Invitation to the General Meeting of Shareholders on May 10, 2017, 10 a.m., at the Grugahalle in 45131 Essen, Norbertstraße 2
E.ON Group Financial Highlights 1 in millions 2016 2015 +/- % Sales 38,173 42,656-11 Adjusted EBITDA 2 4,939 5,844-15 Adjusted EBIT 2 3,112 3,563-13 Net loss -16,007-6,377-151 Net loss attributable to shareholders of E.ON SE -8,450-6,999-21 Adjusted net income 2 904 1,076-16 Investments 3,169 3,227-2 Research and development expense 14 20-30 Cash provided by operating activities of continuing operations 2,961 4,191-29 Economic net debt (at year-end) 26,320 27,714-5 Debt factor 3 5.3 3.7 4 +1.6 5 Equity 1,287 19,077-93 Total assets 63,699 113,693-44 ROCE (%) 10.4 10.9-0.5 6 Pretax cost of capital (%) 5.8 6.7-0.9 6 After-tax cost of capital (%) 4.0 4.9-0.9 6 Value added 1,370 1,216 +13 Employees (at year-end) 43,138 43,162 Earnings per share 7, 8 ( ) -4.33-3.60-20 Equity per share 7, 8 ( ) -0.54 8.42 Dividend per share 9 ( ) 0.21 0.50-58 Dividend payout 410 976-58 Market capitalization 8 ( in billions) 13.1 17.4-25 1 The Uniper Group was deconsolidated effective December 31, 2016; it is shown in our 2015 and 2016 income statement as discontinued operation. 2 Adjusted for non-operating effects. 3 Ratio of economic net debt and adjusted EBITDA. 4 Not adjusted for Uniper; figure as reported in the 2015 Annual Report. 5 Change in absolute terms. 6 Change in percentage points 7 Attributable to shareholders of E.ON SE. 8 Based on shares outstanding. 9 For the respective financial year; the 2016 figure represents management s dividend proposal. Glossary of Selected Financial Terms Adjusted EBIT Adjusted earnings before interest and taxes. The EBIT figure used by E.ON is derived from income/loss from continuing operations before interest income and income taxes and is adjusted to exclude material non-operating income and expenses (see Other non-operating earnings). It is our key earnings figure for purposes of internal management control and as an indicator of our businesses long-term earnings power. Adjusted EBITDA Earnings before interest, taxes, depreciation, and amortization. It equals the EBIT figure used by E.ON before depreciation and amortization. Adjusted net income An earnings figure after interest income, income taxes, and minority interests that has been adjusted to exclude certain extraordinary effects. The adjustments include effects from the marking to market of derivatives, book gains and book losses on disposals, restructuring expenses, and other non-operating income and expenses of a non-recurring or rare nature (after taxes and non-controlling interests). Adjusted net income also excludes income/loss from discontinued operations, net.
Invitation to the General Meeting of Shareholders 1 We hereby invite the shareholders of our Company to the annual General Meeting of Shareholders to be held on May 10, 2017, 10.00 a.m., at the Grugahalle in 45131 Essen, Norbertstraße 2. Agenda for the General Meeting of Shareholders 1. Presentation of the adopted Annual Financial Statements and the approved Consolidated Financial Statements for financial year 2016, along with the Management Report Summary for E.ON SE and the E.ON Group and the Report of the Supervisory Board as well as the Explanatory Report of the Board of Management regarding the statements pursuant to sections 289 para. 4 and 315 para. 4 of the German Commercial Code (Handelsgesetzbuch HGB) On March 14, 2017, the Supervisory Board has approved the Annual Financial Statements and Consolidated Financial Statements prepared by the Board of Management. Thus, the Annual Financial Statements are adopted. The documents specified under this Item of the Agenda are to be presented to the General Meeting of Shareholders without the adoption of a resolution being required. 2. Appropriation of balance sheet profits for financial year 2016 The Supervisory Board and the Board of Management propose that the balance sheet profits generated in financial year 2016 in the amount of 452,024,286.00 be used for the distribution of a dividend in the amount of 0.21 per no-par value share entitled to dividend payment, equaling a total amount of 452,024,076.00, and that the remaining amount of 210.00 be carried forward as profit carried forward to the next financial year. The dividend will be paid in cash or partly in E.ON SE shares; details about the cash distribution and the option of shareholders to receive shares will be specified in a document provided to the shareholders which contains, in particular, information on the number and type of shares and states the rationale and details of the offer. The dividend is expected to be paid on June 7, 2017. However, if the number of shares to be delivered as a result of the right to opt for shares being exercised exceeds the number of shares available for distribution, the dividend will be paid on June 13, 2017, as a pro rata allocation will then be required. All documents on the option to convert part of the cash dividend entitlement into shares are available on the E.ON SE website (www.eon.com/agm-2017). The dividend is subject to taxation. If a conversion into shares of part of the cash dividend entitlement is selected, a fractional amount of about 28 percent of the dividend paid per no-par value share will be distributed in cash and will in full or in part be paid to the tax authorities depending on the tax status of the respective shareholders.
Invitation to the General Meeting of Shareholders 2 3. Discharge of the Board of Management for financial year 2016 The Supervisory Board and the Board of Management propose that discharge be granted. 4. Discharge of the Supervisory Board for financial year 2016 The Supervisory Board and the Board of Management propose that discharge be granted. 5. Election of the auditor for financial year 2017 and the review of the financial statements for financial year 2017 and the first quarter of financial year 2018 On the basis of the recommendation of its Audit and Risk Committee, the Supervisory Board proposes that the following be resolved: a) PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Düsseldorf, is appointed as auditor and group auditor for financial year 2017. b) PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Düsseldorf, is appointed as auditor for the review of abbreviated financial statements and interim management reports for financial year 2017. c) Moreover, PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Düsseldorf, is appointed as auditor for the review of the abbreviated financial statements and the interim management report for the first quarter of financial year 2018. 6. Amendment to the Articles of Association, change of registered office In connection with the move of the Company s head office to Essen at the beginning of 2016, the Company s registered office shall be changed as well. In this respect, the Supervisory Board and the Board of Management propose that the following be resolved: Article 1 para. 1 sentence 2 of the Company s Articles of Association will be amended as follows: Its registered office is in Essen.
3 7. Resolution on the approval of concluding domination and profit and loss transfer agreements between E.ON SE and two subsidiaries On 16 March 2017, a domination and profit and loss transfer agreement (each an Agreement ) was entered into between E.ON SE as controlling entity and its whollyowned subsidiaries E.ON Gruga Geschäftsführungsgesellschaft mbh and E.ON Fünfund zwanzigste Verwaltungs GmbH, respectively (each a Subsidiary ). The Agreements each have the following material content: The Subsidiary transfers the governance of its company to E.ON SE. E.ON SE is entitled to instruct the Subsidiary s managing directors in respect of the governance of the Subsidiary. Notwithstanding the right to give instructions, the Subsidiary s managing directors remain responsible for the management and the representation of the Subsidiary. The Subsidiary undertakes to transfer its total profits to E.ON SE during the term of the Agreement pursuant to all provisions of section 301 of the German Stock Corporation Act (Aktiengesetz AktG), as amended from time to time. Other earnings retained during the term of the Agreement have to be written back and transferred as profit by the Subsidiary on request of E.ON SE. The Subsidiary may, with E.ON SE s approval, transfer amounts of the net income to the retained earnings (section 272 para. 3 of the German Commercial Code (Handelsgesetzbuch HGB)), to the extent legally permitted for commercial accounting purposes and economically justified from a reasonable commercial point of view. The entitlement to the transfer of profits arises at the end of the financial year of the Subsidiary. It becomes due with value date at this point of time. E.ON SE is obliged to assume the losses of the Subsidiary pursuant to any provision of section 302 of the German Stock Corporation Act, as amended from time to time. The obligation to assume losses arises at the end of the financial year of the Subsidiary. It has to be fulfilled with value date at this point of time.
Invitation to the General Meeting of Shareholders 4 The Agreement is effective in respect of the domination for the period as of the entry of this Agreement in the Subsidiary s commercial register; in all other aspects the Agreement is effective as of January 1, 2017. The Agreement is concluded for a fixed term of five calendar years until the end of December 31, 2021 and is renewed in its current form for one year each time, unless it is terminated by one party to the Agreement with effect as of the end of the financial year of the Subsidiary no later than three months before the end of the financial year of the Subsidiary. In deviation from this provision, without complying with a notice period, the Agreement may only be terminated for cause. E.ON SE is the sole shareholder of each Subsidiary and will continue to be the sole shareholder at the time of the General Meeting of Shareholders. For that reason, E.ON SE does not have to grant any guarantee dividend or compensation pursuant to sections 304, 305 of the German Stock Corporation Act to external shareholders of the Subsidiaries. For the same reasons, a review of the Agreements by an agreement examiner is not necessary. In order to enter into effect, the Agreements require the approval of both the General Meeting of Shareholders of E.ON SE and the shareholders meeting of the respective Subsidiary. The shareholders meetings of the Subsidiaries have already approved the Agreements. As of the time of adjourning the General Meeting of Shareholders, the Agreements, the joint report of the Board of Management of E.ON SE and the managing directors of E.ON Gruga Geschäftsführungsgesellschaft mbh pursuant to section 293a of the German Stock Corporation Act, the joint report of the Board of Management of E.ON SE and the managing directors of E.ON Fünfundzwanzigste Verwaltungs GmbH pursuant to section 293a of the German Stock Corporation Act and any other document to be published are available on the E.ON SE website (www.eon.com/agm-2017). The documents will also be made available to the General Meeting of Shareholders of E.ON SE.
5 The Supervisory Board and the Board of Management propose that the following be resolved: a) The domination and profit and loss transfer agreement entered into on March 16, 2017 between E.ON SE as controlling entity and E.ON Gruga Geschäftsführungsgesellschaft mbh as controlled entity with registered office in Düsseldorf, AG Düsseldorf, HRB 55463, is approved. b) The domination and profit and loss transfer agreement entered into on March 16, 2017 between E.ON SE as controlling entity and E.ON Fünfundzwanzigste Verwaltungs GmbH as controlled entity with registered office in Düsseldorf, AG Düsseldorf, HRB 75326, is approved. 8. Creation of new authorized capital including the possibility to exclude the subscription right, and amendment of article 3 para. 5 of the Articles of Association The utilization of the currently existing authorized capital pursuant to article 3 para. 5 of the Articles of Association of the Company is limited until May 2, 2017. In order to enable the Company to increase the registered share capital on a flexible basis and without further resolution of the General Meeting of Shareholders in the future, the authorized capital is to be renewed. The Supervisory Board and the Board of Management propose that the following be resolved: a) The Board of Management shall be authorized, with the approval of the Supervisory Board, to increase the registered share capital of the Company until May 9, 2022 by up to 460,000,000.00 through the issuance of new registered no-par value shares against contributions in cash and/or in kind on one or several occasions (authorized capital pursuant to section 202 et seq. of the German Stock Corporation Act, Authorized Capital 2017). If the registered share capital is increased against cash contributions, the shareholders are to be granted a subscription right. The shares may also be issued to one or several financial institutions or one or several entities conducting business pursuant to section 53 para. 1 sentence 1 or section 53b para. 1 sentence 1 or para. 7 of the German Banking Act (Gesetz über das Kreditwesen KWG), subject to the obligation to offer them to the shareholders for subscription (indirect subscription right).
Invitation to the General Meeting of Shareholders 6 The Board of Management shall be authorized, with the approval of the Supervisory Board, to exclude the shareholders subscription right in case of an issue of shares against cash contributions in the amount of up to 10 percent of the registered share capital as at the effective date or in the event that this amount is the lower one as at the time of the utilization of this authorization. In case of such exclusion of the subscription right, the issue price of the new shares may not be significantly lower than the stock market price (section 186 para. 3 sentence 4 of the German Stock Corporation Act). The aforementioned 10 percent limit must include any shares or any rights to receive or obligations to accept shares of the Company which are issued or disposed of during the term of the Authorized Capital 2017 until the issue of the new shares under such Authorized Capital, in each case with an exclusion of the shareholders subscription right pursuant or according to section 186 para. 3 sentence 4 of the German Stock Corporation Act. Furthermore, the Board of Management shall be authorized, with the approval of the Supervisory Board, to exclude the shareholders subscription right in case of an issue of shares against contributions in kind, but only to such extent that the aggregate amount of the shares issued under this authorization (article 3 para. 5 of the Articles of Association) against contributions in kind with an exclusion of the shareholders subscription right may not exceed 20 percent of the registered share capital as at the effective date or in the event that this amount is the lower one as at the time of the utilization of this authorization. Moreover, the Board of Management shall be authorized, with the approval of the Supervisory Board, to exclude the shareholders subscription right in case of an issue of shares to offer a so-called optional dividend where shareholders may choose to contribute their dividend entitlement to the Company in the form of a contribution in kind in exchange for new shares. The total amount of the shares issued against contributions in cash or in kind and issued and disposed of with an exclusion of the subscription right may not exceed 20 percent of the registered share capital as at the effective date or in the event that this amount is the lower one at the time of the utilization of this authorization. This 20 percent limit includes shares which were issued or disposed of during the term of the Authorized Capital 2017 with an exclusion of the subscription right pursuant or according to section 186 para. 3 sentence 4 of the German Stock Corporation
7 Act and issued against contributions in kind under the Authorized Capital 2017, as well as such shares which are to be issued during the term of the Authorized Capital 2017 in respect of bonds carrying conversion or option rights or conversion obligations which were issued with an exclusion of the shareholders subscription right. The Board of Management shall further be authorized, with the approval of the Supervisory Board, to exclude fractional amounts from the shareholders subscription right and also to exclude the subscription right to the extent necessary in order to grant the holders of previously issued bonds carrying conversion or option rights or conversion obligations, a subscription right for new shares to such extent as they would be entitled to upon exercising the conversion or option right, or in case of a mandatory conversion. Finally, the Board of Management shall be authorized, with the approval of the Supervisory Board, to exclude the shareholders subscription right in case of an issue of shares to persons being in an employment relationship with the Company or one of its affiliates, or to organ members of affiliates of the Company. The Board of Management, with the approval of the Supervisory Board, shall be authorized to determine the further content of the rights attached to the shares as well as further details of executing capital increases. The Supervisory Board shall be authorized to make adjustments to the wording of article 3 of the Articles of Association after the increase of the registered share capital has been executed, in whole or in part, in accordance with the respective utilization of the Authorized Capital 2017 and if the Authorized Capital 2017 has not or not completely been utilized until May 9, 2022 after the expiry of the term of the authorization. b) Article 3 para. 5 of the Articles of Association is restated as follows: The Board of Management is authorized, with the approval of the Supervisory Board, to increase the registered share capital of the Company until May 9, 2022 by up to 460,000,000.00 through the issuance of new registered no-par value shares against contributions in cash and/or in kind on one or several occasions (authorized capital pursuant to section 202 et seq. of the German Stock Corporation Act, Authorized Capital 2017).
Invitation to the General Meeting of Shareholders 8 If the registered share capital is increased against cash contributions, the shareholders are to be granted a subscription right. The shares may also be issued to one or several financial institutions or one or several entities conducting business pursuant to section 53 para. 1 sentence 1 or section 53b para 1 sentence 1 or para. 7 of the German Banking Act, subject to the obligation to offer them to the shareholders for subscription (indirect subscription right). The Board of Management is authorized, with the approval of the Supervisory Board, to exclude the shareholders subscription right in case of an issue of shares against cash contributions in the amount of up to 10 percent of the registered share capital as at the effective date or in the event that this amount is the lower one as at the time of the utilization of this authorization. In case of such exclusion of the subscription right, the issue price of the new shares may not be significantly lower than the stock market price (section 186 para. 3 sentence 4 of the German Stock Corporation Act). The aforementioned 10 percent limit must include any shares or any rights to receive or obligations to accept shares of the Company which are issued or disposed of during the term of the Authorized Capital 2017 until the issue of the new shares under such Authorized Capital, in each case with an exclusion of the shareholders subscription right pursuant or according to section 186 para. 3 sentence 4 of the German Stock Corporation Act. Furthermore, the Board of Management is authorized, with the approval of the Supervisory Board, to exclude the shareholders subscription right in case of an issue of shares against contributions in kind, but only to such extent that the aggregate amount of the shares issued under this authorization (article 3 para. 5 of the Articles of Association) against contributions in kind with an exclusion of the shareholders subscription right may not exceed 20 percent of the registered share capital as at the effective date or in the event that this amount is the lower one as at the time of the utilization of this authorization. Moreover, the Board of Management is authorized, with the approval of the Supervisory Board, to exclude the shareholders subscription right in case of an issue of shares to offer a so-called optional dividend where shareholders may choose to contribute their dividend entitlement to the Company in the form of a contribution in kind in exchange for new shares.
9 The total amount of the shares issued against contributions in cash or in kind and issued and disposed of with an exclusion of the subscription right may not exceed 20 percent of the registered share capital as at the effective date or in the event that this amount is the lower one as at the time of the utilization of this authorization. This 20 percent limit includes such shares which were issued or disposed of during the term of the Authorized Capital 2017 with an exclusion of the subscription right pursuant or according to section 186 para. 3 sentence 4 of the German Stock Corporation Act and issued against contributions in kind under the Authorized Capital 2017, as well as such shares which are to be issued during the term of the Authorized Capital 2017 in respect of bonds carrying conversion or option rights or conversion obligations which were issued with an exclusion of the shareholders subscription right. The Board of Management is further authorized, with the approval of the Supervisory Board, to exclude fractional amounts from the shareholders subscription right and also to exclude the subscription right to such extent as is necessary in order to grant to the holders of previously issued bonds carrying conversion or option rights or conversion obligations, a subscription right for new shares to such extent as they would be entitled to upon exercising the conversion or option right or in case of a mandatory conversion. Finally, the Board of Management is authorized, with the approval of the Supervisory Board, to exclude the shareholders subscription right in case of an issue of shares to persons being in an employment relationship with the Company or one of its affiliates, or to organ members of affiliates of the Company. The Board of Management, with the approval of the Supervisory Board, is authorized to determine the further content of the rights attached to the shares as well as the further details of executing capital increases. The Supervisory Board is authorized to make adjustments to the wording of article 3 of the Articles of Association after the increase of the registered share capital has been executed, in whole or in part, in accordance with the respective utilization of the Authorized Capital 2017 and if the Authorized Capital 2017 has not or not completely been utilized until May 9, 2022 after the expiry of the term of the authorization.
Invitation to the General Meeting of Shareholders 10 9. Authorization for the issue of option or convertible bonds, profit participation rights or participating bonds and/or any combination of these instruments and creation of conditional capital The authorization resolved by the General Meeting of Shareholders on May 3, 2012, under item 8 of the agenda for the issue of option or convertible bonds, profit participation rights or participating bonds and for the exclusion of subscription rights is valid until May 2, 2017. In order to maintain the Company s flexibility in respect of these financing options, the authorization for the issue of option or convertible bonds, profit participation rights or participating bonds, including the creation of conditional capital, is to be renewed. The Supervisory Board and the Board of Management propose that the following be resolved: a) Authorization for the issue of option or convertible bonds, profit participation rights or participating bonds and/or any combination of these instruments aa) Term of the authorization, nominal amount The Board of Management shall be authorized, with the approval of the Supervisory Board to issue until May 9, 2022 on one or several occasions, also in different series at the same time, subordinated or unsubordinated option or convertible bonds, profit participation rights or participating bonds in bearer or registered form and/or any combination of these instruments (hereinafter referred to as Bonds ) with a total nominal amount of up to 5,000,000,000.00 having a limited or unlimited term, respectively, and to grant conversion or option rights to the holders or creditors of the Bonds (hereinafter referred to as Holders ) on 175,000,000 registered shares in the Company with a proportionate amount of the registered share capital of up to 175,000,000.00 in total, in accordance with the more detailed terms and conditions of the Bonds (hereinafter referred to as Terms and Conditions ). The Bonds may be issued against contribution in cash or kind. The Terms and Conditions may also include a conversion obligation or an obligation to exercise an option at the end of the term or at an earlier date.
11 In addition to issuances in Euro, the Bonds may also be issued in the legal currency of any OECD country limited to the appropriate equivalent amount in Euros. Upon issuance in a currency other than Euro, the respective equivalent, as calculated on the basis of the Euro reference rate of the European Central Bank on the day before the resolution to issue the Bonds is passed, is to be used as basis. The Bonds may also be issued by a group company of E.ON SE as defined in section 18 of the German Stock Corporation Act. In that case, the Board of Management shall be authorized, with the approval of the Supervisory Board, to grant a guarantee for the Bonds on behalf of E.ON SE and to grant or impose on the Holders, as the case may be, conversion rights, conversion obligations, option rights and/or option obligations for registered shares of E.ON SE. bb) Subscription right Shareholders are generally granted a subscription right in respect of the Bonds. The subscription right may also be granted in such manner that the Bonds are issued to a financial institution or a similar entity pursuant to section 186 para. 5 sentence 1 of the German Stock Corporation Act or a syndicate of such financial institutions or entities, subject to the obligation to offer them to the shareholders for subscription (indirect subscription right). Where Bonds are being issued by a group company of E.ON SE as defined in section 18 of the German Stock Corporation Act, E.ON SE will ensure that the statutory subscription right for the shareholders of E.ON SE is granted. However, the Board of Management is authorized, with the approval of the Supervisory Board, to exclude fractional amounts from the shareholders subscription right and also to exclude the subscription right to the extent necessary in order to grant a subscription right to the holders of previously issued bonds carrying conversion rights, conversion obligations, option rights and/or option obligations, to such extent as they would be entitled to upon exercising these rights or fulfilling these obligations, as the case may be, or to the extent the Bonds are issued against a contribution in kind.
Invitation to the General Meeting of Shareholders 12 The Board of Management is further authorized, with the approval of the Supervisory Board, to exclude the shareholders subscription right in its entirety for Bonds carrying conversion rights, conversion obligations, option rights and/ or option obligations, provided that the Board of Management, upon a duly conducted examination, comes to the conclusion that the issue price of the Bonds is not significantly lower than their hypothetical market price determined in accordance with generally accepted, and in particular, financial mathematics methods. This authorization for the exclusion of the subscription right will apply to Bonds carrying conversion rights, conversion obligations, option rights and/or option obligations for shares with a proportionate amount of the registered share capital which, in total, may not exceed 10 percent of the registered share capital, neither as at the effective date, nor in the event that this amount is the lower one as at the time of the utilization of this authorization. The aforementioned 10 percent limit will include the following shares: new shares which are issued during the term of this authorization from an authorized capital with an exclusion of the subscription right pursuant to section 186 para. 3 sentence 4 of the German Stock Corporation Act before the issue without granting subscription rights pursuant to section 186 para. 3 sentence 4 of the German Stock Corporation Act of Bonds carrying conversion rights, conversion obligations, option rights and/or option obligations; and such shares which are acquired on the basis of the authorization granted by the General Meeting of Shareholders and are disposed of during the term of this authorization with an exclusion of the subscription right pursuant to section 71 para. 1 no. 8 sentence 5 in conjunction with section 186 para. 3 sentence 4 of the German Stock Corporation Act before the issue without granting subscription rights pursuant to section 186 para. 3 sentence 4 of the German Stock Corporation Act of the Bonds carrying conversion rights, conversion obligations, option rights and/or option obligations. Besides, the total amount of the shares issued against contributions in cash or in kind and issued and disposed of with an exclusion of the subscription right may not exceed 20 percent of the registered share capital as at the effective date or in the event that this amount is the lower one as at the time of the utilization of this authorization. This 20 percent limit must include shares which are to be issued or disposed of under Bonds that were issued with an exclusion of the subscription right pursuant to this authorization, as well as
13 shares issued under authorized capital with an exclusion of the subscription right against contributions in kind and otherwise issued or disposed of pursuant to or by applying section 186 para. 3 sentence 4 of the German Stock Corporation Act. To the extent that profit participation rights or participating bonds without conversion rights/obligations or option rights/obligations are issued, the Board of Management shall be authorized, with the approval of the Supervisory Board, to exclude the shareholders subscription right in its entirety if the characteristics of such profit participation rights or participating bonds are similar to that of obligatory relationships, i.e. if they do not confer any membership rights in the Company, grant no right to participate in the liquidation proceeds and the interest rate is not calculated on the basis of the amount of net income, balance sheet profits or dividends. In that case, in addition, the interest rate and the issue price of the profit participation rights or participating bonds also have to correspond to current market conditions at the time of the issue. cc) Option rights, option obligations If Bonds carrying option rights and/or option obligations are issued, one or more warrants will be attached to each partial bond, entitling or requiring the Holder to subscribe for registered no-par value shares of E.ON SE in accordance with the more detailed terms and conditions of issue to be determined by the Board of Management, with the approval of the Supervisory Board. In respect of option bonds denominated in Euro which are issued by E.ON SE or a group company, the terms and conditions of issue may stipulate that the payment of the option price may also be effected by way of transfer of partial bonds (trade-in) and, as the case may be, an additional cash payment. The proportionate amount of the registered share capital attributable to the shares to be subscribed for each partial bond may not exceed the nominal value of the partial bonds. dd) Conversion rights, conversion obligations If Bonds carrying conversion rights and/or conversion obligations are issued, the Holders will have the right or the obligation to exchange their Bonds pursuant to the terms and conditions of issue determined by the Board of Management with the approval of the Supervisory Board for registered no-par value shares of E.ON SE. The proportionate amount of the registered share capital of the Company s shares to be issued per Bond upon conversion may not exceed the nominal value of the Bond or if the issue price is below the nominal value the issue price of the Bond.
Invitation to the General Meeting of Shareholders 14 The conversion ratio will be determined by dividing the nominal value or if the issue price is below the nominal value the issue price of the Bond by the determined conversion price for one share of the Company. The terms and conditions of issue may also provide for a variable conversion ratio and a determination of the conversion price on the basis of future stock market prices within a certain range. ee) Option or conversion price If Bonds carrying option rights, conversion rights, conversion obligations and/or option obligations are issued, the option or conversion price, as the case may be, may not be less than 80 percent of the stock price of the shares of the Company in Xetra trading (or a comparable successor system) of the Frankfurt Stock Exchange. The relevant stock price shall be the volume-weighted average stock price of the shares of E.ON SE on the ten stock exchange trading days preceding the final determination of the conditions of the Bonds. By way of derogation from the above, in cases which provide for a conversion obligation, an option obligation and/or a right of the Company to deliver shares in the Company or any other listed company instead of the payment of the cash amount due (right to offer alternative performance), the following applies: the respective conversion or share price must correspond to either (i) the minimum price stated above, or (ii) the volume-weighted average stock price of the shares of E.ON SE on at least three stock exchange trading days preceding the day of the determination of the conversion or option price in accordance with the more detailed terms and conditions of issue, even if this average stock price is below the minimum price described above. In any case, section 9 para. 1 and section 199 para. 2 of the German Stock Corporation Act remain unaffected. ff) Antidilution, adjustment mechanisms The terms and conditions of issue may provide for antidilution provisions and adjustment mechanisms also notwithstanding section 9 para. 1 and section 199 para 2 of the German Stock Corporation Act. In particular, this applies to the following cases: Capital measures of the Company during the term of the Bonds (e.g. capital increases by way of granting subscription rights, capital reductions and share splits);
15 Distribution of dividends; Issue of subscription rights in respect of further Bonds carrying conversion rights, conversion obligations, option rights and/or option obligations which provide for a right or obligation to receive shares in the Company; other extraordinary events during the term of the Bonds (e.g. change of control at the Company). The antidilution provisions and adjustment mechanisms specified in the terms and conditions of issue may, in particular, provide for changes in the conversion or option price, the granting of subscription rights in respect of shares in the Company or convertible or option bonds, or the granting or adjustment of cash components. gg) Other possible determinations in the terms and conditions of issue The terms and conditions of issue may provide for the right of the Company to pay a cash amount instead of issuing new shares in case of a conversion or the exercise of an option. In order to fulfil the Holders option or conversion rights or to satisfy the entitlements upon a mandatory conversion or mandatory exercise of an option, the Company may, according to the terms and conditions of issue, deliver own shares and issue new shares from the Company s conditional and/or authorized capital or from conditional and/or authorized capital to be agreed on at a later date and/or from an ordinary capital increase. The conversion or subscription ratio may, in accordance with the terms and conditions of issue, be rounded up or down to whole numbers. The terms and conditions of issue may provide for fractional amounts to be added up and/or offset against cash; moreover, an additional payment in cash may be provided for.
Invitation to the General Meeting of Shareholders 16 The terms and conditions of issue may provide for the right of the Company to deliver, in full or in part, shares in the Company or any other listed company instead of paying the cash amount due (right to offer alternative performance). In this case, in order to satisfy the Holders entitlements, the Company may also, according to the terms and conditions of issue, deliver own shares and issue new shares from the Company s conditional and/or authorized capital or from conditional and/or authorized capital to be agreed on at a later date and/or from an ordinary capital increase. Section 9 para. 1 and section 199 para. 2 of the German Stock Corporation Act must be adhered to. hh) Execution The Board of Management shall be authorized, with the approval of the Supervisory Board, or in agreement with the corporate bodies of the group company of E.ON SE issuing the Bonds within the meaning of section 18 of the German Stock Corporation Act, to determine the accurate calculation of the exact conversion or option price and further details of the issue and the characteristics of the Bonds and the terms and conditions of issue, in particular interest rate, issue price, term and denomination, conversion or subscription ratio, conversion or option price, creation of a conversion or option obligation, determination of an additional cash payment, offsetting or addition of fractional amounts, cash payment instead of delivery of shares, delivery of shares instead of paying the cash amount due, delivery of existing shares instead of issuing new shares, and conversion periods and periods in which options may be exercised. b) Creation of new conditional capital The registered share capital shall be conditionally increased by up to 175,000,000.00 through the issuance of up to 175,000,000 new registered no-par value shares with a proportionate amount of the registered share capital of 1.00 each (Conditional Capital 2017). The conditional capital increase serves the purpose of granting registered no-par value shares to the holders of convertible or option bonds, profit participation rights or participating bonds (or combinations of these instruments), in each case carrying option rights, conversion rights, option obligations and/or conversion obligations, which are issued on or before May 9, 2022, by the Company or a group company of the Company as defined in section 18 of the German Stock Corporation Act, in accordance with the authorization resolved by the General Meeting of Shareholders of May 10, 2017, under Item 9 of the Agenda. The issue of the new shares is effected at the conversion or option price to be determined, in each case, in accordance with the aforementioned authorization resolution.
17 The conditional capital increase is to be carried out only to the extent that option or conversion rights are being exercised or, as the case may be, bond holders obliged to conversion or exercise of the option fulfil their conversion obligation or, as the case may be, their obligation to exercise the option. The new shares issued because of the exercise of the option or conversion right or the fulfilment of the conversion obligation are entitled to profit participation starting from the beginning of the financial year in which they come into existence. To the extent permitted by law and in deviation herefrom and from section 60 para. 2 of the German Stock Corporation Act, the Board of Management can, with the approval of the Supervisory Board, also determine that these shares are also entitled to profit participation for a financial year already ended. The Board of Management is authorized, with the approval of the Supervisory Board, to determine the further details of the implementation of the conditional capital increase. c) Amendments to the Articles of Association Article 3 para. 4 of the Articles of Association shall be amended as follows: The registered share capital is conditionally increased by another up to 175,000,000.00 divided into up to 175,000,000 registered shares (Conditional Capital 2017). The conditional capital increase is to be carried out only to the extent that the holders of option or conversion rights or persons obliged to conversion under option or convertible bonds, profit participation rights or participating bonds issued or guaranteed by the Company or a group company of the Company as defined in section 18 of the German Stock Corporation Act in accordance with the authorization resolved by the General Meeting of Shareholders of May 10, 2017, under Item 9 of the Agenda exercise their option or conversion rights or, if they are obliged to conversion or exercise of the option, fulfil their conversion obligation or, as the case may be, their obligation to exercise the option. The issue of the new shares is effected at the conversion or option price to be determined, in each case, in accordance with the aforementioned authorization resolution. The new shares are entitled to profit participation starting from the beginning of the financial year in which they come into existence by virtue of the exercising of option or conversion rights or the fulfilment of conversion or option obligations. To the extent permitted by law and in deviation herefrom and from section 60 para. 2 of the German Stock Corporation Act, the Board of Management can, with the approval of the Supervisory Board, also determine that these shares are entitled to profit participation for a financial year already ended.
Invitation to the General Meeting of Shareholders 18 The Board of Management is authorized, with the approval of the Supervisory Board, to determine the further details of the implementation of the conditional capital increase. d) Authorization to amend the Articles of Association The Supervisory Board is authorized to make adjustments to the wording of article 3 of the Articles of Association in accordance with the respective issue of shares to be subscribed and to conduct all other related amendments to the Articles of Association which merely concern the wording of the latter. The same will apply in the event that the authorization granted by the General Meeting of Shareholders of May 10, 2017 under Item 9 of the Agenda has not been utilized after the term of the authorization has expired, as well as in the event that the Conditional Capital 2017 has not been utilized after all periods for the exercise of option or conversion rights or, respectively, for the fulfilment of conversion obligations or option obligations have expired. 10. Authorization for the acquisition and use of treasury shares and the exclusion of subscription rights Since the existing authorization for the acquisition and use of treasury shares expires on May 2, 2017, the resolution on the authorization for the acquisition and use of treasury shares shall be renewed. The Supervisory Board and the Board of Management propose that the following be resolved: a) The Company is authorized to acquire, on or before May 9, 2022, treasury shares of up to a total maximum of 10 percent of the registered share capital existing at the time of the adoption of the resolution or in the event that this amount is the lower one at the time of the utilization of the authorization. The acquired shares, together with other treasury shares which are in the possession of the Company or are attributable to it pursuant to sections 71a et seq. of the German Stock Corporation Act, may at no time exceed 10 percent of the Company s registered share capital. At the discretion of the Board of Management, the acquisition may be conducted (1) through a stock exchange, (2) by means of a public offer directed at all shareholders or a public solicitation to submit offers (hereinafter Acquisition Offer ), (3) by means of a public offer or a public solicitation to submit offers for the exchange of liquid shares, which are admitted to trading on an organized market within the meaning of the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz WpÜG) (hereinafter Exchange Shares ), against shares of the Company, (hereinafter Exchange Offer ) or (4) by use of derivatives (put or call options or a combination thereof).
19 aa) If the acquisition is conducted through a stock exchange, the consideration paid by the Company for each share of the Company (not including incidental acquisition costs) may not exceed the market price of one E.ON share in Xextra trading (or a comparable successor system), determined in the opening auction on the relevant trading day at the Frankfurt Stock Exchange, by more than 10 percent and may not fall below such price by more than 20 percent. bb) If the acquisition is conducted through an Acquisition Offer, the Company may determine either a price or a price range at which it is willing to acquire the shares. However, subject to an adjustment during the offer period the purchase price (in each case not including incidental acquisition costs) may not exceed the average market price of the share of the Company on the Frankfurt Stock Exchange on the last three exchange trading days prior to the public announcement of the Acquisition Offer, as determined based on the arithmetic means of the auction closing prices in Xextra trading (or a comparable successor system), by more than 10 percent and may not fall below such price by more than 20 percent. In the event that after the public announcement of the offer significant variances in the applicable price occur, the purchase price may be adjusted. In that case, the average market price of the shares on the Frankfurt Stock Exchange on the last three exchange trading days prior to the public announcement of the adjustment, if any, as determined based on the arithmetic means of the auction closing prices in Xetra trading (or a comparable successor system), will be relevant. The Acquisition Offer may provide for additional requirements. In the event that the Acquisition Offer is over-subscribed, the acceptance is to be effected, as a general rule, in proportion to the respective shares offered. However, a preferred acceptance of small offers or small portions of offers of up to a maximum of 150 shares may be provided for. cc) If the acquisition is conducted through an Exchange Offer, the Company may determine either an exchange ratio or a respective exchange range at which it is willing to acquire the shares of the Company. In this regard, a cash consideration may be provided for as supplementary purchase price payment or as compensation for fractional amounts.
Invitation to the General Meeting of Shareholders 20 Subject to an adjustment during the offer period, the exchange ratio or the exchange range, respectively, in the form of one or several Exchange Shares and mathematical fractions (in each case including any fractional amounts, but not including incidental acquisition costs) may not exceed the relevant value of a share of the Company by more than 10 percent and may not fall below such value by more than 20 percent. In that case, the basis for the calculation of the exchange ratio or the exchange range, respectively, shall be the average market price of the Exchange Shares and of the shares of the Company on the Frankfurt Stock Exchange on the last three exchange trading days prior to the public announcement of the Exchange Offer, as determined based on the arithmetic means of the auction closing prices in Xetra trading (or a comparable successor system). In the event that after the public announcement significant variances in the relevant market price of the shares of the Company or, respectively, the Exchange Shares occur, the exchange ratio or the exchange range may be adjusted. In that case, the average market prices of the Exchange Shares and the shares of the Company on the Frankfurt Stock Exchange on the last three exchange trading days prior to the public announcement of the adjustment, if any, as determined based on the arithmetic means of the auction closing prices in Xextra trading (or a comparable successor system), shall be relevant. The Exchange Offer may provide for additional requirements. In the event that the Exchange Offer is over-subscribed, the acceptance is to be effected, as a general rule, in proportion to the respective shares offered. However, a preferred acceptance of small offers or small portions of offers of up to a maximum of 150 shares may be provided for. dd) If the acquisition is conducted using derivatives in the form of put or call options or a combination thereof, the derivative transactions must be entered into with a financial institution or an entity conducting business pursuant to section 53 para. 1 sentence 1 or section 53b para. 1 sentence 1 or para. 7 of the German Banking Act or through the stock exchange at terms close to market conditions, for the determination of which, inter alia, the purchase price of the shares payable upon exercise of the derivative, the exercise price, shall be taken into account. In any case, where derivatives are being used, treasury shares of up to a total maximum of 5 percent of the registered share capital existing at the time of the adoption of the resolution or in the event the amount of the registered share capital is subsequently reduced the registered share capital existing at the time of the utilization of the authorization may be acquired. The term of the respective option may not exceed 18 months and will end, in any case, no later than on May 9, 2022. In application, mutatis mutandis, of section 186 para. 3 sentence 4