Convenience Translation Constantin Medien AG Ismaning WKN 914720 ISIN DE0009147207 We hereby invite our shareholders to the Annual General Meeting which will take place on July 19, 2011 at 10:00 am at the hotel The Westin Grand München, Arabellastr. 6, 81925 Munich Agenda 1. Presentation of the approved annual financial statements and the approved consolidated financial statements as at December 31, 2010, the combined Group Management Report and Management Report and the report of the Supervisory Board for fiscal year 2010 2. Resolution on the discharge of the Management Board for fiscal year 2010 The Management Board und Supervisory Board propose passing the following resolution: The members of the Management Board who were in office in fiscal year 2010 are granted discharge for this period. 3. Resolution on the discharge of the Supervisory Board for fiscal year 2010 The Management Board and Supervisory Board propose passing the following resolution: The members of the Supervisory Board who were in office in fiscal year 2010 are granted discharge for this period. 4. Resolution on the appointment of the auditor and group auditor for fiscal year 2011 The Supervisory Board proposes passing the following resolution: PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Munich shall be appointed as auditor and group auditor for fiscal year 2011. The Supervisory Board bases its proposed appointment on the recommendation of the audit committee. 5. Election of members to the Supervisory Board The term of office of Supervisory Board members Dr. Erwin Conradi, Dr. Dieter Hahn, Werner E. Klatten and Dr. Bernd Kuhn will end upon expiry of the annual general meeting on July 19, 2011. Pursuant to 5 (1) of the Articles of Association in conjunction with 95 (1), 96 (1) AktG [German Stock Corporation Act], the Supervisory Board of the Company consists of six members all of whom are elected by the annual general meeting. The annual general meeting is not bound by proposed appointments. The Supervisory Board proposes passing the following resolutions: a) Dr. Erwin Conradi, professional member of supervisory boards and board of directors, residing in Risch, Switzerland, is elected member of the Supervisory Board.
2 The term of office shall begin after the expiry of the annual general meeting of the Company on July 19, 2011 and shall end upon expiry of the annual general meeting ruling on the discharge for the first fiscal year following the start of the term of office. The fiscal year in which the term of office begins is not counted in this. b) Dr. Dieter Hahn, managing director and shareholder of KF 15 GmbH & Co. KG, residing in Munich, is elected member of the Supervisory Board. The term of office shall begin after the expiry of the annual general meeting of the Company on July 19, 2011 and shall end upon the expiry of the annual general meeting ruling on the discharge for the second fiscal year after the term of office begins. The fiscal year in which the term of office begins is not counted in this. c) Mr. Werner E. Klatten, independent attorney, residing in Hamburg, is elected member of the Supervisory Board. The term of office shall begin after the expiry of the annual general meeting of the Company on July 19, 2011 and shall end upon expiry of the annual general meeting ruling on the discharge for the second fiscal year after the term of office begins. The fiscal year in which the term of office begins is not counted in this. d) Dr. Bernd Kuhn, an attorney with the law firm Kuhn Rechtsanwälte, residing in Munich, is elected member of the Supervisory Board. The term of office shall begin after the expiry of the annual general meeting of the Company on July 19, 2011 and shall end upon expiry of the annual general meeting ruling on the discharge for the first fiscal year after the term of office begins. The fiscal year in which the term of office begins is not counted in this. Dr. Erwin Conradi is at the time of the announcement of this annual general meeting a member of the following statutorily required supervisory boards and similar national and international regulatory bodies: Highlight Communications AG, Pratteln, Switzerland (member of the Board of Directors) Sensile Holding AG, Baar, Switzerland (Chairman of the Board of Directors) Sensile Medical AG, Hägendorf, Switzerland (Chairman of the Board of Directors) Sensile PAT AG, Hägendorf, Switzerland (Chairman of the Board of Directors) Mang Medical One AG, Essen (Chairman of the Supervisory Board) Dr. Dieter Hahn is at the time of the announcement of this annual general meeting a member of the following statutorily required supervisory boards and similar national and international regulatory bodies: bitop AG, Witten (member of the Supervisory Board) BNK Service GmbH, Munich (member of the Advisory Committee) Highlight Communications AG, Pratteln, Switzerland (member of the Board of Directors) Mr. Werner E. Klatten is at the time of the announcement of this annual general meeting a member of the following statutorily required supervisory boards and similar national and international regulatory bodies: teneues Verlag GmbH & Co. KG, Kempen (Chairman of the Advisory Committee) MAMA AG, Berlin (member of the Supervisory Board) Stiftung Deutsche Sporthilfe, Frankfurt/Main (Chairman of the Supervisory Board) Bundesliga-Stiftung, Frankfurt/Main (member of the Board of Trustees) CTC Media Inc., Moscow, Russia (member of the Board of Directors) Oskar Rakso S. à r. l., Luxembourg, Luxemburg (member of the Advisory Committee) Dr. Bernd Kuhn is at the time of the announcement of this annual general meeting a member of the following statutorily required supervisory boards and similar national and international regulatory bodies: bitop AG, Witten (member of the Supervisory Board)
3 6. Resolution on the approval of the system for compensation of the members of the Management Board Management Board and Supervisory Board propose passing the following resolution: The system for compensation of the Management Board members is approved. In addition to the information in the annual report, a description of the system for compensation of Management Board members can be downloaded from the Company website at www.constantin-medien.de in the section Investor Relations / Annual General Meeting as Commentary on Agenda item 6. 7. Resolution on cancellation of the authorization to issue warrant bonds and convertible bonds and of the Conditional Capital 2008/I and the grant of an authorization to issue convertible bonds and/or warrant bonds and other financial instruments and the creation of a new Conditional Capital 2011/I in the amount of EUR 20,000,000.00 together with corresponding amendment of the Articles of Association The Management Board and Supervisory Board propose passing the following resolution: a) The authorization granted by the annual general meeting of July 9, 2008 in agenda item 8 to issue convertible bonds, warrant bonds, participation rights and/or participating bonds is cancelled. The Conditional Capital in 3 (10) of the Articles of Association is also cancelled. b) The Management Board is authorized, up until July 19, 2016 with the consent of the Supervisory Board to issue on one or more occasions bearer or registered (i) convertible bonds and/or (ii) warrant bonds and/or (iii) conversion participation rights and/or (iv) option participation rights and/or (v) participation rights and/or (vi) participating bonds (or combinations of these instruments) ((i) to (iv) jointly referred to hereafter as financial instruments and (i) to (vi) jointly referred to a instruments ) in the aggregate nominal amount of up to EUR 150,000,000.00 with a maximum term of 15 years and to grant to the holders or creditors of financial instruments conversion or option rights to new no-par value bearer shares of the Company representing up to EUR 20,000,000.00 of the nominal capital in accordance with terms of the convertible or option bond or the terms of the conversion or participation rights. As well as being issued in euros, the instruments may also be issued in the legal currency of an OECD country provided this is limited to the corresponding equivalent in euros. They may also be issued by companies in which the Company holds a direct or indirect majority interest if issuing the instruments is in the financial interest of the Group. In this case the Management Board is authorized, with the consent of the Supervisory Board, to assume the guarantee for the instruments for the Company and to grant holders or creditors of such financial instruments conversion rights or option rights to new no-par value bearer shares of the Company. The instruments shall be allocated as partial bonds or partial participation rights with equal rights inter se. The instruments are to be assumed by a banking consortium with the obligation to offer them for subscription to the shareholders of the Company provided they are not offered to the shareholders for immediate subscription. The Management Board is, however, authorized, with the consent of the Supervisory Board, to exclude the subscription right of the shareholders of the Company to the instruments in whole or in part, for fractional amounts; if the instruments are issued in connection with the acquisition of companies, equity interests in companies or parts of companies;
to the extent that it is necessary in order to grant holders or creditors of option rights, convertible bonds and conversion participation rights then outstanding a subscription right to convertible bonds or warrant bonds or conversion participation rights or option participation rights or participation rights or participating bonds to the same extent as they would be entitled to after exercise of the conversion or option right or after fulfillment of the conversion obligation; provided the financial instruments are issued in exchange for cash and the issue price does not fall substantially below the theoretical market value of the partial bonds or partial participation rights determined in accordance with recognized actuarial methods. This authorization to exclude the subscription right, however, only exists for partial bonds or partial participation rights with a conversion or option right or a conversion obligation to shares representing no more than 10% of the nominal capital neither at the time said authorization takes effect nor at the time it is exercised; with regard to whether the 10% limit is used up, the exclusion of the subscription right based on other authorizations in accordance with 186 (3) sentence 4 AktG must be taken into account. In the event that bearer convertible bonds or conversion participation rights are issued the holders, or else the creditors, of the partial bonds or partial participation rights shall be entitled to exchange their partial bonds or partial participation rights in accordance with the terms of the convertible bond or conversion participation rights for new no-par value bearer shares of the Company. The exchange ratio is found by dividing the nominal amount of a partial bond or partial participation right by the stipulated conversion price for a no-par value bearer share of the Company. The exchange ratio may also be found by dividing the issue amount of a partial bond or a partial participation right that is below the nominal amount by the stipulated conversion price for a new no-par value bearer share of the Company. It may be provided for the exchange ratio to be set variably and the conversion price within a range to be specified depending on how the share price develops during the term or during a specified period within the term. The exchange ratio may in each case be rounded up or down to a whole number; in addition, a supplemental cash payment may be stipulated. In addition, it may be provided that fractions be combined and/or settled in cash. The proportion of the nominal capital represented by the shares to be issued in the conversion may not exceed the nominal amount of the partial convertible bond or partial participation right, 9 (1) and 199 (2) AktG shall remain unaffected. In the event of warrant bonds or option participation certificates being issued, each partial bond or each partial participation right shall have attached to it one or more warrants which entitle the holders of creditors to subscribe to new shares in the Company in accordance with the option terms to be stipulated by the Management Board with the consent of the Supervisory Board The proportion of the nominal capital represented by the shares to be received for each partial bond or partial participation right must not exceed the nominal amount of the warrant bonds or option participation rights. 9 (1) and 199 (2) AktG shall remain unaffected. The term of the option rights may not exceed 15 years. The Management Board may also, with the consent of the Supervisory Board, issue such convertible bonds or conversion participation rights in the name of the holders or creditors, in respect of which the holders or creditors of the convertible bonds or conversion participation rights are obligated, in accordance with the terms of the convertible bond or terms of the conversion participation rights, during the 4
conversion period or at the end of the conversion period, to exchange the convertible bonds or conversion participation rights for new shares of the Company. Finally, the terms of the bonds or participation rights may provide in the case of conversion or exercise of an option for the Company not to grant shares in the Company to those entitled to convert their bonds or to option holders but to pay the cash equivalent which in accordance with the terms of the bond or participation rights corresponds to the average price of the shares of the Company in the final auction on the Xetra trading platform (or on a functionally comparable system that supersedes the Xetra system) on the Frankfurt securities exchange during the last one to ten trading days prior to the declaration of the conversion or exercise of the option right. The terms of the bonds or participation rights may further provide that (i) the convertible bonds or conversion participation rights may be converted not into new shares from conditional capital but into already existing shares of the Company or that the option rights can be fulfilled by delivery of such shares or (ii) the preemptive shares can be created in the context of a capital increase from authorized capital. The conversion or option price for a share of the Company to be set in each case (the subscription price) must also in the case of a variable exchange ratio or a variable conversion or option price either amount to (a) at least 80% of the average final auction price of the shares of the Company on the Xetra trading platform (or on a functionally comparable system that supersedes the Xetra system) (i) on the ten trading days prior to the day the Management Board resolves to issue the financial instruments or (ii) on the five trading days immediately before the public announcement of an offer to subscribe for financial instruments or (iii) on the five trading days immediately before the issue of the declaration of acceptance by the Company following an initial public offering or (b) correspond to at least 80% of the average final auction price of the shares of the Company on the Xetra trading platform (or on a functionally comparable system that supersedes the Xetra system) during the days on which the subscription rights to the financial instruments are traded on the Frankfurt am Main securities exchange, with the exception of the last two subscription rights trading days. The conversion or option price may, notwithstanding 9 (1) and 199 (2) AktG, based on an anti-dilution clause be reduced, in accordance with the terms of the convertible or warrant bonds or convertible or option participation rights, by payment of a corresponding monetary amount on the exercise of the conversion or option right or fulfillment of a conversion obligation, or by a reduction in the supplemental payment if the Company during the conversion or option period, subject to granting a subscription right for its shareholders, increases the nominal capital or issues or guarantees additional convertible or warrant bonds or conversion or option participation rights, or grants other option rights and the holders or creditors of conversion or option rights are not granted a subscription right to the extent to which they would be entitled after exercise of the conversion or option right or fulfillment of the conversion obligation. Instead of a payment in cash or a reduction in the supplemental payment, the exchange ratio may also, as far as possible, be adjusted by dividing by the reduced conversion price/option price. The terms of the convertible or warrant bonds or terms of the conversion or option participation rights may in addition, in the event of a capital decrease, a stock split or a special dividend and other measures which may lead to a dilution of the value of the conversion or option rights, provide for an adjustment of the conversion or option rights; 9 (1) and 199 AktG must be complied with. 5
The Management Board is authorized, with the consent of the Supervisory Board, to stipulate the other details of the issue and characteristics of the instruments, including interest rate, issue price, term and splitting, conversion or option price and the conversion or option period or by agreement with the executive bodies of the holding companies issuing the instruments. c) Creation of conditional capital The nominal capital is conditionally increased by up to EUR 20,000,000.00 by the issue of up to 20,000,000 no par value bearer shares. The conditional capital increase is for the sole purpose of granting share rights to the holders or creditors of financial instruments which are issued by the Company pursuant to the above authorization under letter b) until July 19, 2016. The conditional capital increase, in accordance with the terms of the convertible bonds or the terms of the conversion participation rights, is also for the purpose of issuing shares to holders or creditors of convertible bonds or conversion participation rights which come with conversion obligations. The new shares are issued at the conversion or option price to be stipulated in each case pursuant to letter b). The conditional capital increase must only be implemented to the extent that use is made of these rights, or to the extent that the holders or creditors under a conversion obligation fulfill their conversion obligation and to the extent that no treasury shares are provided to service these rights. The new shares shall participate in the profits from the start of the fiscal year in which they arise by exercise of conversion or option rights or by fulfillment of conversion obligations; by way of exception hereto, the Management Board may with the consent of the Supervisory Board stipulate that the new shares participate in the profits from the start of the fiscal year for which, at the time of exercise of conversion or option rights or fulfillment of conversion obligations, no resolution by the annual general meeting on the appropriation of the net annual profits has yet been passed. The Management Board is authorized, with the consent of the Supervisory Board, to stipulate further details concerning implementation of a conditional capital increase. d) Amendment of Articles of Association 3 (10) of the Articles of Association shall be worded as follows: (10) The nominal capital is conditionally increased by up to EUR 20,000,000.00 by the issue of up to 20,000,000 no-par value bearer shares (Conditional Capital 2011/I). The conditional capital increase is only implemented to the extent that the holders or creditors of conversion rights or warrants which are attached to the convertible or warrant bonds or conversion or option participation rights to be issued by July 19, 2016 by the Company or the companies in which it has a direct or indirect majority holding pursuant to the authorization resolution of the annual general meeting of July 19, 2011 make use of their conversion or option rights or the holders or creditors of the convertible bonds or conversion participation rights to be issued by July 19, 2016 by the Company or companies in which it has a direct or indirect majority holding pursuant to the authorization resolution of the annual general meeting of July 19, 2011, and who are subject to a conversion obligation, fulfill their conversion obligation. The new shares shall participate in the profits from the start of the fiscal year in which they arise by exercise of conversion or option rights or by fulfillment of conversion obligations; by way of exception hereto, the Management Board may with the consent of the Supervisory Board stipulate that the new 6
7 shares may participate in the profits from the start of the fiscal year for which at the time of exercise of conversion or option rights or fulfillment of conversion obligations no resolution by the annual general meeting concerning the appropriation of the annual net profits has yet been passed. e) The Supervisory Board is authorized to adapt the version of 3 of the Articles of Association according to the respective utilization of the Conditional Capital 2011/I and to make all other associated amendments of the Articles of Association which only concern the version. The same shall apply in the event of failure to utilize the authorization to issue convertible or warrant bonds or conversion or option participation rights after the expiry of the authorization period and in the event of failure to utilize the Conditional Capital 2011/I after expiry of the time limits for the exercise of conversion and option rights. 8. Resolution on the partial cancellation of the Conditional Capital 2005/I and the grant of an authorization to issue convertible bonds and/or warrant bonds and other financial instruments and the creation of a new Conditional Capital 2011/II in the amount of EUR 15,000,000.00 together with corresponding amendment of the Articles of Association The Management Board und Supervisory Board propose passing the following resolution: a) The Conditional Capital 2005/I is reduced to up to EUR 5,000,000.00 and 3 (9) of the Articles of Association shall be reworded as follows: (9) The nominal capital is conditionally increased by up to EUR 5,000,000.00 by the issue of up to 5,000,000 new no-par value bearer shares (Conditional Capital 2005/I). The conditional capital increase is only implemented to the extent that (i) the holders or creditors of conversion rights or warrants which are attached to the convertible and/or warrant bonds issued by the Company or a company held directly or indirectly by the Company by July 4, 2010 pursuant to the authorization resolution of the annual general meeting dated July 5, 2005 make use of their conversion or option rights or (ii) the holders or creditors subject to a conversion obligation of the convertible bonds issued by July 4, 2010 by the Company or a company held directly or indirectly by the Company pursuant to the authorization resolution of the annual general meeting dated July 5, 2005 fulfill their conversion obligation, but in both aforementioned cases (i) and (ii) only to the extent that treasury shares are not used for this purpose. The new shares shall participate in the profits from the start of the fiscal year in which they arise by exercise of conversion or option rights or by fulfillment of conversion obligations. b) The Management Board is authorized up until July 19, 2016 with the consent of Supervisory Board to issue on one or more occasions bearer or registered (i) convertible bonds and/or (ii) warrant bonds and/or (iii) conversion participation rights and/or (iv) option participation rights and/or (v) participation rights and/or (vi) participating bonds (or combinations of these instruments) ((i) to (iv) jointly referred to hereafter as financial instruments and (i) to (vi) jointly referred to as instruments ) in the aggregate amount of up to EUR 112,500,000.00 with a maximum term of 15 years and to grant the holders or creditors of financial instruments conversion or option rights to new no-par bearer shares of the Company representing up to EUR 15,000,000 of the nominal capital in accordance with the terms of the convertible or warrant bonds or the terms of the conversion or participation rights. As well as being issued in euros, the instruments may also be issued in the legal currency of an OECD country provided this is limited to the corresponding equivalent in euros. They may also be issued by companies in which the Company holds
a direct or indirect majority interest if issuing the instruments is in the financial interest of the Group. In this case the Management Board is authorized, with the consent of the Supervisory Board, to assume the guarantee for the instruments for the Company and to grant holders or creditors of such financial instruments conversion rights or option rights to new no-par value bearer shares of the Company. The instruments shall be allocated as partial bonds or partial participation rights with equal rights inter se. The instruments are to be assumed by a banking consortium with the obligation to offer them for subscription to the shareholders of the Company provided they are not offered to the shareholders for immediate subscription. The Management Board is, however, authorized, with the consent of the Supervisory Board, to exclude the subscription right of the shareholders of the Company to the instruments in whole or in part, for fractional amounts; if the instruments are issued in connection with the acquisition of companies, equity interests in companies or parts of companies; to the extent that it is necessary in order to grant holders or creditors of option rights, convertible bonds and conversion participation rights then outstanding a subscription right to convertible bonds or warrant bonds or conversion participation rights or option participation rights or participation rights or participating bonds to the same extent as they would be entitled to after exercise of the conversion or option right or after fulfillment of the conversion obligation; provided financial instruments are issued in exchange for cash and the issue price does not fall substantially below the theoretical market value of the partial bonds or partial participation rights determined in accordance with recognized actuarial methods. This authorization to exclude the subscription right, however, only exists for partial bonds or partial participation rights with a conversion or option right or a conversion obligation to shares representing no more than 10% of the nominal capital neither at the time said authorization takes effect nor at the time it is exercised; with regard to whether the 10% limit is used up, the exclusion of the subscription right based on other authorizations in accordance with 186 (3) sentence 4 AktG must be taken into account. In the event that bearer convertible bonds or conversion participation rights are issued the holders, or else the creditors, of the partial bonds or partial participation rights shall be entitled to exchange their partial bonds or partial participation rights in accordance with the terms of the convertible bond or conversion participation rights for new no-par value bearer shares of the Company. The exchange ratio is found by dividing the nominal amount of a partial bond or partial participation right by the stipulated conversion price for a no-par value bearer share of the Company. The exchange ratio may also be found by dividing the issue amount of a partial bond or a partial participation right that is below the nominal amount by the stipulated conversion price for a new no-par value bearer share of the Company. It may be provided for the exchange ratio to be set variably and the conversion price within a range to be specified depending on how the share price develops during the term or during a specified period within the term. The exchange ratio may in each case be rounded up or down to a whole number; in addition, a supplemental cash payment may be stipulated. In addition, it may be provided that fractions be combined and/or settled in cash. The proportion of the nominal capital represented by the shares to be issued in the conversion may not exceed the nominal amount of 8
the partial convertible bond or partial participation right, 9 (1) and 199 (2) AktG shall remain unaffected. In the event of warrant bonds or option participation certificates being issued, each partial bond or each partial participation right shall have attached to it one or more warrants which entitle the holders of creditors to subscribe to new shares in the Company in accordance with the option terms to be stipulated by the Management Board with the consent of the Supervisory Board The proportion of the nominal capital represented by the shares to be received for each partial bond or partial participation right must not exceed the nominal amount of the warrant bonds or option participation rights. 9 (1) and 199 (2) AktG shall remain unaffected. The term of the option rights may not exceed 15 years. The Management Board may also, with the consent of the Supervisory Board, issue such convertible bonds or conversion participation rights in the name of the holders or creditors, in respect of which the holders or creditors of the convertible bonds or conversion participation rights are obligated, in accordance with the terms of the convertible bond or terms of the conversion participation rights, during the conversion period or at the end of the conversion period, to exchange the convertible bonds or conversion participation rights for new shares of the Company. Finally, the terms of the bonds or participation rights may provide in the case of conversion or exercise of an option for the Company not to grant shares in the Company to those entitled to convert their bonds or to option holders but to pay the cash equivalent which in accordance with the terms of the bond or participation rights corresponds to the average price of the shares of the Company in the final auction on the Xetra trading platform (or on a functionally comparable system that supersedes the Xetra system) on the Frankfurt securities exchange during the last one to ten trading days prior to the declaration of the conversion or exercise of the option right. The terms of the bonds or participation rights may further provide that (i) the convertible bonds or conversion participation rights may be converted not into new shares from conditional capital but into already existing shares of the Company or that the option rights can be fulfilled by delivery of such shares or (ii) the preemptive shares can be created in the context of a capital increase from authorized capital. The conversion or option price for a share of the Company to be set in each case (the subscription price) must also in the case of a variable exchange ratio or a variable conversion or option price either amount to (a) at least 80% of the average final auction price of the shares of the Company on the Xetra trading platform (or on a functionally comparable system that supersedes the Xetra system) (i) on the ten trading days prior to the day the Management Board resolves to issue the financial instruments or (ii) on the five trading days immediately before the public announcement of an offer to subscribe for financial instruments or (iii) on the five trading days immediately before the issue of the declaration of acceptance by the Company following an initial public offering or (b) correspond to at least 80% of the average final auction price of the shares of the Company on the Xetra trading platform (or on a functionally comparable system that supersedes the Xetra system) during the days on which the subscription rights to the financial instruments are traded on the Frankfurt am Main securities exchange, with the exception of the last two subscription rights trading days. The conversion or option price may, notwithstanding 9 (1) and 199 (2) AktG, based on an anti-dilution clause be reduced, in accordance with the terms of the convertible or warrant bonds or convertible or option participation rights, by payment of a corresponding monetary amount on the exercise of the conversion or op- 9
tion right or fulfillment of a conversion obligation, or by a reduction in the supplemental payment if the Company during the conversion or option period, subject to granting a subscription right for its shareholders, increases the nominal capital or issues or guarantees additional convertible or warrant bonds or conversion or option participation rights, or grants other option rights and the holders or creditors of conversion or option rights are not granted a subscription right to the extent to which they would be entitled after exercise of the conversion or option right or fulfillment of the conversion obligation. Instead of a payment in cash or a reduction in the supplemental payment, the exchange ratio may also, as far as possible, be adjusted by dividing by the reduced conversion price/option price. The terms of the convertible or warrant bonds or terms of the conversion or option participation rights may in addition, in the event of a capital decrease, a stock split or a special dividend and other measures which may lead to a dilution of the value of the conversion or option rights, provide for an adjustment of the conversion or option rights; 9 (1) and 199 AktG must be complied with. The Management Board is authorized, with the consent of the Supervisory Board, to stipulate the other details of the issue and characteristics of the instruments, including interest rate, issue price, term and splitting, conversion or option price and the conversion or option period or by agreement with the executive bodies of the holding companies issuing the instruments. c) Creation of conditional capital The nominal capital is conditionally increased by up to EUR 15,000,000.00 by the issue of up to 15,000,000 no par value bearer shares. The conditional capital increase is for the sole purpose of granting share rights to the holders or creditors of financial instruments which are issued by the Company pursuant to the above authorization under letter b) until July 19, 2016. The conditional capital increase, in accordance with the terms of the convertible bonds or the terms of the conversion participation rights, is also for the purpose of issuing shares to holders or creditors of convertible bonds or conversion participation rights which come with conversion obligations. The new shares are issued at the conversion or option price to be stipulated in each case pursuant to letter b). The conditional capital increase must only be implemented to the extent that use is made of these rights, or to the extent that the holders or creditors under a conversion obligation fulfill their conversion obligation and to the extent that no treasury shares are provided to service these rights. The new shares shall participate in the profits from the start of the fiscal year in which they arise by exercise of conversion or option rights or by fulfillment of conversion obligations; by way of exception hereto, the Management Board may with the consent of the Supervisory Board stipulate that the new shares participate in the profits from the start of the fiscal year for which, at the time of exercise of conversion or option rights or fulfillment of conversion obligations, no resolution by the annual general meeting on the appropriation of the net annual profits has yet been passed. The Management Board is authorized, with the consent of the Supervisory Board, to stipulate further details concerning implementation of a conditional capital increase. d) Amendment of Articles of Association 3 of the Articles of Association receives a new paragraph 11 worded as follows: (11) The nominal capital is conditionally increased by up to EUR 15,000,000.00 by the issue of up to 15,000,000 no-par value bearer shares (Conditional Capital 2011/II). The conditional capital increase is only implemented to the extent that 10
11 the holders or creditors of conversion rights or warrants which are attached to the convertible or warrant bonds or conversion or option participation rights to be issued by July 19, 2016 by the Company or the companies in which it has a direct or indirect majority holding pursuant to the authorization resolution of the annual general meeting of July 19, 2011 make use of their conversion or option rights or the holders or creditors of the convertible bonds or conversion participation rights to be issued by July 19, 2016 by the Company or companies in which it has a direct or indirect majority holding pursuant to the authorization resolution of the annual general meeting of July 19, 2011, and who are subject to a conversion obligation, fulfill their conversion obligation. The new shares shall participate in the profits from the start of the fiscal year in which they arise by exercise of conversion or option rights or by fulfillment of conversion obligations; by way of exception hereto, the Management Board may with the consent of the Supervisory Board stipulate that the new shares may participate in the profits from the start of the fiscal year for which at the time of exercise of conversion or option rights or fulfillment of conversion obligations no resolution by the annual general meeting concerning the appropriation of the annual net profits has yet been passed. e) The Supervisory Board is authorized to adapt the version of 3 of the Articles of Association according to the respective utilization of the Conditional Capital 2011/II and to make all other associated amendments of the Articles of Association which only concern the version. The same shall apply in the event of failure to utilize the authorization to issue convertible or warrant bonds or conversion or option participation rights after the expiry of the authorization period and in the event of failure to utilize the Conditional Capital 2011/II after expiry of the time limits for the exercise of conversion and option rights. Reports of the Management Board Concerning agenda item 7, the Management Board has pursuant to 221 (4) sentence 2, 186 (4) sentence 2 AktG issued a written report the main contents of which are announced as follows: The authorization proposed as agenda item 7 replaces the authorization granted by the general shareholders meeting of July 9, 2008 to issue convertible and/or warrant bonds, participation rights and/or participating bonds. These authorizations were, in terms of their content, shaped by the case-law at that time of some of the lower courts and are disadvantageous to the Company with regard to the present price level, in particular due to the stipulation of a fixed subscription price (conversion or option price). The old authorization is therefore to be cancelled and replaced by a new authorization of the same volume. The proposed authorization to issue convertible and/or warrant bonds or conversion and/or option participation rights puts the Company in the position of also procuring capital by issuing bonds or participation rights which come with option or conversion rights to shares of the Company. At the same time it shall also be possible to issue convertible bonds or conversion option rights which come with a conversion obligation. In addition, the Company shall also be enabled to issue participation rights or participating bonds. Convertible bonds, warrant bonds, conversion participation rights and/or option participation rights shall also be referred to below as financial instruments and financial instruments, participation rights and/or participating bonds as instruments.
12 The Company shall be granted as much flexibility as possible in terms of financing by the possibility of issuing instruments. So that it can make optimal use of this latitude in the interest of the Company, the Management Board is to be authorized, in certain cases, with the consent of the Supervisory Board, to exclude the subscription right of the shareholders to the instruments. The proposed authorizations to exclude the subscription right are in the interest of the Company; they are necessary, appropriate and reasonable. The Management Board is firstly authorized, with the consent of the Supervisory Board, to exclude fractional amounts arising based on the subscription ratio from the subscription right of the shareholders. The possibility of excluding the subscription right for fractional amounts enables instruments to be issued while ensuring a viable subscription ratio and thereby makes it easier to process the subscription right of the shareholders. It should also be possible to exclude the subscription right if the instruments are issued in connection with the acquisition of companies, equity participations in companies or parts of companies. This will put the Company in the position of providing vendor notes to finance the purchase price and of also structuring these as instruments. If the lender is promised conversion or option rights to shares or, in the context of participation rights or participating bonds, a participation in future profits of the Company, this generally results in a lower interest rate than in the case of loans or bonds without these additional rights. In addition, excluding the subscription right affords the Company in these cases the possibility of granting the seller a delayed equity interest in the Company. Experience teaches that this may lead to a reduction in the purchase price since the seller receives the option of participating in the success of the Company. In addition, cooperations that are intended by the acquisition of a company can in this way be underpinned first financially and then under company law. Conversion or option rights arising from bonds or participation rights which have been issued in consideration of a payment in kind cannot be serviced from the conditional capital. This requires either recourse to treasury shares or a real capital increase. The Authorized Capital 2009/I is one of the options available for a real capital increase. The receivable from the bond must be included as a contribution in kind, and the impairment test must extend to ensuring that the value of the receivable is not impaired and the payment in kind which is provided to create it corresponded to the issue price. In addition, the aim of the authorization is to also exclude the subscription right to the extent necessary to grant holders of option and conversion rights or of bonds or participation rights that have conversion obligations a subscription right to shares of Constantin Medien AG to the extent they would be entitled to after exercise of the option or conversion rights or after fulfillment of the conversion obligations. The following considerations underlie this additional authorization of the Management Board, with the consent of the Supervisory Board, to exclude the subscription right for the purpose of affording protection from dilution to holders or creditors of the financial instruments then issued by the Company: holders or creditors of the financial instruments to be issued by the Company or an affiliated company are usually afforded protection from dilution if the Company during the conversion or option period subject to granting a subscription right to its shareholders increases the nominal capital or increases the nominal capital from Company funds or issues other instruments or grants other option rights etc. In practice, in the capital markets, protection from dilution is granted either by adjusting the conversion or option conditions (payment of a settlement amount in cash, reduction of any supplemental payment amount or adjustment of the exchange ratio) or by granting a subscription right to the new instruments. Which of the two possibilities is advisable is decided by the Management Board with the consent of the Supervisory Board promptly before utilization of the authorization to issue further instruments. So as not to be limited from the outset to the first alternative (payment of a settlement amount in cash, reduction of any supplemental payment amount or adjustment of the ex-
13 change ratio), the Management Board is to be authorized to exclude the subscription right of the shareholders to the new instruments with the consent of the Supervisory Board to the extent necessary to grant holders of financial instruments that have already been issued a subscription right to the same extent to which they would have been entitled if they had made use of their exchange or option right prior to the issue of the new instruments. The new instruments to be issued to holders of financial instruments subject to exclusion of the subscription right shall be issued to the latter in each case on the same conditions as they are offered to the shareholders of the Company for subscription. The subscription right may also be excluded by the Management Board with the consent of the Supervisory Board, provided the respective issue of the financial instruments is performed at a price which does not fall substantially below their theoretical market value. Through this exclusion of the subscription right the Company is also enabled to take advantage of favorable stock market situations in the short-term and to issue the financial instruments as part of a private placement or public offering. This exclusion of the subscription right safeguards the interests of the shareholders. The volume of the shares to be received on the financial instruments issued subject to exclusion of the subscription right as a result of exercise of the conversion or option right is limited to 10% of the current nominal capital of the Company, i.e. subscription or conversion rights to 8,513,078 shares. This aggregate number is offset by those treasury shares and those shares from authorized capital and subscription or conversion rights based on other authorizations, which are sold or issued during the term of this authorization subject to exclusion of the subscription right pursuant to 186 (3) sentence 4 AktG. The shareholders are thereby protected from dilution of their holding. The shareholders are protected from their holding being financially diluted by the fact that the financial instruments must be issued at a price which does not fall substantially below their theoretical market value. In order to adhere to these requirements the Management Board shall determine the market value of the financial instruments carefully, where necessary using an investment bank or auditing firm. The Management Board shall when it sets the price taking account of the relevant situation on the capital market keep the discount on the market value as small as possible. Based on the stipulation provided in the authorization of the issue price not substantially below the arithmetical market value, the value of the (excluded) subscription right has a tendency to be zero, i.e. the shareholders incur no economic disadvantage as a result of the exclusion of a subscription right, especially since they can maintain the proportion of their holding by purchasing shares on the stock exchange. Regardless of this test by the Management Board, the conditions can also be stipulated in line with the market, thereby avoiding any appreciable dilution in value, by implementing a bookbuilding process. This process means that the instruments will not be offered at a fixed issue price; instead the issue price or individual conditions of the financial instruments such as, for example, interest rate and conversion or option price, are stipulated on the basis of the purchase applications issued by the investors. The aggregate value of the bond is in this way determined close to market value. Concerning agenda item 8, the Management Board has pursuant to 221 (4) sentence 2, 186 (4) sentence 2 AktG issued a written report the main content of which is announced as follows: As a result of the redemption, cancellation and conversion of the convertible bond 2006/2013 issued by EM.TV Finance BV and guaranteed by the Company pursuant to the authorization granted by the 2005 annual general meeting, the volume of this convertible bond placed in the market has declined from EUR 87,750,000 originally to EUR 2,465,599.50 (as at May 31, 2011). As at May 31, 2011 only convertible bonds granting entitlement to subscribe for a total of 426,654 shares (rounded down) are still in existence. The Company also currently holds convertible bonds granting entitlement to subscribe for 6,634,165 shares (rounded down); it will by the annual general meeting reduce the portfolio of its own convertible bonds to EUR
14 26,428,995.45, which grant entitlement to subscribe for 4,573,345 shares (rounded down), by cancelling the partial bonds and by offsetting the mutual claims between the Company and its subsidiary EM.TV Finance BV, which issued the convertible bond. Only conditional capital in the amount of up to EUR 5,000,000.00 will accordingly now be needed to service the conversion rights from outstanding and own convertible bonds. Therefore the proposal will be made to the annual general meeting in letter a) of the resolution to reduce the conditional capital 2005/I to EUR 5,000,000.00. The proposed authorization to issue convertible and/or warrant bonds or conversion and/or option participation rights also enables the Company to procure capital by issuing bonds or participation rights which come with option or conversion rights to shares of the Company. It will also be possible simultaneously to issue convertible bonds or conversion option rights which come with a conversion obligation. In addition, the Company should also be enabled to issue participation rights or participating bonds. Convertible bonds, warrant bonds, conversion participation rights and/or option participation rights shall also be referred to hereafter as financial instruments and financial instruments, participation rights and/or participating bonds as instruments. The issue of instruments, in particular financial instruments, continues in the view of the Management Board to represent for the Company an interesting financing option which enables the Company to procure liquidity on comparatively attractive terms. In particular, given the background of the currently low trading price of the Constantin stock, the issue of financial instruments which grant entitlement to delayed subscription to Constantin shares is in the interest of the Company and its shareholders since the subscription price to be agreed where financial instruments are issued is higher than the projected issue price in a capital increase from authorized capital. The Company shall be granted as much flexibility as possible in terms of financing by the possibility of issuing instruments. So that it can make optimal use of this latitude in the interest of the Company, the Management Board is to be authorized, in certain cases, with the consent of the Supervisory Board, to exclude the subscription right of the shareholders to the instruments. The proposed authorizations to exclude the subscription right are in the interest of the Company; they are necessary, appropriate and reasonable. The Management Board is firstly authorized, with the consent of the Supervisory Board, to exclude fractional amounts arising based on the subscription ratio from the subscription right of the shareholders. The possibility of excluding the subscription right for fractional amounts enables instruments to be issued while ensuring a viable subscription ratio and thereby makes it easier to process the subscription right of the shareholders. It should also be possible to exclude the subscription right if the instruments are issued in connection with the acquisition of companies, equity participations in companies or parts of companies. This will put the Company in the position of providing vendor notes to finance the purchase price and of also structuring these instruments. If the lender is promised conversion or option rights to shares or, in the context of participation rights or participating bonds, a participation in future profits of the Company, this generally results in a lower interest rate than in the case of loans or bonds without these additional rights. In addition, excluding the subscription right affords the Company in these cases the possibility of granting the seller a delayed equity interest in the Company. Experience teaches that this may lead to a reduction in the purchase price since the seller receives the option of participating in the success of the Company. In addition, cooperations that are intended by the acquisition of a company can in this way be underpinned first financially and then under company law. Conversion or option rights arising from bonds or participation rights which have been issued in consideration of a payment in kind cannot be serviced from the conditional capital. This requires either recourse to treasury shares or a real capi-