Product Supplement No. COMM SUN-1
(To Prospectus dated September 2, 2021
and Prospectus Supplement dated September 2, 2021)
December 27, 2022
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Filed Pursuant to Rule 424(b)(5)
Registration No. 333-257113 |
Market-Linked Step Up Notes Linked to One or More Commodities, Related Futures Contracts or Commodity Indices
| · | Market-Linked Step Up Notes (the “notes”) are unsecured senior notes issued by Canadian
Imperial Bank of Commerce. Any payments due on the notes, including any repayment of principal, will be subject to the credit risk of
Canadian Imperial Bank of Commerce. |
| · | The notes do not guarantee the return of principal at maturity, and we will not pay interest on the notes.
Instead, the return on the notes will be based on the performance of an underlying “Market Measure,” which will be
a commodity, a futures contract on a commodity, a commodity index, or a basket of the foregoing. |
| · | The notes provide an opportunity to receive the greater of a fixed return and a return based on the positive
performance of the Market Measure. You will be exposed to any negative performance of the Market Measure below the Threshold Value (as
defined below) on a 1-to-1 basis. If specified in the applicable term sheet, your notes may be subject to an automatic call, which will
limit your return to a fixed amount if the notes are called. |
| · | If the value of the Market Measure does not change or increases from its Starting Value to its Ending
Value up to the Step Up Value (each as defined below), you will receive at maturity a cash payment per unit (the “Redemption
Amount”) that equals the principal amount plus the Step Up Payment (as defined below). If the Ending Value is greater than the
Step Up Value, you will receive a return on the notes equal to the percentage increase in the value of the Market Measure from the Starting
Value to the Ending Value, or, if applicable, a multiple of that percentage increase. |
| · | If the value of the Market Measure decreases from its Starting Value to its Ending Value but not below
the Threshold Value, then the Redemption Amount will equal the principal amount. However, if the Ending Value is less than the Threshold
Value, you will be subject to 1-to-1 downside exposure to the decrease of the Market Measure below the Threshold Value. In such a case,
you may lose all or a significant portion of the principal amount of your notes. |
| · | If specified in the applicable term sheet, your notes may be subject to an automatic call. In that case,
the notes will be automatically called if the Observation Level on any Observation Date is greater than or equal to the Call Level (each
as defined below). If called, you will receive a cash payment per unit (the “Call Amount”) that equals the principal
amount plus the applicable Call Premium (as defined below). |
| · | This product supplement describes the general terms of the notes, the risk factors to consider before
investing, the general manner in which they may be offered and sold, and other relevant information. |
| · | For each offering of the notes, we will provide you with a pricing supplement (which we refer to as a
“term sheet”) that will describe the specific terms of that offering, including the specific Market Measure, the Threshold
Value, the Step Up Value, the Step Up Payment, and certain related risk factors, and if the notes are subject to an automatic call, the
Call Level, the Call Amount and the Call Premium for each Observation Date, the Observation Dates and the Call Settlement Dates. The applicable
term sheet will identify, if applicable, any additions or changes to the terms specified in this product supplement. |
| · | The notes will be issued in denominations of whole units. Unless otherwise set forth in the applicable
term sheet, each unit will have a principal amount of $10. The applicable term sheet may also set forth a minimum number of units that
you must purchase. |
| · | Unless otherwise specified in the applicable term sheet, the notes will not be listed on a securities
exchange. |
| · | BofA Securities, Inc. (“BofAS”) and one or more of its affiliates may act as our agents
to offer the notes, and will act in a principal capacity in such role. |
The
notes are unsecured and are not savings accounts or insured deposits of a bank. The notes are not insured by the Canada Deposit Insurance
Corporation, the U.S. Federal Deposit Insurance Corporation (the “FDIC”) or any other governmental agency of the United
States, Canada, or any other jurisdiction. Potential purchasers of the notes should consider the information in “Risk Factors”
beginning on page PS-7 of this product supplement, page S-1 of the accompanying prospectus supplement, and page 1 of the
accompanying prospectus. You may lose all or a significant portion of your investment in the notes.
None of the Securities and Exchange Commission
(the “SEC”), any state securities commission, or any other regulatory body has approved or disapproved of these securities
or passed upon the adequacy or accuracy of this product supplement, the prospectus supplement, or the prospectus. Any representation to
the contrary is a criminal offense.
BofA Securities
TABLE OF CONTENTS
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Page |
SUMMARY |
PS-3 |
RISK FACTORS |
PS-7 |
DESCRIPTION OF THE NOTES |
PS-18 |
SUPPLEMENTAL PLAN OF DISTRIBUTION |
PS-31 |
CANADIAN FEDERAL INCOME TAX SUMMARY |
PS-32 |
U.S. FEDERAL INCOME TAX SUMMARY |
PS-32 |
SUMMARY
The information in this “Summary” section
is qualified in its entirety by the more detailed explanation set forth elsewhere in this product supplement, the prospectus supplement,
and the prospectus, as well as the applicable term sheet. Neither we nor BofAS have authorized any other person to provide you with any
information different from the information set forth in these documents. If anyone provides you with different or inconsistent information
about the notes, you should not rely on it.
Key Terms:
General: |
The notes are senior unsecured debt securities issued by Canadian Imperial
Bank of Commerce, and are not guaranteed or insured by the Canada Deposit Insurance Corporation, the FDIC or any other governmental agency
of the United States, Canada or any other jurisdiction, and are not, either directly or indirectly, an obligation of any third party.
They rank equally with all of our other unsecured senior debt from time to time outstanding. Any payments due on the notes, including
any repayment of principal, will be subject to our credit risk.
The return on the notes will be based on the performance of a Market
Measure and there is no guaranteed return of principal at maturity. Therefore, you may lose all or a significant portion of your investment
if the notes are not automatically called prior to maturity (if applicable), and the value of the Market Measure decreases from the Starting
Value to an Ending Value that is less than the Threshold Value.
Each issue of the notes will mature on the date set forth in the applicable
term sheet, unless, if applicable, the notes are automatically called on an earlier date. You should be aware that if the automatic call
feature applies to your notes, it may shorten the term of an investment in the notes, and you must be willing to accept that your notes
may be called prior to maturity.
You will not receive any interest payments.
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Market Measure: |
The Market Measure may consist of one or more of the following:
· commodities;
· futures
contracts on a commodity;
· commodity
indices; or
· any
combination of the above.
The Market Measure may consist of a group, or “Basket,”
of the foregoing. We refer to each component included in any Basket as a “Basket Component.” If the Market Measure
to which your notes are linked is a Basket, the Basket Components will be set forth in the applicable term sheet.
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Market Measure Performance: |
The performance of the Market Measure will be measured according to
the percentage change of the Market Measure from its Starting Value to its Ending Value or, if applicable, its Observation Level.
Unless otherwise specified in the applicable term sheet:
The “Starting Value” will be the closing value
of the Market Measure on the date when the notes are priced for initial sale to the public (the “pricing date”). |
| If the Market Measure consists of a Basket, the Starting Value will
be equal to 100. See “Description of the Notes—Basket Market Measures.”
If a Market Disruption Event (as defined below) occurs and is continuing
on the scheduled pricing date, or if certain other events occur, the calculation agent will determine the Starting Value as set forth
in the section “Description of the Notes—Market Disruption Events— Starting Value” or “—Basket Market
Measures— Determination of the Component Ratio for Each Basket Component.”
The “Threshold Value” will be a value of the Market
Measure that equals a specified percentage (100% or less) of the Starting Value. The Threshold Value will be determined on the pricing
date and set forth in the applicable term sheet. If the Threshold Value is equal to 100% of the Starting Value, you will be exposed to
any decrease in the value of the Market Measure from the Starting Value to the Ending Value on a 1-to-1 basis, and you may lose all of
your investment in the notes.
The “Ending Value” will be the closing value of
the Market Measure on the calculation day (as defined below).
If the applicable term sheet specifies that the notes will be subject
to an automatic call:
The “Call Level” will be a value of the Market Measure
that equals a specified percentage of the Starting Value.
The “Observation Level” will be the closing value
of the Market Measure on the applicable Observation Date (as defined below).
The “Observation Dates” will be set forth in the
applicable term sheet, subject to postponement in the event of Market Disruption Events and non-Market Measure Business Days. The final
Observation Date will be prior to the calculation day. See “Description of the Notes—Automatic Call.”
If the Market Measure consists of a Basket, the Ending Value will be
the value of the Basket on the calculation day, and if applicable, each Observation Level will be the value of the Basket on the applicable
Observation Date, determined as described in “Description of the Notes—Basket Market Measures—Observation Level or Ending
Value of the Basket.”
If a Market Disruption Event occurs and is continuing on the scheduled
calculation day or a scheduled Observation Date, if applicable, or if certain other events occur, the calculation agent will determine
the Ending Value or an Observation Level, if applicable, as set forth in the section “Description of the Notes—Market Disruption
Events—Observation Level,” “—Market Disruption Events—Ending Value,” or “—Basket Market
Measures—Observation Level or Ending Value of the Basket.”
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Step Up Value: |
A value of the Market Measure that is a specified percentage (over 100%) of the Starting Value, as set forth in the applicable term sheet. |
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Step Up Payment: |
A dollar amount that will be equal to a percentage of the principal amount. This percentage will equal the percentage by which the Step Up Value is greater than the Starting Value. The Step Up Payment will be determined on the pricing date and set forth in the applicable term sheet. |
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Redemption Amount at Maturity: |
Unless the notes are subject to an automatic call and are automatically
called prior to the maturity date, at maturity, you will receive a Redemption Amount that is greater than the principal amount if the
value of the Market Measure does not change or increases from the Starting Value to the Ending Value. If the value of the Market |
| Measure
decreases from the Starting Value to the Ending Value but not below the Threshold Value, you will receive a Redemption Amount equal to
the principal amount. If the Ending Value is less than the Threshold Value, you will be subject to 1-to-1 downside exposure to the decrease
in the value of the Market Measure below the Threshold Value, and will receive a Redemption Amount that is less than the principal amount.
If the Threshold Value is equal to 100% of the Starting Value, the Redemption Amount could be zero.
Any payments due on the notes, including any repayment of principal,
are subject to our credit risk as issuer of the notes.
The Redemption Amount, denominated in U.S. dollars, will be calculated
as follows:
The Redemption Amount will not be less than zero.
If specified in the applicable term sheet, your notes may provide at
maturity a leveraged return if the Ending Value is greater than the Step Up Value. In this case, a Participation Rate (as defined below)
will be specified in the applicable term sheet. |
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Participation Rate: |
The Participation Rate, if applicable, is the rate at which investors participate in any increase in the value of the Market Measure if the Ending Value is greater than the Step Up Value. |
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Automatic Call: |
If specified in the applicable term sheet, your notes may be subject to an automatic call. In that case, the notes will be automatically called on an Observation Date if the Observation Level of the Market Measure on that Observation Date is greater than or equal to the Call Level. If not called, see “Redemption Amount at Maturity” above. |
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Call Amount: |
If your notes are subject to an automatic call and are called on an Observation Date, you will receive the Call Amount applicable to that Observation Date. The Call Amount will be equal to the principal amount per unit plus the applicable “Call Premium.” Each Call Premium will be a percentage of the principal amount and will be set forth in the applicable term sheet. The Call Amount, if payable, will be payable on the applicable “Call Settlement Date” set forth in the applicable term sheet. |
Principal at Risk: |
You may lose all or a significant portion of the principal amount of
the notes. Further, if you sell your notes prior to maturity or prior to an automatic call (if applicable) in the secondary market (if
any), you may find that the market value per note is less than the price that you paid for the notes. |
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Calculation Agent: |
The calculation agent will make all determinations associated with the notes. Unless otherwise set forth in the applicable term sheet, we will appoint BofAS or one of its affiliates to act as the calculation agent for the notes. See the section entitled “Description of the Notes—Role of the Calculation Agent.” |
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Agents: |
BofAS and one or more of its affiliates will act as our agents in connection with each offering of the notes and will receive an underwriting discount based on the number of units of the notes sold. None of the agents is your fiduciary or advisor solely as a result of the making of any offering of the notes, and you should not rely upon this product supplement, the applicable term sheet, or the accompanying prospectus or prospectus supplement as investment advice or a recommendation to purchase the notes. |
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Listing: |
Unless otherwise specified in the applicable term sheet, the notes will not be listed on a securities exchange. |
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ERISA Considerations: |
See “Certain Considerations for U.S. Plan Investors” beginning on page 37 of the accompanying prospectus. |
This product supplement relates only to the notes
and does not relate to any commodity, futures contract or commodity index that comprises the Market Measure described in any term sheet.
You should read carefully the entire prospectus, prospectus supplement, and this product supplement, together with the applicable term
sheet, to understand fully the terms of your notes, as well as the tax and other considerations important to you in making a decision
about whether to invest in any notes. In particular, you should review carefully the sections in this product supplement and the accompanying
prospectus supplement and prospectus entitled “Risk Factors,” which highlight a number of risks of an investment in the notes,
to determine whether an investment in the notes is appropriate for you. Additional risk factors may be set forth in the applicable term
sheet. If information in this product supplement is inconsistent with information in the prospectus or prospectus supplement, this product
supplement will supersede those documents. However, if information in any term sheet is inconsistent with information in this product
supplement, that term sheet will supersede this product supplement. For example, we may offer notes in which the Step Up Payment will
be paid if the Ending Value equals or exceeds the Threshold Value. You should carefully review the applicable term sheet to understand
the specific terms of your notes.
Neither we nor any agent is making an offer to
sell the notes in any jurisdiction where the offer or sale is not permitted.
Certain capitalized terms used and not defined
in this product supplement have the meanings ascribed to them in the prospectus supplement and prospectus. Unless otherwise indicated
or unless the context requires otherwise, all references in this product supplement to “we,” “us,” “our”
or similar references are to Canadian Imperial Bank of Commerce.
You are urged to consult with your own attorneys
and business and tax advisors before making a decision to purchase any notes.
RISK
FACTORS
Your investment in the notes is subject to investment
risks, many of which differ from those of a conventional debt security. Your decision to purchase the notes should be made only after
carefully considering the risks, including those discussed below, in light of your particular circumstances. The notes are not an appropriate
investment for you if you are not knowledgeable about the material terms of the notes or investments in commodities, futures contracts
on commodities, or commodity-based indices in general.
Structure-related Risks
Your investment may result in a loss; there
is no guaranteed return of principal. There is no fixed principal repayment amount on the notes at maturity. The return on the notes
will be based on the performance of the Market Measure and therefore, you may lose all or a significant portion of your investment if
the notes are not automatically called (if applicable) and if the value of the Market Measure decreases from the Starting Value to an
Ending Value that is less than the Threshold Value. If the Threshold Value is equal to 100% of the Starting Value, the Redemption Amount
could be zero.
If the notes are subject to an automatic call
and are called prior to maturity, your investment return will be limited to the return represented by the Call Premium, and may be less
than a comparable investment directly in the Market Measure or any of its underlying assets. If the notes are subject to an automatic
call, and if the Observation Level of the Market Measure on an Observation Date is greater than or equal to the Call Level, we will automatically
call the notes. If the notes are automatically called, your return will be limited to the applicable Call Premium, regardless of the extent
of the increase in the value of the Market Measure. In contrast, a direct investment in the Market Measure or a Basket Component or the
components included in the Market Measure, as applicable, would allow you to receive the full benefit of any appreciation in the value
of the Market Measure, Basket Component or those components.
Additionally, the Market Measure may consist of
one or more commodities, futures contracts or commodity indices that are or include components traded in a non-U.S. currency. If the value
of that currency strengthens against the U.S. dollar during the term of your notes, you may not obtain the benefit of that increase, which
you would have received if you had owned the commodities or futures contracts represented by the Market Measure.
Reinvestment Risk. If the notes are
subject to an automatic call and are automatically called prior to maturity, the term of the notes will be short. There is no guarantee
that you would be able to reinvest the proceeds from an investment in the notes at a comparable return for a similar level of risk in
the event the notes are called prior to maturity.
Payment on the notes will not reflect changes
in the value of the Market Measure that occur other than on the calculation day or the Observation Dates, if applicable. Changes in
the value of the Market Measure during the term of the notes other than on the calculation day, or the Observation Dates, if applicable,
will not be reflected in the calculation of the Redemption Amount or the determination of whether the notes will be automatically called,
if applicable. To make that calculation or determination, the calculation agent will refer only to the value of the Market Measure on
the calculation day, or the Observation Dates, if applicable. No other values of the Market Measure will be taken into account. As a result,
even if the value of the Market Measure has increased at certain times during the term of the notes, your notes will not be called, if
applicable, if the Observation Level on each Observation Date is less than the Call Level, and you will receive a Redemption Amount that
is less than the principal amount if the Ending Value is less than the Threshold Value.
If your notes are linked to a Basket, changes
in the values of one or more of the Basket Components may be offset by changes in the value of one or more of the other Basket Components.
The Market Measure of your notes may be a Basket. In such a case, changes in the values of one or more of the Basket Components may not
correlate with changes in the values of one or more of the other Basket Components. The values of one or more Basket Components may increase,
while the values of one or more of the other Basket Components may decrease or not increase as much. Therefore, in calculating the value
of the Market Measure at any time, increases in the value of one Basket Component may be moderated or wholly offset by decreases or lesser
increases in the values of one or more of the other Basket Components. If the weightings of the applicable Basket Components are not equal,
adverse changes in the values of the Basket Components which are more heavily weighted could have a greater impact upon the value of the
Market Measure and, consequently, the return on your notes.
Your return on the notes may be less than the
yield on a conventional fixed or floating rate debt security of comparable maturity. There will be no periodic interest payments on
the notes as there would be on a conventional fixed-rate or floating-rate debt security having the same maturity. Any return that you
receive on the notes may be less than the return you would earn if you purchased a conventional debt security with the same maturity date.
As a result, your investment in the notes may not reflect the full opportunity cost to you when you consider factors, such as inflation,
that affect the time value of money.
Payments on the notes are subject to our credit
risk, and any actual or perceived changes in our creditworthiness are expected to affect the value of the notes. The notes are our
senior unsecured debt securities and are not, either directly or indirectly, an obligation of any third party. As a result, your receipt
of any payments on the notes is dependent upon our ability to repay our obligations on the applicable payment date, regardless of whether
the Market Measure increases from the Starting Value to the Ending Value, or the Observation Level, if applicable. No assurance can be
given as to what our financial condition will be on the applicable payment date. If we become unable to meet our financial obligations
as they become due, you may not receive the amounts payable under the terms of the notes.
In addition, our credit ratings are an assessment
by ratings agencies of our ability to pay our obligations. Consequently, our perceived creditworthiness and actual or anticipated decreases
in our credit ratings or increases in the spread between the yield on our securities and the yield on U.S. Treasury securities (the “credit
spread”) prior to the maturity date may adversely affect the market value of the notes. However, because your return on the
notes depends upon factors in addition to our ability to pay our obligations, such as the value of the Market Measure, an improvement
in our credit ratings will not reduce the other investment risks related to the notes.
Valuation- and Market-related Risks
Our initial estimated value of the notes will
be lower than the public offering price of the notes. The public offering price of the notes will exceed our initial estimated value
because costs associated with selling and structuring the notes, as well as hedging the notes, are included in the public offering price
of the notes.
Our initial estimated value does not represent
future values of the notes and may differ from others’ estimates. Our initial estimated value is only an estimate, which will
be determined by reference to our internal pricing models when the terms of the notes are set. This estimated value will be based on market
conditions and other relevant factors existing at that time, our internal funding rate on the pricing date and our assumptions about market
parameters, which can include volatility, dividend rates, interest rates and other factors. Different pricing models and assumptions could
provide valuations for the notes that are
greater or less than our initial estimated value. In addition, market conditions and other relevant
factors in the future may change, and any assumptions may prove to be incorrect. On future dates, the market value of the notes could
change significantly based on, among other things, changes in market conditions, including the value of the Market Measure, our creditworthiness,
interest rate movements and other relevant factors, which may impact the price at which BofAS or any other party would be willing to buy
the notes from you in any secondary market transactions. Our estimated value does not represent a minimum price at which BofAS or any
other party would be willing to buy your notes in any secondary market (if any exists) at any time.
Our initial estimated value of the notes will
not be determined by reference to credit spreads for our conventional fixed-rate debt. The internal funding rate to be used in the
determination of our initial estimated value of the notes generally represents a discount from the credit spreads for our conventional
fixed-rate debt. The discount is based on, among other things, our view of the funding value of the notes as well as the higher issuance,
operational and ongoing liability management costs of the notes in comparison to those costs for our conventional fixed-rate debt. If
we were to use the interest rate implied by our conventional fixed-rate debt, we would expect the economic terms of the notes to be more
favorable to you. Consequently, our use of an internal funding rate for market-linked notes would have an adverse effect on the economic
terms of the notes, the initial estimated value of the notes on the pricing date and any secondary market prices of the notes.
We cannot assure you that there will be a trading
market for your notes. If a secondary market exists, we cannot predict how the notes will trade, or whether that market will be liquid
or illiquid. The development of a trading market for the notes will depend on various factors, including our financial performance and
changes in the value of the Market Measure. The number of potential buyers of your notes in any secondary market may be limited. There
is no assurance that any party will be willing to purchase your notes at any price in any secondary market.
We anticipate that one or more of the agents or
their affiliates will act as a market-maker for the notes, but none of them is required to do so and may cease to do so at any time. Any
price at which an agent or its affiliates may bid for, offer, purchase, or sell any of the notes may be higher or lower than the applicable
public offering price, and that price may differ from the values determined by pricing models that it may use, whether as a result of
dealer discounts, mark-ups, or other transaction costs. These bids, offers, or transactions may adversely affect the prices, if any, at
which the notes might otherwise trade in the market. In addition, if at any time any entity were to cease acting as a market-maker for
any issue of the notes, it is likely that there would be significantly less liquidity in that secondary market. In such a case, the price
at which those notes could be sold would likely be lower than if an active market existed.
Unless otherwise stated in the applicable term
sheet, we will not list the notes on any securities exchange. Even if an application were made to list your notes, we cannot assure you
that the application will be approved or that your notes will be listed and, if listed, that they will remain listed for their entire
term. The listing of the notes on any securities exchange will not necessarily ensure that a trading market will develop, and if a trading
market does develop, that there will be liquidity in the trading market.
If you attempt to sell the notes prior to maturity,
their market value, if any, will be affected by various factors that interrelate in complex ways, and their market value may be less than
the principal amount. The notes are not designed to be short-term trading instruments. The limited protection against the risk of
losses provided by the Threshold Value, if any, will only apply if you hold the notes to maturity. You have no right to have your notes
redeemed at your option prior to maturity. If you wish to liquidate your investment in the
notes prior to maturity, your only option would
be to sell them. At that time, there may be an illiquid market for your notes or no market at all. Even if you were able to sell your
notes, there are many factors outside of our control that may affect their market value, some of which, but not all, are stated below.
These factors may interact with each other in complex and unpredictable ways, and the impact of any one factor may be offset or magnified
by the effect of another factor. The following paragraphs describe a specific factor’s expected impact on the market value of the
notes, assuming all other conditions remain constant.
| · | Value of the Market Measure. We anticipate that the market value of
the notes prior to maturity generally will depend to a significant extent on the value of the Market Measure. In general, it is expected
that the market value of the notes will decrease as the value of the Market Measure decreases, and increase as the value of the Market
Measure increases. However, as the value of the Market Measure increases, the market value of the notes may decrease or may not increase
at the same rate. If you sell your notes when the value of the Market Measure is less than, or not sufficiently above, the Starting Value,
then you may receive less than the principal amount of your notes. |
| | |
| | In addition, if the notes are subject to an automatic call,
because the amount payable on the notes upon an automatic call will not exceed the applicable Call Amount, we do not expect that the notes
will trade in any secondary market prior to any Observation Date at a price that is greater than the applicable Call Amount. |
| · | Volatility of the Market Measure. Volatility is the term used to describe
the size and frequency of market fluctuations. The volatility of the Market Measure during the term of the notes may vary. In addition,
an unsettled international environment and related uncertainties may result in greater market volatility, which may continue over the
term of the notes. Increases or decreases in the volatility of the Market Measure may have an adverse impact on the market value of the
notes. Even if the value of the Market Measure increases after the applicable pricing date, if you are able to sell your notes before
their maturity date, you may receive substantially less than the amount that would be payable upon an automatic call, if applicable, or
at maturity based on that value because of the anticipation that the value of the Market Measure will continue to fluctuate until the
notes are automatically called, if applicable, or the calculation day. |
| · | Economic and Other Conditions Generally. The general economic conditions
of the capital markets in the United States, as well as geopolitical conditions and other financial, political, public health, regulatory
and judicial events, natural disasters, acts of terrorism or war, and related uncertainties that affect commodity markets generally, may
adversely affect the value of the Market Measure and the market value of the notes. If the Market Measure includes one or more components
traded in one or more non-U.S. markets (a “non-U.S. Market Measure”), the value of your notes may also be adversely
affected by similar events in the markets of the relevant foreign countries. |
| · | Interest Rates. We expect that changes in interest rates will affect
the market value of the notes. In general, if U.S. interest rates increase, we expect that the market value of the notes will decrease.
In general, we expect that the longer the amount of time that remains until maturity, the more significant the impact of these changes
will be on the value of the notes. In the case of non-U.S. Market Measures, the level of interest rates in the relevant foreign countries
may also affect their economies and in turn the value of the non-U.S. Market Measure, and, thus, the market value of the notes may be
adversely affected. |
| · | Exchange
Rate Movements and Volatility. If the Market Measure of your notes includes any non-U.S. Market Measures, changes in, and the volatility
of, the exchange rates between the U.S. dollar and the relevant non-U.S. currency or currencies could |
| | have an adverse impact on the value of your notes, and the payment on the notes may depend in part
on the relevant exchange rates. In addition, the correlation between the relevant exchange rate and any applicable non-U.S. Market Measure
reflects the extent to which a percentage change in that exchange rate corresponds to a percentage change in the applicable non-U.S. Market
Measure, and changes in these correlations may have an adverse impact on the value of your notes. |
| · | Our Financial Condition and Creditworthiness. Our perceived creditworthiness,
including any increases in our credit spreads and any actual or anticipated decreases in our credit ratings, may adversely affect the
market value of the notes. In general, we expect the longer the amount of time that remains until maturity, the more significant the impact
will be on the value of the notes. However, a decrease in our credit spreads or an improvement in our credit ratings will not necessarily
increase the market value of the notes. |
| · | Time to Maturity or, if Applicable, the Next Observation Date. There
may be a disparity between the market value of the notes prior to maturity, or if applicable, prior to an Observation Date, and their
value at maturity or as of the next Observation Date, if applicable. This disparity is often called a time “value,” “premium”
or “discount,” and reflects expectations concerning the value of the Market Measure during the term of the notes. As the time
to maturity, or if applicable, the next Observation Date, decreases, this disparity will likely decrease, such that the market value of
the notes will approach the expected Redemption Amount to be paid at maturity, or if applicable, the Call Amount to be paid at the next
Call Settlement Date. |
Conflict-related Risks
Trading and hedging activities by us, the agents,
and our respective affiliates may affect your return on the notes and their market value. We, the agents, and our respective affiliates
may buy or sell the commodities represented by or included in the Market Measure, futures or options contracts or exchange-traded instruments
on the Market Measure or its components, or other listed or over-the counter derivative instruments whose value is derived from the Market
Measure or its components. We, the agents, or our respective affiliates may execute such purchases or sales for our own or their own accounts,
for business reasons, or in connection with hedging our obligations under the notes. These transactions could adversely affect the value
of these components and, in turn, the value of a Market Measure in a manner that could be adverse to your investment in the notes. On
or before the applicable pricing date, any purchases or sales by us, the agents and our respective affiliates, or others on our or their
behalf (including those for the purpose of hedging some or all of our anticipated exposure in connection with the notes), may increase
the value of the Market Measure or its components. Consequently, the value of that Market Measure or the components included in that Market
Measure may decrease subsequent to the pricing date of an issue of the notes, which may adversely affect the market value of the notes.
We, the agents, or one or more of our respective
affiliates expect to also engage in hedging activities that could increase the value of the Market Measure on the applicable pricing date.
In addition, these activities, including the unwinding of a hedge, may decrease the market value of your notes prior to maturity, including
on the calculation day, or if applicable, on each Observation Date, and may adversely affect the payment on the notes. We, the agents,
or one or more of our respective affiliates may purchase or otherwise acquire a long or short position in the notes, and may hold or resell
the notes. For example, the agents may enter into these transactions in connection with any market making activities in which they engage.
We cannot assure you that these activities will not adversely affect the value of the Market Measure, the market value of your notes prior
to maturity or the payment on the notes.
Our trading, hedging and other business activities,
and those of the agents or one or more of our respective affiliates, may create conflicts of interest with you. We, the agents, or
one or more of our respective affiliates may engage in trading activities related to the Market Measure and to components included in
the Market Measure (and related futures and options contracts on the Market Measure or its components) that are not for your account or
on your behalf. We, the agents, or one or more of our respective affiliates also may issue or underwrite other financial instruments with
returns based upon the applicable Market Measure or its components. In addition, in the ordinary course of their business activities,
the agents or their affiliates may hold and trade our or our affiliates’ debt and equity securities (or related derivative securities)
and financial instruments (including bank loans) for their own account and for the accounts of their customers. Certain of the agents
or their affiliates may also have a lending or other financial relationship with us. In order to hedge such exposure, the agents or their
affiliates may enter into transactions such as the purchase of credit default swaps or the creation of short positions in our or our affiliates’
securities, including potentially the notes. Any such short positions could adversely affect future trading prices of the notes. These
trading and other business activities may present a conflict of interest between your interest in the notes and the interests we, the
agents and our respective affiliates may have in our proprietary accounts, in facilitating transactions, including block trades, for our
or their customers, and in accounts under our or their management. These trading and other business activities, if they influence the
value of the Market Measure or secondary trading in your notes, could be adverse to your interests as a beneficial owner of the notes.
We, the agents, and our respective affiliates expect
to enter into arrangements or adjust or close out existing transactions to hedge our obligations under the notes. We, the agents, or our
respective affiliates also may enter into hedging transactions relating to other securities or instruments that we or they issue, some
of which may have returns calculated in a manner related to that of a particular issue of the notes. We may enter into such hedging arrangements
with one or more of our subsidiaries or affiliates, or with one or more of the agents or their affiliates. Such a party may enter into
additional hedging transactions with other parties relating to the notes and the applicable Market Measure. This hedging activity is expected
to result in a profit to those engaging in the hedging activity, which could be more or less than initially expected, but could also result
in a loss. We, the agents, and our respective affiliates will price these hedging transactions with the intent to realize a profit, regardless
of whether the value of the notes increases or decreases, whether the notes will be automatically called, if applicable, or whether the
Redemption Amount on the notes is more or less than the principal amount of the notes. Any profit in connection with such hedging activities
will be in addition to any other compensation that we, the agents, and our respective affiliates receive for the sale of the notes, which
creates an additional incentive to sell the notes to you.
There may be potential conflicts of interest
involving the calculation agent. We have the right to appoint and remove the calculation agent. We expect to appoint BofAS or one
of its affiliates as the calculation agent for the notes and, as such, it will determine the Starting Value, the Step Up Value, the Threshold
Value, the Ending Value, the Redemption Amount, and if applicable, each Observation Level and whether the notes will be called. As the
calculation agent, BofAS or one of its affiliates will have discretion in making various determinations that affect your notes. The exercise
of this discretion by the calculation agent could adversely affect the value of your notes and may present the calculation agent with
a conflict of interest of the kind described under “—Trading and hedging activities by us, the agents, and our respective
affiliates may affect your return on the notes and their market value” and “—Our trading, hedging and other business
activities, and those of the agents or one or more of our respective affiliates, may create conflicts of interest with you” above.
Market Measure-related Risks
You must rely on your own evaluation of the
merits of an investment linked to the applicable Market Measure. In the ordinary course of business, we, the agents, and our respective
affiliates may have expressed views on expected movements in a Market Measure or the components included in the Market Measure, and may
do so in the future. These views or reports may be communicated to our clients and clients of these entities. However, these views are
subject to change from time to time. Moreover, other professionals who deal in markets relating to a Market Measure may at any time have
significantly different views from our views and the views of these entities. For these reasons, you are encouraged to derive information
concerning a Market Measure and its components from multiple sources, and you should not rely on our views or the views expressed by these
entities.
Ownership of the notes will not entitle you
to any rights with respect to any commodities or futures contracts represented by or included in the Market Measure. You will not
own or have any beneficial or other legal interest in any of the commodities or futures contracts represented by or included in the Market
Measure. We will not invest in any of the commodities or futures contracts represented by or included in that Market Measure for your
benefit.
The prices of commodities or futures contracts
represented by or included in the Market Measure may change unpredictably, affecting the value of your notes in unforeseeable ways.
Trading in commodities and futures contracts is speculative and can be extremely volatile. Their market prices may fluctuate rapidly based
on numerous factors, including: changes in supply and demand relationships; liquidity; weather conditions and natural disasters; trends
in agriculture; trade; fiscal, monetary, and exchange control programs; national and international political, military, public health
and economic events and policies; disease or pestilence; technological developments; changes in interest rates, whether through governmental
action or market movements; currency exchange rates; volatility from speculative activities; the development, availability and/or decrease
in price of substitutes; monetary and other governmental policies, action and inaction; macroeconomic or geopolitical and military events,
including political instability in some oil-producing countries or other countries in which the production of particular commodities may
be concentrated; and natural or nuclear disasters. These factors may adversely affect the value of a Market Measure or its components
in varying ways, and different factors may cause the levels and volatilities of commodity prices to move in inconsistent directions at
inconsistent rates. A physical commodity futures contract (which may be a component of a commodity index) may decrease to zero or a negative
price, which would adversely affect the value of your notes. The prices of physical commodities, including the commodities underlying
the Market Measure or a Basket Component, can fluctuate widely due to supply and demand disruptions in major producing or consuming regions.
Additionally, certain Market Measures may be concentrated in only a few, or even a single industry (e.g., energy). These Market Measures
are likely to be more volatile than those that represent a broad base of commodities.
If the liquidity of the components of a Market
Measure is limited, the value of the notes may be adversely affected. Commodities and derivatives contracts on commodities may be
difficult to buy or sell, particularly during adverse market conditions. Reduced liquidity would likely have an adverse effect on the
value of the Market Measure and, therefore, on the return, if any, on your notes. Limited liquidity relating to the components of a Market
Measure may also result in its publisher being unable to determine its value using its normal means. The resulting discretion by the publisher
of a Market Measure in determining the value could adversely affect the value of the notes.
Suspension or disruptions of market trading
in the applicable commodities and related futures contracts may adversely affect the value of the notes. The commodity
markets are
subject to disruptions due to various factors, including the lack of liquidity in the markets, the participation of speculators and government
regulation and intervention. In addition, U.S. futures exchanges and some foreign exchanges have regulations that limit the amount of
fluctuation in futures contract prices that may occur during a single business day. These limits are generally referred to as “daily
price fluctuation limits,” and the maximum or minimum price of a contract on any given day as a result of these limits is referred
to as a “limit price.” Once the limit price has been reached in a particular contract, no trades may be made at a different
price. Limit prices have the effect of precluding trading in a particular contract or forcing the liquidation of contracts at disadvantageous
times or prices. Any such disruption, or any other force majeure (such as an act of God, fire, flood, severe weather conditions, act of
governmental authority, labor difficulty, etc.), could have an adverse effect on the value of or trading in the Market Measure, or
the manner in which it is calculated, and therefore, the value of the notes.
Changes in exchange methodology may adversely
affect the value of the notes prior to maturity. The value of a Market Measure will be determined by reference to fixing prices, spot
prices, or related futures contracts of the commodities represented by or included in a Market Measure or Basket Component, as determined
by the applicable exchange or as otherwise set forth in the applicable term sheet. An exchange may from time to time change its rules or
take extraordinary actions under its rules, which could adversely affect the prices of the applicable commodities or futures contracts,
which could reduce the value of the Market Measure and the value of the notes.
In addition, some fixing prices or spot prices
are derived from a principals’ market, which operates as an over the counter (“OTC”) physical commodity market.
Although market-making members of principals’ markets are typically supervised by regulating entities, the principals’ markets
themselves are not regulated. If any tax or other form of regulation should affect the members of the relevant principals’ market,
the role of the principals’ market as a benchmark for the applicable commodity may be affected.
Legal and regulatory changes could adversely
affect the return on and value of your notes. The value of the underlying commodities or futures contracts could be adversely affected
by new laws or regulations or by the reinterpretation of existing laws or regulations (including, without limitation, those related to
taxes and duties on commodities and futures contracts) by one or more governments, courts, or other official bodies.
In the U.S., the regulation of commodity transactions
is subject to ongoing modification by governmental and judicial action. For example, the U.S. Commodity Futures Trading Commission (“CFTC”)
has interpreted the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), which was enacted in
July 2010, to require the CFTC to impose limits on the size of positions that can be held by market participants in futures contracts
and OTC derivatives on certain physical commodities. The CFTC adopted final position limits rules in October 2020; the final
rules became effective in March 2021 and are in the process of being phased in. While the ultimate effect of the final position
limit rules are not yet known, these limits will likely restrict the ability of many market participants to trade in the commodities
markets to the same extent as they have in the past, including affecting their ability to enter into or maintain hedge positions in the
applicable commodity or futures contracts. These rules and various other legislative and regulatory requirements may, among other
things, reduce liquidity, increase market volatility, and increase costs in these markets. These consequences could adversely affect the
applicable Market Measure and the value of your notes.
In addition, other governmental or regulatory bodies
(such as the European Commission) have proposed or may propose in the future legislation or regulations containing restrictions similar
to those contemplated by Dodd-Frank, or other legislation or regulations containing other restrictions that could adversely impact the
liquidity of and increase costs of
participating in the commodities markets. If such legislation or regulations are adopted or other legislation
or regulations are adopted in the future, they could have an adverse effect on the value of the applicable Market Measure and your notes.
The notes will not be regulated by the CFTC.
Unlike an investment in the notes, an investment in a collective investment vehicle that invests in futures contracts on behalf of its
participants may be regulated as a commodity pool and its operator may be required to be registered with and regulated by the CFTC as
a “commodity pool operator” (a “CPO”). Because the notes will not be interests in a commodity pool, the
notes will not be regulated by the CFTC as a commodity pool, we will not be registered with the CFTC as a CPO, and you will not benefit
from the CFTC’s or any non-U.S. regulatory authority’s regulatory protections afforded to persons who trade in futures contracts
or who invest in regulated commodity pools. The notes will not constitute investments by you or by us on your behalf in futures contracts
traded on regulated futures exchanges, which may only be transacted through a person registered with the CFTC as a “futures commission
merchant” (“FCM”). We are not registered with the CFTC as an FCM, and you will not benefit from the CFTC’s
or any other non-U.S. regulatory authority’s regulatory protections afforded to persons who trade in futures contracts on a regulated
futures exchange through a registered FCM.
A Market Measure may include commodities or
futures contracts traded on foreign exchanges that are less regulated than U.S. markets and may involve different and greater risks than
trading on U.S. exchanges. A Market Measure or Basket Component may include commodities or futures contracts that trade on exchanges
located outside the U.S. The regulations of the CFTC do not apply to trading on foreign exchanges, and trading on foreign exchanges may
involve different and greater risks than trading on U.S. exchanges. Certain foreign markets may be more susceptible to disruption than
U.S. exchanges due to the lack of a government-regulated clearinghouse system. Trading on foreign exchanges also involves certain other
risks that are not applicable to trading on U.S. exchanges. Those risks include: (a) exchange rate risk relative to the U.S. dollar;
(b) exchange controls; (c) expropriation; (d) burdensome or confiscatory taxation; and (e) moratoriums, and political
or diplomatic events. It may also be more costly and difficult for participants in those markets to enforce the laws or regulations of
a foreign country or exchange, and it is possible that the foreign country or exchange may not have laws or regulations which adequately
protect the rights and interests of investors in the relevant commodities or contracts. These factors could reduce the value of the applicable
Market Measure and the value of your notes.
An investment linked to commodity futures contracts
is not equivalent to an investment linked to the spot prices of physical commodities. The price of a futures contract reflects
the expected value of the commodity upon delivery in the future, whereas the price of a physical commodity reflects the value of such
commodity upon immediate delivery, which is referred to as the spot price. Several factors can result in differences between the price
of a commodity futures contract and the spot price of a commodity, including the cost of storing such commodity for the length of the
futures contract, interest costs related to financing the purchase of such commodity, and expectations of supply and demand for such commodity.
While the changes in the price of a futures contract are usually correlated with the changes in the spot price, such correlation is not
exact. In some cases, the performance of a commodity futures contract can deviate significantly from the spot price performance of the
related underlying commodity, especially over longer periods of time. Accordingly, investments linked to the return of commodities futures
contracts may underperform similar investments that reflect the spot price return on physical commodities.
If a Market Measure includes a commodity index,
future prices of the commodities included in that index that are different from their current prices may have a negative effect on the
level of that index, and therefore the value of the notes. A Market Measure may include a commodity index. Commodity indices generally
reflect
movements in commodity prices by measuring the value of futures contracts for the applicable commodities, not the change in the
spot price of the actual physical commodity to which such futures contracts relate. To maintain the index, as futures contracts approach
expiration, they are replaced by similar contracts that have a later expiration. For example, a futures contract purchased and held in
August may specify an October expiration date. As time passes, the contract expiring in October may be replaced by a contract
for delivery in December. This process is referred to as “rolling.” The level of the index is calculated as if the expiring
futures contracts are sold and the proceeds from those sales are used to purchase longer-dated futures contracts. The difference in the
price between the contracts that are sold and the new contracts for more distant delivery that are purchased is called “roll yield,”
and the change in price that contracts experience while they are components of the index is sometimes referred to as “spot return.”
If the expiring futures contract included in the
index is “rolled” into a less expensive futures contract with a more distant delivery date, the market for that futures contract
is (putting aside other considerations) trading in “backwardation.” In the example above, the purchase of the December contract
would take place at a price that is lower than the sale price of the October contract. In this case, the effect of the roll yield
on the level of the applicable index will be positive because it costs less to replace the expiring futures contract. However, if the
expiring futures contract included in the index is “rolled” into a more expensive futures contract with a more distant delivery
date, the market for that futures contract is trading in “contango.” This would occur, for example, if the purchase of the
December contract took place at a price that is higher than the sale price of the October contract. In this case, the effect
of the roll yield on the level of the index will be negative because it will cost more to replace the expiring futures contract.
There is no indication that the markets for any
specific commodity will consistently be in backwardation or that there will be a positive roll yield that increases the level of any applicable
index. It is possible, when near-term or spot prices of the constituent commodities are decreasing, for the level of that index to decrease
significantly over time even when some or all of the constituent commodities are experiencing backwardation. If all other factors remain
constant, the presence of contango in the market for a commodity included in an index could generally result in negative roll yield, even
when the near-term or spot prices of the constituent commodities are stable or increasing, which could decrease the level of that index
and the market value of the notes.
The publisher of an index may adjust that index
in a way that affects its level, and the publisher has no obligation to consider your interests. If the Market Measure consists of
a commodity index, unless otherwise specified in the term sheet, we have no affiliation with the publisher of that index (the “Index
Publisher”). The composition of a commodity index may change over time as additional commodities satisfy the eligibility criteria
or commodities or futures contracts currently included in that index fail to satisfy such criteria. The weighting factors applied to each
commodity included in an index may change over time, based on changes in commodity prices, commodity forward curves, production statistics,
or other factors. An Index Publisher can add, delete, or substitute the components included in that index or make other methodological
changes that could change its level. A new component included in an index may perform significantly better or worse than the replaced
component, and the performance will impact the level of the applicable index. Additionally, an Index Publisher may alter, discontinue,
or suspend calculation or dissemination of an index. Any of these actions could adversely affect the value of the Market Measure and,
consequently, the market value of your notes. No Index Publisher will have any obligation to consider your interests in calculating or
revising any index. See “Description of the Notes—Adjustments to a Market Measure” and “—Discontinuance
of a Market Measure.”
We are not responsible for the actions or public
disclosure of information of any principals’ market or exchange on which a Market Measure trades. None of us, the selling agents
or any of our respective affiliates is responsible for the adequacy or accuracy of the prices determined by these entities relating to
the Market Measure. You should make your own investigation into the applicable Market Measure and how it is traded. None of the principals’
markets or any exchange on which a Market Measure or component trades will be involved in any offering of the notes in any way and none
of them has any obligation to consider your interests in taking any actions that might affect the value of the notes.
Exchange rate movements may adversely impact
the value of the notes. If any component included in an index is traded in a currency other than U.S. dollars and, for purposes of
calculating the level of that index, is converted into U.S. dollars, then the level of that index may depend in part on the relevant exchange
rates. If the value of the U.S. dollar strengthens against the currencies of that index, the level of the applicable index may be adversely
affected and the Redemption Amount may be reduced. Exchange rate movements may be particularly impacted by existing and expected rates
of inflation and interest rate levels; political, civil, or military unrest; the balance of payments between countries; and the extent
of governmental surpluses or deficits in the relevant countries and the United States. All of these factors are in turn sensitive to the
monetary, fiscal, and trade policies pursued by the governments of those countries and the United States and other countries important
to international trade and finance.
Other Risk Factors Relating to the Applicable
Market Measure
The applicable term sheet may set forth additional
risk factors as to the Market Measure that you should review prior to purchasing the notes.
Tax-related Risks
The U.S. federal income tax consequences of
an investment in the notes are uncertain, and may be adverse to a holder of the notes. No statutory, judicial, or administrative authority
directly addresses the characterization of the notes or securities similar to the notes for U.S. federal income tax purposes. As a result,
significant aspects of the U.S. federal income tax consequences of an investment in the notes are not certain. Under the terms of the
notes, you will have agreed with us to treat the notes as prepaid cash settled derivative contracts, as described under “U.S. Federal
Income Tax Summary.” If the Internal Revenue Service (the “IRS”) were successful in asserting an alternative
characterization for the notes, the timing and character of gain or loss with respect to the notes may differ. No ruling will be requested
from the IRS with respect to the notes and no assurance can be given that the IRS will agree with the statements made in the section entitled
“U.S. Federal Income Tax Summary.”
You are urged to consult with your own tax advisor
regarding all aspects of the U.S. federal income tax consequences of investing in the notes.
DESCRIPTION
OF THE NOTES
General
Each issue of the notes will be part of a series
of medium-term notes entitled “Senior Global Medium-Term Notes” that will be issued under the indenture, as amended and supplemented
from time to time. The indenture is described more fully in the prospectus and prospectus supplement. The following description of the
notes supplements and, to the extent it is inconsistent with, supersedes the description of the general terms and provisions of the notes
and debt securities set forth under the headings “Description of the Notes We May Offer” in the prospectus supplement
and “Description of Senior Debt Securities” in the prospectus. These documents should be read in connection with the applicable
term sheet.
The maturity date of the notes and the aggregate
principal amount of each issue of the notes will be stated in the applicable term sheet. If the scheduled maturity date is not a business
day, we will make the required payment on the next business day, and no interest will accrue as a result of such delay. A “business
day” means a Monday, Tuesday, Wednesday, Thursday or Friday that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law or executive order to close in New York City.
We will not pay interest on the notes. The notes
do not guarantee the return of principal at maturity. The notes will be payable only in U.S. dollars.
Unless subject to an automatic call and automatically
called prior to the maturity date, the notes will mature on the date set forth in the applicable term sheet. Prior to the maturity date,
the notes are not redeemable at our option or repayable at the option of any holder. The notes are not subject to any sinking fund. The
notes are not subject to the defeasance provisions described in the section “Description of Senior Debt Securities—Defeasance”
beginning on page 8 of the accompanying prospectus.
We will issue the notes in denominations of whole
units. Unless otherwise set forth in the applicable term sheet, each unit will have a principal amount of $10. The CUSIP number for each
issue of the notes will be set forth in the applicable term sheet. You may transfer the notes only in whole units.
Payment at Maturity
If the notes are not subject to an automatic call
or if the notes are subject to an automatic call but are not called, then at maturity, subject to our credit risk as issuer of the notes,
you will receive a Redemption Amount, denominated in U.S. dollars. Unless otherwise specified in the applicable term sheet, the “Redemption
Amount” will be calculated as follows:
| • | If the Ending Value is greater than the Step Up Value, then the Redemption
Amount will equal: |
If specified in the applicable term sheet, at maturity,
your notes may provide a leveraged return if the Ending Value is greater than the Step Up Value. In this case, a Participation Rate will
be specified in the applicable term sheet.
| • | If the Ending Value is equal to or greater than the Starting Value but is
equal to or less than the Step Up Value, then the Redemption Amount will equal: |
Principal Amount + Step Up Payment
| • | If the Ending Value is less than the Starting Value, but is equal to or greater
than the Threshold Value, then the Redemption Amount will equal the principal amount. |
| • | If the Ending Value is less than the Threshold Value, then the Redemption
Amount will equal: |
The Redemption Amount will not be less than zero.
The “Step Up Value” will be
a value of the Market Measure that is a specified percentage (over 100%) of the Starting Value, as set forth in the applicable term sheet.
The “Step Up Payment” will be
a dollar amount that will be equal to a percentage of the principal amount. This percentage will equal the percentage by which the Step
Up Value is greater than the Starting Value. The Step Up Payment will be determined on the pricing date and set forth in the applicable
term sheet.
The “Threshold Value” will be
a value of the Market Measure that equals a specified percentage of the Starting Value, which will be less than or equal to 100%. The
Threshold Value will be determined on the pricing date and set forth in the applicable term sheet. If the Threshold Value is equal to
100% of the Starting Value, then the Redemption Amount for the notes will be less than the principal amount if there is any decrease in
the value of the Market Measure from the Starting Value to the Ending Value, and you may lose all of your investment in the notes.
The “Participation Rate”, if
applicable, is the rate at which investors participate in any increase in the value of the Market Measure if the Ending Value is greater
than the Step Up Value.
Each term sheet will provide examples of Redemption
Amounts based on a range of hypothetical Ending Values.
The applicable term sheet will set forth information
as to the specific Market Measure, including information as to the historical values of the Market Measure. However, historical values
of the Market Measure are not indicative of its future performance or the performance of your notes.
An investment in the notes does not entitle you
to any ownership interest in any commodities or futures contracts that are represented by or included in a Market Measure.
Automatic Call
If specified in the applicable term sheet, the
notes may be subject to an automatic call. In that case, the notes will be called, in whole but not in part, if the Observation Level
of the Market Measure on any Observation Date is greater than or equal to the Call Level set forth in the applicable term sheet.
The “Call Level” will be a value
of the Market Measure that equals a specified percentage of the Starting Value.
The “Observation Dates” will
be set forth in the applicable term sheet, subject to postponement in the event of Market Disruption Events or non-Market Measure Business
Days. The final Observation Date will be prior to the calculation day.
If the notes are automatically called on an Observation
Date, for each unit of the notes that you own, we will pay you the Call Amount applicable to that Observation Date on the relevant Call
Settlement Date. The “Call Amount” will be equal to the principal amount plus the applicable Call Premium. The “Call
Premium” will be a percentage of the principal amount.
The Observation Dates and the related Call Amounts
and Call Premiums will be specified in the applicable term sheet.
If the notes are automatically called on an Observation
Date, we will redeem the notes and pay the applicable Call Amount on the applicable Call Settlement Date. Each “Call Settlement
Date” will occur on approximately the fifth business day after the applicable Observation Date, subject to postponement as described
below.
The Starting Value, the Observation Level and the Ending Value
Starting Value
Unless otherwise specified in the applicable term
sheet, the “Starting Value” will be the closing value of the Market Measure on the pricing date.
If the Market Measure consists of a Basket, the
Starting Value will be equal to 100. See “—Basket Market Measures.”
Observation Level
Unless otherwise specified in the applicable term
sheet, the “Observation Level” will be the closing value of the Market Measure on the applicable Observation Date.
Ending Value
Unless otherwise specified in the applicable term
sheet, the “Ending Value” will be the closing value of the Market Measure on the calculation day.
The “calculation day” means
a scheduled Market Measure Business Day shortly before the maturity date. The calculation day will be set forth in the applicable term
sheet.
Unless otherwise specified in the applicable term
sheet, a “Market Measure Business Day” means a day on which the index level, spot price or official settlement price
(as applicable) for the applicable Market Measure is determined and published by the applicable index sponsor, commodities exchange, or
other price source (or any successor thereto) described in the applicable term sheet.
If the Market Measure consists of a Basket, each
Observation Level, if applicable, and the Ending Value of the Basket will be determined as described in “—Basket Market Measures.”
Market Disruption Events
Unless otherwise set forth in the applicable term
sheet, a “Market Disruption Event” for a Market Measure, a Basket Component or an index component means any of the
following events, as determined by the calculation agent in its sole discretion:
|
(1) |
a material limitation, suspension, or disruption of trading in a Market Measure, a Basket Component or in one or more index components which results in a failure by the exchange on which the Market Measure, each applicable Basket Component or index component is traded to report an exchange published settlement price for such contract on the day on which such event occurs or any succeeding day on which it continues; |
|
(2) |
the exchange published settlement price for the Market Measure, Basket Component or any index component is a “limit price,” which means that the exchange published settlement price for such contract for a day has increased or decreased from the previous day’s exchange published settlement price by the maximum amount permitted under applicable exchange rules; |
|
(3) |
failure by the applicable exchange to announce or publish the exchange published settlement price for the Market Measure, Basket Component or any index component; |
|
(4) |
a suspension of trading in the Market Measure, Basket Component or one or more index components, for which the trading does not resume at least 10 minutes prior to the scheduled or rescheduled closing time; or |
|
(5)
|
any other event, if the calculation agent determines in its sole discretion that the event materially interferes with our ability or the ability of any of our affiliates to unwind all or a material portion of a hedge that we, the agents or any of our respective affiliates has effected or may effect as to the applicable notes. |
Starting Value
Market Measure That Is a Commodity or Futures
Contract
For a Market Measure that is a commodity or futures
contract, if the scheduled pricing date is determined by the calculation agent not to be a Market Measure Business Day by reason of an
extraordinary event, occurrence, declaration, or otherwise (a “non-Market Measure Business Day”), or if there is a
Market Disruption Event on that day, the pricing date will be the immediately succeeding Market Measure Business Day during which no Market
Disruption Event occurs or is continuing; provided that the Starting Value will be determined (or, if not determinable, estimated) by
the calculation agent in a manner which the calculation agent considers commercially reasonable under the circumstances on a date no later
than the second scheduled Market Measure Business Day following the scheduled pricing date, regardless of the occurrence of a Market Disruption
Event or non-Market Measure Business Day on that day.
Market Measure That Is a Commodity Index
For a Market Measure that is a commodity index,
if a Market Disruption Event occurs on the scheduled pricing date with respect to any component of the index or the scheduled pricing
date is determined by the calculation agent to be a non-Market Measure Business Day (each such component of the index, an “Affected
Component” on the pricing date), the calculation agent will determine the Starting Value as follows:
| (1) | With respect to each commodity or futures contract included in the index that is not an Affected Component on the scheduled pricing
date, the Starting Value of the Market Measure will be based on the exchange published settlement price or other applicable price of that
commodity or futures contract on the scheduled pricing date. |
| (2) | With respect to each Affected Component on the scheduled pricing date: |
| a. | The Starting Value of the Market Measure will be based on the exchange published settlement price or other applicable price of that
Affected Component on the first Market Measure Business Day following the scheduled pricing date on which no Market Disruption Event occurs
or is continuing with respect to that Affected Component, provided that the Starting Value will not be determined on a date later than
the second scheduled Market Measure Business Day following the scheduled pricing date. If a Market Disruption Event or non-Market Measure
Business Day continues to occur on the second scheduled Market Measure Business Day following the scheduled pricing date, the calculation
agent will estimate on such date the price of that Affected Component to be used to determine the value of the Market Measure in a manner
that it considers commercially reasonable under the circumstances. |
| b. | The final term sheet will set forth a brief statement of the facts relating to the establishment of the Starting Value (including
a description of the relevant Market Disruption Event(s) or non-Market Measure Business Day). |
| (3) | The calculation agent will determine the value of the Market Measure by reference to the exchange published settlement prices or other
prices determined in clauses (1) and (2) above using the then current method for calculating the index. The exchange or other
price source on which an applicable commodity or futures contract is traded or valued for purposes of the above definition means the exchange
or other price source used to value that commodity or futures contract for the calculation of the index. |
Observation Level
Market Measure That Is a Commodity or Futures Contract
For a Market Measure that is a commodity or futures
contract, if a scheduled Observation Date is determined by the calculation agent to be a non-Market Measure Business Day, or if there
is a Market Disruption Event on that day, the applicable Observation Date will be the immediately succeeding Market Measure Business Day
during which no Market Disruption Event occurs or is continuing; provided that the applicable Observation Level will be determined (or,
if not determinable, estimated) by the calculation agent in a manner which the calculation agent considers commercially reasonable under
the circumstances on a date no later than the fifth scheduled Market Measure Business Day following the scheduled applicable Observation
Date, regardless of the occurrence of a Market Disruption Event or non-Market Measure Business Day on that day.
Market Measure That Is a Commodity Index
For a Market Measure
that is a commodity index, if a Market Disruption Event occurs on a scheduled Observation Date with respect to any component of the index
or a scheduled Observation Date is determined by the calculation agent to be a non-Market Measure Business Day (each such component
of the index, an “Affected Component” on the applicable
Observation Date), the calculation
agent will determine the applicable Observation Level as follows:
| (1) | With respect to each commodity or futures contract included in the index that is not an Affected Component on the scheduled applicable
Observation Date, the applicable Observation Level of the Market Measure will be based on the exchange published settlement price or other
applicable price of that commodity or futures contract on the scheduled applicable Observation Date. |
| (2) | With respect to each Affected Component on the scheduled applicable Observation Date, the applicable Observation Level of the Market
Measure will be based on the exchange published settlement price or other applicable price of that Affected Component on the first Market
Measure Business Day following the scheduled applicable Observation Date on which no Market Disruption Event occurs or is continuing with
respect to that Affected Component, provided that the applicable Observation Level will not be determined on a date later than the fifth
scheduled Market Measure Business Day following the scheduled applicable Observation Date. If a Market Disruption Event or non-Market
Measure Business Day continues to occur on the fifth scheduled Market Measure Business Day following the scheduled applicable Observation
Date, the calculation agent will estimate on such date the price of that Affected Component to be used to determine the value of the Market
Measure in a manner that it considers commercially reasonable under the circumstances, regardless of the occurrence of a Market Disruption
Event or non-Market Measure Business Day on that day. |
The calculation agent will determine the value
of the Market Measure by reference to the exchange published settlement prices or other prices determined in clauses (1) and (2) above
using the then current method for calculating the index. The exchange or other price source on which an applicable commodity or futures
contract is traded or valued for purposes of the above definition means the exchange or other price source used to value that commodity
or futures contract for the calculation of the index.
If, due to a Market Disruption Event or otherwise,
a scheduled Observation Date is postponed, the relevant Call Settlement Date, will be approximately the fifth business day following the
Observation Date as postponed, unless otherwise specified in the applicable term sheet.
Ending Value
Market Measure That Is a Commodity or Futures
Contract
For a Market Measure that is a commodity or futures
contract, if the scheduled calculation day is determined by the calculation agent to be a non-Market Measure Business Day, or if there
is a Market Disruption Event on that day, the calculation day will be the immediately succeeding Market Measure Business Day during which
no Market Disruption Event occurs or is continuing; provided that the Ending Value will be determined (or, if not determinable, estimated)
by the calculation agent in a manner which the calculation agent considers commercially reasonable under the circumstances on a date no
later than the second scheduled Market Measure Business Day prior to the maturity date, regardless of the occurrence of a Market Disruption
Event or non-Market Measure Business Day on that day.
Market Measure That Is a Commodity Index
For a Market Measure that is a commodity index,
if a Market Disruption Event occurs on the scheduled calculation day with respect to any component of the index or the scheduled
calculation
day is determined by the calculation agent to be a non-Market Measure Business Day (each such component of the index, an “Affected
Component” on the calculation day), the calculation agent will determine the Ending Value as follows:
| (1) | With respect to each commodity or futures contract included in the index that is not an Affected Component on the scheduled calculation
day, the Ending Value of the Market Measure will be based on the exchange published settlement price or other applicable price of that
commodity or futures contract on the scheduled calculation day. |
| (2) | With respect to each Affected Component on the scheduled calculation day, the Ending Value of the Market Measure will be based on
the exchange published settlement price or other applicable price of that Affected Component on the first Market Measure Business Day
following the scheduled calculation day on which no Market Disruption Event occurs or is continuing with respect to that Affected Component,
provided that the Ending Value will not be determined on a date later than the second scheduled Market Measure Business Day prior to maturity.
If a Market Disruption Event or non-Market Measure Business Day continues to occur on the second scheduled Market Measure Business Day
prior to maturity, the calculation agent will estimate on such date the price of that Affected Component to be used to determine the value
of the Market Measure in a manner that it considers commercially reasonable under the circumstances, regardless of the occurrence of a
Market Disruption Event or non-Market Measure Business Day on that day. |
The calculation agent will determine the value
of the Market Measure by reference to the exchange published settlement prices or other prices determined in clauses (1) and (2) above
using the then current method for calculating the index. The exchange or other price source on which an applicable commodity or futures
contract is traded or valued for purposes of the above definition means the exchange or other price source used to value that commodity
or futures contract for the calculation of the index.
Adjustments to a Market Measure
After the applicable pricing date, the relevant
index sponsor, exchange or other price source for a Market Measure or Basket Component (a “Market Measure Publisher”)
may make a material change in the method of determining the value of a Market Measure or Basket Component, or in any other way that changes
the Market Measure or a Basket Component, such that it does not, in the opinion of the calculation agent, fairly represent the value of
the Market Measure or a Basket Component had those changes or modifications not been made. In this case, the calculation agent will, at
the close of business in New York, New York, on each date that the closing value of the Market Measure or a Basket Component is to be
calculated, make adjustments to the Market Measure or a Basket Component. Those adjustments will be made in good faith as necessary to
arrive at a calculation of a value of the applicable Market Measure or Basket Component as if those changes or modifications had not been
made, and calculate the closing value of the Market Measure or a Basket Component, as so adjusted.
Discontinuance of a Market Measure
After the pricing date, a Market Measure Publisher
may discontinue publication or determination of the Market Measure, or one or more Basket Components. The Market Measure Publisher or
another entity may then publish or calculate a successor or substitute market measure that the calculation agent determines, in its sole
discretion, to be comparable to that Market Measure or Basket Component (a “successor market measure”). If this occurs,
the calculation agent will substitute the successor market measure and calculate the Observation Level, if applicable, and/or the Ending
Value as described above under “—The
Starting Value, the Observation Level and the Ending
Value” or below under “—Basket Market Measures,” as applicable. If the calculation agent selects a successor
market measure, the calculation agent will give written notice of the selection to the trustee, to us and to the holders of the notes.
If a Market Measure Publisher discontinues publication
or determination of the Market Measure before the scheduled calculation day, or if applicable, an Observation Date, and the calculation
agent does not select a successor market measure, then on the day that would otherwise be the calculation day, or, if applicable, an
Observation Date, until the earlier to occur of:
| ● | the
occurrence of an automatic call, if applicable; |
| | |
| ● | the
determination of the Ending Value; and |
| | |
| ● | a determination
by the calculation agent that a successor market measure is available, |
the calculation agent will compute a substitute value for the Market
Measure in accordance with the procedures last used to calculate the value of the Market Measure or a Basket Component before any discontinuance
as if that day were the calculation day or, if applicable, an Observation Date. The calculation agent will make available to holders
of the notes information regarding those levels by means of Bloomberg L.P., Thomson Reuters, a website, or any other means selected by
the calculation agent in its reasonable discretion.
If a successor market measure is selected or the
calculation agent calculates a value as a substitute for a Market Measure or Basket Component as described above, the successor market
measure or value will be used as a substitute for that Market Measure or Basket Component for all purposes, including for the purpose
of determining whether a Market Disruption Event exists.
Notwithstanding these alternative arrangements,
any modification or discontinuance of the publication of the Market Measure or any Basket Component may adversely affect trading in the
notes.
Basket Market Measures
If the Market Measure to which your notes are
linked is a Basket, the Basket Components will be set forth in the applicable term sheet. We will assign each Basket Component a weighting
(the “Initial Component Weight”) so that each Basket Component represents a percentage of the Starting Value of the
Basket on the pricing date. The Basket Components may or may not have equal Initial Component Weights, as set forth in the applicable
term sheet.
Determination of the Component Ratio for Each Basket
Component
The “Starting Value” of the
Basket will be equal to 100. We will set a fixed factor (the “Component Ratio”) for each Basket Component on the applicable
pricing date, based on the weighting of that Basket Component. The Component Ratio for each Basket Component will equal:
| ● | the Initial
Component Weight (expressed as a percentage) for that Basket Component, multiplied by 100;
divided by |
| ● | the closing
value of that Basket Component on the applicable pricing date. |
Each Component Ratio will be rounded to eight
decimal places.
The Component Ratios will be calculated in this
way so that the Starting Value of the Basket will equal 100 on the applicable pricing date. The Component Ratios will not be revised
subsequent to their determination on the applicable pricing date, except that the calculation agent may in its good faith judgment adjust
the Component Ratio of any Basket Component in the event that Basket Component is materially changed or modified in a manner that does
not, in the opinion of the calculation agent, fairly represent the value of that Basket Component had those material changes or modifications
not been made.
The following table is for illustration purposes
only, and does not reflect the actual composition, Initial Component Weights, or Component Ratios, all of which will be set forth
in the applicable term sheet.
Example: The hypothetical Basket Components
are Commodity ABC, Commodity XYZ, and Commodity RST, with their Initial Component Weights being 50.00%, 25.00% and 25.00%, respectively,
on a hypothetical pricing date:
Basket Component |
|
Initial
Component Weight |
|
Hypothetical
Closing Value(1) |
|
Hypothetical Component
Ratio(2) |
|
Initial Basket Value Contribution |
Commodity ABC |
|
50.00% |
|
500.00 |
|
0.10000000 |
|
50.00 |
Commodity XYZ |
|
25.00% |
|
2,420.00 |
|
0.01033058 |
|
25.00 |
Commodity RST |
|
25.00% |
|
1,014.00 |
|
0.02465483 |
|
25.00 |
Starting Value |
|
100.00 |
(1) |
This column sets forth the hypothetical closing value of each
Basket Component on the hypothetical pricing date. |
|
|
(2) |
The hypothetical Component Ratio for each Basket Component equals
its Initial Component Weight (expressed as a percentage) multiplied by 100, and then divided by the hypothetical closing
value of that Basket Component on the hypothetical pricing date, with the result rounded to eight decimal places. |
Unless otherwise specified in the applicable term
sheet, if a Market Disruption Event or non-Market Measure Business Day occurs on the scheduled pricing date as to any Basket Component
(an "Affected Basket Component" on the pricing date), the calculation agent will establish the closing value of each
Basket Component as of the pricing date, and, as a result, each Component Ratio, as follows:
| (1) | With respect to each Basket Component that is not an Affected Basket
Component on the scheduled pricing date, the closing value of such Basket Component will
be |
based on the exchange published settlement price or other
applicable price of that commodity or futures contract or closing level of that index on the pricing date.
| (2) | With respect to each Affected Basket Component on the scheduled pricing
date, the closing value of such Basket Component will be determined in the manner described
above in “—Market Disruption Events—Starting Value” provided that
references to “Market Measure” will be references to “Basket Component,”
references to “Starting Value” will be references to “closing value of
the Basket Component on the pricing date,” and references to “Affected Component”
will be references to “Affected Basket Component.” |
Observation Level or Ending Value of the Basket
If applicable, the “Observation Level”
of the Basket will be the value of the Basket on the applicable Observation Date. The “Ending Value” of the Basket
will be the value of the Basket on the calculation day.
The calculation agent will calculate the value
of the Basket for a calculation day or, if applicable, a relevant Observation Date, by summing the products of the closing value of each
Basket Component on that day and the Component Ratio for that Basket Component. The value of the Basket will vary based on the increase
or decrease in the closing value of each Basket Component. Any increase in the closing value of a Basket Component (assuming no change
in the closing value of the other Basket Component or Basket Components) will result in an increase in the value of the Basket. Conversely,
any decrease in the closing value of a Basket Component (assuming no change in the closing value of the other Basket Component or Basket
Components) will result in a decrease in the value of the Basket.
Unless otherwise specified in the applicable term
sheet, if, for any Basket Component (an “Affected Basket Component”), (i) a Market Disruption Event occurs on
the scheduled calculation day or, if applicable, a scheduled Observation Date, or (ii) any such date is determined by the calculation
agent to be a non-Market Measure Business Day (any such day in either (i) or (ii) being a “non-calculation day”),
the calculation agent will determine the closing values of the Basket Components for such non-calculation day, and as a result, the Ending
Value or the relevant Observation Level, if applicable, as follows:
| ● | With
respect to each Basket Component that is not an Affected Basket Component on the scheduled
non-calculation day, the closing value of such Basket Component will be based on the exchange
published settlement price or other applicable price of that commodity or futures contract
or closing level of that index on such non-calculation day. |
| ● | With
respect to each Affected Basket Component on the scheduled non-calculation day, the closing
value of such Basket Component will be determined in the manner described above in “—Market
Disruption Events” provided that references to "Market Measure" will be references
to "Basket Component," references to “Observation Level” or “Ending
Value” will be references to “closing value of the Basket Component,” and
references to "Affected Component" will be references to "Affected Basket
Component." |
Role of the Calculation Agent
The calculation agent has the sole discretion
to make all determinations regarding the notes as described in this product supplement, including determinations regarding the Starting
Value, the Step Up Value, the Threshold Value, the Ending Value, the Market Measure, the Redemption Amount, any Market Disruption Events,
a successor market measure, Market
Measure Business Days, business days, the
calculation day, non-calculation days and determinations related to any adjustments to, or discontinuance of, any Market Measure or
Basket Component, and if applicable, the Call Level, the Observation Level of the Market Measure on each Observation Date, and
whether the notes will be called. Absent manifest error, all determinations of the calculation agent will be conclusive for all
purposes and final and binding on you and us, without any liability on the part of the calculation agent.
We expect to appoint BofAS or one of its affiliates
as the calculation agent for each issue of the notes. However, we may change the calculation agent at any time without notifying you.
The identity of the calculation agent will be set forth in the applicable term sheet.
Payment of Additional Amounts
We will pay any amounts to be paid by us on the
notes without deduction or withholding for, or on account of, any and all present or future income, stamp and other taxes, levies, imposts,
duties, charges, fees, deductions, or withholdings (“taxes”) now or hereafter imposed, levied, collected, withheld,
or assessed by or on behalf of Canada or any Canadian political subdivision or authority that has the power to tax, unless the deduction
or withholding is required by law or by the interpretation or administration thereof by the relevant governmental authority. At any time
a Canadian taxing authority requires us to deduct or withhold for or on account of taxes from any payment made under or in respect of
the notes, we will pay such additional amounts (“Additional Amounts”) as may be necessary, so that the net amounts
received by each holder (including Additional Amounts), after such deduction or withholding, shall not be less than the amount the holder
would have received had no such deduction or withholding been required.
However, no Additional Amounts will be payable
with respect to a payment made to a holder of a note or of a right to receive payments in respect thereto (a “Payment Recipient”),
which we refer to as an “Excluded Holder,” in respect of any taxes imposed because the beneficial owner or Payment
Recipient:
| (i) | is someone with whom we do not deal at arm’s length (within
the meaning of the Income Tax Act (Canada)), or is entitled to the payment in respect
of a debt or other obligation to pay an amount to such a person, at the time of making such
payment; |
| (ii) | is subject to such taxes by reason of the holder being connected
presently or formerly with Canada or any province or territory thereof otherwise than by
reason of the holder’s activity in connection with purchasing the notes, the holding
of the notes or the receipt of payments thereunder; |
| (iii) | is or does not deal at arm’s length with a person who is,
a “specified shareholder” (within the meaning of subsection 18(5) of the
Income Tax Act (Canada)) of Canadian Imperial Bank of Commerce (generally a person
will be a “specified shareholder” for this purpose if that person, either alone
or together with persons with whom the person does not deal at arm’s length for purposes
of the Income Tax Act (Canada), owns 25% or more of (a) our voting shares, or
(b) the fair market value of all of our issued and outstanding shares); |
| (iv) | presents such notes for payment (where presentation is required)
more than 30 days after the relevant date; for this purpose, the “relevant date”
in relation to any payments on any note means: |
| (a) | the due date for payment thereof (whether at maturity or upon an earlier
acceleration), or |
| (b) | if the full amount of the monies payable on such date has not been received
by the trustee on or prior to such due date, the date on which the full amount of such monies
has been received and notice to that effect is given to holders of the notes in accordance
with the indenture; or |
| (v) | who could lawfully avoid
(but has not so avoided) such withholding or deduction by complying, or requiring that any
agent comply with, any statutory requirements or administrative practice of the relevant
taxing authority necessary to establish qualification for an exemption from withholding or
by making, or requiring that any agent make, a declaration of non-residence or other similar
claim for exemption to any relevant tax authority. |
For purposes of clause (iv) above, if the
notes are presented for payment more than 30 days after the relevant date, we shall only be required to pay such Additional Amounts as
would have been payable if the notes had been presented for payment on such 30th day, and no further Additional Amounts shall accrue
or become payable after such date.
For the avoidance of doubt, we will not have any
obligation to pay any holders Additional Amounts on any tax which is payable otherwise than by deduction or withholding from payments
made under or in respect of the notes.
We will also make such withholding or deduction
and remit the full amount deducted or withheld to the relevant taxing authority in accordance with applicable law. We will furnish to
the trustee, within 30 days after the date the payment of any taxes is due pursuant to applicable law, certified copies of tax receipts
evidencing that such payment has been made or other evidence of such payment satisfactory to the trustee. We will indemnify and hold
harmless each holder of the notes (other than an Excluded Holder) and upon written request reimburse each such holder for the amount
of (x) any taxes so levied or imposed and paid by such holder as a result of payments made under or with respect to the notes and
(y) any taxes levied or imposed and paid by such holder with respect to any reimbursement under (x) above, but excluding any
such taxes on such holder’s net income or capital.
For additional information, see the section entitled
“Material Income Tax Consequences—Canadian Taxation” in the accompanying prospectus, and where applicable, any supplement
thereto in the applicable term sheet.
Same-Day Settlement and Payment
The notes will be delivered in book-entry form
only through The Depository Trust Company against payment by purchasers of the notes in immediately available funds. We will pay the
amounts payable on the notes in immediately available funds so long as the notes are maintained in book-entry form.
Events of Default and Acceleration
Events of default are defined in the indenture.
Subject to the below paragraph, if such an event occurs and is continuing, unless otherwise stated in the applicable term sheet, the
amount payable to a holder of the notes upon any acceleration permitted under the indenture will be equal to the Redemption Amount described
under the caption “—Payment at Maturity,” determined as if the date of acceleration were the maturity date of the notes
and as if the calculation day were the fifth Market Measure Business Day prior to the date of acceleration.
If the notes are subject to an automatic call,
and an event of default occurs on or prior to the final Observation Date (i.e., not during the period from the final Observation
Date to the original maturity date of the notes), then the payment on the notes will be determined as
described under the caption “—Automatic
Call,” as if the relevant Observation Date were the fifth Market Measure Business Day prior to the date of acceleration; provided
that the applicable Observation Level as of that date is greater than or equal to the Call Level. In such a case, the calculation agent
shall pro-rate the applicable Call Premium and Call Amount according to the period of time elapsed between the settlement date of the
notes and the date of acceleration. For the avoidance of doubt, if the Observation Level of the Market Measure as of that date is less
than the Call Level, the payment on the notes will be calculated as set forth in the prior paragraph.
If a bankruptcy proceeding is commenced in respect
of us, your claim may be limited under applicable bankruptcy law. In case of a default in payment of the notes, whether at their maturity
or upon acceleration, they will not bear a default interest rate. For additional discussion of these matters, please see the discussion
in the accompanying prospectus under the headings “Description of Senior Debt Securities—Modification and Waiver of the Senior
Debt Securities” beginning on page 5 and “—Events of Default” beginning on page 9.
Listing
Unless otherwise specified in the applicable term
sheet, the notes will not be listed on a securities exchange.
SUPPLEMENTAL PLAN OF DISTRIBUTION
BofAS and one or more of its affiliates may act
as our agents for any offering of the notes. The agents may act on either a principal basis or an agency basis, as set forth in the applicable
term sheet. Each agent will be a party to the distribution agreement described in the “Supplemental Plan of Distribution (Conflicts
of Interest)” on page S-48 of the accompanying prospectus supplement.
Each agent will receive an underwriting discount
that is a percentage of the aggregate principal amount of the notes sold through its efforts, which will be set forth in the applicable
term sheet. You must have an account with the applicable agent in order to purchase the notes.
None of the agents is acting as your fiduciary
or advisor solely as a result of the making of any offering of the notes, and you should not rely upon this product supplement, the applicable
term sheet, or the accompanying prospectus or prospectus supplement as investment advice or a recommendation to purchase any notes. You
should make your own investment decision regarding the notes after consulting with your legal, tax, and other advisors.
BofAS and its affiliates may use this product
supplement, the prospectus supplement, and the prospectus, together with the applicable term sheet, in market-making transactions for
any notes after their initial sale solely for the purpose of providing investors with the description of the terms of the notes that
were made available to investors in connection with the initial distribution of the notes. Secondary market investors should not, and
will not be authorized to rely on these documents for information regarding Canadian Imperial Bank of Commerce or for any purpose other
than that described in the immediately preceding sentence.
Canadian
Federal Income Tax summary
An investor should read carefully the description
of material Canadian federal income tax considerations relevant to a Non-Resident Holder owning debt securities under “Material
Income Tax Consequences—Canadian Taxation” in the accompanying prospectus (as defined therein). Canadian federal income tax
considerations applicable to the notes may be described particularly when such notes are offered in the applicable term sheet related
thereto and, in that event, the disclosure in the accompanying prospectus will be superseded in such term sheet to the extent indicated
therein.
U.S.
FEDERAL INCOME TAX SUMMARY
The following summary of the material U.S. federal
income tax considerations of the acquisition, ownership, and disposition of the notes is based upon the Internal Revenue Code of 1986,
as amended (the “Code”), regulations promulgated under the Code by the U.S. Treasury Department (“Treasury”)
(including proposed and temporary regulations), rulings, current administrative interpretations and official pronouncements of the IRS,
and judicial decisions, all as currently in effect and all of which are subject to differing interpretations or to change, possibly with
retroactive effect. The following discussion supplements, and to the extent inconsistent supersedes, the discussion under “Material
Income Tax Consequences—United States Taxation” in the accompanying prospectus and is not exhaustive of all possible tax
considerations. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any
of the tax consequences described below. This summary does not include any description of the tax laws of any state or local governments,
or of any foreign government, that may be applicable to a particular holder. If the tax consequences associated with the notes are different
than those described below, they will be described in the applicable term sheet.
This summary is directed solely to U.S. holders
and non-U.S. holders that, except as otherwise specifically noted, will purchase the notes upon original issuance and will hold the notes
as capital assets within the meaning of Section 1221 of the Code, which generally means property held for investment, and that are
not excluded from the discussion under “Material Income Tax Consequences—United States Taxation” in the accompanying
prospectus.
You should consult your own tax advisor concerning
the U.S. federal income tax consequences to you of acquiring, owning, and disposing of the notes, as well as any tax consequences arising
under the laws of any state, local, foreign, or other tax jurisdiction and the possible effects of changes in U.S. federal or other tax
laws.
General
Although there is no statutory, judicial, or administrative
authority directly addressing the characterization of the notes, we intend to treat the notes for all tax purposes as prepaid cash-settled
derivative contracts with respect to the Market Measure and under the terms of the notes, we and every investor in the notes agree, in
the absence of an administrative determination or judicial ruling to the contrary, to treat the notes in accordance with such characterization.
In the opinion of our special U.S. tax counsel, it is reasonable to treat the notes as prepaid cash-settled derivative contracts with
respect to the Market Measure. This discussion assumes that the notes constitute prepaid cash-settled derivative contracts with respect
to the Market Measure for U.S. federal income tax purposes. If the notes did not constitute prepaid cash-settled derivative contracts,
the tax consequences described below would be materially different.
This characterization of the notes is not binding
on the IRS or the courts. No statutory, judicial, or administrative authority directly addresses the characterization of the notes or
any
similar instruments for U.S. federal income tax
purposes, and no ruling is being requested from the IRS with respect to their proper characterization and treatment. Due to the absence
of authorities on point, significant aspects of the U.S. federal income tax consequences of an investment in the notes are not certain,
and no assurance can be given that the IRS or any court will agree with the characterization and tax treatment described in this product
supplement. Accordingly, you are urged to consult your tax advisor regarding all aspects of the U.S. federal income tax consequences
of an investment in the notes, including possible alternative characterizations.
Unless otherwise stated, the following discussion
is based on the characterization described above. The discussion in this section assumes that there is a significant possibility of a
significant loss of principal on an investment in the notes.
U.S. Holders
Upon receipt of a cash payment at maturity or
upon a sale or exchange of the notes prior to maturity, a U.S. holder generally will recognize capital gain or loss equal to the difference
between the amount realized and the U.S. holder’s tax basis in the notes. A U.S. holder’s tax basis in the notes will equal
the amount paid by that holder to acquire them. This capital gain or loss generally will be long-term capital gain or loss if the U.S.
holder held the notes for more than one year. The deductibility of capital losses is subject to limitations.
Alternative Tax Treatments. Due to the
absence of authorities that directly address the proper tax treatment of the notes, prospective investors are urged to consult their
tax advisors regarding all possible alternative tax treatments of an investment in the notes. In particular, if the notes have a term
that exceeds one year, the IRS could seek to subject the notes to the Treasury regulations governing contingent payment debt instruments.
If the IRS were successful in that regard, the timing and character of income on the notes would be affected significantly. Among other
things, a U.S. holder would be required to accrue original issue discount every year at a “comparable yield” determined at
the time of issuance. In addition, any gain realized by a U.S. holder at maturity, or upon a sale or exchange of the notes generally
would be treated as ordinary income, and any loss realized at maturity or upon a sale or exchange of the notes generally would be treated
as ordinary loss to the extent of the U.S. holder’s prior accruals of original issue discount, and as capital loss thereafter.
If the notes have a term of one year or less, a U.S. holder who uses the accrual method of accounting generally should be required to
accrue any original issue discount on the notes on a straight-line basis. At maturity or upon a sale or exchange, a U.S. holder using
either a cash or accrual method of accounting generally should recognize taxable gain (all or a portion of which may be treated as ordinary
income) or loss in an amount equal to the difference between the amount realized and such holder’s tax basis in the notes.
The IRS released Notice 2008-2 (“Notice”)
which sought comments from the public on the taxation of financial instruments currently taxed as “prepaid forward contracts.”
This Notice addresses instruments such as the notes. According to the Notice, the IRS and Treasury are considering whether a holder of
an instrument such as the notes should be required to accrue ordinary income on a current basis, regardless of whether any payments are
made prior to maturity. It is not possible to determine what guidance the IRS and Treasury will ultimately issue, if any. Any such future
guidance may affect the amount, timing and character of income, gain, or loss in respect of the notes, possibly with retroactive effect.
The IRS and Treasury are also considering additional
issues, including whether additional gain or loss from such instruments should be treated as ordinary or capital, whether foreign holders
of such instruments should be subject to withholding tax on any deemed income accruals, whether Section 1260 of the Code, concerning
certain “constructive
ownership transactions,” generally applies or
should generally apply to such instruments, and whether any of these determinations depend on the nature of the underlying asset.
In addition, proposed Treasury regulations require
the accrual of income on a current basis for contingent payments made under certain notional principal contracts. The preamble to the
regulations states that the “wait and see” method of accounting does not properly reflect the economic accrual of income
on those contracts, and requires current accrual of income for some contracts already in existence. While the proposed regulations do
not apply to prepaid forward contracts, the preamble to the proposed regulations expresses the view that similar timing issues exist
in the case of prepaid forward contracts. If the IRS or Treasury publishes future guidance requiring current economic accrual for contingent
payments on prepaid forward contracts, it is possible that you could be required to accrue income over the term of the notes.
Because of the absence of authority regarding
the appropriate tax characterization of the notes, it is also possible that the IRS could seek to characterize the notes in a manner
that results in tax consequences that are different from those described above. For example, the IRS could possibly assert that any gain
or loss that a holder may recognize at maturity or upon the sale or exchange of the notes should be treated as ordinary gain or loss.
It is possible that the IRS could assert that
a U.S. holder’s holding period in respect of the notes should end on the calculation day, even though such holder will not receive
any amounts in respect of the notes prior to the redemption or maturity of the notes. In such case, if the calculation day is not in
excess of one year from the original issue date, a U.S. holder may be treated as having a holding period in respect of the notes equal
to one year or less, in which case any gain or loss such holder recognizes at such time would be treated as short-term capital gain or
loss.
If a Market Measure is or includes an index that
periodically rebalances, it is possible that the notes could be treated as a series of prepaid cash-settled derivative contracts, each
of which matures on the next rebalancing date. If the notes were properly characterized in such a manner, a U.S. holder would
be treated as disposing of the notes on each rebalancing date in return for new notes that mature on the next rebalancing date, and a
U.S. holder would accordingly likely recognize capital gain or loss on each rebalancing date equal to the difference between the holder’s
tax basis in the notes (which would be adjusted to take into account any prior recognition of gain or loss) and the fair market value
of the notes on such date.
If a Market Measure is or includes a commodity
futures contract or an index that tracks the value of commodity futures contracts, it is possible that the IRS could assert that Section 1256
of the Code should apply to the notes or a portion of the notes. If Section 1256 of the Code were to apply to the notes, gain or
loss recognized with respect to the notes (or the relevant portion of the notes) would be treated as 60% long-term capital gain or loss
and 40% short-term capital gain or loss, without regard to a U.S. Holder’s holding period in the notes. A U.S. Holder would also
be required to mark the notes (or a portion of the notes) to market at the end of each year (i.e., recognize gain or loss as if the notes
or the relevant portion of the notes had been sold for fair market value).
Non-U.S. Holders
Except as provided below, a non-U.S. holder will
generally not be subject to U.S. federal income or withholding tax on any gain from the sale or exchange of the notes or their settlement
at maturity, provided that the non-U.S. holder complies with applicable certification requirements and that the payment is not effectively
connected with the conduct by the non-U.S. holder of a U.S. trade or business. Notwithstanding the foregoing, gain from the sale or exchange
of the notes or their settlement at maturity may be subject to U.S. federal income tax
if that non-U.S. holder is a non-resident alien individual
and is present in the U.S. for 183 days or more during the taxable year of the settlement at maturity, sale or exchange and certain other
conditions are satisfied.
If a non-U.S. holder of the notes is engaged in
the conduct of a trade or business within the U.S. and if gain realized on the settlement at maturity or upon the sale or exchange of
the notes, is effectively connected with the conduct of such trade or business (and, if certain tax treaties apply, is attributable to
a permanent establishment maintained by the non-U.S. holder in the U.S.), the non-U.S. holder generally will be subject to U.S. federal
income tax on such gain on a net income basis in the same manner as if it were a U.S. holder. Such non-U.S. holders should read the material
under the heading “—U.S. Holders,” for a description of the U.S. federal income tax consequences of acquiring, owning,
and disposing of the notes. In addition, if such non-U.S. holder is a foreign corporation, it may also be subject to a branch profits
tax equal to 30% (or such lower rate provided by any applicable tax treaty) of a portion of its earnings and profits for the taxable
year that are effectively connected with its conduct of a trade or business in the U.S., subject to certain adjustments.
As discussed above, alternative characterizations
of the notes for U.S. federal income tax purposes are possible. Should an alternative characterization, by reason of change or clarification
of the law, by regulation or otherwise, cause payments as to the notes to become subject to withholding tax, tax will be withheld at
the applicable statutory rate. As discussed above, the IRS has indicated in the Notice that it is considering whether income in respect
of instruments such as the notes should be subject to withholding tax. Prospective non-U.S. holders of the notes should consult their
own tax advisors in this regard.
Backup Withholding and Information Reporting
Please see the discussions under “Material
Income Tax Consequences—United States Taxation—Tax Consequences to U.S. Holders—U.S. Backup Withholding and Information
Reporting” and “Material Income Tax Consequences—United States Taxation—Tax Consequences to Non-U.S. Holders—Backup
Withholding and Information Reporting for Non-U.S. Holders” in the accompanying prospectus for a description of the applicability
of the backup withholding and information reporting rules to payments made on the notes.
Canadian Imperial Bank (PK) (USOTC:CNDIF)
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