COMMERZBANK AKTIENGESELLSCHAFT

Notes 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 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.
The final price of the Reference Obligation will be based on the market value of such obligation of the
affected Reference Entity after the occurrence of the Credit Linkage Event as compared to its nominal
value (the "Final Price"). It will be determined by the Determination Agent who solicits quotations from
one or more reference banks at which such banks would be prepared to purchase the Reference
Obligation. The market value of such Reference Obligation(s) may decrease significantly following the
occurrence of a Credit Event and may be subject to significant upward or downward fluctuations both
prior to and following the notification of the Credit Event (on the Determination Date, as defined in § 6
of the Terms and Conditions). The proceeds of cash settlement are not expected to be sufficient to
purchase other obligations with the same nominal amount as the Reference Obligation(s).
The Final Terms may also stipulate and thus preset the Final Prices with respect to each Reference
Entity, including a Final Price which could be zero. In these cases, the prices may apply to the
calculation of the redemption amount or an adjustment of interest, if applicable, irrespective of any
market value of the corresponding Reference Obligations. If the Final Price is preset at zero, potential
investors should be aware that the occurrence of a Credit Linkage Event will lead to a total loss of the
capital invested.The Final Terms may also provide that the Final Price will be determined by an auction
organised by the International Swaps and Derivatives Association, Inc. ("ISDA") with respect to such
Reference Entity and its obligations. ISDA is a private trade organisation which represents its
members – large institutions world-wide which trade with derivative financial products linked to specific
underlyings, as well as numerous private and state-owned companies – in the derivatives market, and
develops and publishes standard terms and conditions as well as documentation materials in
agreement with market participants.
Potential investors should be aware that their investment in the Notes and any loss following a Credit
Event is then dependent on the result of such ISDA auctions, as are other market participants who
have invested in credit derivative instruments documented under ISDA standard terms. Noteholders
take the risk that where the auction final price is used, this may result in a lower recovery value than a
Reference Entity or Reference Obligation would have if such auction final price had not been used.
Also, the Issuer may have a conflict of interest to the extent that it participates in any auction or other
process used to determine the Credit Event and is under no obligation to consider the interests of the
Noteholders when so acting.
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 Hypothetical Credit Default Swaps relating to the Reference Entities.
The Final Terms may provide that, upon occurrence of a Trigger Event relating to the value of Credit
Default Swap Spreads, the Notes redeem early at a Spread Cash Settlement Amount (as defined in
§ 7 Paragraph (2) of the Terms and Conditions). The determination of this amount, inter alia, depends
on the aggregate of the current market values of Hypothetical Credit Default Swaps (similar to those
described in "Risk of Credit Default Swaps Tightening" below) relating to the Reference Entities and
with a certain maturity specified in the Final Terms.
The effects of Credit Linkage Events on the Notes may be leveraged, meaning that (i) where the
Principal Amount of the Note is lower than the sum of the Weighted Amounts of all Reference Entities,
Credit Linkage Events do not affect the payments under the Notes proportional to their weighting
within the portfolio but by the absolute Weighted Amount of the respective Reference Entity, or (ii) the
Weighted Amount of the respective Reference Entity is multiplied by a factor.
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