STATUTES of the Association of German Pfandbrief Banks
(Verband deutscher Pfandbriefbanken e.V.)

(as of August 18, 2008)

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This translation is for your information only. Only the German language version of the statutes shall be legally binding.

1. NAME AND LEGAL STATUS
The German Pfandbrief banks have created an association of legal capacity by the name of "Verband deutscher Pfandbriefbanken".

2. SEAT AND FINANCIAL YEAR
(1) The association's seat is Berlin (Federal Republic of Germany).
(2) The financial year is the calendar year.

3. PURPOSE
(1) The association's purpose is to foster mutual professional tasks. These are in particular:
a) to protect the rights and interests of the Pfandbrief banks including public relations
work in the areas of capital market, public-sector lending, property finance, ship finance and tax policy as well as participate in and discuss legal matters.
b) to support and advise the legislative bodies and government agencies on a national, European and international level in all matters concerning Pfandbrief banks;
c) to safeguard the interests of the Pfandbrief banks vis-à-vis other German, European and international professional associations;
d) to become a member of German, European and international professional associations or participate in companies regardless of their legal status inasmuch as membership or participation serves the association's purpose or the interests of the association's members.
(2) The association is not established for economic purposes; in particular, it does not perform any cartel tasks. The association may, however, participate in contracts, decisions and resolutions pursuant to section 29 of the German Law against Restraint of Competition ("Gesetz gegen Wettbewerbsbeschränkungen") of July 27, 1957.

4. ORDINARY MEMBERS
(1) Any German bank may become an ordinary member institution of the association provided its business activities comprise Pfandbrief business within the meaning of the Pfandbrief Act (“Pfandbriefgesetz”).
(2) Membership must be applied for in writing to the association. Admission of new members is decided upon by the Members' Meeting. The admitted ordinary member must pay a one-time admission fee the amount of which will be determined by the Board of Directors.
(3) Membership ends upon resignation or exclusion. A member may resign from the association only by submitting its resignation in writing to the President with a term of notice of six months to the end of the financial year.
(4) A resigning ordinary member shall continue to be obliged to pay a pro rata share of the association's costs allocated for the current fiscal year and a pro rata share of the longer-term debts of the association at the time of its resignation.

5. EXTRAORDINARY MEMBERS
(1) Other banks or financial holding companies whose interests are similar to those of ordinary members may become extraordinary members.
(2) Admission is governed by section 4 subsection 2 with the proviso that the decision by the Members’ Meeting must be preceded by a relevant proposal by the Board of Directors.
(3) Membership ends upon resignation or exclusion. Section 4 subsection 3 sentence 2 shall apply analogously.

6. GUEST MEMBERS
(1) Other organizations or individuals whose membership may be expected to promote the purpose of the association or is in the association’s interest may become guest members.
(2) Guest membership is subject to a decision by the Board of Directors. Section 4 subsection 3 shall apply analogously to termination of guest membership.
(3) The Board of Directors shall determine the financial obligations of guest members.
(4) In certain cases the Board of Directors may allow a guest member to attend a Members’ Meeting. In such a case the guest member shall not be entitled to table motions, make election nominations or participate in elections and voting procedures.
(5) Guest members are regularly informed of the association’s activities.

7. RIGHTS AND DUTIES OF THE MEMBERS
(1) Ordinary and extraordinary members (member institutions) exercise their rights in matters relating to the association in the Members' Meeting. For details, see section 14 and the subsequent sections.
(2) All members shall comply with the regulations set forth in the statutes and support the association loyally in the fulfillment of its tasks.
(3) The financial obligations of the member institutions are described in section 21.
(4) Only ordinary members have a share in the association’s assets. Resigned members do not have a share.

8. CONSTITUTION OF THE ASSOCIATION
The bodies of the association are:
a) the President (chairman of the association),
b) the Board of Directors,
c) the Members' Meeting,
d) the Management Board.

9. PRESIDENT
(1) The President is elected by the Members' Meeting for a term of two years. The President may be re-elected. The President remains in office until the next election at the end of his term, unless he resigns prematurely or the Members' Meeting dismisses the President from office due to a vote of no confidence. An election by the Members' Meeting that may be required to fill a vacant position during the President's term is only valid up to the end of the current election period.
(2) The President heads the association and represents it in and out of court within the meaning of section 26 of the German Civil Code ("Bürgerliches Gesetzbuch").
(3) If the President is unavailable to fulfill his tasks for a longer period of time, the President shall appoint a member of the Board of Directors to manage the affairs of the President as his deputy. If no member has been appointed, or if the President's unavailability to fulfill his tasks lasts longer than three months, the Board of Directors shall elect a deputy from among its board members. This person shall perform the President's tasks until the next Members' Meeting.
(4) If the President's office ends during his term of office, subsection 3 sentence 2 shall apply analogously.
(5) On approval of the Board of Directors, the President may appoint one or more General Managers and one of them as Chief Executive Manager, and may conclude agreements with them concerning their employment relationship.

10. COMPOSITION OF THE BOARD OF DIRECTORS
(1) The Board of Directors comprises 14 members: the President, twelve other persons elected by the Members' Meeting for a term of three years each and the Chief Executive Manager by virtue of his office. Of the twelve persons to be elected by the Members’ Meeting, not more than two may belong to an extraordinary member of the association.
(2) Only managing board members of the member institutions can be elected. Members may be re-elected.
(3) The office as elected board member of a member of the Board of Directors ends upon his leaving the member institution to which he belonged at the time of his election. If the office of an elected member ends during his term, an election shall be held to replace this person until the end of the current election period
a. either during the next Members' Meeting
b. or, at the proposal of the President, by way of voting by letter (secret postal vote). The voting-right proportions are defined, also in the case of this election, by section 16 subsections 3 and 4.

11. DUTIES OF THE BOARD OF DIRECTORS
(1) The Board of Directors shall:
a) advise and support the President, deal with fundamental questions and make suggestions;
b) form working groups according to section 13 inasmuch as this is not done by the Members' Meeting itself;
c) participate by approving decisions in the appointment of the General Managers, the Chief Executive Manager and the agreements concluded concerning their employment relationship (section 9 subsection 5);
d) pass the budget of the association;
e) resolve amendments of the statutes which relate only to the wording of the statutes;
f) decide on motions pursuant to section 21 subsection 6;
g) determine the amount of the admission fee pursuant to section 4 subsection 2 sentence 3.
(2) The Members' Meeting may assign additional duties to the Board of Directors. Rights and duties of the President or powers of supervision over the President cannot, however, be delegated to the Board of Directors; section 9 subsection 3 remains unaffected.

12. INTERNAL PROCEDURES OF THE BOARD OF DIRECTORS
(1) The President is the board's chairperson. If the President is unable to chair a board meeting, the board selects a chairperson from among the elected board members.
(2) Meetings of the Board of Directors are convened by the President or - if he is unavailable - by his deputy or by the eldest elected board member.
(3) The Board of Directors shall meet at least once every three months. Further, a meeting shall be convened if at least tree elected members of the board or five member institutions demand such a meeting.
(4) Decisions by the Board of Directors are valid only if at least seven board members are present or have voted in written or electronic form. Decisions are made by majority vote; in the event of a parity of votes, the vote of the chairperson is decisive. A written or electronic voting procedure is permissible only if no member objects to this form of voting.
(5) The chairperson may consult experts or informants from among the member institutions.

13. WORKING GROUPS
(1) If need be, working groups can be established to deal with specific topics. In general, the task of the working groups is limited to the submission of expert opinions on certain questions or matters. Additional powers may be granted to a working group or the group's chairperson.
(2) When electing a member to a working group, the member's professional qualification for the task to be performed by the working group shall be of prime importance. The members of the working group are elected by the Board of Directors for a term of four years; they remain in office until the next election. A member may be re-elected. The office ends prior to a new election when the working group member leaves the member institution to which he belonged at the time of his election. In case of early resignation, a successor is elected for the remaining term of the resigning member.
(3) Board members and other persons belonging to member institutions may be elected.

(4) If an elected member of the Board of Directors belongs to the working group, this member chairs the working group. If this is not the case, the working group elects a chairperson from among its elected members. The President may attend the meetings.

14. MEMBERS' MEETING
(1) The Members' Meeting is the highest body of the association.
(2) Its tasks are in particular:
a) to elect the President and the members to be elected to the Board of Directors;
b) to establish working groups subject to section 11 subsection 1 letter b;
c) to take receipt of the annual report and accept the annual accounts;
d) to formally approve the actions of the President and the Board of Directors;
e) to authorize the President to formally approve the actions of the Management Board;
f) to determine the basic membership fee and the costs to be allocated;
g) to pass resolutions on amendments to the statutes inasmuch as they do not relate only to the wording, on the dissolution of the association and on the use of the association's assets;
h) to elect the auditors for the association's annual accounts.
i) to admit and exclude member institutions.

15. CONVENING THE MEMBERS' MEETING
(1) The ordinary Members' Meeting shall be convened once a year. The President may convene an extraordinary Members' Meeting for valid reasons. Such a meeting must be convened if one third of the member institutions or at least three elected members of the Board of Directors apply for such a meeting in writing, specifying the reasons and its purpose.
(2) The President convenes an ordinary or extraordinary Members' Meeting in writing or by electronic transmission, giving two weeks’ notice and informing the members of the agenda in the notice. If under the given circumstances the convening notice period is deemed to be unreasonable, the President may determine a reasonable shorter convening notice period.

16. REPRESENTATION, QUORUM AND VOTING RIGHT
(1) In the Members' Meeting the member institutions can only be represented by their managing board members.
(2) The Members' Meeting constitutes a quorum if more than half of the member institutions are represented. When electing a President and members of the Board of Directors, the Members’ Meeting constitutes a quorum only if more than three fourths of the member institutions are represented; when voting on amendments to the statutes, the exclusion of a member institution or the dissolution of the association, it constitutes a quorum only if more than three fourths of the ordinary members are represented. The Members' Meeting can allow by a simple majority, a quorum not being required, a member institution not present for valid reasons to be represented by another member institution that is present. In the cases stated in sentence 2, where no quorum has been attained, a new Members' Meeting with the same agenda shall be convened within a period of one month; this Members' Meeting shall constitute a quorum in any case.
(3) Each ordinary member institution has one vote for each percentage that it contributes to the association's costs allocated to each member (section 21 subsection 3 letter b). Each member has a minimum of one vote and a maximum of ten votes, the latter on the condition that the loss of votes due to the aforementioned permissible maximum does not represent more than half of the votes lost. For the calculation of votes, fractions of percentages are rounded up if they reach or exceed half of a full percentage, and are otherwise rounded down to the next full percentage. Reductions of the allocated amount due to special arrangements (section 21 subsection 6) remain unaffected. The calculation shall be based on the latest allocation formula effective at the time of voting. Section 21 subsection 3 letter b sentence 4 remains unaffected.
(4) Every extraordinary member has one vote
(5) The voting right of member institutions in liquidation or relocated for winding-up purposes only is suspended in the case of matters not concerning them.
(6) Amendments to the statutes, the exclusion of a member institution and the dissolution of the association may only be resolved by a three fourths majority of the votes cast by the ordinary members. Other decisions by the Members' Meeting require a majority of the valid votes cast (simple majority). If in a vote the required number of votes is not attained, a decision shall be made by final ballot. For each position not yet filled after a valid election, two candidates shall be chosen for election from those with the most votes. In the event of a parity of votes between any two candidates, a decision shall be made by drawing lots; the same applies in the event of a parity of votes during the final ballot itself.

17. VOTING PROCEDURE
The members vote by secret ballot to elect the President and the members of the Board of Directors and in the event of motions of no confidence. If one fourth of the member institutions represented at the Members' Meeting demand a secret ballot, a secret ballot shall also apply in other cases, except when electing members of working groups.

18. EXERCISE OF FUNCTIONS
(1) All offices may only be exercised personally and are not subject to remuneration.
(2) Th e office bearers, the members of the working groups, the experts and the General Managers (section 19) shall treat all information obtained during their work for the association about the business activities of the member institutions confidentially. This also applies vis-à-vis member institutions and the association's bodies. However, the duty to observe secrecy– also towards federal or regional authorities – does not apply to summarizing documents for all member institutions or for specific groups or to facts if such a breakdown is required.

19. MANAGEMENT BOARD
(1) The Management Board appointed by the President shall conduct the association's business in accordance with the President's instructions. The Management Board may act on behalf of the association, sign for it and conclude agreements required for the association's business within the scope of the budget. Business activities going beyond this require the approval of the President.
(2) The annual accounts to be established by the Management Board shall be audited by the auditors elected by the Members' Meeting before being presented to the Members' Meeting.
(3) The Management Board shall participate in the Members' Meetings and, as a rule, in the meetings of the Board of Directors or the working groups inasmuch as the President or the chairperson, in agreement with the President, does not decide otherwise in certain cases. In justified cases, the Management Board may be represented by another staff member of the office.

20. MINUTES
(1) Minutes shall be taken for all sessions of the Members' Meetings, the Board of Directors and the working groups – usually by one of the General Managers. These minutes shall be signed by the chairperson of the meeting and by one of the General Managers.
(2) Copies of the minutes of the Members' Meetings shall be forwarded to all member institutions; copies of the minutes of the meetings of the Board of Directors or of the working groups shall be forwarded to the President and the members of the Board of Directors and the relevant working group.
(3) The President shall regularly inform the member institutions of the results of the groups' discussions. The President may assign this task to the Management Board.

21. COST ALLOCATION
(1) The costs of the association and its Management Board (section 19) are shared and allocated to the members.
(2) The Board of Directors shall, in its last meeting in the financial year, adopt the association's budget for the following financial year. The President may approve extraordinary expenses within one financial year amounting to a maximum of ten percent above the budget adopted by the Board of Directors.
(3) Each ordinary member pays:
a) a basic fee, the amount being determined for each financial year by the Members' Meeting. If several member institutions belong to the same banking group under one management, the basic fee is to be paid by only one of these member institutions;
b) the portion of the allocation to be decided upon by the Members' Meeting corresponding to the ratio of the volume of Pfandbriefe outstanding to the volume of Pfandbriefe outstanding of all ordinary members, rounded down to full million amounts. In this connection, the volume of Pfandbriefe outstanding of a Pfandbrief bank that issued Pfandbriefe prior to the entry into force of the Pfandbrief Act but only becomes an ordinary member after the entry into force of the Pfandbrief Act will be considered as follows:

- in the years 2005 and 2006, with a share of 10% in each case;
- in the year 2007, with a share of 30%;
- in the year 2008, with a share of 50%;
- in the year 2009, with a share of 70%;
- from the year 2010 onwards, at 100%.

Where a Pfandbrief bank becomes an ordinary member within the meaning of the above sentence during the current financial year, the share of the volume of Pfandbriefe outstanding of this bank to be considered for the financial year of the admission will only be applied on a pro rata basis. However, the calculation of the number of votes allocated to a Pfandbrief bank within the meaning of sentence 2 (section 16 subsection 3) will be governed without restriction by sentence 1.
(4) Each extraordinary member pays an amount that is equivalent to not more than four times the basic fee stipulated in section 3 letter a).
(5) For each current financial year the pro rata calculation of the allocation amount pursuant to subsection 3 letter b) shall be based on the final, published annual accounts of the previous financial year of each ordinary member. If not all ordinary members have yet published their annual accounts in the current financial year, the calculation shall be based on the accounts of the earlier financial year for which annual accounts of all ordinary members are available. Until such times as all ordinary members again periodically publish their annual accounts or corresponding financial statements, the calculation shall be based provisionally on the reports to the Federal German Statistical Office ("Statistisches Bundesamt") that are made in each case as of the date of the previous annual accounts.
(6) In justified cases, the Board of Directors may make special arrangements about which the members must be informed by the President in the following Members' Meeting.