COMMERZBANK AKTIENGESELLSCHAFT

Further, Credit Linkage Events may not have direct effects on the payments under the Notes in cases
where Credit Linkage Events below a certain threshold are not taken into account.
Risks in case of Redemption by Physical Delivery
The Final Terms may provide that the Derivative Notes will be redeemed by delivery of a given number
of bonds, loans or any other deliverable obligation specified in the Final Terms ("Deliverable
Obligation”) of a Reference Entity and not by cash, except in special circumstances specified in the
Final Terms. Hence, by purchasing the Derivative Notes, prospective investors are also making a
potential investment decision with respect to the Reference Entity or the Reference Entities, as the
case may be. If more than one type, series or issue of Deliverable Obligations of the affected
Reference Entity is available, the Issuer may choose in its own discretion which of such Deliverable
Obligation it will deliver and the Issuer will usually choose such Deliverable Obligation that is the
cheapest to deliver.
Prospective investors must be aware that, as a result of such a physical delivery, should it occur,
investors and their investment no longer depend on the creditworthiness of the Issuer but on the value
of the Deliverable Obligations actually delivered.
Furthermore, investors should note that the Final Terms may provide that no fractions of Deliverable
Obligations will be delivered. Hence, the number of Deliverable Obligations to be delivered may be
rounded down to the nearest number of Deliverable Obligations and the Final Terms may provide that
the Issuer is required to pay a cash compensation for undeliverable fractions thereof.
The value of any such delivered obligation might be significantly less than the capital invested by the
investor and may, in extreme cases, even be zero. If such delivered obligations are denominated in a
currency other than the Specified Currency of the Notes, Noteholders are exposed to the risk of
exchange rate fluctuations. Such a risk exists in addition to the risk of a fall in value of such delivered
obligation. In addition, the Deliverable Obligations may not be liquid at all or only to a limited extent.
The liquidity of the Deliverable Obligation will typically change in accordance with fluctuations of the
underlying market, the conditions of the relevant economy, national and international political
developments, the development in any particular industry and the creditworthiness of the relevant
issuer. Further, the Deliverable Obligation may be subject to selling or transfer restrictions.
Subject to the Final Terms, the investor may be required to bear all costs, fees, expenses and taxes
associated with the delivery of the obligations. Furthermore, delivery of Deliverable Obligation may be
impossible or delayed due to various circumstances including the occurrence of a delivery disruption
event. Such delivery disruption event may have the consequence, if provided for in the Final Terms,
that the delivery of the Deliverable Obligations will occur later than scheduled or that the delivery of
the specified obligation may be replaced by payment of the cash amount as specified in the Final
Terms or by other deliverable obligations specified in the Final Terms.
If, following the occurrence of a Credit Event, Deliverable Obligations are delivered, the term to
maturity of such Deliverable Obligations typically will not be identical to the initially scheduled
remaining term to maturity of the Notes at the time of occurrence of the Credit Event. This means that
the initial investment horizon of the investor will change. Moreover, the market value of delivered longterm
obligations compared to their nominal value is lower than in the case of obligations with a shorter
term. In addition, if Deliverable Obligations with a term to maturity longer than that of the Notes at the
time of occurrence of the Credit Event are delivered, the risk of a potential increase in general interest
rate levels following delivery of such Deliverable Obligations will be higher than as compared to the
investor’s initial investment. In the case of a Restructuring Credit Event, the Issuer may deliver
Deliverable Obligations with a term to maturity that is customary in the credit derivatives market for
credit default swaps having the same term as the relevant Notes. These risks will be borne by the
investor.
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