COMMERZBANK AKTIENGESELLSCHAFT

Events (as defined herein) and may be also subject to Trigger Events (as defined herein) related to
those Reference Entities (together "Credit Linkage Events").
A credit event occurs if during the relevant Observation Period(s) certain circumstances occur, having
economically adverse effects on a Reference Entity, in particular Bankruptcy, Failure to Pay,
Restructuring, Obligation Acceleration, Repudiation/Moratorium as specified in the Final Terms
("Credit Event").
In addition, the Final Terms may provide for potential failure to pay. A potential failure to pay is not a
Credit Event. However, it occurs if a Failure to Pay threatens to occur because a grace period under
the payment obligation which has not expired by the end of the Observation Period has to be taken
into account in accordance with the Final Terms ("Potential Failure to Pay"). If in this case a Failure
to Pay eventually occurs upon expiry of a grace period and/or a corresponding extension period under
the Notes (resulting from the corresponding Potential Failure to Pay), such Failure to Pay, in spite of
having occurred only after the end of the relevant Observation Period is deemed to be a relevant
Credit Event which can be notified to the Noteholders and thus may have effects on the Notes in
accordance with the Final Terms. If the Final Terms do not provide for Potential Failure to Pay, the risk
that a Failure to Pay occurs is even higher since grace periods (if any) under the payment obligation
are not taken into account, e.g. a Failure to Pay would occur immediately if payments of a certain
threshold amount are not made as they become due.
A trigger event occurs if during the relevant Observation Period (i) the Credit Default Swap Spread
linked to the Reference Entity or one of the Reference Entities is greater than a certain level, (ii) the
weighted average of the Credit Default Swap Spreads linked to each of the Reference Entities is equal
to or greater than a certain level, or (iii) the market price of the Notes falls below a certain level, each
such level being specified in the Final Terms ("Trigger Event"). The Credit Default Swap Spread is the
market offer price payable for a Hypothetical Credit Default Swap with a certain maturity and nominal
amount (as specified in the Final Terms) providing for the respective credit protection.
Upon the occurrence of a Credit Linkage Event, the Notes may cease to bear interest or interest may
be payable on a reduced basis. With respect to Notes which do not provide for capital protection (the
"Derivative Notes"), such Credit Linkage Events may, in addition, lead to a redemption at maturity or
an early redemption (i) at a Cash Settlement Amount (following the occurrence of (a) Credit Event(s)),
a Spread Cash Settlement Amount or a Trigger Cash Settlement Amount (following the occurrence of
Trigger Events), as the case may be, (together the "Cash Settlement Amount") or (ii) by delivery of a
certain number of bonds, loans or any other deliverable obligations of a Reference Entity
("Deliverable Obligation") specified in the Final Terms and selected by the Issuer in its own
discretion. Hence, by purchasing the Derivative Notes, prospective investors are also making an
investment decision with respect to the Reference Entity or the Reference Entities, as the case may
be. The determination of the Cash Settlement Amount may be based on the market value of certain
Reference Obligations of the affected Reference Entity. The value of the Reference Obligation(s) or
Deliverable Obligation(s) may after the occurrence of a Credit Event be significantly lower then their
principal amount. Hence, repayments to be made at maturity may not be made at all or only on a
reduced basis.
If the Notes are linked to a portfolio of Reference Entities with respect to which the Final Terms provide
for a continuous, computed cash settlement following each Credit Event that occurs with respect to the
Reference Entities, the Notes will be subject to an adjustment of the (Early) Redemption Amount,
which would be paid if no Credit Event occurred, taking into account the applicable Final Price for the
relevant Reference Obligation.
Upon occurrence of a Trigger Event, the Final Terms may provide that the calculation of the payable
amount will generally be based on either (i) the current market value of the Notes or (ii) the
performances of one or more Hypothetical Credit Default Swaps relating to the Reference Entities.
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