing underlyings is determined for a valuation date, averaging date, call observation date or coupon observation date, the occurrence of a later market disruption event or non-underlying business day will not alter such calculation.
Coupon Payments
If so specified in the applicable pricing supplement, the notes will or may pay a coupon.
Coupon Payment Dates
The coupon payment date or set of coupon payment dates for your notes will be the date or dates specified in the applicable pricing supplement, unless for any such coupon payment date that date is not a business day, in which case such coupon payment date will be postponed to the next following business day.
A coupon payment date will also be postponed if the applicable originally scheduled coupon payment date for your notes, as specified in the applicable pricing supplement, is equal to or less than 5 scheduled business days following the corresponding originally scheduled coupon observation date for your notes and such coupon observation date is postponed as described under “— Coupon Observation Dates” below. In such a case, such coupon payment date will be postponed by the same number of business day(s) from but excluding the applicable originally scheduled coupon observation date to and including the actual coupon observation date. If, however, the applicable originally scheduled coupon payment date for your notes is greater than 5 scheduled business days following the applicable originally scheduled coupon observation date for your notes, any postponement of the coupon observation date will not postpone the applicable coupon payment date.
The applicable pricing supplement may specify that coupon observation dates will apply to your notes. In such case, the following rules will apply unless otherwise specified in the applicable pricing supplement. For the consequences of a market disruption event or non-underlying business day, please see “— Consequences of a Market Disruption Event or a Non-Underlying Business Day” in this general terms supplement no. 7,016. If the applicable pricing supplement specifies that observation end dates apply to your notes, all references to coupon observation dates used in this general terms supplement no. 7,016 will be deemed to refer to “observation end dates”.
Notes Linked to a Single Underlying. If the applicable pricing supplement specifies that a coupon or coupons may be paid for your notes, the applicable coupon observation date or dates for your notes in this case will be the date or dates specified in the applicable pricing supplement, unless the calculation agent determines that a market disruption event occurs or is continuing on such day or such day is not an underlying business day. In that event, such coupon observation date will be the first following underlying business day on which the calculation agent determines that a market disruption event does not occur and is not continuing and the closing value (or adjusted closing value, if applicable) will be determined as provided under “— Consequences of a Market Disruption Event or a Non-Underlying Business Day — Notes Linked to a Single Underlying” above. If an originally scheduled coupon payment date for your notes is equal to or less than 5 scheduled business days following the corresponding originally scheduled coupon observation date for your notes, however, a coupon observation date will not be postponed to a date later than the corresponding originally scheduled coupon payment date or, if the corresponding originally scheduled stated coupon payment date is not a business day, later than the first business day after the originally scheduled coupon payment date. However, if an originally scheduled coupon payment date for your notes is greater than 5 scheduled business days following the corresponding originally scheduled coupon observation date for your notes, such coupon observation date will not be postponed by more than five scheduled underlying business days. If a market disruption event occurs or is
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continuing on the day that is the last possible coupon observation date applicable to the relevant call payment date or such last possible day is not an underlying business day, that day will nevertheless be the coupon observation date applicable to the relevant coupon payment date. If a coupon observation date does not occur on the applicable originally scheduled coupon observation date, such coupon observation date will occur on the latest of the coupon observation dates applicable to the relevant coupon date.
Notes Linked to a Basket of Underlyings. If the applicable pricing supplement specifies that a coupon or coupons may be paid for your notes, the applicable coupon observation date or dates for your notes in this case will be the date or dates specified in the applicable pricing supplement, unless the calculation agent determines that a market disruption event with respect to a basket underlying occurs or is continuing on such day or such day is not an underlying business day with respect to a basket underlying. In that event, such coupon observation date will be the first following underlying business day on which the calculation agent determines that, on or subsequent to such originally scheduled coupon observation date, each basket underlying has had at least one underlying business day on which no market disruption event has occurred or is continuing and the closing value (or adjusted closing value, if applicable) of each of the basket underlyings for that coupon observation date will be determined on or prior to the postponed coupon observation date as set forth under “— Consequences of a Market Disruption Event or a Non-Underlying Business Day — Notes Linked to a Basket of Underlyings” above. (In such case, the coupon observation date may differ from the dates on which the values of one or more basket underlyings are determined for the purpose of the calculations to be performed on the coupon observation date.) If an originally scheduled coupon payment date for your notes is equal to or less than 5 scheduled business days following the corresponding originally scheduled coupon observation date for your notes, however, the coupon observation date will not be postponed to a date later than the originally scheduled coupon payment date or, if the originally scheduled stated coupon payment date is not a business day, later than the first business day after the originally scheduled coupon payment date. However, if an originally scheduled coupon payment date for your notes is greater than 5 scheduled business days following the corresponding originally scheduled coupon observation date for your notes, such coupon observation date will not be postponed by more than five scheduled underlying business days. On such last possible coupon observation date applicable to the relevant coupon payment date, if a market disruption event occurs or is continuing with respect to a basket underlying that has not yet had such an underlying business day on which no market disruption event has occurred or is continuing or if such last possible day is not an underlying business day with respect to such basket underlying, that day will nevertheless be the coupon observation date applicable to the relevant coupon payment date.
Notes Linked to the Worst Performing of Two or More Underlyings. If the applicable pricing supplement specifies that a coupon or coupons may be paid for your notes, the applicable coupon observation date or dates for your notes in this case will be the date or dates specified in the applicable pricing supplement, unless the calculation agent determines that a market disruption event with respect to a potential worst performing underlying occurs or is continuing on such day or such day is not an underlying business day with respect to a potential worst performing underlying. In the event the originally scheduled coupon observation date is a non-underlying business day with respect to any potential worst performing underlying, the coupon observation date will be the first day thereafter that is an underlying business day for all potential worst performing underlyings (the “first qualified coupon underlying business day”) provided that no market disruption event occurs or is continuing with respect to a potential worst performing underlying on that day. If a market disruption event with respect to a potential worst performing underlying occurs or is continuing on the originally scheduled coupon observation date or the first qualified coupon underlying business day, the coupon observation date will be the first following underlying business day on which the calculation agent determines that each potential worst performing underlying has had at least one underlying business day (from and including the originally scheduled coupon observation date or the first qualified coupon underlying business day, as applicable) on which no market disruption event has occurred or is continuing and the closing value (or adjusted closing value, if applicable) of each potential worst performing underlying will be determined on or prior to the postponed coupon observation date as set forth under “— Consequences of a Market Disruption Event or a Non-Underlying Business Day — Notes Linked to the Worst Performing of Two or More Underlyings” above. (In such case, the coupon observation date may differ from the dates on which the values of one or more worst performing underlyings are determined for the purpose of the calculations to be performed on the
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coupon observation date.) If an originally scheduled coupon payment date for your notes is equal to or less than 5 scheduled business days following the corresponding originally scheduled coupon observation date for your notes, however, the coupon observation date will not be postponed to a date later than the originally scheduled coupon payment date or, if the originally scheduled stated coupon payment date is not a business day, later than the first business day after the originally scheduled coupon payment date, either due to the occurrence of serial non-underlying business days or due to the occurrence of one or more market disruption events. However, if an originally scheduled coupon payment date for your notes is greater than 5 scheduled business days following the corresponding originally scheduled coupon observation date for your notes, such coupon observation date will not be postponed by more than five scheduled underlying business days, either due to the occurrence of serial non-underlying business days or due to the occurrence of one or more market disruption events. On such last possible coupon observation date applicable to the relevant coupon payment date, if a market disruption event occurs or is continuing with respect to a potential worst performing underlying that has not yet had such an underlying business day on which no market disruption event has occurred or is continuing or if such last possible day is not an underlying business day with respect to such potential worst performing underlying, that day will nevertheless be the coupon observation date applicable to the relevant coupon payment date.
Discontinuance or Modification of an Underlying
Unless otherwise specified in the applicable pricing supplement, with respect to an underlying that is an index:
If an underlying publisher discontinues publication of the applicable underlying and such underlying publisher or anyone else publishes a substitute underlying that the calculation agent determines is comparable to the applicable underlying or if the calculation agent designates a substitute underlying, then the calculation agent will determine the amount payable on a coupon payment date, interest payment date, call payment date or the stated maturity date by reference to the substitute underlying. We refer to any substitute underlying approved by the calculation agent as a successor underlying.
If the calculation agent determines that the publication of an underlying is discontinued and there is no successor underlying, the calculation agent will determine the amount payable on a coupon payment date, interest payment date, call payment date or the stated maturity date, by a computation methodology that the calculation agent determines will as closely as reasonably possible replicate the applicable underlying.
If the calculation agent determines that (i) an underlying, the underlying stocks comprising that underlying or any constituent index of that underlying or the method of calculating that underlying is changed at any time in any respect — including any addition, deletion or substitution and any reweighting or rebalancing of the underlying, the constituent indices, if applicable, or the applicable underlying stocks, and whether the change is made by the applicable underlying publisher under its existing policies or following a modification of those policies, is due to the publication of a successor underlying, is due to events affecting one or more of the applicable underlying stocks or their issuers, or is due to any other reason — and is not otherwise reflected in the value of the applicable underlying by the applicable underlying publisher pursuant to the applicable then-current underlying methodology of the underlying or (ii) there has been a split or reverse split of the underlying, then the calculation agent will be permitted (but not required) to make such adjustments in the applicable underlying or the method of its calculation and, in the case of notes linked to a basket of underlyings, the applicable weighting multiplier or underlying weightings, as it believes are appropriate to ensure that the underlying, basket or potential worst performing underlying value used to determine the amount payable on a coupon payment date, interest payment date, call payment date or the stated maturity date is equitable.
As is the case throughout this general terms supplement no. 7,016, references to an underlying includes the applicable underlying, basket underlyings or potential worst performing underlyings and any successor underlying as it may be modified, replaced or adjusted from time to time.
All determinations and adjustments to be made by the calculation agent with respect to an underlying may be made by the calculation agent in its sole discretion. The calculation agent is not obligated to make any such adjustments.
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Unless otherwise specified in the applicable pricing supplement, with respect to an underlying that is an exchange-traded fund:
If the underlying is delisted from the exchange on which the underlying has its primary listing and the investment advisor or anyone else publishes a substitute underlying that the calculation agent determines is comparable to the applicable underlying or if the calculation agent designates a substitute underlying, then the calculation agent will determine the amount payable on a coupon payment date, interest payment date, call payment date or the stated maturity date by reference to the substitute underlying. We refer to any substitute underlying approved by the calculation agent as a successor underlying.
If the calculation agent determines that the underlying is delisted or withdrawn from the exchange on which the underlying has its primary listing, and there is no successor underlying, the calculation agent will determine the amount payable on a coupon payment date, interest payment date, call payment date or the stated maturity date, by a computation methodology that the calculation agent determines will as closely as reasonably possible replicate the applicable underlying.
If the calculation agent determines that an underlying, the underlying stocks comprising that underlying or the method of calculating that underlying is changed at any time in any respect — including any split or reverse split of the underlying, a material change in the investment objective of the underlying, any addition, deletion or substitution and any reweighting or rebalancing of the applicable underlying stocks, and whether the change is made by the applicable investment advisor under its existing policies or following a modification of those policies, is due to the publication of a successor underlying, is due to events affecting one or more of the applicable underlying stocks or their issuers, or is due to any other reason — then the calculation agent will be permitted (but not required) to make such adjustments in the applicable underlying or the method of its calculation and, in the case of notes linked to a basket of underlyings, the applicable weighting multiplier or underlying weightings, as it believes are appropriate to ensure that the underlying, basket or potential worst performing underlying value used to determine the amount payable on a coupon payment date, interest payment date, call payment date or the stated maturity date is equitable.
As is the case throughout this general terms supplement no. 7,016, references to an underlying includes the applicable underlying, basket underlyings or potential worst performing underlyings and any successor underlying as it may be modified, replaced or adjusted from time to time.
All determinations and adjustments to be made by the calculation agent with respect to an underlying may be made by the calculation agent in its sole discretion. The calculation agent is not obligated to make any such adjustments.
The calculation agent, in its sole discretion, will make all determinations regarding the amount payable on your notes and any other determination as applicable or as specified in the applicable product supplement, if any, and applicable pricing supplement. Absent manifest error, all determinations of the calculation agent will be final and binding on you and us, without any liability on the part of the calculation agent.
We may change the calculation agent after the issue date without notice and the calculation agent may resign as calculation agent at any time upon 60 days’ written notice to us.
Anti-dilution Adjustments for Exchange-Traded Funds
For notes linked to exchange-traded funds, the calculation agent will have discretion to adjust the closing value of the underlying, any basket underlying or any potential worst performing underlying, as applicable, if certain events occur (including those described above under “— Discontinuance or Modification of an Underlying”). Exchange-traded funds are registered investment companies that are eligible for trading on the exchanges on which they are listed. Generally, exchange-traded funds (other than commodities based exchange-traded funds) are subject to regulation under the Investment Company Act of 1940 and are restricted in their activities and have dividend requirements. In the event that any event other than a delisting or withdrawal from the relevant exchange occurs with respect to an exchange-traded fund that is
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an underlying, the calculation agent shall determine whether and to what extent an adjustment should be made to the value of the underlying or any other term. The calculation agent shall have no obligation to make an adjustment for any such event.
Interest Payments
Your notes may bear interest if so specified in the applicable pricing supplement. Interest will accrue on the principal amount of your notes and will be calculated and paid as described in the accompanying prospectus with regard to fixed rate notes or floating rate notes, except that the interest rate and the interest payment dates will be those specified in the applicable pricing supplement. If the stated maturity date does not occur on the date specified in the applicable pricing supplement, however, the interest payment date scheduled for that date will instead occur on the postponed stated maturity date. No interest will accrue from and including the originally scheduled stated maturity date to and including the postponed stated maturity date, if the stated maturity date is so postponed.
Our Redemption Right
Redemption Right
If so specified in the applicable pricing supplement, we may, at our sole option, redeem your notes on or after the initial redemption date, in whole or in part, for mandatory exchange into cash at the redemption price specified in the applicable pricing supplement. If we elect to redeem your notes, we will pay you for each principal amount of your notes to be redeemed an amount in cash equal to the redemption price on the redemption date in exchange for your notes to be redeemed, and no payment on your notes so redeemed will be made thereafter.
Redemption Date. If we elect to exercise our redemption right, we will specify the redemption date in the notice of redemption. We may specify (i) any scheduled underlying business day on or after the initial redemption date or (ii) the stated maturity date (whether or not it is a scheduled underlying business day) as the redemption date, unless otherwise specified in the applicable pricing supplement.
Redemption Price. If we elect to exercise our redemption right, we will specify (i) an amount in cash or (ii) a formula by which an amount in cash may be determined as the redemption price in the notice of redemption. The redemption price will never be less than the principal amount of your notes.
Notice of Redemption. If we elect to exercise our redemption right, we will deliver a notice of redemption at least 30 but not more than 60 calendar days prior to the redemption date, unless otherwise specified in the applicable pricing supplement.
Price Dependent Redemption Right
If so specified in the applicable pricing supplement, we may have the option to redeem the notes, in whole or in part, for mandatory exchange into cash during the price dependent redemption period (as defined below), which we can exercise at our sole discretion only if the closing value of an underlying or the basket closing value, as applicable, on the underlying business day immediately preceding the redemption notice date (as defined below) is greater, less than or equal to the upper or lower threshold value specified in such pricing supplement. If we elect to redeem your notes in such cases, your notes to be redeemed will be mandatorily exchanged for cash as described under the subsection entitled “— Redemption Right” above.
Price Dependent Redemption Period. If we elect to exercise our price dependent redemption right, the applicable pricing supplement will specify the period during which the mandatory exchange of your notes to be redeemed for cash may be effected.
Redemption Notice Date. The redemption notice date is the date the notice of redemption is delivered to the holder of your notes and the trustee. If we elect to exercise our price dependent redemption right, the redemption notice date must fall within the price dependent redemption period, unless otherwise specified in the applicable pricing supplement.
Defeasance, Default Amount, Other Terms
Neither full defeasance nor covenant defeasance will apply to your notes. The following will apply to your notes:
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the default amount will be payable on any acceleration of the maturity of your notes as described under “— Special Calculation Provisions” below; |
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if your notes are linked to an underlying that is an exchange-traded fund, anti-dilution provisions will apply to your notes as described under “— Anti-dilution Adjustments for Exchange-Traded Funds” above; |
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a business day for your notes will have the meaning described under “— Special Calculation Provisions” below; and |
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an underlying business day for your notes will have the meaning described under “— Special Calculation Provisions” below. |
Please note that the information about the settlement or pricing dates, issue price discounts or commissions and net proceeds to GS Finance Corp. in the applicable pricing supplement relates only to the initial issuances and sales of your notes. If you have purchased your notes in a market-making transaction after any initial issuance and sale, any such relevant information about the sale to you will be provided in a separate confirmation of sale.
Default Amount on Acceleration
If an event of default occurs and the maturity of your notes is accelerated, we will pay the default amount in respect of the principal of your notes at the maturity. We describe the default amount under “— Special Calculation Provisions” below.
For the purpose of determining whether the holders of our Series E medium-term notes, which include the notes, are entitled to take any action under the indenture, we will treat the outstanding principal amount of each note as the outstanding principal amount of that note. Although the terms of the notes differ from those of the other Series E medium-term notes, holders of specified percentages in principal amount of all Series E medium-term notes, together in some cases with other series of our debt securities, will be able to take action affecting all the Series E medium-term notes, including the notes, except with respect to certain Series E medium-term notes if the terms of such notes specify that the holders of specified percentages in principal amount of all of such notes must also consent to such action. This action may involve changing some of the terms that apply to the Series E medium-term notes, accelerating the maturity of the Series E medium-term notes after a default or waiving some of our obligations under the indenture. In addition, certain changes to the indenture and the notes that only affect certain debt securities may be made with the approval of holders of a majority in principal amount of such affected debt securities. We discuss these matters in the accompanying prospectus under “Description of Debt Securities We May Offer — Default, Remedies and Waiver of Default” and “— Modification of the Debt Indentures and Waiver of Covenants”.
Manner of Payment
Any payment on your notes at maturity or upon redemption will be made to an account designated by the holder of your notes and approved by us, or at the office of the trustee in New York City, but only when your notes are surrendered to the trustee at that office. If the applicable pricing supplement specifies that your notes bear interest, we may pay interest due on any interest payment date by check mailed to the person who is the holder on the regular record date. We also may make any payment in accordance with the applicable procedures of the depositary.
Modified Business Day
As described in the accompanying prospectus, any payment on your notes that would otherwise be due on a day that is not a business day may instead be paid on the next day that is a business day, with the same effect as if paid on the original due date. For your notes, however, the term business day has a different meaning than it does for other Series E medium-term notes. We discuss this term under “— Special Calculation Provisions” below.
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Special Calculation Provisions
Business Day
When we refer to a business day with respect to your notes, we mean a day that is a New York business day of the kind described in the accompanying prospectus, unless otherwise specified in the applicable pricing supplement. Unless otherwise specified in the applicable pricing supplement or unless the context otherwise requires, when we refer to a scheduled business day, we mean a day that is scheduled to be such a day as of the pricing date.
Underlying Business Day, Index Business Day and ETF Business Day
In this general terms supplement no. 7,016, when we refer to an underlying business day, we mean (i) with respect to an underlying that is an index, an index business day and (ii) with respect to an underlying that is an exchange-traded fund, an ETF business day, in each case, unless the context requires otherwise. When we refer to a scheduled underlying business day, we mean (i) with respect to an underlying that is an index, a scheduled index business day and (ii) with respect to an underlying that is an exchange-traded fund, a scheduled ETF business day, in each case, unless the context requires otherwise.
Unless otherwise specified in the applicable pricing supplement, when we refer to an index business day with respect to any underlying that is an index (other than the MSCI EAFE Index, MSCI Emerging Markets Index or the EURO STOXX 50® Index), we mean a day on which (i) the respective principal securities markets for all of the underlying stocks that comprise such underlying are open for trading, (ii) the underlying publisher for such underlying is open for business and (iii) such underlying is calculated and published by the applicable underlying publisher. Although an underlying publisher may publish an underlying value with respect to the applicable underlying on a day when one or more of the principal securities markets for the underlying stocks for the applicable underlying are closed, that day would not be an index business day for purposes of the applicable underlying. Unless otherwise specified in the applicable pricing supplement or unless the context otherwise requires, when we refer to a scheduled index business day with respect to any underlying that is an index (other than the MSCI EAFE Index, MSCI Emerging Markets Index or the EURO STOXX 50® Index), we mean a day that is scheduled to be such an index business day as of the pricing date.
Unless otherwise specified in the applicable pricing supplement, when we refer to an index business day with respect to the MSCI EAFE Index, MSCI Emerging Markets Index or the EURO STOXX 50® Index, we mean a day on which the MSCI EAFE Index, MSCI Emerging Markets Index or the EURO STOXX 50® Index, as the case may be, is calculated and published by the underlying publisher. Therefore, in the case of any such underlying, a day would be an index business day regardless of whether one or more of the principal securities markets for the underlying stocks for that underlying are closed on that day, if the underlying publisher publishes that index value on that day. Unless otherwise specified in the applicable pricing supplement or the context otherwise requires, when we refer to a scheduled index business day with respect to any such underlying, we mean a day that is scheduled to be such an index business day as of the pricing date.
When we refer to an ETF business day with respect to any underlying that is an exchange-traded fund, we mean a day on which (i) the exchange on which such underlying has its primary listing is open for trading and (ii) the price of one share of the underlying is quoted by the exchange on which such underlying has its primary listing. Unless otherwise specified in the applicable pricing supplement or the context otherwise requires, when we refer to a scheduled ETF business day with respect to any underlying that is an exchange-traded fund, we mean a day that is scheduled to be such a day as of the pricing date.
Closing Value, Index Closing Value and ETF Closing Price
In this general terms supplement no. 7,016, when we refer to the closing value of the applicable underlying, we mean (i) with respect to an underlying that is an index, the index closing value and (ii) with respect to an underlying that is an exchange-traded fund, the ETF closing price, in each case, unless the context requires otherwise.
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Unless otherwise specified in the applicable pricing supplement, with respect to any underlying that is an index (other than the Russell 2000® Index or an MSCI index), the index closing value on any index business day will be the official closing value of the underlying or any successor underlying published by the underlying publisher on such index business day for such underlying.
Unless otherwise specified in the applicable pricing supplement, with respect to the Russell 2000® Index or any MSCI index, the index closing value on any index business day will be the closing value of such index or any successor underlying reported by Bloomberg Financial Services, or any successor reporting service we may select, on such index business day for such index. Currently, whereas the applicable underlying publisher publishes the official closing value of each such index to six decimal places, Bloomberg Financial Services reports the closing value to fewer decimal places. As a result, the index closing value of each such index reported by Bloomberg Financial Services may be lower or higher than the official closing value published by the applicable underlying publisher.
Unless otherwise specified in the applicable pricing supplement, with respect to any underlying that is an exchange-traded fund, the ETF closing price on any ETF business day will equal the closing sale price or last reported sale price, regular way, for the underlying or any successor underlying, on a per-share or other unit basis:
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on the principal national securities exchange on which that underlying is listed for trading on that day, or |
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if the underlying is not listed on any national securities exchange on that day, on any other U.S. national market system that is the primary market for the trading of that underlying. |
If the underlying is not listed or traded as described above, then the closing price for that underlying on any day will be the average, as determined by the calculation agent, of the bid prices for the underlying obtained from as many dealers in that underlying selected by the calculation agent as will make those bid prices available to the calculation agent. The number of dealers need not exceed three and may include the calculation agent or any of its or our affiliates.
Value of the Underlying, Index Value and ETF Price
In this general terms supplement no. 7,016, when we refer to the value of the applicable underlying, we mean (i) with respect to an underlying that is an index, the index value and (ii) with respect to an underlying that is an exchange-traded fund, the ETF price, in each case, unless the context requires otherwise.
With respect to an underlying that is an index, the index value of the underlying at any time on any index business day will be official value of the underlying published by the underlying publisher at any time on any index business day.
With respect to an underlying that is an exchange-traded fund, the ETF price of the underlying at any time on any ETF business day will be the sale price, regular way, for the underlying, on a per-share or other unit basis:
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on the principal national securities exchange on which that underlying is listed for trading on that day, or |
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if the underlying is not listed on any national securities exchange on that day, on any other U.S. national market system that is the primary market for the trading of that underlying. |
If the underlying is not listed or traded as described above, then the sale price for that underlying at any time on any day will be the average, as determined by the calculation agent, of the bid prices for the underlying obtained from as many dealers in that underlying selected by the calculation agent as will make those bid prices available to the calculation agent. The number of dealers need not exceed three and may include the calculation agent or any of its or our affiliates.
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With respect to any given underlying business day, any of the following will be a market disruption event with respect to an underlying that is an index:
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a suspension, absence or material limitation of trading in underlying stocks constituting 20% or more, by weight, of the applicable underlying or any constituent index of such underlying on their respective primary markets, in each case for more than two consecutive hours of trading or during the one-half hour before the close of trading in that market, as determined by the calculation agent in its sole discretion, or |
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a suspension, absence or material limitation of trading in option or futures contracts, if available, relating to (i) the applicable underlying or any constituent index of such underlying or (ii) underlying stocks constituting 20% or more, by weight, of the applicable underlying or any constituent index of such underlying in the respective primary markets for those contracts, in each case for more than two consecutive hours of trading or during the one-half hour before the close of trading in that market, as determined by the calculation agent in its sole discretion, or |
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(i) underlying stocks constituting 20% or more, by weight, of the applicable underlying or any constituent index of such underlying, or (ii) option or futures contracts, if available, relating to the applicable underlying or any constituent index of such underlying, or to underlying stocks constituting 20% or more, by weight, of the applicable underlying or any constituent index of such underlying do not trade on what were the respective primary markets for those underlying stocks or contracts, as determined by the calculation agent in its sole discretion, |
and, in the case of any of these events, the calculation agent determines in its sole discretion that the event could materially interfere with the ability of GS Finance Corp. or any of its affiliates or a similarly situated party to unwind all or a material portion of a hedge that could be effected with respect to the notes. For more information about hedging by GS Finance Corp. and/or any of its affiliates, see “Use of Proceeds” and “Hedging” below, in the applicable product supplement, if any, and/or the applicable pricing supplement.
The following events will not be market disruption events with respect to an underlying that is an index:
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a limitation on the hours or numbers of days of trading, but only if the limitation results from an announced change in the regular business hours of the relevant market, and |
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a decision to permanently discontinue trading in the option or futures contracts relating to the applicable underlying or any constituent index of such underlying or to any underlying stock. |
For this purpose, an “absence of trading” in the primary securities market on which an underlying stock is traded, or on which option or futures contracts, if available, relating to any underlying or any constituent index of such underlying or to any underlying stock are traded, will not include any time when that market is itself closed for trading under ordinary circumstances. In contrast, a suspension or limitation of trading in an underlying stock or in option or futures contracts, if available, relating to any underlying or any constituent index of such underlying or to any underlying stock in the primary market for that stock or those contracts, by reason of:
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a price change exceeding limits set by that market, or |
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an imbalance of orders relating to that underlying stock or those contracts, or |
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a disparity in bid and ask quotes relating to that underlying stock or those contracts, |
will constitute a suspension or material limitation of trading in that underlying or those contracts in that market.
For purposes of this subsection entitled “— Market Disruption Event”, a “constituent index of an underlying” with respect to the MSCI EAFE Index or MSCI Emerging Markets Index refers to the component country indices that comprise the MSCI EAFE Index or MSCI Emerging Markets Index, as applicable. For any other underlying, the applicable pricing supplement will specify the constituent indices
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of the underlying, if any, that comprise or underlie the underlying or underlyings to which your notes may be linked.
The following events will be market disruption events with respect to an underlying that is an exchange-traded fund:
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a suspension, absence or material limitation of trading in the underlying on its primary market for more than two consecutive hours of trading or during the one half-hour before the close of trading in that market, as determined by the calculation agent in its sole discretion, |
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a suspension, absence or material limitation of trading in option or futures contracts relating to the underlying in the primary market for those contracts for more than two consecutive hours of trading or during the one-half hour before the close of trading in that market, as determined by the calculation agent in its sole discretion, or |
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the underlying does not trade on what was the primary market for the underlying, as determined by the calculation agent in its sole discretion, |
and, in the case of any of these events, the calculation agent determines in its sole discretion that the event could materially interfere with the ability of GS Finance Corp. or any of its affiliates or a similarly situated party to unwind all or a material portion of a hedge that could be effected with respect to the notes. For more information about hedging by GS Finance Corp. and/or any of its affiliates, see “Use of Proceeds” and “Hedging” below, in the applicable product supplement, if any, and/or the applicable pricing supplement.
The following events will not be market disruption events with respect to an underlying that is an exchange-traded fund:
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a limitation on the hours or numbers of days of trading, but only if the limitation results from an announced change in the regular business hours of the relevant market, and |
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a decision to permanently discontinue trading in option or futures contracts relating to the underlying. |
For this purpose, an “absence of trading” in the primary securities market on which shares of the underlying are traded, or on which option or futures contracts, if available, relating to the underlying are traded, will not include any time when that market is itself closed for trading under ordinary circumstances. In contrast, a suspension or limitation of trading in shares of the underlying or in option or futures contracts, if available, relating to the underlying in the primary market for that underlying or those contracts, by reason of:
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a price change exceeding limits set by that market, or |
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an imbalance of orders relating to the shares of the underlying or those contracts, or |
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a disparity in bid and ask quotes relating to the shares of the underlying or those contracts, |
will constitute a suspension or material limitation of trading in shares of the underlying or those contracts in that market.
The following will be a market disruption event with respect to underlyings that are denominated in currencies other than U.S. dollars or the underlying stocks of which trade in currencies other than U.S. dollars where the calculation agent adjusts such underlyings to reflect their U.S. dollar value:
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with respect to the exchange rate applicable to such underlying or underlying stocks, a market disruption event will occur when the exchange rate is not available as specified in the applicable pricing supplement if the calculation agent determines in its sole discretion that the event could materially interfere with the ability of GS Finance Corp. or any of its affiliates or a similarly situated party to unwind all or a material portion of a hedge that could be effected with respect to the notes. For more information about hedging by GS Finance Corp. and/or any of its affiliates, see “Use of Proceeds” and “Hedging” below, in the applicable product supplement, if any, and/or the applicable pricing supplement. |
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A market disruption event with respect to one or more underlyings will not, by itself, constitute a market disruption event for the remaining unaffected underlying or underlyings.
Default Amount
The default amount for your notes on any day (except as provided in the last sentence under “— Default Quotation Period” below) will be an amount, in the specified currency for the principal of your notes, equal to the cost of having a qualified financial institution, of the kind and selected as described below, expressly assume all our payment and other obligations with respect to your notes as of that day and as if no default or acceleration had occurred, or to undertake other obligations providing substantially equivalent economic value to you with respect to your notes. That cost will equal:
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the lowest amount that a qualified financial institution would charge to effect this assumption or undertaking, plus |
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the reasonable expenses, including reasonable attorneys’ fees, incurred by the holder of your notes in preparing any documentation necessary for this assumption or undertaking. |
During the default quotation period for your notes, which we describe below, the holder and/or we may request a qualified financial institution to provide a quotation of the amount it would charge to effect this assumption or undertaking. If either party obtains a quotation, it must notify the other party in writing of the quotation. The amount referred to in the first bullet point above will equal the lowest — or, if there is only one, the only — quotation obtained, and as to which notice is so given, during the default quotation period. With respect to any quotation, however, the party not obtaining the quotation may object, on reasonable and significant grounds, to the assumption or undertaking by the qualified financial institution providing the quotation and notify the other party in writing of those grounds within two business days after the last day of the default quotation period, in which case that quotation will be disregarded in determining the default amount.
Default Quotation Period. The default quotation period is the period beginning on the day the default amount first becomes due and ending on the third business day after that day, unless:
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no quotation of the kind referred to above is obtained, or |
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every quotation of that kind obtained is objected to within five business days after the due day as described above. |
If either of these two events occurs, the default quotation period will continue until the third business day after the first business day on which prompt notice of a quotation is given as described above. If that quotation is objected to as described above within five business days after that first business day, however, the default quotation period will continue as described in the prior sentence and this sentence.
In any event, if the default quotation period and the subsequent two-business-day objection period have not ended before the valuation date, then the default amount will equal the principal amount of your notes.
Qualified Financial Institutions. For the purpose of determining the default amount at any time, a qualified financial institution must be a financial institution organized under the laws of any jurisdiction in the United States of America, Europe or Japan, which at that time has outstanding debt obligations with a stated maturity of one year or less from the date of issue and that is, or whose securities are, rated either:
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A-1 or higher by Standard & Poor’s Ratings Services, or any successor, or any other comparable rating then used by that rating agency, or |
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P-1 or higher by Moody’s Investors Service or any successor, or any other comparable rating then used by that rating agency. |
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We intend to lend the net proceeds from the sale of the notes to The Goldman Sachs Group, Inc. or its affiliates. The Goldman Sachs Group, Inc. expects to use the proceeds from such loans for the purposes we describe in the accompanying prospectus under “Use of Proceeds”. We or our affiliates may also use those proceeds in transactions intended to hedge our obligations under the offered notes as described below.
In anticipation of the sale of the notes, we and/or our affiliates expect to enter into hedging transactions involving purchases of the underlying (in the case of exchange-traded funds), the underlying stocks, listed or over-the-counter options, futures and/or other instruments linked to the underlyings, constituent indices of such underlyings, the underlying stocks, foreign currencies or other instruments linked to the underlyings, constituent indices of such underlyings, the underlying stocks and indices designed to track the performance of the relevant equity markets or components of such markets on or before the pricing date. In addition, from time to time after we issue the notes, we and/or our affiliates expect to enter into additional hedging transactions and to unwind those we have entered into, in connection with the notes and perhaps in connection with other notes we issue, some of which may have returns linked to any one or more of the underlyings, one or more of the constituent indices thereof, as applicable, the underlying stocks or foreign currencies. Consequently, with regard to your notes, from time to time, we and/or our affiliates:
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expect to acquire or dispose of positions in listed or over-the-counter options, futures or other instruments linked to some or all of the underlyings, some or all of the constituent indices of such underlyings or some or all underlying stocks or foreign currencies; |
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may take or dispose of positions in the securities of the underlying stock issuers themselves or the underlyings (in the case of exchange-traded funds); |
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may take or dispose of positions in listed or over-the-counter options or other instruments based on underlyings designed to track the performance of the stock exchanges or other components of the equity markets; |
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may take short positions in the underlying stocks or other securities of the kind described above — i.e., we and/or our affiliates may sell securities of the kind that we do not own or that we borrow for delivery to purchaser; and/or |
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may acquire or dispose of U.S. dollars in foreign exchange transactions involving the Japanese yen, euro, British pound sterling or other foreign currency or currencies. |
We and/or our affiliates may acquire a long or short position in securities similar to your notes from time to time and may, in our or their sole discretion, hold or resell those securities.
In the future, we and/or our affiliates expect to close out hedge positions relating to the notes and perhaps relating to other notes with returns linked to the underlyings, the constituent indices of such underlyings, as applicable, the underlying stocks or the foreign currencies. We expect these steps to involve sales of instruments linked to the underlyings, the underlying stocks or the foreign currencies on or shortly before the valuation date. These steps also may involve sales and/or purchases of some or all of the underlying stocks or listed or over-the-counter options, futures or other instruments linked to any one or more of the underlyings, constituent indices thereof or the foreign currencies, some or all of the underlying stocks, constituent indices or indices designed to track the performance of the U.S., European, Asian or other stock exchanges or other components of the U.S., European, Asian or other equity markets or other components of such markets, as applicable.
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Supplemental Discussion of U.S. Federal Income Tax Consequences
The following section supplements the discussion of U.S. federal income taxation in the accompanying prospectus.
The following section is the opinion of Sidley Austin llp, counsel to GS Finance Corp. and The Goldman Sachs Group, Inc. In addition, it is the opinion of Sidley Austin llp that the characterization of the notes for U.S. federal income tax purposes that will be required under the terms of the notes, as discussed below, is a reasonable interpretation of current law.
The following discussion addresses certain tax consequences that are generally expected to be applicable to the notes issued off of this general terms supplement no. 7,016 but it does not address the tax treatment of any particular note. Accordingly, tax consequences different than those described herein may be applicable to any particular note. The tax consequences for a particular note will be discussed in the applicable pricing supplement. Furthermore, this discussion only addresses the tax treatment of notes that are not linked to currency exchange rates. The tax treatment of currency-linked notes will be addressed in the applicable pricing supplement.
This section does not apply to you if you are a member of a class of holders subject to special rules, such as:
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a dealer in securities or currencies; |
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a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings; |
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a bank; |
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a life insurance company; |
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a tax exempt organization; |
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a partnership; |
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an accrual method taxpayer subject to special tax accounting rules as a result of its use of financial statements; |
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a regulated investment company; |
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a person that owns a note as a hedge or that is hedged against interest rate risks; |
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a person that purchases or sells the note as part of a wash-sale for tax purposes; |
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a person that owns a note as part of a straddle or conversion transaction for tax purposes; or |
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a United States holder (as defined below) whose functional currency for tax purposes is not the U.S. dollar. |
Although this section is based on the U.S. Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations under the Internal Revenue Code, published rulings and court decisions, all as currently in effect, no statutory, judicial or administrative authority directly addresses how your notes should be treated for U.S. federal income tax purposes, and as a result, the U.S. federal
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income tax consequences of your investment in your notes are uncertain. Moreover, these laws are subject to change, possibly on a retroactive basis.
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You should consult your tax advisor concerning the U.S. federal income tax and any other applicable tax consequences of your investments in the notes, including the application of state, local or other tax laws and the possible effects of changes in federal or other tax laws. |
United States Holders
This section applies to you only if you are a United States holder that holds your notes as a capital asset for tax purposes. You are a United States holder if you are a beneficial owner of each of your notes and you are:
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a citizen or resident of the United States; |
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a domestic corporation; |
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an estate whose income is subject to U.S. federal income tax regardless of its source; or |
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a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust. |
You will be obligated pursuant to the terms of the notes – in the absence of a change in law, an administrative determination or a judicial ruling to the contrary – to characterize each note for all tax purposes as a pre‑paid forward contract or a pre‑paid derivative contract (which is an income-bearing pre-paid forward contract or pre-paid derivative contract if the notes pay a coupon) in respect of the underlyings or basket of underlyings, as specified in the applicable pricing supplement. Except as otherwise noted below, the discussion herein assumes that the notes will be so treated.
If your notes pay a coupon, it is likely that any coupon payment will be taxed as ordinary income in accordance with your regular method of accounting for U.S. federal income tax purposes.
Upon the sale, exchange, redemption or maturity of your notes, it would be reasonable for you to recognize capital gain or loss equal to the difference, if any, between the amount of cash you receive at such time (excluding amounts attributable to an accrued and unpaid coupon payment) and your tax basis in your notes. Your tax basis in the notes will generally be equal to the amount that you paid for the notes. If you hold your notes for more than one year, the gain or loss generally will be long-term capital gain or loss, except to the extent attributable to accrued but unpaid coupon, if any, with respect to your notes. If you hold your notes for one year or less, the gain or loss generally will be short-term capital gain or loss, except to the extent attributable to accrued but unpaid coupon, if any, with respect to your notes. Any resulting character mismatch may result in adverse tax consequences to you, because an investor's ability to deduct capital losses is subject to significant limitations.
We will not attempt to ascertain whether any underlying, component of any underlying or any underlying included in a basket would be treated as a “passive foreign investment company” (“PFIC”), within the meaning of Section 1297 of the Internal Revenue Code. If any underlying, component of any underlying or any underlying included in a basket were so treated, certain adverse U.S. federal income tax consequences could possibly apply to a United States holder. You should refer to information filed with the SEC with respect to each underlying, each component of any underlying or each underlying included in a basket and consult your tax advisor regarding the possible consequences to you, if any, if a particular underlying, component of any underlying or underlying included in a basket is or becomes a PFIC.
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No statutory, judicial or administrative authority directly discusses how your notes should be treated for U.S. federal income tax purposes. As a result, the U.S. federal income tax consequences of your investment in the notes are uncertain and alternative characterizations are possible. Accordingly, we urge you to consult your tax advisor in determining the tax consequences of an investment in your notes in your particular circumstances, including the application of state, local or other tax laws and the possible effects of changes in federal or other tax laws.
Alternative Treatments. There is no judicial or administrative authority discussing how your notes should be treated for U.S. federal income tax purposes. Therefore, the Internal Revenue Service might assert that a treatment other than that described above is more appropriate. For example, the Internal Revenue Service could treat your notes as a single debt instrument subject to special rules governing contingent payment debt instruments if your notes have a term of more than one year. Under those rules, the amount of interest you are required to take into account for each accrual period would be determined by constructing a projected payment schedule for the notes and applying rules similar to those for accruing original issue discount on a hypothetical noncontingent debt instrument with that projected payment schedule. This method is applied by first determining the comparable yield – i.e., the yield at which we would issue a noncontingent fixed rate debt instrument with terms and conditions similar to your notes – and then determining a payment schedule as of the issue date that would produce the comparable yield. These rules may have the effect of requiring you to include interest in income in respect of your notes prior to your receipt of cash attributable to that income.
If the rules governing contingent payment debt instruments apply, you would recognize gain or loss upon the sale, exchange, redemption or maturity of your notes in an amount equal to the difference, if any, between the amount of cash you receive at that time and your adjusted basis in your notes. In general, your adjusted basis in your notes would equal the amount you paid for your notes, increased by the amount of interest you previously accrued with respect to your notes, in accordance with the comparable yield and the projected payment schedule for your notes, and decreased by the amount of any noncontingent payment and the projected amount of any contingent payment previously made to you with respect to your notes.
If the rules governing contingent payment debt instruments apply, any gain you recognize upon the sale, exchange, redemption or maturity of your notes would be ordinary interest income. Any loss you recognize at that time would be ordinary loss to the extent of interest you included as income in the current or previous taxable years in respect of your notes, and, thereafter, as capital loss.
If the rules governing contingent payment debt instruments apply, special rules would apply to a person who purchases notes at a price other than the adjusted issue price as determined for tax purposes.
If your notes have a term of one year or less, the Internal Revenue Service may assert that your notes should be treated as contingent short-term debt instruments. Although there is no authority that specifically addresses the tax treatment of contingent short-term debt instruments, it is likely that, if your notes are so treated, you should not recognize any income prior to the maturity of the notes (except for any coupon payments on the notes). If your notes are so treated, upon the sale, exchange or redemption of your notes, it would be reasonable for you to recognize short-term capital gain or loss in an amount equal to the difference between the amount you paid for your notes and the amount received by you upon such sale, exchange or redemption (other than amounts attributable to accrued but unpaid coupons), unless your notes are sold, exchanged or redeemed between the valuation date and the maturity date, in which case it would be reasonable for you to generally treat any gain that you recognize as ordinary income and any loss that you recognize as a short-term capital loss. If you are a secondary purchaser of the notes, special rules apply to you and you should consult your tax advisor. There is no statutory, judicial or administrative authority that governs how short-term contingent debt should be treated for U.S. federal income tax purposes. Accordingly, if your notes have a term of less than one year, you should consult your tax advisor about this potential alternative treatment.
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It is possible that the Internal Revenue Service could seek to characterize your notes in a manner that results in tax consequences to you different from those described above. For example, if your notes pay a coupon, your notes could also be treated as a unit consisting of a forward contract (the “Forward Contract”) and an interest-bearing cash deposit used to secure your obligation to purchase the underlying under the Forward Contract (the “Cash Deposit”). Under this characterization, if you are an initial purchaser of the notes, your notes would likely be treated for U.S. federal income tax purposes in the same manner as an income-bearing pre-paid derivative contract as described above. If, however you are a secondary purchaser of the notes, you would likely be required to allocate your purchase price for the notes between the Forward Contract and the Cash Deposit based on the respective fair market value of each on the date of the purchase. If the portion of your purchase price allocated to the Cash Deposit is at a discount from, or is in excess of, the principal amount of your note, you may be subject to the market discount or amortizable bond premium rules described in the accompanying prospectus under “United States Taxation — Taxation of Debt Securities — United States Holders — Market Discount” and “United States Taxation — Taxation of Debt Securities — United States Holders — Debt Securities Purchased at a Premium” with respect to the Cash Deposit. Accordingly, if you purchase your notes in the secondary market, you should consult your tax advisor as to the possible application of such rules to you.
If your notes pay a coupon, it is also possible that the Internal Revenue Service could seek to characterize your notes as notional principal contracts. If your notes pay a coupon, it is also possible that the coupon payments would not be treated as either interest or ordinary income for U.S. federal income tax purposes, but instead would be treated in some other manner. For example, the coupon payments could be treated all or in part as contract fees in respect of a forward contract, and the U.S. federal income tax treatment of such contract fees is uncertain. In addition, if your notes provide a fixed supplemental amount of return irrespective of the performance of the underlying or basket of underlyings, it is possible that the Internal Revenue Service may take the position that you are required to accrue the supplemental amount in ordinary income over the life of your notes or that it should be characterized as ordinary income upon the maturity of the notes irrespective of the amount you receive upon the maturity of your notes.
In addition, if your notes are properly treated as a pre-paid forward or derivative contract (or income-bearing forward or derivative contract), the constructive ownership rules of Section 1260 of the Internal Revenue Code could possibly apply to notes that have a term in excess of one year if (a) the underlying is an ETF, (b) the underlying is an index that includes an ETF or other “pass-thru entity” (as defined in Section 1260(c)(2) of the Internal Revenue Code), or (c) the notes are linked to a basket that includes (a) or (b). If your notes are subject to the constructive ownership rules, it is possible that any long-term capital gain that you realize upon the sale, exchange, redemption or maturity of your notes would be recharacterized as ordinary income (and you would be subject to an interest charge on deferred tax liability with respect to such amounts). The application of the constructive ownership rules to the notes will depend on the particular terms of the note. In particular, the application of the constructive ownership rules to a note linked to an index or basket is uncertain. Therefore, you are strongly urged to consult your tax advisor with respect to the possible application of the constructive ownership rules to your investment in the notes.
It is also possible that your notes could be treated in the manner described above, except that (i) any gain or loss that you recognize at maturity would be treated as ordinary gain or loss or (ii) you should not include the coupon payments, if any, in income as you receive them but instead you should reduce your basis in your notes by the amount of the coupon payments that you receive. In addition, it is possible that you could recognize gain when there is a change to the components of the underlying or any of the underlyings that comprise the basket. You should consult your tax advisor as to the tax consequences of such characterization and any possible alternative characterizations of your notes for U.S. federal income tax purposes.
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On December 7, 2007, the Internal Revenue Service released a notice stating that the Internal Revenue Service and the Treasury Department are actively considering the proper federal income tax treatment of an instrument such as your notes, including whether the holder of an instrument such as your notes should be required to accrue ordinary income on a current basis and whether gain or loss should be ordinary or capital. It is not possible to determine what guidance they will ultimately issue, if any. The Internal Revenue Service and the Treasury Department are also considering other relevant issues, including whether foreign holders of such instruments should be subject to withholding tax on any deemed income accruals and whether the special “constructive ownership rules” of Section 1260 of the Internal Revenue Code might be applied to such instruments. Holders are urged to consult their tax advisors concerning the significance, and the potential impact, of the above considerations. Except to the extent otherwise provided by law, GS Finance Corp. intends to continue treating the notes for U.S. federal income tax purposes in accordance with the treatment set forth in this section unless and until such time as Congress, the Treasury Department or the Internal Revenue Service determine that some other treatment is more appropriate. You are urged to consult your tax advisor as to the possibility that any legislative or administrative action may adversely affect the tax treatment and the value of your notes.
Moreover, in 2007, legislation was introduced in Congress that, if enacted, would have required holders that acquired instruments such as the notes after the bill was enacted to accrue interest income over the term of such instruments even though there may be no coupon payments over the term of such instruments. It is not possible to predict whether a similar or identical bill will be enacted in the future, or whether any such bill would affect the tax treatment of such notes.
It is impossible to predict what any such legislation or administrative or regulatory guidance might provide, and whether the effective date of any legislation or guidance will affect notes that were issued before the date that such legislation or guidance is issued. You are urged to consult your tax advisor as to the possibility that any legislative or administrative action may adversely affect the tax treatment of your notes.
Backup Withholding and Information Reporting
Please see the discussion under “United States Taxation — Taxation of Debt Securities — Backup Withholding and Information Reporting — United States Holders” in the accompanying prospectus for a description of the applicability of the backup withholding and information reporting rules to payments made on your notes. These rules will apply notwithstanding that we do not intend to treat the notes as debt for tax purposes.
United States Alien Holders
This section applies to you only if you are a United States alien holder. You are a United States alien holder if you are the beneficial owner of notes and are, for U.S. federal income tax purposes:
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a nonresident alien individual; |
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a foreign corporation; or |
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an estate or trust that in either case is not subject to U.S. federal income tax on a net income basis on income or gain from notes. |
If your notes pay a coupon, because the U.S. federal income tax treatment (including the applicability of withholding) of the coupon payments on the notes is uncertain, in the absence of further guidance, we intend to withhold on the coupon payments (including any coupon payments on your notes at maturity) made to you at a 30% rate or at a lower rate specified by an applicable income tax treaty under an “other income” or similar provision. We will not make payments of any additional amounts. To claim a reduced treaty rate for withholding, you generally must provide a valid Internal Revenue Service Form W-8BEN,
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Internal Revenue Service Form W-8BEN-E or an acceptable substitute form upon which you certify, under penalty of perjury, your status as a United States alien holder and your entitlement to the lower treaty rate. Payments will be made to you at a reduced treaty rate of withholding only if such reduced treaty rate would apply to any possible characterization of the payments (including, for example, if the payments were characterized as contract fees). Withholding also may not apply to coupon payments made to you if: (i) the coupon payments are “effectively connected” with your conduct of a trade or business in the United States and are includable in your gross income for U.S. federal income tax purposes, (ii) the coupon payments are attributable to a permanent establishment that you maintain in the United States, if required by an applicable tax treaty, and (iii) you comply with the requisite certification requirements (generally, by providing an Internal Revenue Service Form W-8ECI). If you are eligible for a reduced rate of United States withholding tax, you may obtain a refund of any amounts withheld in excess of that rate by filing a refund claim with the Internal Revenue Service.
“Effectively connected” payments includable in your United States gross income are generally taxed at rates applicable to United States citizens, resident aliens, and domestic corporations; if you are a corporate United States alien holder, “effectively connected” payments may be subject to an additional “branch profits tax” under certain circumstances.
Whether or not your notes pay a coupon, you will be subject to generally applicable information reporting and backup withholding requirements with respect to payments on your notes and, notwithstanding that we do not intend to treat the notes as debt for tax purposes, we intend to backup withhold on such payments with respect to your notes unless you comply with the requirements necessary to avoid backup withholding on debt instruments (in which case you will not be subject to such backup withholding) as set forth under “United States Taxation – Taxation of Debt Securities – Backup Withholding and Information Reporting – United States Alien Holders” in the accompanying prospectus.
As discussed above, alternative characterizations of the notes for U.S. federal income tax purposes are possible. Should an alternative characterization of the notes, by reason of a change or clarification of the law, by regulation or otherwise, cause payments with respect to the notes to become subject to withholding tax, we will withhold tax at the applicable statutory rate and we will not make payments of any additional amounts. Prospective United States alien holders of the notes should consult their tax advisors in this regard.
We will not attempt to ascertain whether any underlying, component of any underlying or any underlying included in a basket would be treated as a “United States real property holding corporation” (“USRPHC”), within the meaning of Section 897 of the Internal Revenue Code. If any underlying or component of any underlying were so treated, certain adverse U.S. federal income tax consequences could possibly apply to a United States alien holder. You should refer to information filed with the SEC with respect to each underlying, each component of any underlying or each underlying included in a basket and consult your tax advisor regarding the possible consequences to you, if any, if a particular underlying, component of any underlying or underlying included in a basket is or becomes a USRPHC.
Furthermore, on December 7, 2007, the Internal Revenue Service released Notice 2008-2 soliciting comments from the public on various issues, including whether instruments such as your notes should be subject to withholding. It is therefore possible that rules will be issued in the future, possibly with retroactive effects, that would cause payments on your notes to be subject to withholding, even if you comply with certification requirements as to your foreign status.
The Treasury Department has issued regulations under which amounts paid or deemed paid on certain financial instruments (“871(m) financial instruments”) that are treated as attributable to U.S.-source dividends could be treated, in whole or in part depending on the circumstances, as a “dividend equivalent” payment that is subject to tax at a rate of 30% (or a lower rate under an applicable treaty), which in the case of any coupon payments and any amounts you receive upon the sale, exchange, redemption or maturity of your notes, could be collected via withholding. If these regulations were to apply to the notes, we may be required to withhold such taxes if any U.S.-source dividends are paid with respect to any
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underlying, component of any underlying or any underlying or component of any underlying included in a basket during the term of the notes. We could also require you to make certifications e.g., an applicable Internal Revenue Service Form W-8 prior to any coupon payment or the maturity of the notes in order to avoid or minimize withholding obligations, and we could withhold accordingly (subject to your potential right to claim a refund from the Internal Revenue Service) if such certifications were not received or were not satisfactory. If withholding was required, we would not be required to pay any additional amounts with respect to amounts so withheld. These regulations generally will apply to 871(m) financial instruments (or a combination of financial instruments treated as having been entered into in connection with each other) issued (or significantly modified and treated as retired and reissued) on or after January 1, 2018, but will also apply to certain 871(m) financial instruments (or a combination of financial instruments treated as having been entered into in connection with each other) that have a delta (as defined in the applicable Treasury regulations) of one and are issued (or significantly modified and treated as retired and reissued) on or after January 1, 2017. In addition, these regulations will not apply to financial instruments that reference a “qualified index” (as defined in the regulations). We will determine, as of the issue date of your notes, if your notes will be subject to withholding under these rules. In certain limited circumstances, however, you should be aware that it is possible for United States alien holders to be liable for tax under these rules with respect to a combination of transactions treated as having been entered into in connection with each other even when no withholding is required. You should consult your tax advisor concerning these regulations, subsequent official guidance and regarding any other possible alternative characterizations of your notes for U.S. federal income tax purposes.
Foreign Account Tax Compliance Act (FATCA) Withholding
Pursuant to Treasury regulations, Foreign Account Tax Compliance Act (FATCA) withholding (as described in “United States Taxation—Taxation of Debt Securities—Foreign Account Tax Compliance Act (FATCA) Withholding” in the accompanying prospectus) will generally apply to obligations that are issued on or after July 1, 2014; therefore, your notes will generally be subject to the FATCA withholding rules. Pursuant to recently proposed regulations, the Treasury Department has indicated its intent to eliminate the requirements under FATCA of withholding on gross proceeds from the sale, exchange, maturity or other disposition of relevant financial instruments. The Treasury Department has indicated that taxpayers may rely on these proposed regulations pending their finalization.
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Employee Retirement Income Security Act
This section is only relevant to you if you are an insurance company or the fiduciary of a pension plan or an employee benefit plan (including a governmental plan, an IRA or a Keogh Plan) proposing to invest in the notes.
The U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and the U.S. Internal Revenue Code of 1986, as amended (the “Code”), prohibit certain transactions (“prohibited transactions”) involving the assets of an employee benefit plan that is subject to the fiduciary responsibility provisions of ERISA or Section 4975 of the Code (including individual retirement accounts, Keogh plans and other plans described in Section 4975(e)(1) of the Code) (a “Plan”) and certain persons who are “parties in interest” (within the meaning of ERISA) or “disqualified persons” (within the meaning of the Code) with respect to the Plan; governmental plans may be subject to similar prohibitions unless an exemption applies to the transaction. The assets of a Plan may include assets held in the general account of an insurance company that are deemed “plan assets” under ERISA or assets of certain investment vehicles in which the Plan invests. Each of The Goldman Sachs Group, Inc. and certain of its affiliates may be considered a “party in interest” or a “disqualified person” with respect to many Plans, and, accordingly, prohibited transactions may arise if the notes are acquired by or on behalf of a Plan unless those notes are acquired and held pursuant to an available exemption. In general, available exemptions are: transactions effected on behalf of that Plan by a “qualified professional asset manager” (prohibited transaction exemption 84-14) or an “in-house asset manager” (prohibited transaction exemption 96-23), transactions involving insurance company general accounts (prohibited transaction exemption 95-60), transactions involving insurance company pooled separate accounts (prohibited transaction exemption 90-1), transactions involving bank collective investment funds (prohibited transaction exemption 91-38) and transactions with service providers under Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code where the Plan receives no less and pays no more than “adequate consideration” (within the meaning of Section 408(b)(17) of ERISA and Section 4975(f)(10) of the Code). The person making the decision on behalf of a Plan or a governmental plan shall be deemed, on behalf of itself and the plan, by purchasing and holding the notes, or exercising any rights related thereto, to represent that (a) the plan will receive no less and pay no more than “adequate consideration” (within the meaning of Section 408(b)(17) of ERISA and Section 4975(f)(10) of the Code) in connection with the purchase and holding of the notes, (b) none of the purchase, holding or disposition of the notes or the exercise of any rights related to the notes will result in a non-exempt prohibited transaction under ERISA or the Code (or, with respect to a governmental plan, under any similar applicable law or regulation), and (c) neither The Goldman Sachs Group, Inc. nor any of its affiliates is a “fiduciary” (within the meaning of Section 3(21) of ERISA or, with respect to a governmental plan, under any similar applicable law or regulation) with respect to the purchaser or holder in connection with such person’s acquisition, disposition or holding of the notes, or as a result of any exercise by The Goldman Sachs Group, Inc. or any of its affiliates of any rights in connection with the notes, and neither The Goldman Sachs Group, Inc. nor any of its affiliates has provided investment advice in connection with such person’s acquisition, disposition or holding of the notes.
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If you are an insurance company or the fiduciary of a pension plan or an employee benefit plan (including a governmental plan, an IRA or a Keogh plan) and propose to invest in the notes, you should consult your legal counsel. |
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Supplemental Plan of Distribution
With respect to each note to be issued, GS Finance Corp. expects to agree to sell to GS&Co., and GS&Co. expects to agree to purchase from GS Finance Corp., the principal amount of the notes specified, at the price specified under “Net proceeds to the issuer”, in the applicable pricing supplement. GS&Co. proposes initially to offer each note it purchases to the public at the original issue price specified in the applicable pricing supplement and, if the applicable pricing supplement so provides, to certain securities dealers at such price less a concession or no concession as specified in the applicable pricing supplement.
In the future, GS&Co. or other affiliates of GS Finance Corp. may repurchase and resell the notes in market-making transactions, with resales being made at prices related to prevailing market prices at the time of resale or at negotiated prices. The estimated share of GS Finance Corp. of the total offering expenses for your notes, excluding underwriting discounts and commissions and marketing and licensing fees, will be provided in the applicable pricing supplement. For more Information about the plan of distribution and possible market-making activities, see “Plan of Distribution” in the accompanying prospectus.
Any notes which are the subject of the offering contemplated by this general terms supplement no. 7,016, the accompanying prospectus, the accompanying prospectus supplement, the applicable product supplement, if any, and the applicable pricing supplement may not be offered, sold or otherwise made available to any retail investor in the European Economic Area. Consequently no key information document required by Regulation (EU) No 1286/2014 (the "PRIIPs Regulation") for offering or selling the notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation. For the purposes of this provision:
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the expression "retail investor" means a person who is one (or more) of the following: |
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a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); or |
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a customer within the meaning of Directive 2002/92/EC (as amended, the "Insurance Mediation Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or |
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not a qualified investor as defined in Directive 2003/71/EC (as amended, the "Prospectus Directive"); and |
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the expression an “offer" includes the communication in any form and by any means of sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe for the notes. |
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), GS&Co. has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of notes which are the subject of the offering contemplated by this general terms supplement no. 7,016, the accompanying prospectus, the accompanying prospectus supplement, the applicable product supplement, if any, and the applicable pricing supplement to the public in that Relevant Member State except that, with effect from and including the Relevant Implementation Date, an offer of such notes may be made to the public in that Relevant Member State:
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at any time to any legal entity which is a qualified investor as defined in the Prospectus Directive; |
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at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive, |
provided that no such offer of notes referred to above shall require us or any dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer of notes to the public” in relation to any notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe for the notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC (as amended, including by Directive 2010/73/EU), and includes any relevant implementing measure in the Relevant Member State.
Notes which have a maturity of less than one year may not be offered or sold other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the notes would otherwise constitute a contravention of Section 19 of the Financial Services and Markets Act 2000 (the “FSMA”) by GS Finance Corp.
Any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) in connection with the issue or sale of the notes may only be communicated or caused to be communicated in circumstances in which Section 21(1) of the FSMA does not apply to GS Finance Corp. or The Goldman Sachs Group, Inc.
All applicable provisions of the FSMA must be complied with in respect to anything done by any person in relation to the notes in, from or otherwise involving the United Kingdom.
The notes may not be offered or sold in Hong Kong by means of any document other than (i) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) and any rules made thereunder, or (ii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) or which do not constitute an offer to the public within the meaning of that Ordinance; and no advertisement, invitation or document relating to the notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere) which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made thereunder.
This general terms supplement no. 7,016, along with the applicable pricing supplement, the accompanying prospectus supplement and the accompanying prospectus have not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this general terms supplement no. 7,016, along with the applicable pricing supplement, the accompanying prospectus supplement and the accompanying prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the notes may not be circulated or distributed, nor may the notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”)) under Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in
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Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to conditions set forth in the SFA.
Where the notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor, the securities (as defined in Section 239(1) of the SFA) of that corporation shall not be transferable for six months after that corporation has acquired the notes under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer in that corporation’s securities pursuant to Section 275(1A) of the SFA, (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore (“Regulation 32”).
Where the notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is a trust (where the trustee is not an accredited investor (as defined in Section 4A of the SFA)) whose sole purpose is to hold investments and each beneficiary of the trust is an accredited investor, the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferable for six months after that trust has acquired the notes under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer that is made on terms that such rights or interest are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction (whether such amount is to be paid for in cash or by exchange of securities or other assets), (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32.
The notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended), or the FIEA. The notes may not be offered or sold, directly or indirectly, in Japan or to or for the benefit of any resident of Japan (including any person resident in Japan or any corporation or other entity organized under the laws of Japan) or to others for reoffering or resale, directly or indirectly, in Japan or to or for the benefit of any resident of Japan, except pursuant to an exemption from the registration requirements of the FIEA and otherwise in compliance with any relevant laws and regulations of Japan.
The notes are not offered, sold or advertised, directly or indirectly, in, into or from Switzerland on the basis of a public offering and will not be listed on the SIX Swiss Exchange or any other offering or regulated trading facility in Switzerland. Accordingly, neither this general terms supplement no. 7,016 nor any accompanying prospectus supplement, prospectus or other marketing material constitute a prospectus as defined in article 652a or article 1156 of the Swiss Code of Obligations or a listing prospectus as defined in article 32 of the Listing Rules of the SIX Swiss Exchange or any other regulated trading facility in Switzerland. Any resales of the notes by the underwriters thereof may only be undertaken on a private basis to selected individual investors in compliance with Swiss law. This general terms supplement no. 7,016 and accompanying prospectus and prospectus supplement may not be copied, reproduced, distributed or passed on to others or otherwise made available in Switzerland without our prior written consent. By accepting this general terms supplement no. 7,016 and accompanying prospectus and prospectus supplement or by subscribing to the notes, investors are deemed to have acknowledged and agreed to abide by these restrictions. Investors are advised to consult with their financial, legal or tax advisers before investing in the notes.
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GS&Co. is an affiliate of GS Finance Corp. and The Goldman Sachs Group, Inc. and, as such, will have a “conflict of interest” in any offering of notes within the meaning of Financial Industry Regulatory Authority, Inc. (FINRA) Rule 5121. Consequently, any offering of notes will be conducted in compliance with the provisions of FINRA Rule 5121. GS&Co. will not be permitted to sell notes in any offering to an account over which it exercises discretionary authority without the prior specific written approval of the account holder.
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