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Subject to Completion
Preliminary Term Sheet dated November 24,
2015 |
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Filed Pursuant to Rule 433 Registration Statement
No. 333-202584 (To Prospectus dated April 30, 2015,
Prospectus Supplement dated April 30, 2015 and
Product Supplement EQUITY INDICES LIRN-1 dated August 28, 2015) |
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Units $10 principal amount per unit CUSIP No. |
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Pricing Date*
Settlement Date*
Maturity Date* |
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December , 2015
December , 2015
December , 2017 |
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*Subject to change based on the actual date the notes are priced for initial sale to
the public (the pricing date) |
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Capped Leveraged Index Return Notes® Linked to the EURO
STOXX 50® Index |
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Maturity of approximately two years |
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2-to-1 upside exposure to increases in the Index, subject to a capped return of [19% to 23%] |
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1-to-1 downside exposure to decreases in the Index beyond a 10% decline, with up to 90% of your principal at risk |
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All payments occur at maturity and are subject to the credit risk of Canadian Imperial Bank of Commerce |
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No periodic interest payments |
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Limited secondary market liquidity, with no exchange listing |
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The notes are unsecured debt securities and are not savings accounts or insured deposits of a bank. The notes are not insured or
guaranteed by the Canada Deposit Insurance Corporation, the U.S. Federal Deposit Insurance Corporation or any other governmental agency of the United States, Canada, or any other jurisdiction
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The notes are being issued by Canadian Imperial Bank of Commerce (CIBC). There are important differences
between the notes and a conventional debt security, including different investment risks and certain additional costs. See Risk Factors beginning on page TS-6 of this term sheet and beginning on page PS-6 of product supplement EQUITY
INDICES LIRN-1.
The initial estimated value of the notes as of the pricing date is expected to be between $9.60 and $9.72 per unit, which is
less than the public offering price listed below. See Summary on the following page, Risk Factors beginning on page TS-6 of this term sheet and Structuring the Notes on page TS-11 of this term sheet for
additional information. The actual value of your notes at any time will reflect many factors and cannot be predicted with accuracy.
None of the Securities and
Exchange Commission (the SEC), any state securities commission, or any other regulatory body has approved or disapproved of these securities or determined if this Note Prospectus (as defined below) is truthful or complete. Any
representation to the contrary is a criminal offense.
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Per Unit |
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Total |
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Public offering price(1)(2) |
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10.00 |
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$ |
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Underwriting discount(1)(2) |
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0.20 |
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$ |
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Proceeds, before expenses, to
CIBC |
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$ |
9.80 |
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$ |
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(1) |
For any purchase of 500,000 units or more in a single transaction by an individual investor or in combined transactions with the investors household in this offering, the public offering price and the underwriting
discount will be $9.95 per unit and $0.15 per unit, respectively. See Supplement to the Plan of Distribution below. |
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(2) |
For any purchase by certain fee-based trusts and discretionary accounts managed by U.S. Trust operating through Bank of America, N.A., the public offering price and underwriting discount will be $9.80 per unit and $0.00
per unit, respectively. |
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The notes:
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Are Not FDIC Insured |
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Are Not Bank Guaranteed |
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May Lose Value |
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Merrill Lynch & Co.
December , 2015
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Capped Leveraged Index Return Notes®
Linked to the EURO STOXX 50® Index, due December , 2017 |
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Summary
The Capped Leveraged Index Return Notes® Linked to the EURO STOXX 50® Index, due December , 2017 (the notes) are our senior unsecured debt securities. The notes are not guaranteed or insured by the Canada Deposit Insurance
Corporation, the U.S. Federal Deposit Insurance Corporation or any other governmental agency in the United States, Canada or any other jurisdiction or secured by collateral. The notes will rank equally with all of our other unsecured and
unsubordinated debt. Any payments due on the notes, including any repayment of principal, will be subject to the credit risk of CIBC. The notes provide you a leveraged return, subject to a cap, if the Ending Value of the Market Measure, which is
the EURO STOXX 50® Index (the Index), is greater than the Starting Value. If the Ending Value is equal to or less than the Starting Value but greater than or equal to the Threshold
Value, you will receive the principal amount of your notes. If the Ending Value is less than the Threshold Value, you will lose a portion, which could be significant, of the principal amount of your notes. Payments on the notes, including the amount
you receive at maturity, will be calculated based on the $10 principal amount per unit and will depend on the performance of the Index, subject to our credit risk. See Terms of the Notes below.
The economic terms of the notes (including the Capped Value) are based on our internal funding rate, which is the rate we would pay to borrow funds
through the issuance of market-linked notes, and the economic terms of certain related hedging arrangements. Our internal funding rate is typically lower than the rate we would pay when we issue conventional fixed rate debt securities. This
difference in funding rate, as well as the underwriting discount and the hedging related charge described below, will reduce the economic terms of the notes to you and the initial estimated value of the notes on the pricing date. Due to these
factors, the public offering price you pay to purchase the notes will be greater than the initial estimated value of the notes.
On the cover page
of this term sheet, we have provided the initial estimated value range for the notes. This initial estimated value range was determined based on our pricing models. The initial estimated value as of the pricing date will be based on our internal
funding rate on the pricing date, market conditions and other relevant factors existing at that time, and our assumptions about market parameters. For more information about the initial estimated value and the structuring of the notes, see
Structuring the Notes on page TS-11.
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Terms of the Notes |
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Redemption Amount Determination |
Issuer: |
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Canadian Imperial Bank of Commerce (CIBC) |
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On the maturity date, you will receive a cash payment per unit determined as follows:
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Principal
Amount: |
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$10.00 per unit |
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Term: |
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Approximately two years |
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Market
Measure: |
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The EURO STOXX 50® Index
(Bloomberg symbol: SX5E), a price return index. |
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Starting
Value: |
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The closing level of the Market Measure on the pricing date. |
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Ending
Value: |
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The average of the closing levels of the Market Measure on each scheduled
calculation day occurring during the Maturity Valuation Period. The calculation days are subject to postponement in the event of Market Disruption Events, as described beginning on page PS-18 of product supplement EQUITY INDICES LIRN-1. |
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Threshold
Value: |
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90% of the Starting Value, rounded to two decimal places. |
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Participation
Rate: |
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200% |
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Capped
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[$11.90 to $12.30] per unit, which represents a return of [19% to 23%] over the
principal amount. The actual Capped Value will be determined on the pricing date. |
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Maturity
Valuation
Period: |
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Five scheduled calculation days shortly before the maturity date. |
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Fees and
Charges: |
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The underwriting discount of $0.20 per unit listed on the cover page and the
hedging related charge of $0.075 per unit described in Structuring the Notes on page TS-11. |
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Calculation
Agent: |
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Merrill Lynch, Pierce, Fenner & Smith Incorporated
(MLPF&S). |
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Capped Leveraged Index Return Notes® |
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TS-2 |
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Capped Leveraged Index Return Notes®
Linked to the EURO STOXX 50® Index, due December , 2017 |
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The terms and risks of the notes are contained in this term sheet and in the following:
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Product supplement EQUITY INDICES LIRN-1 dated August 28, 2015: |
http://www.sec.gov/Archives/edgar/data/1045520/000119312515306968/d69532d424b2.htm
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Prospectus dated April 30, 2015 and prospectus supplement dated April 30, 2015: |
http://www.sec.gov/Archives/edgar/data/1045520/000119312515161379/d916405d424b3.htm
These documents (together, the
Note Prospectus) have been filed as part of a registration statement with the SEC, which may, without cost, be accessed on the SEC website as indicated above or obtained from MLPF&S by calling 1-800-294-1322.
Before you invest, you should read the Note Prospectus, including this term sheet, for information about us and this offering. Any prior or
contemporaneous oral statements and any other written materials you may have received are superseded by the Note Prospectus. Capitalized terms used but not defined in this term sheet have the meanings set forth in product supplement EQUITY INDICES LIRN-1. Unless otherwise indicated or unless the context requires otherwise, all references in this document to we, us, our, or similar references are to CIBC.
Investor Considerations
You may wish to consider an investment in the notes if:
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You anticipate that the Index will increase moderately from the Starting Value to the Ending Value. |
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You are willing to risk a substantial loss of principal if the Index decreases from the Starting Value to an Ending Value that is below the Threshold Value. |
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You accept that the return on the notes will be capped. |
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You are willing to forgo the interest payments that are paid on conventional interest bearing debt securities. |
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You are willing to forgo dividends or other benefits of owning the stocks included in the Index. |
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You are willing to accept a limited or no market for sales prior to maturity, and understand that the market prices for the notes, if any, will be affected by various factors, including our actual and perceived
creditworthiness, our internal funding rate and fees and charges on the notes. |
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You are willing to assume our credit risk, as issuer of the notes, for all payments under the notes, including the Redemption Amount.
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The notes may not be an appropriate investment for you if:
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You believe that the Index will decrease from the Starting Value to the Ending Value or that it will not increase sufficiently over the term of the notes to provide you with your desired return. |
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You seek 100% principal repayment or preservation of capital. |
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You seek an uncapped return on your investment. |
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You seek interest payments or other current income on your investment. |
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You want to receive dividends or other distributions paid on the stocks included in the Index. |
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You seek an investment for which there will be a liquid secondary market. |
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You are unwilling or are unable to take market risk on the notes or to take our credit risk as issuer of the notes.
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We urge you to consult your investment, legal, tax, accounting, and other advisors before you invest in the
notes.
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Capped Leveraged Index Return Notes® |
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TS-3 |
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Capped Leveraged Index Return Notes®
Linked to the EURO STOXX 50® Index, due December , 2017 |
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Hypothetical Payout Profile and Examples of Payments at Maturity
The below graph is based on hypothetical numbers and values.
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Capped Leveraged Index Return Notes®
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This graph reflects the returns on the notes based on the Threshold Value of 90% of the Starting Value, the Participation Rate of
200%, and a Capped Value of $12.10 (the midpoint of the Capped Value range of [$11.90 to $12.30]). The green line reflects the returns on the notes, while the dotted gray line reflects the returns of a direct investment in the stocks included in the
Index, excluding dividends. This graph has been prepared for purposes of illustration
only. |
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The following table and examples are for purposes of illustration only. They are based on hypothetical values and
show hypothetical returns on the notes. They illustrate the calculation of the Redemption Amount and total rate of return based on a hypothetical Starting Value of 100, a Threshold Value of 90, the Participation Rate of 200%, a Capped Value
of $12.10 per unit and a range of hypothetical Ending Values. The actual amount you receive and the resulting total rate of return will depend on the actual Starting Value, Threshold Value, Participation Rate, Ending Value, Capped Value, and
whether you hold the notes to maturity. The following examples do not take into account any tax consequences from investing in the notes.
For
recent actual levels of the Market Measure, see The Index section below. The Index is a price return index and as such the Ending Value will not include any income generated by dividends paid on the stocks included in the Index, which
you would otherwise be entitled to receive if you invested in those stocks directly. In addition, all payments on the notes are subject to issuer credit risk.
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Ending Value |
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Percentage Change from
the Starting Value to the Ending
Value |
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Redemption Amount per Unit |
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Total Rate of Return on the
Notes |
0.00 |
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-100.00% |
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$1.00 |
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-90.00% |
50.00 |
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-50.00% |
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$6.00 |
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-40.00% |
80.00 |
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-20.00% |
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$9.00 |
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-10.00% |
90.00(1) |
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-10.00% |
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$10.00 |
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0.00% |
94.00 |
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-6.00% |
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$10.00 |
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0.00% |
95.00 |
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-5.00% |
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$10.00 |
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0.00% |
97.00 |
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-3.00% |
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$10.00 |
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0.00% |
100.00(2) |
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0.00% |
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$10.00 |
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0.00% |
102.00 |
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2.00% |
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$10.40 |
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4.00% |
105.00 |
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5.00% |
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$11.00 |
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10.00% |
110.00 |
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10.00% |
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$12.00 |
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20.00% |
120.00 |
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20.00% |
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$12.10(3) |
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21.00% |
130.00 |
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30.00% |
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$12.10 |
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21.00% |
140.00 |
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40.00% |
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$12.10 |
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21.00% |
150.00 |
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50.00% |
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$12.10 |
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21.00% |
160.00 |
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60.00% |
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$12.10 |
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21.00% |
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(1) |
This is the hypothetical Threshold Value. |
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(2) |
The hypothetical Starting Value of 100 used in these examples has been chosen for illustrative purposes only, and does not represent a likely actual Starting Value for the Market Measure. |
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(3) |
The Redemption Amount per unit cannot exceed the hypothetical Capped Value. |
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Capped Leveraged Index Return Notes® |
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TS-4 |
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Capped Leveraged Index Return Notes®
Linked to the EURO STOXX 50® Index, due December , 2017 |
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Redemption Amount Calculation Examples
Example 1
The Ending Value is 80.00, or 80.00%
of the Starting Value:
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Starting Value: |
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100.00 |
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Threshold Value: |
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90.00 |
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Ending Value: |
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80.00 |
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Redemption Amount per unit |
Example 2
The
Ending Value is 95.00, or 95.00% of the Starting Value:
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Starting Value: |
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100.00 |
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Threshold Value: |
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90.00 |
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Ending Value: |
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95.00 |
Redemption Amount (per unit) = $10.00, the principal amount, since the Ending Value is less than the Starting Value
but equal to or greater than the Threshold Value.
Example 3
The Ending Value is 105.00, or 105.00% of the Starting Value:
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Starting Value: |
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100.00 |
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Ending Value: |
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105.00 |
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= $11.00 Redemption Amount per unit |
Example 4
The
Ending Value is 130.00, or 130.00% of the Starting Value:
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Starting Value: |
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100.00 |
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Ending Value: |
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130.00 |
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= $16.00, however, because the Redemption Amount for the notes cannot exceed the Capped Value, the Redemption Amount will be $12.10 per unit |
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Capped Leveraged Index Return Notes® |
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TS-5 |
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Capped Leveraged Index Return Notes®
Linked to the EURO STOXX 50® Index, due December , 2017 |
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Risk Factors
There are important differences between the notes and a conventional debt security. An investment in the notes involves significant risks, including
those listed below. You should carefully review the more detailed explanation of risks relating to the notes in the Risk Factors sections beginning on page PS-6 of product supplement EQUITY INDICES LIRN-1, page S-1 of the prospectus
supplement, and page 1 of the prospectus identified above. We also urge you to consult your investment, legal, tax, accounting, and other advisors before you invest in the notes.
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Depending on the performance of the Index as measured shortly before the maturity date, your investment may result in a loss; there is no guaranteed return of principal. |
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Your return on the notes may be less than the yield you could earn by owning a conventional fixed or floating rate debt security of comparable maturity. |
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Payments on the notes are subject to our credit risk, and actual or perceived changes in our creditworthiness are expected to affect the value of the notes. If we become insolvent or are unable to pay our obligations,
you may lose your entire investment. |
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Your investment return is limited to the return represented by the Capped Value and may be less than a comparable investment directly in the stocks included in the Index. |
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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, all as further described in Structuring the Notes on page TS-11, are included in the public offering price of the notes. |
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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 we or any agents would be willing to buy notes from you in any secondary market
transactions. Our estimated value does not represent a minimum price at which we or our agents would be willing to buy your notes in any secondary market (if any exists) at any time. |
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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. |
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A trading market is not expected to develop for the notes. Neither we nor MLPF&S is obligated to make a market for, or to repurchase, the notes. There is no assurance that any party will be willing to purchase your
notes at any price in any secondary market. |
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Your return on the notes and the value of the notes may be affected by factors affecting the international securities markets, specifically changes within the Eurozone. In addition, you will not obtain the benefit of
any increase in the value of the euro against the U.S. dollar which you would have received if you had owned the securities in the Index during the term of your notes, although the level of the Index may be adversely affected by general exchange
rate movements in the market. |
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Our business, hedging and trading activities, and those of MLPF&S and our respective affiliates (including trades in shares of companies included in the Index), and any hedging and trading activities we, MLPF&S
or our respective affiliates engage in for our clients accounts, may affect the market value and return of the notes and may create conflicts of interest with you. |
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The Index sponsor may adjust the Index in a way that affects its level, and has no obligation to consider your interests. |
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You will have no rights of a holder of the securities represented by the Index, and you will not be entitled to receive securities or dividends or other distributions by the issuers of those securities.
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While we, MLPF&S or our respective affiliates may from time to time own securities of companies included in the Index, we, MLPF&S and our respective affiliates do not control any company included in the Index,
and have not verified any disclosure made by any other company. |
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There may be potential conflicts of interest involving the calculation agent. We have the right to appoint and remove the calculation agent. |
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Capped Leveraged Index Return Notes® |
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TS-6 |
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Capped Leveraged Index Return Notes®
Linked to the EURO STOXX 50® Index, due December , 2017 |
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The U.S. federal income tax consequences of the notes are uncertain, and may be adverse to a holder of the notes. See Summary of U.S. Federal Income Tax Consequences below and U.S. Federal Income Tax
Summary beginning on page PS-30 of product supplement EQUITY INDICES LIRN-1. For a discussion of the Canadian federal income tax consequences of investing in the notes, see Certain Income Tax ConsequencesCertain Canadian Income Tax
Considerations in the prospectus supplement dated April 30, 2015, as supplemented by the discussion under Summary of Canadian Federal Income Tax Considerations herein. |
Other Terms of the Notes
The provisions of this section supersede and replace the definition of Market Measure Business Day set forth in product supplement EQUITY
INDICES LIRN-1.
Market Measure Business Day
A Market Measure Business Day means a day on which:
(A) the Eurex (or any successor) is open for trading; and
(B) the Index or any successor thereto is calculated and published.
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Capped Leveraged Index Return Notes® |
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TS-7 |
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Capped Leveraged Index Return Notes®
Linked to the EURO STOXX 50® Index, due December , 2017 |
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The Index
All disclosures contained in this term sheet regarding the Index, including, without limitation, its make-up, method of calculation, and changes in
its components, have been derived from publicly available sources. The information reflects the policies of, and is subject to change by, STOXX Limited (the Index sponsor or STOXX). The Index sponsor, which licenses the
copyright and all other rights to the Index, has no obligation to continue to publish, and may discontinue publication of, the Index. The consequences of the Index sponsor discontinuing publication of the Index are discussed in the section entitled
Description of LIRNsDiscontinuance of an Index beginning on page PS-19 of product supplement EQUITY INDICES LIRN-1. None of us, the calculation agent, or MLPF&S accepts any responsibility for the calculation, maintenance or
publication of the Index or any successor index.
General
The EURO STOXX 50® Index (Bloomberg ticker SX5E Index) was created by the index
sponsor, STOXX Limited (STOXX), a joint venture between Deutsche Börse AG and SIX Group AG. Publication of the Index began in February 1998, based on an initial index level of 1,000 at December 31, 1991. On March 1, 2010,
STOXX announced the removal of the Dow Jones prefix from all of its indices, including the Index.
Index Composition and Maintenance
For each of the 19 EURO STOXX regional supersector indices, the stocks are ranked in terms of free-float market capitalization. The largest
stocks are added to the selection list until the coverage is close to, but still less than, 60% of the free-float market capitalization of the corresponding supersector index. If the next highest-ranked stock brings the coverage closer to 60% in
absolute terms, then it is also added to the selection list. All current stocks in the Index are then added to the selection list. All of the stocks on the selection list are then ranked in terms of free-float market capitalization to produce the
final index selection list. The largest 40 stocks on the selection list are selected; the remaining 10 stocks are selected from the largest remaining current stocks ranked between 41 and 60; if the number of stocks selected is still below 50, then
the largest remaining stocks are selected until there are 50 stocks. In exceptional cases, STOXXs management board can add stocks to and remove them from the selection list.
The index components are subject to a capped maximum index weight of 10%, which is applied on a quarterly basis.
The composition of the Index is reviewed annually, based on the closing stock data on the last trading day in August. Changes in the composition of the
Index are made to ensure that the Index includes the 50 market sector leaders from within the EURO STOXX® Index.
The free float factors for each component stock used to calculate the Index, as described below, are reviewed, calculated, and implemented on a quarterly
basis and are fixed until the next quarterly review.
The Index is subject to a fast exit rule. The index components are monitored for any
changes based on the monthly selection list ranking. A stock is deleted from the Index if: (a) it ranks 75 or below on the monthly selection list and (b) it has been ranked 75 or below for a consecutive period of two months in the monthly
selection list. The highest-ranked stock that is not an index component will replace it. Changes will be implemented on the close of the fifth trading day of the month, and are effective the next trading day.
The Index is also subject to a fast entry rule. All stocks on the latest selection lists and initial public offering (IPO) stocks are reviewed
for a fast-track addition on a quarterly basis. A stock is added, if (a) it qualifies for the latest STOXX blue-chip selection list generated end of February, May, August or November and (b) it ranks within the lower buffer on
this selection list.
The Index is also reviewed on an ongoing basis. Corporate actions (including initial public offerings, mergers and takeovers,
spin-offs, delistings, and bankruptcy) that affect the index composition are immediately reviewed. Any changes are announced, implemented, and effective in line with the type of corporate action and the magnitude of the effect.
Index Calculation
The Index is calculated with
the Laspeyres formula, which measures the aggregate price changes in the component stocks against a fixed base quantity weight. The formula for calculating the index level can be expressed as follows:
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Index = |
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Adjusted base date market capitalization of the Index |
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The free float market capitalization of the Index is equal to the sum of the product of the closing price,
number of shares outstanding, free float factor, and weighting cap factor, for each component stock as of the time the Index is being calculated.
The
Index is also subject to a divisor, which is adjusted to maintain the continuity of the index values across changes due to corporate actions, such as the deletion and addition of stocks, the substitution of stocks, stock dividends, and stock splits.
Neither we nor any of our affiliates, including the selling agent, accepts any responsibility for the calculation, maintenance, or publication
of, or for any error, omission, or disruption in, the Index or any successor to the Index. STOXX does not guarantee the accuracy or the completeness of the Index or any data included in the Index. STOXX assumes no liability for any errors,
omissions, or disruption in the calculation and dissemination of the Index. STOXX disclaims all responsibility for any errors or omissions in the calculation and dissemination of the Index or the manner in which the Index is applied in determining
the amount payable on the notes at maturity.
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Capped Leveraged Index Return Notes® |
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TS-8 |
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Capped Leveraged Index Return Notes®
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The following graph shows the daily historical performance of the Index in the period from
January 1, 2008 through November 20, 2015. We obtained this historical data from Bloomberg L.P. We have not independently verified the accuracy or completeness of the information obtained from Bloomberg L.P. On November 20, 2015, the
closing level of the Index was 3,452.45.
Historical Performance of the Index
This historical data on the Index is not necessarily indicative of the future performance of the Index or what
the value of the notes may be. Any historical upward or downward trend in the level of the Index during any period set forth above is not an indication that the level of the Index is more or less likely to increase or decrease at any time over the
term of the notes.
Before investing in the notes, you should consult publicly available sources for the levels of the Index.
License Agreement
We have entered into an
agreement with STOXX Limited providing us and certain of our affiliates or subsidiaries identified in that agreement with a non-exclusive license and, for a fee, with the right to use the Index, which is owned and published by STOXX Limited, in
connection with certain securities, including the notes.
STOXX Limited and its licensors (the Licensors) have no relationship to us,
other than the licensing of the Index and the related trademarks for use in connection with the notes.
STOXX Limited and its Licensors do not
sponsor, endorse, sell or promote the notes; recommend that any person invest in the notes; have any responsibility or liability for or make any decisions about the timing, amount or pricing of the notes; have any responsibility or liability for the
administration, management or marketing of the notes; or consider the needs of the notes or the owners of the notes in determining, composing or calculating the Index or have any obligation to do so.
STOXX Limited and its Licensors will not have any liability in connection with the notes. Specifically, STOXX Limited and its Licensors do not make any
warranty, express or implied and disclaim any and all warranty about: the results to be obtained by the notes, the owners of the notes or any other person in connection with the use of the Index and the data included in the Index; the accuracy or
completeness of the Index and its data; and the merchantability and the fitness for a particular purpose or use of the Index and its data. STOXX Limited and its Licensors will have no liability for any errors, omissions or interruptions in the Index
or its data. Under no circumstances will STOXX Limited or its Licensors be liable for any lost profits or indirect, punitive, special or consequential damages or losses, even if STOXX Limited or its Licensors knows that they might occur. The
licensing agreement between us and STOXX Limited is solely for our benefit and the benefit of STOXX Limited and not for the benefit of the owners of the notes or any other third parties.
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Capped Leveraged Index Return Notes® |
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Capped Leveraged Index Return Notes®
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Supplement to the Plan of Distribution
Under our distribution agreement with MLPF&S, MLPF&S will purchase the notes from us as principal at the public offering price indicated on the
cover of this term sheet, less the indicated underwriting discount.
We may deliver the notes against payment therefor in New York, New York on a date
that is greater than three business days following the pricing date. Under Rule 15c6-1 of the Securities Exchange Act of 1934, trades in the secondary market generally are required to settle in three business days, unless the parties to any such
trade expressly agree otherwise. Accordingly, if the initial settlement of the notes occurs more than three business days from the pricing date, purchasers who wish to trade the notes more than three business days prior to the original issue date
will be required to specify alternative settlement arrangements to prevent a failed settlement.
The notes will not be listed on any securities
exchange. In the original offering of the notes, the notes will be sold in minimum investment amounts of 100 units. If you place an order to purchase the notes, you are consenting to MLPF&S acting as a principal in effecting the transaction for
your account.
MLPF&S will not receive an underwriting discount for notes sold to certain fee-based trusts and fee-based discretionary accounts
managed by U.S. Trust operating through Bank of America, N.A.
MLPF&S may repurchase and resell the notes, with repurchases and resales being made
at prices related to then-prevailing market prices or at negotiated prices, and these prices will include MLPF&Ss trading commissions and mark-ups. MLPF&S may act as principal or agent in these market-making transactions; however, it
is not obligated to engage in any such transactions. At MLPF&Ss discretion, for a short, undetermined initial period after the issuance of the notes, MLPF&S may offer to buy the notes in the secondary market at a price that may exceed
the initial estimated value of the notes. Any price offered by MLPF&S for the notes will be based on then-prevailing market conditions and other considerations, including the performance of the Index and the remaining term of the notes. However,
none of us, MLPF&S, or any of our respective affiliates is obligated to purchase your notes at any price or at any time, and we cannot assure you that we, MLPF&S or any of our respective affiliates will purchase your notes at a price that
equals or exceeds the initial estimated value of the notes.
The value of the notes shown on your account statement will be based on MLPF&Ss
estimate of the value of the notes if MLPF&S or another of its affiliates were to make a market in the notes, which it is not obligated to do. That estimate will be based upon the price that MLPF&S may pay for the notes in light of
then-prevailing market conditions, and other considerations, as mentioned above, and will include transaction costs. At certain times, this price may be higher than or lower than the initial estimated value of the notes.
The distribution of the Note Prospectus in connection with these offers or sales will be solely for the purpose of providing investors with the
description of the terms of the notes that was made available to investors in connection with their initial offering. Secondary market investors should not, and will not be authorized to, rely on the Note Prospectus for information regarding CIBC or
for any purpose other than that described in the immediately preceding sentence.
An investors household, as referenced on the cover of this
term sheet, will generally include accounts held by any of the following, as determined by MLPF&S in its discretion and acting in good faith based upon information then available to MLPF&S:
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the investors spouse (including a domestic partner), siblings, parents, grandparents, spouses parents, children and grandchildren, but excluding accounts held by aunts, uncles, cousins, nieces, nephews or
any other family relationship not directly above or below the individual investor; |
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a family investment vehicle, including foundations, limited partnerships and personal holding companies, but only if the beneficial owners of the vehicle consist solely of the investor or members of the investors
household as described above; |
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a trust where the grantors and/or beneficiaries of the trust consist solely of the investor or members of the investors household as described above; provided that, purchases of the notes by a trust generally
cannot be aggregated together with any purchases made by a trustees personal account. |
Purchases in retirement accounts will not
be considered part of the same household as an individual investors personal or other non-retirement account, except for individual retirement accounts (IRAs), simplified employee pension plans (SEPs), savings incentive
match plan for employees (SIMPLEs), and single-participant or owners only accounts (i.e., retirement accounts held by self-employed individuals, business owners or partners with no employees other than their spouses).
Please contact your Merrill Lynch financial advisor if you have any questions about the application of these provisions to your specific circumstances or
think you are eligible.
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Capped Leveraged Index Return Notes® |
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Capped Leveraged Index Return Notes®
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Structuring the Notes
The notes are our debt securities, the return on which is linked to the performance of the Index. As is the case for all of our debt securities,
including our market-linked notes, the economic terms of the notes reflect our actual or perceived creditworthiness at the time of pricing. The internal funding rate we use in pricing the market-linked notes is typically lower than the rate we would
pay when we issue conventional fixed-rate debt securities of comparable maturity. This difference 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. This generally relatively lower internal funding rate, which is reflected in the economic terms of the notes, along with the fees and charges associated
with market-linked notes, typically results in the initial estimated value of the notes on the pricing date being less than their public offering price.
At maturity, we are required to pay the Redemption Amount to holders of the notes, which will be calculated based on the performance of the Index and the
$10 per unit principal amount. In order to meet these payment obligations, at the time we issue the notes, we may choose to enter into certain hedging arrangements (which may include call options, put options or other derivatives) with MLPF&S or
one of its affiliates. The terms of these hedging arrangements are determined by seeking bids from market participants, including MLPF&S and its affiliates, and take into account a number of factors, including our creditworthiness, interest rate
movements, the volatility of the Index, the tenor of the notes and the tenor of the hedging arrangements. The economic terms of the notes and their initial estimated value depend in part on the terms of these hedging arrangements.
MLPF&S has advised us that the hedging arrangements will include a hedging related charge of approximately $0.075 per unit, reflecting an estimated
profit to be credited to MLPF&S from these transactions. Since hedging entails risk and may be influenced by unpredictable market forces, additional profits and losses from these hedging arrangements may be realized by MLPF&S or any third
party hedge providers.
For further information, see Risk FactorsGeneral Risks Relating to LIRNs beginning on page PS-6 and
Use of Proceeds and Hedging on page PS-15 of product supplement EQUITY INDICES LIRN-1.
Summary of Canadian
Federal Income Tax Considerations
In the opinion of Blake, Cassels & Graydon LLP, our Canadian tax counsel, the following summary
describes the principal Canadian federal income tax considerations under the Income Tax Act (Canada) (the Canadian Tax Act) generally applicable at the date hereof to a purchaser who acquires beneficial ownership of a note
pursuant to this term sheet and who for the purposes of the Canadian Tax Act and the regulations thereto and at all relevant times: (a) is neither resident nor deemed to be resident in Canada; (b) deals at arms length with CIBC and
any transferee resident (or deemed to be resident) in Canada to whom the purchaser disposes of the note; (c) does not use or hold and is not deemed to use or hold the note in, or in the course of, carrying on a business in Canada; (d) is
entitled to receive all payments (including any interest and principal) made on the note, and (e) is not a, and deals at arms length with any, specified shareholder of CIBC for purposes of the thin capitalization rules in the
Canadian Tax Act (a Non-Resident Holder). A specified shareholder for these purposes generally includes a person who (either alone or together with persons with whom that person is not dealing at arms length for the
purposes of the Canadian Tax Act) owns or has the right to acquire or control or is otherwise deemed to own 25% or more of CIBCs shares determined on a votes or fair market value basis. Special rules which apply to non-resident insurers
carrying on business in Canada and elsewhere are not discussed in this summary.
This summary is supplemental to and should be read together with the
description of material Canadian federal income tax considerations relevant to a Non-Resident Holder owning notes under Certain Income Tax ConsequencesCertain Canadian Income Tax Considerations in the accompanying prospectus
supplement and a Non-Resident Holder should carefully read that description as well.
Based on Canadian tax counsels understanding of the
Canada Revenue Agencys administrative polices, interest payable on the notes should not be considered to be participating debt interest and accordingly, a Non-Resident Holder should not be subject to Canadian non-resident
withholding tax in respect of amounts paid or credited or deemed to have been paid or credited by CIBC on a note as, on account of or in lieu of payment of, or in satisfaction of, interest.
Non-Resident Holders should consult their own tax advisors regarding the consequences to them of a disposition of the notes to a person with whom they
are not dealing at arms length for purposes of the Canadian Tax Act.
Summary of U.S. Federal Income Tax Consequences
The following discussion is a brief summary of the material U.S. federal income consequences relating to an investment in the notes. The
following summary is not complete and is both qualified and supplemented by, or in some cases supplements, the discussion entitled U.S. Federal Income Tax Summary beginning on page PS-30 of product supplement EQUITY INDICES LIRN-1, which
you should carefully review prior to investing the notes.
The U.S. federal income tax consequences of your investment in the notes are uncertain. No
statutory, judicial or administrative authority directly discusses how the notes should be treated for U.S. federal income tax purposes. In the opinion of our tax counsel, Mayer Brown LLP, it would be generally reasonable to treat the notes as
prepaid cash-settled derivative contracts. Pursuant to the terms of the notes, you agree to treat the notes in this manner for all U.S. federal income tax purposes. If your notes are so treated, you
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Capped Leveraged Index Return Notes® |
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TS-11 |
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Capped Leveraged Index Return Notes®
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should generally recognize capital gain or loss upon the sale, exchange, redemption or payment on maturity in an amount equal to the difference between the amount you receive at such time and the
amount that you paid for your notes. Such gain or loss should generally be long-term capital gain or loss if you have held your notes for more than one year. In regard to a potential application of the constructive ownership rules, U.S.
holders should review the discussion set forth in Supplemental Discussion of U.S. Federal Income Tax ConsequencesSupplemental U.S. Tax ConsiderationsU.S. Holders in the product prospectus supplement.
The characterization described above is not binding on the U.S. Internal Revenue Service (the IRS) or the courts. Thus, it is possible that
the IRS would seek to characterize your notes in a manner that results in tax consequences to you that are different from those described above or in the accompanying product supplement. For a more detailed discussion of certain alternative
characterizations with respect to your notes and certain other considerations with respect to your investment in the notes, you should consider the discussion set forth in U.S. Federal Income Tax Summary of the product supplement. We are
not responsible for any adverse consequences that you may experience as a result of any alternative characterization of the notes for U.S. federal income tax or other tax purposes.
Additionally, the following changes are hereby made to the U.S. Federal Income Tax Summary section of the product supplement EQUITY INDICES
LIRN-1 to reflect certain changes to the U.S. federal income tax law as a result of U.S. taxing authority guidance and activity:
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The fourth paragraph in the section captioned Non-U.S. Holders is hereby deleted and replaced with the following: A dividend equivalent payment made with respect to an equity-linked instrument is treated as
a U.S.-source dividend. Such payments are generally subject to a 30% U.S. withholding tax (or lower rate if a tax treaty applies) when paid to a non-U.S. holder. Treasury regulations provide that certain equity-linked instruments with payments that
are contingent upon or determined by reference to U.S.-source dividends (including payments reflecting adjustments for dividends), are considered to pay dividend equivalents. Regulations exempt equity-linked instruments issued prior to 2016 from
these rules and are shortly expected to be revised to exempt instruments issued prior to 2017 from these rules. Depending on the composition of the Market Measure, a note might be treated as an equity-linked instrument; however, since it is issued
prior to 2017, it is expected to be exempt from the withholding tax rules specified for dividend equivalents. |
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The following sentences are hereby added immediately after the sentence in the section captioned Additional Information for Investors: FATCA may impose a 30% withholding tax on payments of gross proceeds
from the sale, exchange or redemption of property that gives rise to U.S.-source dividends or interest. The Internal Revenue Service recently announced in published guidance its intent to amend the regulations to extend the effective date of
withholding on gross proceeds to 1 January 2019. Similarly the Internal Revenue Service announced its intention to delay the effective date of withholding tax on foreign passthru payments to the later of 1 January 2019 or the
date of publication of final U.S. Treasury regulations defining such term. |
You should consult your tax advisor as to the tax
consequences of such characterization and any possible alternative characterizations of the notes for U.S. federal income tax purposes. You should also consult your tax advisor concerning the U.S. federal income tax and other tax consequences of
your investment in the notes in your particular circumstances, including the application of state, local or other tax laws and the possible effects of changes in federal or other tax laws.
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Capped Leveraged Index Return Notes® |
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Capped Leveraged Index Return Notes®
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Where You Can Find More Information
We have filed a registration statement (including a product supplement, a prospectus supplement, and a prospectus) with the SEC for the offering to which
this term sheet relates. Before you invest, you should read the Note Prospectus, including this term sheet, and the other documents that we have filed with the SEC, for more complete information about us and this offering. You may get these
documents without cost by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, we, any agent, or any dealer participating in this offering will arrange to send you these documents if you so request by calling MLPF&S toll-free at
1-800-294-1322.
Market-Linked Investments Classification
MLPF&S classifies certain market-linked investments (the Market-Linked Investments) into categories,
each with different investment characteristics. The following description is meant solely for informational purposes and is not intended to represent any particular Enhanced Return Market-Linked Investment or guarantee any performance.
Enhanced Return Market-Linked Investments are short- to medium-term investments that offer you a way to enhance exposure to a particular market view
without taking on a similarly enhanced level of market downside risk. They can be especially effective in a flat to moderately positive market (or, in the case of bearish investments, a flat to moderately negative market). In exchange for the
potential to receive better-than market returns on the linked asset, you must generally accept market downside risk and capped upside potential. As these investments are not market downside protected, and do not assure full repayment of principal at
maturity, you need to be prepared for the possibility that you may lose all or part of your investment.
Leveraged Index Return Notes® and LIRNs® are registered service marks of Bank of America Corporation, the parent company of MLPF&S.
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Capped Leveraged Index Return Notes® |
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TS-13 |
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