DEUTSCHE BANK 2009 tax ruling

CLASSIFICATION SHEET This document relates to the following request: 24 June 2009 References: DDRI l/IAMI I/MADE/Q2709 l 08M-TYBM RREEF Global Opportunities Fund III, LLC G.O. III - Luxembourg One S.a r.I. - 2007 2448 945 G.O. Ill - Luxembourg Oxford S.a r.I. - 2007 2450 613 I _ 1_. _ K _, ey'-t_o.._ pi_cs_: _A_m_e_nd_m _e_n_t t_o_h_ol_d_in.... g_a1_1d_fi_in_a_nc_in_..g._s_tr_uc_tu_r_es_ _ _ _ _ _ _ _ _ _ _ _ _ _ 1 2. Name of the advisor: PwC i 1m_e~,..;.. or_f;.;;u_ n..;.. d~ sp~o_ n.;...; so..;..r..;.. :RRE ;...:_;;;=E;.;..;.F_ _ _ _ _ _ _ _ _ _ _ _ _ _ __JI 1 -:.3..;...C~o.;...;r~·p~o•~·a_te~g~r..;..ou~p..;..'s..;..1_u_ -----'I I 4. Name of the RrOJ,.,..;. c= c t..;.. : 'Fu;.;..;.n;.;; d..;;.l;.;; 11 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 5. Amount intended to be invested: N/J\ 6. Date of implementation : 2 9 JUIL. 2009 R.C.S. Luxcml>Jurg ll 65 477 · TV/\ l.Ul7564~47 PriccwatcrhouscCoopcrs Socicte il responsabilite limitce Reviseur d'entrepriscs For the attention of Mr Marius Kohl Administration des Contributions Directes Bureau d'imposition Societes VI 18, Rue du Fort Wedell L-2982 Luxembourg 400, route d'Esch B.P. 1443 L-1014 Luxembourg Telephone +352 494848-1 facsimile 1352 494848-2900 www.pwc.com/lu [email protected] 24 June 2009 References: DDRH/IAMH/MADE/Q2709108M-TYBM RREEF Global Opportunities Fund 111, LLC G.O. Ill - Luxembourg One S.a r.I. - 2007 2448 945 G.O. Ill - Luxembourg Oxford S.a r.1. - 2007 2450 613 Addendum to the Advance Tax Agreement of 6 June 2007 Dear Mr Kohl, At the request of the above-mentioned client, we wish to notify you of some amendments to the strncture described in the Advance Tax Agreement dated 6 June 2007 (references: DDRH/ANBE/Q27007089M-CHBR) (hereafter the "ATA") (Enclosure 1), and to confinn the identity of the Luxembourg companies that to date are within the scope of the above ATA (please refer to Appendix 2). We are also seeking your confirmation of the tax treatment applicable to new clements of the financing structure covered by the AT A, which have arisen more recently and thus have not been presented to you. A. Background 1. Consequent on the development of the RREEF Global Opportunities Fund III, LLC ("the Fund") structure, its corporate and financing structure has evolved as described hereinafter. For your convenience, you will find enclosed with this letter a chart showing the current holding and financing structure of the Fund, in so far as it involves Luxembourg entities, in a diagrammatic form (Appendix 1). R.C.S. Luxembourg U65 477 · TVA LU17564447 A.I Amendments to the corporate structure 2. G. 0. III - Luxembourg One Sar. l. ("luxCo Master Holding'') 3. LuxCo Master Holding has invested in a real estate portfolio located in the UK through its fully owned subsidiary named G.O. III - Luxembourg Oxford S.a r.J. (hereafter "SubLux"). 4. LuxCo Master Holding has also subscribed for 70% of the units in a Korean Real Estate Fund Trust named Opus One Private Real Estate Fund (formerly known as KWR Private Placement Real Estate Investment Trust NO. I) ("Korean REF") in November 2007 and has subsequently sold its holding down to 67.06% of the units in July 2008. A.2 Amendments to the financing structure 5. The financing structure put in place with respect to the investments carried out is in line with the ATA: • LuxCo Master Holding was financed by the PPL from the Fund (with 1% of the profits derived from the investment financed being left as a margin), invested down the structure as equity in, and interest free loan to SubLux, and in the units in the Korean REF. • SubLux received interest bearing Joan financing from the Fund and onJent this amount to the UK structure beneath, leaving a taxable spread of 0.25% on this on-lending activity as outlined in the ATA. • SubLux received additional financing under an interest free loan from the Fund to cover its ongoing expenses. B. Applicable tax regime B.1 Treatment of the Korean REF for Luxembourg tax purposes Comparison rules 6. Under Luxembourg domestic law, no specific prov1s10ns currently exist to determine whether an entity established under foreign law should be treated as transparent or opaque for Luxembourg tax purposes. In order to assess the Luxembourg tax treatment of the Korean REF, its characteristics have to be compared to the characteristics of similar entities governed by Luxembourg law. (2) The Korean REF to be treated like a Luxembourg FCP for tax purposes 7. 8. Both the constructional perspective and the Luxembourg interpretation of an FCP give arguments for the treatment of the Korean REF in Luxembourg as tax transparent. 9. Based on this analysis, the position is taken that the Korean REF is comparable to a Luxembourg FCP. Accordingly, the Korean REF will be treated as tax transparent for the application of both the domestic Luxembourg tax law and the double tax treaty concluded between Korea and Luxembourg (hereafter the "DTT"). B.2 Consequences of the tax transparency of the Korean REF Luxembourg corporate income tax and municipal business tax l 0. By virtue of the tax transparency of the Korean REF, for Luxembourg tax purposes LuxCo Master Holding will be considered as holding directly the assets and liabilities of the Korean REF. In support, tax balance sheets, which will be prepared by Lux Co Master Holding showing the direct ownership of the appropriate share of the real estate located in Korea as well as other assets and liabilities of the Korean REF, and copies of the accounts of the Korean REF will be submitted with the tax returns of LuxCo Master Holding. 11. Therefore, for Luxembourg tax purposes, all income dclived by LuxCo Master Holding from the Korean REF will be considered as income derived directly from the assets held by the Korean REF. 12. By virtue of the tax transparency of the Korean REF, for Luxembourg tax purposes the disposal by LuxCo Master Holding of the beneficiary certificates of the Korean REF will be considered to be a direct disposal of the underlying Korean assets held by Korean REF. Luxembourg net wealth tax 13 . In general, Luxembourg resident companies are subject to net wealth tax rate of 0.5%. The taxable basis for this tax is the net operating assets, which are themselves reflected by the unitary value of the company. 14. As the Korean REF is tax transparent, for Luxembourg net wealth tax purposes LuxCo Master Holding will be considered as holding directly the assets and liabilities of the Korean REF. (3) All other aspects of the ATA remain valid and unaltered. We respectfully request that you confirm the tax treatment of the situation described above or that you provide us with your remarks, if any. We remain at your disposal should you need any further information and would like to thank you for the attention that you will give to our request. Yours sincerely, Thierry Braem Senior Manager David Roach Partner - Appendix 1: Structure chart of the Fund Appendix 2: List of Luxembourg companies Appendix 3: Analysis of the tax transparency of the Korean REF Enclosure l: Advance Tax Agreement dated 6 June 2007 Enclosure 2: Korean REF's Trust Deed val d Le prepose du b11reau imposition Societes 6 Mt1ritl Kohl 2 9 JUIL. 2009 Luxembourg, le I I I This tax agreement is based 011 the facts as presented to Pric~ •aterhouseCoopers Sari as at /he date the advice was gil'en. 711e agreement is dependent on specific facts a11d circumstances and 1i1 y not be appropriate to another party than t/1e one for which it was 1 prepared. 111is tax agreement was prepared with only the interests DB Real Estate 18 lP in mind. and was not planned or carried out in contemplation of any use by any other party. PricewaterhouseC .opers Sari. its par111ers. employees and or agenls. neither owe nor accepl any duly of care or any responsibility to any other parly. whJiher in conlract or in lort (including without limitation, negligence or breach ofstalutOJy duty) however arising, and shall not be liable in respect ofany loss. damage or expense of whatever nature which is caused 10 any other party. (4) fR/cEWAJERHous@PERS I Appendix 1 G'Oba:tOpp;..."f:u...'l-lles Co-inve-s.t""llErlt. UC RR:::~ G!ct>a.I 0ppor.uni'iii$ =Jrd Ill ~Re-tr A.m~!ka _LC (53.r.-..E l !1r.r 1'' 3r.a,;er as. tor R.=l.EEF GC F II) LLC Trip3 ~i:,,.. Al rw.~.-~n1 A~-·ff'"~nt 1)Cf'n Int C:"M 'Ii"¥• GSS Po!cl!"'Q5 fRREEF GO;:: ( 11 In; (OfJl~n ~tmbid' \1.~~t:rt AA~EF' GO ·111 \bt-.J. U.'T'l~d 100'¥. R'iCEE= GO tn LU)Qe-~f'QOM S a<.1. 1·j !):";i ~7.0,~ GO t II Luxen-Vourg OX!ord Sari Rt•I s~~ E.ru-:.. =i..Td fTrult T~•) ~. •.et f<Bri~ Fcu PiLars (Oxfci<d) Lirmed tUK Bi<!CO) ~Yin A:lmnis<ration !'°% Four "1llars 1-.n;els UMted (OpCol .,. · ~,,. Cots-1.otd Foor Piiiars um:ed (Pro:JCo) r 1?0~ 10C.. ·co ~ L>:W. ~ o.:ora Tna:nes Tolworth Thames (P<opeoJ (PropCo) O>tor<I Spires (PropCo) 1~ ..ltne-j ·.,~ (PropCo) (5) fJR/cEWA1fR1-JousE(roPERS I Appendix 2 RREEF Global Opportunities Fund III, LLC LIST OF LUXEMBOURG COMPANIES Name Fiscal number G.O. III - Luxembourg One S.a r.l. (" LuxCo Master 2007 2448 945 Holding"). G.O. m - Luxembourg Oxford S.a r.l. ("SubLux") 2007 2450 613 Shareholders RREEF GO III - Malta Ltd G.O. III- Luxembourg One S.a r.l. (6) Appendix 3 Tax transparency - analysis of the Korean REF Legal Characteristics of the Korean Trust Legal Characteristics of Luxembourg FCP • no legal personality • no legal personality • managed by a company acting as "manager" • managed by the directors of the management company • issues units (beneficiary certificates) to its investors • issues units to its investors • unity value is equal to the aggregate net value of the trust (as determined by the Manager) divided by the number of issued units • unity value is equal to the aggregate net value of the Fund divided by the number of issued units • no responsibility for the obligations/commitments concluded by the management company • a FCP is not responsible for the obligations/commitments concluded by the management company • closed-ended fund: restriction to units transfer (i.e. the beneficiary shall not request the redemption of their certificates) • possible restriction to units/shares transfer (i.e. closed-ended UCITS arc not required to redeem their units or shares at the request of holders) (7) PriccwaterhouseCoopers Societe a rcsponsahillte limitee Reviseur d'entreprises For the attention of Mr Marius Kohl Administration des Contributions Directes Bureau d 'imposition Societes VI 18, Rue du Fort Wedell L-2982 Luxembourg 400, route d'Esch B.P. 1443 L- 104 Lu~cmbourg Tckphonc 1- 352 494848-1 Facsimile+ 352 494848-2900 www.pwc.com/lu [email protected] 6 June 2007 References: DDRH/ANBE/Q2707089M-CHBR RREEF Global Opportunities Fund Ill, LLC ("RREEF Fund III") Master Luxembourg Holding Company ("LuxCo Master Holding") incorporated Luxembourg Joint Venture Companies ("LuxJVs") - To be incorporated Luxembourg Sub-Holding Companies ("SubLux") - To be incorporated - To be Dear Mr Kohl, At the request and on behalf of our client above, we are pleased to submit for your review and approval the Luxembourg tax treatment of the followi ng holding and financing structure, which is at the initial stages of its establishment. Alternatively, we would be pleased to receive your written comments on this structure. 1 Description of operations A new investment structure is to be set up under the new RREEF Fund III. At the date of this letter, no investments have yet been made. A Malta and Luxembourg holding and financing structure will be used to acquire (directly or indirectly) real estate investments. As shown in the chart below, the finance and holding structure envisages a combination of profit participating loans ("PPLs"), interest bearing loans and interest free loans being used by Luxembourg holding companies to finance other entities that are to make the acquisition of the real estate investments. The real estate will be held in special purposes vehicles ("SPVs") or Italian Real Estate Reserved Funds ("ffi..ERFs"). R.C.S. Luxembourg B 65 477 · TVA LU 17564447 fJRJcEWA1fRl-IOUsFC<DPERS I Investors I Investor vehicles RREEF FundlliLLC fixed interest Malta lo ans LuxCo (Master Holding) fixed interest loans ~ ~~ THIRD PARTY JOINT VENTURERS ; , 'high fixed idends , ' interest loans ---di' ----- ---- --·' ~ loans • ' SubLux A,B,C ... (Sub Holding) 12.5 bp spread - - -' : interest free fixed interest _d_i _v!g~r]g~ ____ _ ', r · ···· 10ai15· · ... high fLxed ' interest loans 'I EUSPV A,B,C ... SPVs, IRERFs SPVs, IRERFs Real Estate Real Estate Real Estate ~ fixed interest lo ans ~ ~ (2) To implement the structure, RREEF Fund Ill will incorporate a Maltese limited liability company, (hereafter "MaltaCo"). In tum, MaltaCo will incorporate a master Luxembourg holding company, ("LuxCo Master Holding"), with the minimum share capital of EUR 12,500. Ownership of the SPVs ("Lux SPVs" if the SPY owning the real estate is resident in Luxembourg) will or may be structured in a number of ways, i.e.: • Directly from the LuxCo Master Holding; • Through Luxembourg sub-holding companies (hereafter "SubLux") owned 100% by LuxCo Master Holding; Ownership of the IRERFs will or may be structured in one of the two ways, i.e.: • • Through SubLuxs, Through LuxJVs. We will send you information letters, with the precise names and companies incorporated in Luxembourg and included in the structure and thus covered by this letter, together with copies of their articles of association, as soon as they are available after each investment is made. Framework financing structure 2 At the level of LuxCo Master Holding, financing activities will or may comprise the following. • On-lending of profit participating loans ("PP Ls") - PPL borrowings from RREEF Fund III are on lent by LuxCo Master Holding in the same amounts to SubLuxs with 1 % of the profits deriving from interest being left as a margin in LuxCo Master Holding. • PPL borrowings from RREEF Fund Ill used to finance 99% of economically linked investments - these comprise equity participations in, interest free Joans to, or high fixed interest Joans to SubLuxs, SPVs and LuxJVs that are directly owned with 1% of the profits deriving from dividends and interest being left as a margin in LuxCo Master Holding. (It is noted that wherever PPLs are used to finance interest-free loans, LuxCo Master Holding will also directly own dividendyielding equity in the borrower involved). The last I% of the financing of these investments will come from MaltaCo by way of increases in the paid-in capital of LuxCo Master Holding. (3) The terms of PP Ls noted above are outlined in detail in Appendix 2. • At the SubLux level, financing activities will or may comprise the following. • On-lending of interest-bearing debt - interest bearing loans received from RREEF Fund III are in aggregate on-lent on the same terms to SPVs I IRERFs, with a minimum 12.5 bps spread being left in SubLux. • PPL borrowings - and possibly high fixed interest loans - from LuxCo Master Holding used to finance economical.ly linked investments, i.e. equity participations in SPVs (or interest free loans to such entities) and fRERFs that are directly owned, no margin being left in SubLux. At the LuxJV level, financing activities will or may comprise the following. • On-lending of interest-bearing debt - interest bearing loans received from RR EEF Fund III and third party joint-ventures are in aggregate on-lent on the same terms to SPVs I IRERFs, with a minimum 12.5 bps spread being left in LuxJV. 3 Applicable tax regime 3.1 Tax residency LuxCo Master Holding, LuxJVs and SubLuxs will all be Luxembourg tax residents within the meaning of the double tax treaties concluded by Luxembourg and of article 159 of the Luxembourg Income Tax Law (hereafter "LITL") as their shareholders' meetings and their managers' meetings will take place in Luxembourg and as their accounting will be done in Luxembourg. Consequently, tax residency certificates will be issued upon request. 3.2 Financing activities 3.2.1 PPLs on-lending (LuxCo Master Holding), PPLs used to finance economically linked investments (LuxCo Master Holding, and SubLuxs) PPLs granted by RREEF Fund III to LuxCo Master Holding ("top PPLs"), and subsequently on-lent to SubLuxs by means of PPLs ("bottom PPLs"), or (in the case of both top PPLs or bottom PPLs) used to finance economically linked investments, will be qualified as debt for both net wealth tax purposes and corporate income tax purposes, and (4) interest thereon will in principle be fully tax deductible, subject to article 166 (5) LITL in the case of PPLs used by LuxCo Master Holding or the relevant SubLux to finance economically linked investments (see the further analysis on the tax regime applicable to PP Ls in Appendix 3). These activities will fall outside the calculation of the 85: 15 debt-tocquity ratio (see also Appendix 3), and thus generally no PPL interest payment of any description will be subject to withholding taxes on dividends. Considering the amounts involved and the risk profile, the profit realised by LuxCo Master Holding in relation to this activity will be considered as appropriate and acceptable insofar as it represents 1% per annum of the net income (after all Luxembourg overhead costs) solely derived from the bottom PPLs and other assets financed by the top PPLs. This 1% margin will be left in LuxCo Master Holding. To the extent that this net income derives from the bottom PPLs, it will be fully taxable (i.e. not subject to any deductions or exemptions). 3.2.2 Fixed interest bearing loans As regards the financing activities involving the on-lending of interest bearing debt, taking into account that the entity on-lending will generally bear limited default risk and that amounts borrowed and lent will be the same and in the same currency, and will be on matching terms, the remuneration earned by the entities involved will be considered as being at arm's length and the interest paid fully tax deductible, so long as an arm's length margin is in aggregate realised on these activities. The above arm's length margin will be determined taking into account the global amount of financing of fixed interest bearing loans advanced to SPVs or to IRERFs as a result of the activity outlined in section 2 (which is expected to exceed EUR 25 million before 31 December 2008) and will be adjusted based on that amount in order to correspond to the margin generally considered being am1's length by the Luxembourg tax authorities. This margin is agreed as being a minimum of 12.5 bps for the life of the loans described in this letter in cases where no default risk lies with the entity on lending and 25 bps in cases where all arrangements are as outlined in the previous paragraph except that the entity onlending does bear default risk to the extent that there is no limited recourse provision in the terms of the loan under which it borrows. Furthermore it is agreed that this margin could be reduced in the event that the total amount advanced is significantly increased. We will in such an event write to you to confirm the revised ann's length margin to be agreed. Any adjustment of the arm's length margin will be reflected in the loan documentation so that the taxable margin will in principle correspond to the accounting margin. The above spread will be subject to corporate income tax and municipal business tax in the hands of the entity on-lending. Overhead costs directly attributable to the on-lending will not be deductible. In the case of LuxCo Master Holding and SubLuxs, other overhead costs will be taken into account in calculation of the variable interest due on the PPL financing, and will thus in practice be deductible. (5) In practice, an appropriate margin on these fixed interest bearing loan activities will be left in one of LuxCo Master Holding, LuxJVs or SubLuxs, depending on which entity is on lending. As ruled at 3.2. l above, this margin will not be reduced by the deduction of PPL interest. 3.3 Investment in IRERFs 3.3.1 Characteristics of lRERFs As ruled above, SubLuxs and LuxJVs may invest directly into lRERFs. In order to determine the Luxembourg tax treatment of an IRERF, one should analyse the main characteristics of the Italian vehicle, and compare them with the characteristics of existing Luxembourg forms. Notably, one should check the following characteristics: • • • • • • • 3.3.2 Legal personality Management Units of the fund Calculation of the value of per unit Limited liability Transfer of units Taxation Tax treatment of the IRERF An IRERF closely resembles a Luxembourg FCP as governed by the Law of 20 December 2002. Provided an IRERF has the features listed in Appendix 4, it will be considered a transparent entity from a Luxembourg tax point of view, and the investors will be deemed to have directly invested in the assets owned by the IRERF proportionately to their units held in the IRERF. The IRERFs will invest in immovable property located in Italy. Provided that, on a case by case basis, each IRERF can be considered a tax transparent entity, SubLux and LuxJV may be exempted from taxation on elements of the income that is deemed to be derived directly from the Italian sourced real estate. Specifically Article 6.1 of the Italy-Luxembourg Double Tax Treaty concluded on 3 June 1981 stipulates that income arising from real estate will only be taxable in the country in which the real estate is Eocated. Luxembourg will thus exempt the relevant income from taxation (article 24.1 a of the Italy-Luxembourg Double Tax Treaty). Correspondingly, interest and other expenses related to the acquisition and holding of this income source whether incurred by the IRERF or directly by Sub Lux and LuxJV, will not be tax deductible, in accordance with article 45(2) LITL. (6) Were SubLux and LuxJV to dispose of {part of) the units they hold in lRERF(s), they will be deemed to have disposed of (part ot) the underlying immovable property, due to the tax transparent character of the IRERF. Article 13. l of the Italy-Luxembourg Double Tax Treaty states that the capital gains that are realised on the disposal o f immovable property will only be taxable in the country in which the real estate is located, i.e. Italy. Luxembourg will thus exempt these capital gains from taxation (article 24.1a of the ltalyLuxcmbourg Double Tax Treaty) to the extent that they relate to the underlying immovable property. According to article 23.1 and 24.1 a of the Italian-Luxembourg Double Tax Treaty, Italian situs immovable property will not be subject to Luxembourg net wealth tax. To the extent that an IRERF has other assets apart from immovable property, these too will be deemed to be owned directly by the investors. Any net income deriving from such assets will be subjected to Luxembourg taxation to the same extent that would be the case had a Luxembourg investor owned the appropriate share of the assets directly. In support of all the above, tax balance sheets will be prepared by SubLux and LuxJV showing direct ownership of the appropriate share of the real estate located in Italy as well as other assets and liabilities of the relevant IRERF. Copies of the accounts of the relevant IRERF will also be submitted with the tax returns of Sub Lux and LuxJV. 3.4 Foreign Exchange Any Lux SPY that accounts in a non-EUR currency and has all its real estate assets located in the territory of that non-EU currency is, since its inception, to benefit from a functional currency regime whereby it can hold its accounts in the local currency of its investment, so that no foreign exchange differences not appearing in its accounts will arise when computing taxable profits. The taxable profits of these Lux SPVs will be computed in the local currency, will be converted into EUR at the closing date according to the official exchange rate at that date, and tax liabilities will be denominated and settled in EUR. Whenever a Lux SPY which is to have the above treatment is added to the structure, we will note this in providing the relevant amended version of Appendix 1. (7) We remain at your disposal should you need any further information and would like to thank you for the attention that you will give to our request. Yours sincerely, Ch. Christoph Manager David Roach Partner For appryval Luxembourg, Appendix I : List of Luxembourg companies : 1 Appendix 2: Profit Participating Loan- Prin ipal terms Appendix 3: Further analysis of the tax regi e applicable to the PPLs Appendix 4: Principal characteristics of an ERF This lax agreement is based on the facts as presented 10 PricewaterhouseCoopers Sari as at the date the advice was given. The agreement is dependent on specific facts and circumstances and may not be appropriate 10 another party than the one for wliich it was prepared. This tax agreement was prepared with only the interests of RREEF Global Opportunities Fund Ill, UC tn mind, and was not planned or carried out in contemplation of any use by any 01her party. Pncewaterho11seCoopers Sllrl, its partners, employees and or agents, neither owe nor accept any duty of care or any responsiblllty to any other party, whether in contract or in tort (including without limitation. negligence or breach of statutory duty) however arising. and shall not be liable in respect of any loss. damage or expense of wh111ever nature which is caused 10 any other party. (8) [Translation} TRUST DEED FOR KWR PRIVATE PLACEMENT REAL ESTATE INVESTMENT TRUST NO.I CHAPTER I. Article 1. GENERAL PROVISIONS Purpose (1) The purpose of this Trust Deed is to prescribe the rights and obligations of the AMC, the Trustee, the Beneficiaries and the Sales Agent of the investment trust (this "REF") and any other matters required for the management and administration of the investment trust funds pursuant to the Indirect Investment Asset Management Business Act (the "Asset Management Act"). (2) This REF is a real estate investment trust managed by primarily investing in real estate assets with an inherent risk that the Beneficiaries may have to bear certain risks associated with their investment in this REF. (3) This REF shall not be subject to the general requirements applicable to publicly offered investment trusts for the purpose of protecting investors, including the advance reporting of the trnst deed to the Financial Supervisory Commission, provision of the trust deed for review by the Beneficiaries, provision of the prospectus, provision of the trustee's report, ad hoc disclosure of materials facts required by applicable laws and regulations (including any change in qualified management professionals and non-performing asset write-offs) and daily disclosure of the Net Asset Value per Unit. Article 2. Type of Investment Trust, AMC and Trustee This Investment Trust is a real estate investment trust, with Deutsche Investment Trust Management Co., Ltd. acting as the AMC, and Kookmin Bank acting as the Trustee. Article 3. Definitions In this Trust Deed, the following terms shall have the meanings set forth below: 1. "Beneficiary" shall mean the person who holds a beneficiary certificate of this REF. 2. "Business Day" shall mean a day when the Sales Agent is open for business. 3. "Real Estate Management Company" means a company engaged by the Trust to provide services with respect to the real estates that are acquired by the REF as investment trust funds, such as management, improvement, -IN:\200911139\Trust Dccd\Trust Deed· FfNAL.DOC 4. 5. Article 4. development, or property leasing, and other ancillary services. "Trustee" shall mean the trustee designated for the contemplated transaction. Unless otherwise specifically prescribed herein, the terms used in this Trust Deed shall be determined by the applicable laws and regulations. Effectivcness of Trust Deed (l) This Trust Deed shall be established by the AMC and shall be effective upon execution of the trust agreement by and between the AMC and the Trustee pursuant to this Trust Deed. (2) When a Beneficiary purchases the beneficiary certificates of this REF, the Beneficiary shall be deemed to have accepted the provisions of this Trust Deed. Article 5. Appropriation of Profits and Losses Any profit earned and loss incurred in the course of the management of the investment trust fund in compliance with the instruction of the AMC shall be appropriated to this REF and shall be reverted to the Beneficiaries. Article 6. Businesses of AMC and Trustee (1) The AMC shall conduct the businesses related to establishment and termination of this REF and the management and instruction of the management of the investment trust funds. The AMC may provide services with respect to real estates that are acquired by the REF as investment trust funds, such as management, improvement, development, or property leasing, and any other ancillary services through delegation of such tasks to the Real Estate Management Company. (2) The Trustee shall conduct businesses related to the custody and administration of the investment trust funds, the payment of proceeds, termination amount and profits in relation to the acquisition and disposition of the assets in accordance with the management instructions for the investment trust funds issued by the AMC, the supervision of management instructions for the investment trust funds issued by the AMC and the confirmation of the fairness of the valuation of investment trust funds and the appropriateness of the computation of the Net Asset Value per Unit. (3) Methods and procedures of instruction on management of the investment trust funds, deduction of various taxes and charges and other matters related to the business of the Trustee not provided in this Trust Deed shall be determined by a separate agreement to be executed between the AMC and the Trustee; provided, that in the event any discrepancy between this Trust Deed and such separate agreement, this Trust Deed shall prevail. Article 7. Responsibility of AMC If the AMC, the Trustee, the Sales Agent or the Administrator causes damage to the Beneficiaries by committing any act contrary to applicable laws and regulations or this Trust -2- Deed due to negligence, the AMC, the Trustee or the Sales Agent shall compensate the Beneficiaries for such damages. Article 8. Value of Principal Amount of Investment Trust and Total Number of Beneficiary Certificates The principal amount at the time of initial establishment of this REF shall be [ ] Won and the total number of the units of beneficiary certificates issuable by this REF shall be [ ] units. Article 9. Additional Funding Thjs REF shall issue additional beneficiary certificates, if and to the extent permitted under the the Asset Management Act. The size and the timing of the additional issuance shall be determined by the AMC. The existing Beneficiaries shall have a preemptive right to purchase the additional beneficiary certificates in proportion to the existing number of the beneficiary certificates owned. Article 10. Payment of Investment Trust Amount (l) The AMC shall, upon initial establishment of this REF, pay to the Trustee in cash or check an an1ount equivalent to the amount of principal under Article 8 as the investment trust amount. (2) If the AMC desires to issue additional beneficiary certificates in accordance with Article 9 above, the AMC shall pay to the Trustee an additional investment trust amount in cash or check. In this case, additional investment trust amount shall be the amount of the Net Asset Value per Unit as of the additional establishment date multiplied by the number of additional units of beneficiary certificates. (3) Out of the additional investment trust amount specified in Paragraph (2) above, the amount of the Net Asset Value per Unit as of the initial establishment date multiplied by the number of additional units of beneficiary certificates shall be regarded as the principal of the additional investment trust, whlle the amount equivalent to the profits or losses shall be regarded as a profit adjustment amount. Article 11. Duration of REF (I) The duration of this REF shall be 10 years from its initiaJ establishment date; provided, however, that in the event of the dissolution of this REF, the duration of the Trust shall be from the date of initial establishment of the REF until the date of such dissolution. (2) Despite of the foregoing Paragraph (1), in the event that all of the real estate assets set forth in Article 30 Paragraph (1) Item 1 are disposed of, with the trust principal paid in whole prior to the expiration of t he duration of this REF, the duration of REF shall be until the first following Business Day on which such payment is made. Article 12. Accounting Period of REF -3- The first accounting period of this REP shall be from the establishment of this REF until the last day of December of the relevant year and the accounting period of this REF shall be every 12 months thereafter, and in case of termination of this Trust Deed, the relevant accounting period shall be from the first day of the accounting period of this REF until the termination date of the Trust Deed. CHAPTER II. Article 13. UNITS AND BENEFICIARY CERTIFICATES Division of Units (1) The beneficiary rights units (the "Units") of this REF shall be divided equally into a single unit denomination and shall be represented by the beneficiary certificates. (2) Beneficiaries of this REF shall have equal rights in proportion to the number of Units held by them with respect to redemption of the principal of this REF and distribution of the profits. (3) Even if additional Units are to be issued, the rights of such additional Units shall be the same as those Units already issued. Article 14. Issuance and Deposit of Beneficiary Certificates (1) The AMC shall issue registered beneficiary certificates under the name of the Korea Securities Depository (the "KSD") when the Trustee confirms that the subscription price of the beneficiary certificates (and any additional beneficiary certificates) issued by initial and additional establishment of this REF pursuant to Articles 8 and 9 is paid in full. (2) The Sales Agent shall prepare, and keep in custody of, a customers account book (the "Beneficiary Certificate Customers Account Book") under Article l 74-2, Paragraph (1) of the Securities Exchange Act (the "SEA"), which shall have the following infonnation: 1. 2. Names and addresses of the customers; and Type and number of the beneficiary certificates kept in deposit (3) The beneficiary certificates recorded in the Beneficiary Certificate Customers Account Book in accordance with Paragraph (2) above sha11 be deemed as deposited with the KSD from the time of the recordation in accordance with Article 174 of the SEA. (4) Beneficiaries whose names are recorded in the Beneficiary Certificate Customers Account Book (the "Actual Beneficiaries") shall be deemed to take possession of the deposited beneficiary certificates and be presumed to have co-ownership interest on those deposited beneficiary certificates. -4- Article 15. Return of Deposited Beneficiary Certificates, etc. (I) Actual Beneficia1ies have the right to request the Sales Agent for the return of the deposited beneficiary certificates at any time. (2) In the event that the Actual Beneficiaries request return of the deposited beneficiary certificate pursuant to Paragraph (1) above, the AMC shall issue the beneficiary certificates in seven denominations: one (1), ten (10), one hundred (100), one thousand ( 1,000), ten thousand (10,000), hundred thousand (100,000), one million (1,000,000) units. In such case, the AMC may request reimbursement of the cost and expenses of the issuance of the beneficiary certificates to the Actual Beneficiaries. (3) The Actual Beneficiaries must request the return of the beneficiary certificates in such way to minimize the number of the beneficiary certificates to be returned to the Actual Beneficiaries. Article 16. ( 1) Redelivery of Beneficiary Certificates If a Beneficiary other than the Actual Beneficiaries (the "Physical Beneficiary") loses or otherwise destroys beneficiary ce1tificates due to the loss or theft or a similar reason, the Physical Beneficiary may request re-delivery of the beneficiary certificates from the AMC tlu·ough the Sales Agent which has sold such beneficiary ce1tificate, according to the procedures specified by the AMC, accompanied by an original copy or a certified copy of nullification judgment by public notice. (2) If the beneficiary certificates are stained or damaged, a Physical Beneficiary may request the re-delivery of such beneficiary certificates from the AMC according to the procedures determined by the AMC, accompanied by such beneficiary certificates; provided, that when the stain and/or damage are/is so serious that it is difficult to tell whether the beneficiary certificates are genuine or not, the provision of Paragraph (1) above shall apply mutatis mutandis. (3) If the AMC re-delivers a beneficiary certificate pursuant to Paragraphs (I) and (2) above, the AMC may request reimbursement of its actual costs from the Physical Beneficiary who has requested such re-delivery. Article 17. Transfer of Beneficiary Certificates (1) Units shall be transferred through delivery of the beneficiary certificates, and a person who possesses the beneficiary certificates shall be presumed to be bona fide holder of the beneficiary ce1tificates. The beneficiary certificates shall not be transferred through division to a third party; provided, however, that the beneficiary certificates may be transferred through division to the extent that the number of the beneficiaries does not exceed 30. (2) If any change in the Beneficiary Certificate Customers Account Book was made for the purpose of either transfer or pledge of the beneficiary certificates, such change shall be deemed to have the same effect as delivery of the beneficiary certificates. -5- (3) If the transferee of the beneficiary certificates who acquired them in compliance with the procedures set by the AMC fai ls to record its name and address in the Beneficiaries Registry, then such transferee may not assert its rights as the legal holder of those beneficiary certificates against the AMC. Article 18. Beneficiaries Registry and Actual Beneficiaries Registry (1) The AMC shall delegate the responsibility of preparing and keeping of the Beneficiaries Registry with the KSD. (2) The AMC shall enter into an outsourcing contract for the preparation etc. of the Beneficiaries Registry with KSD, and the KSD shall comply with the applicable laws and regulations, this Trust Deed, and the outsourcing contract in carrying out such duties. (3) The AMC may (a) suspend alteration of entries in the Beneficiaries Registry for a certain period for the purpose of determining the parties who may exercise voting rights, receive dividends or who may exercise its rights as the Beneficiary or the pledgee or (b) determine the record date and deem the Beneficiaries and the pledges who arc recorded on the Beneficiaries Registry on such date to have the right to exercise as the Beneficiaries and the pledgees. (4) Once the AMC sets the period/date as described above, it shall, without delay, notify the KSD of such decision. (5) Upon receipt of such notice by the AMC pursuant to Paragraph (4) above, the KSD may request the Sales Agent to provide following information regarding the Actual Beneficiaries: 1. 2. Name, address and email address of the Actual Beneficiaries; and Type and number of the Units owned by the Actual Beneficiaries (6) Upon receiving the requested information from the Sale Agent in accordance Paragraph (5) above, the KSD shall prepare a registry stating such information provided by the Sale Agent and date of receipt of such information (the "Actual Beneficiaries Registry"). If the AMC requests the information on the matters as stated in the Beneficiaries Registry, Sales Agent shall provide the AMC with the names of, and the number of the Units held by, the Beneficiaries and the Actual Beneficiaries. (7) Recordation in the Actual Beneficiaries Registry provided in Paragraph (6) above shall have the same effect as the recordation in the Beneficiary Registry against the AMC, and the Actual Beneficiaries shall be deemed to own an equal number of the beneficiary certificates in accordance with their co-ownership interest under Article 14, Paragraph (4) of this Trust Deed in exercising their rights as the Beneficiaries. (8) In the event the AMC determ ines the period/date as described in Paragraph (3) above, the main text of the provisions of Article 354, Paragraph (4) of the Commercial Code -6- shall apply mutatis mutandis; provided, that this provision shall not apply to the case where the record date is set upon occurrence of any of the following events: 1. Where the record date of merger is set in accordance with the approval of merger resolved at the general meeting of Beneficiaries; 2. Where the record date is set in order to pay the redemption amount which is payable upon termination of this REF; or 3. Where the record date is set in order to pay the distributions of profits which is payable upon expiration of the accounting period of this REF. CHAPTER III. Article 19. DISTIUBUTION & REDEMPTION OF BENEFICIARY CERT IFICATES Calculati.o n and Notice of Net Asset Value per Unit (1) The daily Net Asset Value per Unit shall be calculated by deducting the total liabilities from the total assets of this REF as recorded in the balance sheet of this REF as of the immediately preceding date (the "Net Asset Value"), divided by the total number of the beneficiary certificates on such date, calculated to the second decimal place and rounded up at the third decimal place if less than one Won per 1 Unit. (2) The valuation of the investment trust funds at the time of calculation of the Net Asset Value per Unit set forth in Paragraph (1) above shall be determined by the applicable laws and regulations; provided, that any assets set forth in Article 29 Paragraph (1) Item 1 hereof, any assets whose fair value is difficult to calculate due to the lack of trading record on the valuation date or any assets for which sale in the market is restricted or otherwise difficult shall be valued at such price as determined by the Indirect Investment Asset Valuation Commission based upon a price determined by the applicable Jaws and regulations. (3) The Net Asset Value per Unit on the date of initial establishment of this REF shall be 1,000 Won and in this case, one Unit shall be I Won. (4) The Administrator shall calculate the Net Asset Value per Unit pursuant to Paragraph (1) above and give notice thereof to the AMC on a daily basis. The AMC shall give a public notice of such Net Asset Value per Unit to the Beneficiary upon the Beneficiary's request. Article 20. Issue Price of Beneficiary Certificates The issue price of the beneficiary certificates shall be the Net Asset Value per Unit notified in accordance with Article 19 Paragraph (4) on the Business Day immediately following the day on which the investors make the payment to the Sales Agent for the acquisition of the beneficiary certificates; provided, that when this REF is initially established, the issue price shall be the Net Asset Value per Unit as of U1e initial establishment date of this REF. - 7- Article 21. Redemption of Beneficiary Certificates The Beneficiaries shall not request the redemption of their beneficiary certificates. CHAPTER IV. Article 22. GENERAL MEETING OF BENEFICIARIES Composition and Authority of General Meeting of Beneficiaries ( 1) This REF shall have the general meeting of Beneficiaries that is composed of all Beneficiaries. (2) The general meeting of Beneficiaries may resolve only those matters specified in the Jaws and regulations and the matters set forth in this Trust Deed. Article 23. Convening of General Meeting of Beneficiaries (1) The general meeting of Beneficiaries shall be convened by the AMC at the place where the head office of the AMC is located or any other neighboring place. (2) When the Trustee or the Beneficiaries holding five hundredths (5/100) or more of the total number of the beneficiary certificates issued request the AMC to convene a general meeting of Beneficiaries by submitting a written statement containing the purpose and the reasons for its convening, the AMC shall convene the meeting within one (I) month. (3) When the AMC does not, without a legitimate reason, take necessary steps to convene a general meeting of Beneficiaries within one (1) month after a request was made pursuant to Paragraph (2) above, the Trustee or the Beneficiaries holding five hundredths (5/100) or more of the total number of the beneficiary certificates issued may convene the meeting with the approval of the Chief of the Financial Supervisory Service. (4) In convening the general meeting of Beneficiaries, a notice of meeting together with the purpose of meeting shall be given to each Beneficiary in writing or via computer telecommunication two (2) weeks prior to the date of meeting; provided, that if such notice is not delivered to the address recorded on the Beneficiaries Registry or the Actual Beneficiaries Registry for three (3) consecutive years, the AMC may avoid the notice of convocation of the general meeting of Beneficiaries to the Beneficiary concerned. (5) The notice under Paragraph (4) above shall record the agenda of the meeting. (6) The AMC (including the Trustee and the Beneficiaries holding five hundredths (5/100) or more of the total number of the beneficiary certificates issued that convene the general meeting of Beneficiaries under Paragraph (3) above) shall entrust to the KSD the issuance of notices to convene the general meeting of Beneficiaries. - 8- Article 24. Operation of General Meeting of Beneficiaries (1) The chairman for the general meeting of Beneficiaries shall be elected at the general meeting of Beneficiaries among the Beneficiaries. (2) The quorum for the general meeting of Beneficiaries shall be fo1med with the attendance of Beneficiaries holding a majority of the total number of the beneficiary certificates issued, and the resolutions shall be adopted with the approval of two thirds (2/3) or more of the votes of attending Beneficiaries and one third (1/3) or more of the total number of the beneficiary certificates issued. However, the resolutions of the matters set forth in this Trust Deed shall be adopted with the approval of more than 50% of the votes of attending Beneficiaries and one fourth (l/4) or more of the total number of the beneficiary certificates issued. Article 25. Exercise of Voting Rights in Writing (1) The Beneficiaries may exercise their votes in writing without attending the general meeting of Beneficiaries. (2) The KSD shall deliver documents necessary for exercising votes in writing and any reference materials when it sends a notice to convene the general meeting of Beneficiaries or when requested by Beneficiaries. (3) The Beneficiaries intending to cast votes in writing shall record the contents of their voting in the documents referred to in Paragraph (2) and shall submit them to the AMC by the date immediately preceding the general meeting of Beneficiaries. (4) Beneficiaries may, at any time during the business hours of the AMC, request for the review and copy of the document and reference material under Paragraph (2) above. Article 26. Voting Rights, etc. (1) Each Beneficiary shall have one (1) vote for each (1) beneficiary ce1tificate held by it. (2) If a Beneficiary intends to exercise its voting rights by proxy, the relevant proxy shall submit to the general meeting of Beneficiaries a letter evidencing the power of attorney. Article 27. Adjournment of General Meeting of Beneficiaries (1) Where the total number of the beneficiary certificates owned by the attending Beneficiaries does not reach a majority of the total number of beneficiary certificates issued after the passage of one (1) hour from the scheduled time for opening the general meeting of Beneficiaries, the AMC may adjourn the meeting. (2) When the general meeting of Beneficiaries is adjourned in accordance with Paragraph (I) above, the AMC shall reconvene the adjourned general meeting of Beneficiaries within two (2) weeks from the date of adjournment. In such case, a -9- notice to reconvene the adjourned general meeting of Beneficiaries, stating the matters specified in Paragraph (3), shall be issued, at least one (I) week prior to the date of the adjourned meeting. (3) Where the total number of the beneficiary certificates owned by the attending Beneficiaries docs not reach a majority of the total number of beneficiary certificates issued after the passage of one ( l) hour from the scheduled time for opening the adjourned general meeting of Beneficiaries, the meeting shall be deemed to constitute with the total number of the beneficiary certificates owned by the attending Beneficiaries and the resolutions at the adjourned general meeting of Beneficiaries shall be adopted with the approval of two thirds (2/3) or more of the votes of attending Beneficiaries. Article 28. Dissenting Beneficiary's Right to Req uest for Purchase of Beneficiary Certificates ( l) If a Beneficiary, dissenting the resolution of the general meeting of Beneficiaries on the amendment of this Trust Deed with respect to the trust fee paid to the AMC or the Trustee, or other material agenda on the increase of fees, the replacement of the Trustee, etc., or amendment of the trust period or otherwise related to the interests of the Beneficiaries as specified by the laws and regulations or on the merger of this REF, gives notice of its intention to dissent to such resolution in writing to the relevant AMC prior to holding such general meeting of Beneficiaries, the relevant Beneficiary may, within twenty (20) days from the date of approval of the resolution at the general meeting of Beneficiaries, request the purchase of the beneficiary certificates it holds by a letter describing the number of the beneficiary certificates. (2) The AMC shall, upon request for purchase of the beneficiary certificates under Paragraph (I) above, which shall be deemed a redemption request as of the final day of the period of the request for purchase of beneficiary certificates, purchase such beneficiary certificates with the investment trust funds in accordance with the applicable laws and regulations; provided, however, that if it cannot comply with such request for purchase due to insufficient funds, such purchase of the beneficiary certificates may be deferred with the approval of the Chief of the Financial Supervisory Service. (3) The AMC may not charge to Beneficiaries any fee for the purchase of the beneficiary certificates or other expenses related to such purchase. Article 29. Applicable Laws and Regulations Article 74 of the Asset Management Act shall apply mutatis mutandis to any matters not specified in this Trust Deed in connection with the general meeting of Beneficiaries. CHAPTER V. Article 30. MANAGEMENT OF INVESTMENT TRUST FUNDS Investment Objects, etc. - 10 - (I) The AMC shall invest the investment trust funds in any of the following investment securities and manners: l. the real estate under Article 2, Item I, Sub-Item C of the Asset Management ACt.i, (2) (3) 2. the government bonds, local government bonds, bonds issued by a corporation established under special laws and debentures (which shall have the credit rating of BBB- or higher, and shall exclude equity-related bonds, privately placed bonds, bonds issued in accordance with the asset-backed secmitization plan under the Asset-backed Securitization Act, mortgage-backed bonds and mortgage-backed secunties issued pursuant to the Mortgage-backed Securitization Company Act or Korea Housing Finance Corporation Act) under Article 2, Paragraph (I), Items l through 4 of the SEA (the "bonds"); 3. the bonds issued in accordance with the asset-backed secmitization plan under the Asset-backed Securitization Act, mortgage-backed bonds or mortgagebacked securities issued pursuant to the Mortgage-backed Securitization Company Act or the Korea Housing Finance Corporation Act (the "assetbacked securities") 4. the notes or debt instruments issued, sold or intermediated by a financial institution under Article 6 of the Enforcement Decree of the Asset Management Act, or notes (which are limited to have the credit rating of A3- or higher) under Article 2-3, Item 4 of the Enforcement Decree of the SEA (the "notes"); and 5. trading with the proprietary property of the Trustee under Article 108 of the Enforcement Decree of the Asset Management Act. The "real estate" referred to in Paragraph (1 ), Item 1 above shall be managed as follows: 1. Acquisition or sale. The AMC shall prepare and maintain a real estate due diligence report according to Article 143, Paragraph (3) of the Asset Management Act. 2. Management, improvement, development and lease. In case the AMC invests in a real estate development business (developing land for residential or factory site, etc, or constructing or re-constructing a building or structure, hereinafter the "real estate development business"), the AMC shall prepare the business plan according to the provisions of Article 143, Paragraph (4) of the Asset Management Act and receive the confirmation from the appraiser licensed pursuant to the Real Estate Price Notice and Appraisal Act. Notwithstanding Paragraph (1) above, the AMC may invest the investment trust funds in accordance with the following methods, if necessary to efficiently manage the monies to be invested: 1. short-term loan (which shall mean the provision of monies in accordance with the - 11 - inter-financial institution short-term financial transaction of not exceeding thirty (30) days); and 2. deposits with a financial institution (which shall be limited to products with maturity within one (1) year). (4) Notwithstanding Paragraph ( l) above, the AMC may acquire shares with the investment trust funds in the case where the AMC is required to do so for recovery of its claims such as bonds and commercial papers, etc. designated by creditor financial institutions by the court decision on the commencement of the composition or corporate reorganization procedure or under the Corporate Reorganization Promotion Act. Article 31. (1) (2) Investment Limits In managing the investment trust funds under Article 29, the AMC shall comply with the following requirements: 1. Investment in real property shall be no less than 70% of the total assets of this REF. 2. Investment in bonds shall be no more than 20% of the total assets of thjs REF. 3. Investment in notes shall be no more than 20% of the total assets of this REF. 4. Investment in asset-backed securities shall be no more than 20% of the total assets of this REF. Notwithstanding the provisions of Paragraph (l), the above ratio for the management of the investment trust funds shall not apply in the case of the following period or events; provided, that in case of Item (4) below, the ratio shall be adjusted to meet the specified investment ratio w ithin fifteen ( 15) days from such exceeding day in the case ofltem (4) below: 1. Three (3) months from the irutial establishment date; 2. Three (3) months prior to the expiration of the accounting period of the REF; 3. Three (3) months prior to the termination of the trust agreement; or 4. If the provision of Paragraph (1) above is breached due to the fluctuation in the prices of investment securities, etc., held as investment trust fund. Article 32. Borrowings (1) The AMC may borrow the money by providing real estate assets that are held as the investment trust fund as collateral as prescribed by the applicable laws and decrees. (2) The AMC shall not manage the money borrowed under the provisions of Paragraph ( l) - 12 - other than for the purpose of investing in the real estate assets. Article 33. (I) Restriction on Management The AMC shall not instruct the Trustee to engage in any of the following activities for the management of the investment trust funds, except as permitted by relevant laws and regulations: I. Extending short-tenn loans in excess of I 0% of the total assets of this REF to an interested party of the AMC as specified in Article 77 of the Enforcement Decree of the Asset Management Act; 2. Using the investment trust funds to acquire investment securities issued or held by a Beneficiary or its related person at the request of such Beneficiary; 3. Investment in subordinated-bonds, the terms of which include a condition that in the case where the issuer becomes bankrupt, other obligations of the issuer shall be repaid first and the obligation under the bonds concerned shall be repaid to the extent that there remain any assets after the repayment of such other obi igations; 4. Disposal of real estate assets acquired with the investment trust fund within three (3) years from the date of such acquisition, provided, however, such restriction shall not apply in cases of the disposition of land or structure developed or established pursuant to the real estate development business or merger or dissolution of this REF. 5. Disposal of structure or land without any structure thereon prior to the real estate development business in relation to such real properties, provided that this restriction shall not be applicable in the following events: 1. 2. 6. (2) Merger or dissolution of this REF; or When it is absolutely necessary to dispose of a real property and abandon real estate development business due to significant adverse effect in the business resulting from enactment, amendment or abolishment of relevant laws or regulations after the acquisition of a real estate for the purposes of conducting a real estate development business. Investment in real estate development business in excess of 30% of the total asset of this REF. In case where the investment exceeds the investment ceiling prescribed in Paragraph (I), Items I inevitably due to any reason such as price fluctuation in price of investment securities held as the investment trust funds or partial dissolution of this REF, the relevant breach of investment limit shall be cured to meet such ratio within three (3) months from the date of such breach; provided, that the investment in the investment securities, which cannot be sold due to bankruptcy of the issuer or other reason, shall be deemed to meet such investment ceiling until the sale thereof becomes possible. - 13 - Article 34. Asset Management Instruction, etc. (I) The AMC shall, when managing the investment trust funds, give instructions to the Trustee as necessary for the acquisition and sale of assets, and the Trustee shall perform such acquisition or sale of assets in accordance with the instructions of the AMC; provided, however, that if the investment trust funds are managed in the trading of investment securities, trading of exchange-traded derivatives or short-term loan, the AMC may directly acquire and sell such assets. (2) In the event that the AMC or the Trustee enters into a transaction for the acquisition or sale of the assets, the AMC or the Trustee shall be responsible for the performance of the obligations thereunder only up to the aggregate amount of the investment trust funds. (3) In the event that the Trustee complies with the management instruction from the AMC relating to the management of the investment trust funds, the Trustee shall monitor whether the instruction is in violation of the authorized investment objects, the method of investment, the investment limits, the restrictions for asset management, the asset management instruction, etc., the prohibitions with respect to the asset management or the restrictions on the transaction with the interested party as specified in the applicable laws and regulations and this Trust Deed and, if any, request the AMC to withdraw, alter or correct the relevant instructions. CHAPTER VI. Article 35. FEES, ETC. Fees (I) The fees for the management and administration of the investment trust funds shall be divided into Asset Management Fees for the AMC, distribution fees for the Sales Agent, trustee fees for the Trustee and administration fee for the Administrator. (2) The AMC shall collect the following fees (the "Asset Management Fees") in accordance with Attachment: I. 2. 3. (3) Base Asset Management Fee in respect of the investment trust funds; Disposition Fee in respect of the disposition of real estates held as investment trust funds; and Acquisition Fee in respect of the acquisition of real estates as investment trust fund. The period based on which the distribution fees for the Sales Agent, trustee fees and the Asset Management Fees (collectively referred to as the "Investment Trust Fees") are calculated (the "fee Calculation Period") shall be deemed to be equal to the accounting period of this REF. I. 2. 1st Period: from the initial establishment date to December 31 , 2007 2nd Period: from January 1, 2008 to March 31, 2008 - 14 - (thereafter, every three (3) month as item (2) above) The Trustee shall withdraw the Investment Trust Fees from the investment trust fw1ds in accordance with the instructions of the AMC in the event of followings: 1. 2. expiration of the Fee Calculation Period or dissolution of the REF in its entirety. During the Fees Calcu lation Period, the Asset Management Fee and the Investment Trust Fees shall be recorded in the balance sheet of this REF on a daily basis. (4) The Investment Trust Fees set forth in Paragraphs (1) above shall be calculated as the product of (x) fee rate, (y) the total assets of investment trust funds, (z) the number of days in the Fee Calculation Period provided that, notwithstanding provision of the main text, the calculation of the fee for the Sales Agent shall be based on the total Net Asset Value. 1. 2. 3. Sales Agent Fee Rate: 0.2/1000 p.a. Trustee Fee Rate: 0.5/1000 p.a. Administrator Fee Rate: 0.25/1000 p.a. Article 36. Expenses for Management of Investment Trust Funds (1) Expenses incurred for the management, etc. of the investment trust funds shall be borne by all the Beneficiaries, and the Trustee shall withdraw such expenses from the investment trust funds and pay such amounts as instructed by the AMC. (2) The "expenses" under Paragraph (1) above shall mean each of the following expenses, with respect to the investment trust funds: 1. 2. 3. 4. 5. 6. 7. 8. 9. fees with respect to the sale and purchase of the real estate assets and investment securities, etc.; fees and expenses with respect to the management, expansion and development of the real estate assets; taxes and other public imposts imposed in relation to the acquisition, disposal and possession of real estate assets and other costs or expenses in relation to the management, maintenance or repair of the real estate assets; costs and expenses incurred with respect to making of deposits or settlement of investment securities; fees, costs and expenses associated with accounting audit of the investment trust funds; costs and expenses incurred with respect to management of a registry of Beneficiaries; costs and expenses incurred with respect to the general meeting of Beneficia1ies; fees payable to the asset manager for managing assets; costs and expenses required with respect to the establishment of this REF; - 15 - l 0. 11. 12. 13. 14. 15. 16. fees, costs and expenses incurred with respect to lawsuits in connection with the investment trust funds; interest on loans and taxes and other public imposts, fees and other expenses with respect to the fund borrowing; costs and expenses for price infomrntion on prices of real estate assets and investment securities, etc.; costs and expenses with respect to securing intellectual property rights necessary for management of investment trust funds; fees or costs payable to a Real Estate Management Company; fees incuned with respect to assessing the value of real property assets, procuring legal, accollllting, environmental and engineering advisers, assessing business prospect and due diligence, etc.; and other equivalent costs and expenses, incurred for the management, etc. of the investment trust funds. CHAPTER VII. TERMINATION OF REF Article 37. (1) (2) Termination of REF The AMC may terminate this REF with the approval of the Chief of the Financial Supervisory Service; provided, that the AMC may terminate this REF without the approval of the Governor of the Financial Supervisory Service in case of the following events: 1. if all of the Beneficiaries give their consents to the termination of this REF; and 2. if the principal of this REF falls below 10 billion Won for a continuous one (I) month period. The AMC shall, if it intends to tem1inate this REF in accordance with Paragraph (1 ), Item 2 above, publish the reason for termination, date of termination, method of payment of the redemption amount, etc. and other matters related to the termination in accordance with Article 45, or give individual notices to each Beneficiary. Article 38. Distribution of Profit (1) The AMC shall determine and distribute the amount to be distributed to the Beneficiaries (the "Distribution Amount") out of the profits earned from management of the investment trust funds to Beneficiaries within one (1) month after the expiration of the accounting period of this REF. (2) The AMC shall distribute the Distribution Amollllt set forth in Paragraph (1 ) above in cash to the Beneficiaries. Article 39. (I) Payment of Redemption Amount The AMC shall, upon expiration of the duration of this REF or termination of this - 16 - REF, without unreasonable delay, make the Trustee pay the redemption price for this REF and the profit (the "Redemption Amount, etc."), through the Sales Agent, to the Beneficiaries. (2) The Sales Agent shall pay the Redemption Amount, etc. delivered from the Trustee to the Beneficiaries without unreasonable delay. (3) If the AMC terminates this REF in accordance with Article 37, it may pay to the Beneficiaries the Redemption Amount, etc, with the asset held in this REF with the consents from all Beneficiaries of this REF. (4) The AMC shall, if the payment of the Redemption Amount, etc. turns difficult due to the delay of sale of the investment securities constituting the investment trust funds or other similar reasons, give the notice thereof to the Beneficiaries. Article 40. Statute of L imitations for Distribution and Redemption Amount, etc. ( I) The Distribution Arnow1t or the Redemption Arnollilt not claimed by the Beneficiary within five (5) years from the relevant payment date (i.e., the date on which the Sales Agent makes the payment of the Distribution /\mount or the Redemption Amount, etc. to the Beneficiaries in accordance with Article 38 or 39), may be retained by the Sales Agent. (2) After delivery of the Distribution Amount or the Redemption Amollilt, etc. by the Trustee to the Sales Agent, the Sales Agent shall bear the responsibility for the payment of such amounts to the Beneficiary. A rticle 41. Treatment of Amounts Payable (I) The Trustee shall pay the amount payable when the AMC terminates this REF in accordance with Article l 05, Paragraph ( l) or (2) of the Asset Management Act. (2) Notwithstanding the provision of Paragraph (I) above, the AMC may pay the amount payable by transferring the amount which has been fixed to another investment trust. CHAPTER VIII. Article 42. (1) (Accounting Audit) The AMC shall prepare any of the following documents and supplements thereto every accollilting period of this REF. I. 2. 3. (2) SUPPLEMENTS Balance sheet; Income statement; and Asset management report. The AMC shall receive the accounting audit from accounting auditors within two (2) months from any of the following dates: - 17 - 1. 2. Article 43. From December of2007 until the last day of December every year; or Dissolution date of this REF. Amendment to Trust Deed. (1) When the AMC amended this Trust Deed, the AMC shall file a report of such amendment to the Governor within seven (7) days from such amendment. (2) lf the AMC amends the Trust Deed, it shall publish such amendment in accordance with the following methods: 1. If this Trust Deed is amended by the resolution of the general meeting of Beneficiaries: notice to all Beneficiaries (3) Notwithstanding Paragraph (2) above, in the event that the relevant amendment is with respect to simple typographical change in wording in this Trust Deed or amendment of the Trust Deed in accordance with the laws and regulations or the order made by the Governor, the details thereof shall be posted for at least one ( 1) month at the business offices of the AMC and the Sales Agent. (4) If the Beneficiary does not file a reasonable objection with the Sales Agent within one (1) month from the date of public notice under Paragraph (2) above or during the posting period under Paragraph (3) above (the "objection period"), the Beneficiary shall be deemed to have consented to the amendment of this Trus.t Deed. (5) In the event that the application of matters stipulated in this Trust Deed becomes mandatory due to any amendment of the relevant laws, such amendment shall be complied with. Article 44. Merger of REF (1) The AMC shall, if it intends to merge this REF with other investment trust it manages, prepare the merger plan and obtain the approval of the general meeting of Beneficiaries. (2) The merger price upon merger of this REF shall be calculated based on the amount of total amount of assets minus total amount of liabilities on the balance sheet as of the date immediately preceding such merger. (3) The AMC shall, upon merger of this REF, immediately give notice of matters of the merger plan with respect of which the general meeting of Beneficiaries has resolved to the Beneficiaries through the KSD. (4) Matters not determined in this Trust Deed with respect to the merger of this REF shall be determined in accordance with Articles 106 through 109 of the Asset Management Act. Article 45. Report to Beneficiaries - 18 - (1) The AMC shall prepare and provide the Beneficiaries with the asset management report as stipulated under Article 121 of the Asset Management Act every three (3) months from the date of the first establishment of the REF. (2) The Trustee shall prepare and provide the Beneficiaries with the trustee report as stipulated under A11icle 123 of the Asset Management Act within two (2) months from the expiration of the accounting period of this REF. (3) In relation to the provision of the asset management report and the trustee report to the Beneficiaries pursuant to Paragraphs (1) and (2) above, written copies of such reports shall be delivered to the Beneficiaries through the Sales Agent; provided, however, that if any Beneficiary expresses an intention to receive such reports via an e-mail, then the relevant reports may be delivered to such Beneficiary accordingly. (4) If the AMC, the Trustee or the Sales Agent intends to give a public notice to the Beneficiaries through daily newspapers, such a public notice shall be made in [ ]. If the public notice is to be made in two or more daily newspapers, such a public notice shall also be made in [ ]. Article 46. Beneficiary Certificate Passbook Transaction The Beneficiary may conduct transactions through passbook in accordance with the "Beneficiary Certificate Passbook Transaction Standardized Contract" drafted by the Asset Management Association. Article 47. Application of Applicable Laws and Regulations Matters not provided for in this Trust Deed shall be determined in accordance with the applicable laws and regulations. Article 48. ( 1) Jurisdiction If the AMC, the Trustee or the Sales Agent institutes any legal proceedings in connection with this Trust Deed, such legal proceedings shall be brought before the court having jurisdiction over the location of the head office of the fi ling party. (2) If the Beneficiary institutes any legal proceedings, it may be brought before the court having jmisdiction over the Beneficiary's address or the location of the business office of the AMC, the Trustee or the Sales Agent with which the Beneficiary transacts at its own discretion. However, if the Beneficiary is a non-resident as defined under the Foreign Exchange Act, any legal proceeding must be brought before the court having jmisdiction over the location of the AMC, Trustee or the Sales Agent that the Beneficiary is transacting with. Supplementary P rovision This Trust Deed shall be effective from November 21 , 2007. - 19 - ATTACHMENT 1. Payment Due Date of Asset Management Fee, etc. (1) The AMC shall receive the Asset Management Fee as prescribed in this Trust Deed pursuant to the following provisions: (i) Base Asset Management Fee in respect of the investment trust funds: the Base Asset Mana~emcnt Fees for the AMC shall be paid monthly in arrears by the tenth ( l 01 ) day of the month immediately following the calendar month in which such fee has accrued; provided, that the initial Base Asset Management Fee shall be calculated and paid for the period from the Balance Payment Date to November 30, 2007. (ii) Disposition Fee in respect of the disposition of real estates held as investment trust funds: to be paid upon the completion of each disposition of the real estate. (iii) Acquisition Fee in respect of the acquisition of real estates as investment trust fund: to be paid upon the completion of the acquisition of real estate. (2) With respect to the Base Asset Management Fee, where the AMC has not provided the asset management service during any full calculation period, the amount of such fee shall be calculated on a pro-rata basis based on the actual period for which the asset management service has been provided during the relevant calculation period. (3) The following terms shall have the following meanings: 1. 2. "Acquisition Cost" means, wi th respect to an asset, total consideration for the acquisition of real estate assets as the investment trust funds, excluding any cost and expense or taxes incurred with respect to such acquisition; but including all debts and obligations (including rental deposit) assumed m connection with the acquisition of such real estate assets. Base Asset Management Fee The " Base Asset Management Fee (excluding VAT)" shall be yearly 0.65% of total assets of the investment trust funds. 3. Disposition Fee (1) D isposition Fee Where the real estate assets held in the investment trust funds is disposed, the amount equivalent to 1% of disposition amount shall be paid to the AMC as a "disposition fee" (excluding VAT). The Disposition Fee is an additional amount separated from the fee payable to any third party service provider. - 20 - (2) Liquidation of the Investment Trust and Change of the AMC Notwithstanding the Paragraph (1) above, where the real estates required being disposed due to the liquidation of this Investment Trust required by the applicable laws and regulations as a result of the AMC's decisions to discontinue the operation of relevant asset management business, the Disposition Fee shall not be paid to the AMC. 4. Acquisition Fee (1) Where the real estate is acquired, the "acquisition fee" (excluding VAT) equal I% of Acquisition Cost shall be paid to the AMC. (2) The acquisition fee is additional fee separated from the fees payable to any third party service with respect to the acquisition of real estate. - 21 - - I In": WIN-I: I I lull-II I 1I-h IF I I'll.