IKB Deutsche Industriebank Aktiengesellschaft IKB FINANCE B.V.

In the case of
Subordinated
Notes issued by
IKB FINANCE
insert:
[In the case of Notes being issued through the Issuing Branch in Luxembourg insert:
(2) Notwithstanding that the Notes are being issued through the Issuing Branch in
Luxembourg, they constitute obligations of the Issuer as whole and are the same as if
the Issuer had issued the Notes through its head office in Düsseldorf.]
[§ 2
STATUS
(1) Status. The obligations under the Notes constitute unsecured and subordinated
obligations of the Issuer ranking pari passu among themselves and pari passu with all
other subordinated obligations of the Issuer. In the event of the dissolution, liquidation,
insolvency, composition or other proceedings for the avoidance of insolvency of, or
against, the Issuer, such obligations will be subordinated to the claims of all
unsubordinated creditors of the Issuer so that in any such event no amounts shall be
payable under such obligations until the claims of all unsubordinated creditors of the
Issuer shall have been satisfied in full. No Holder may set off his claims arising under
the Notes against any claims of the Issuer. No security of whatever kind is, or shall at
any time be, provided by the Issuer or any other person securing rights of the Holders
under such Notes. No subsequent agreement may limit the subordination pursuant to
the provisions set out in this § 2 or amend the Maturity Date in respect of the Notes to
any earlier date or shorten any applicable notice period (Kündigungsfrist). If the Notes
are redeemed before the Maturity Date otherwise than in the circumstances described
in this § 2 or as a result of an early redemption according to § 5 (2) or repurchased by
the Issuer otherwise than in accordance with the provisions of § 10 (5a) sentence 6
German Banking Act (Kreditwesengesetz) 1 , then the amounts redeemed or paid must be
returned to the Issuer irrespective of any agreement to the contrary unless the amounts
paid have been replaced by other liable capital (haftendes Eigenkapital) of at least equal
status within the meaning of the German Banking Act, or the Federal Financial
Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) has consented to
such redemption or repurchase.
(2) Guarantee. IKB AG (the “Guarantor”) has given its unconditional and irrevocable
subordinated guarantee (the “Guarantee”) for the due payment of principal of, and
interest on, and any other amounts expressed to be payable under the Notes. The
Guarantee constitutes a contract for the benefit of the Holders from time to time as
third party beneficiaries in accordance with § 328(1) BGB (German Civil Code) 2 , giving
rise to the right of each Holder to require performance of the Guarantee directly from
the Guarantor and to enforce the Guarantee directly against the Guarantor. Copies of
the Guarantee may be obtained free of charge at the principal office of the Guarantor in
Düsseldorf and at the specified office of the Fiscal Agent [in the case of Notes that are
to be listed on the Luxembourg Stock Exchange insert: and at the specified office of
the Paying Agent in Luxembourg, all] as set forth in § 6.
The obligations of the Guarantor under the Guarantee rank at least pari passu with all
other subordinated obligations of the Guarantor. In the event of the dissolution,
liquidation, insolvency, composition or of other proceedings for the avoidance of the
insolvency of the Guarantor, the obligations of the Guarantor under the Guarantee will
be subordinated to the claims of all unsubordinated creditors of the Guarantor so that
in any such event no amounts shall be payable under the obligations of the Guarantor
under the Guarantee until the claims of all unsubordinated creditors of the Guarantor
shall have been satisfied in full. No Holder may set off his claims arising under the
Notes or under the Guarantee against any claims of the Guarantor. No security of
whatever kind is, or shall at any time be, provided by the Guarantor or any other
person securing rights of the Holders under the Notes or under the Guarantee. No
subsequent agreement may limit the subordination pursuant to the provisions set out
in this § 2(2) or shorten the terms of the Guarantee to a date prior to the Maturity Date.
1 An English language translation of § 10(5a) sentence 6 German Banking Act (Kreditwesengesetz) would read as
follows: “An institution may purchase securitised subordinated liabilities issued by itself up to three per cent of the
total nominal amount of an issue, for market-smoothing purposes, or if it is thereby carrying out instructions to buy
on a commission basis.”
2 An English language translation of § 328(1) German Civil Code would read as follows: “A contract may stipulate
performance for the benefit of a third party, to the effect that the third party acquires the right directly to demand
performance.”
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