CIBC -- summary under Fixed ROC notes

The purchaser of a Cdn.$100 note is entitled to receive quarterly distributions of $1.50 as partial repayments of principal (ROC distributions), or $30 over the five-year term, provided that on the valuation date on the third business day preceding each such repayment date, the total Index Return (on the S&P/TSX 60) is not worse than -30%. On maturity, the investor receives the algebraic sum of the remaining principal amount and the "Variable Amount," which is the positive or negative amount equal to all ROC distributions previously received plus or minus the adjustments below:

(a) if the Index Return is in excess of $30 (30%): plus 10% of that excess;

(b) if the Index Return is negative but not worse than -30%: no adjustment; or

(c) if the Index Return is negative and also -$30 (-30%) or worse: minus the amount of such return (provided that the amount received on maturity cannot be less than $1).

Canadian taxation

The ROC distributions "should not be included in the Investor's income when received but rather, should reduce the Investor's adjusted cost base of the Notes." The Variable Amount (if positive) will be included in income when it becomes calculable (implicitly, in the year of maturity unless there is an early termination event based on market disruption), and will be realized as a capital loss (if the Notes are capital property to the holder) if it is negative. Appreciation in the Note value over its amortized principal amount should be realized as a capital gain if there is a sale by such a holder before maturity, although "the matter is not free from doubt."