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CONVERSION REPORT

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CONVERSION REPORT Powered By Docstoc
					              CONVENIENCE TRANSLATION




              CONVERSION REPORT

         of the Management Board of PUMA AG


    regarding the conversion with change of legal form of




     PUMA Aktiengesellschaft Rudolf Dassler Sport,




        - hereinafter also referred to as “PUMA AG” -




                          into the




legal form of a European Corporation (Societas Europaea, SE)


        - hereinafter also referred to as “PUMA SE” -




                                                        P+P Pöllath+Partners
Conversion Report                                                                                                                   page 2 of 68




Table of Content

CONVERSION REPORT ........................................................................................................................ 1 

A.        Introduction ............................................................................................................................... 6 

B.        PUMA AG ................................................................................................................................... 8 

I.        Overview of PUMA AG and PUMA Group.................................................................................. 8 

II.       History ......................................................................................................................................... 8 

III.      Registered Office, Financial Year and Corporate Purpose ........................................................ 9 

IV.       Participations and Business Activities ...................................................................................... 10 

1.        Participations ............................................................................................................................ 10 
2.        Business Activities and Key Financial Data of PUMA Group ................................................... 11 

V.        Share Capital and Shareholders .............................................................................................. 14 

1.        Share Capital ............................................................................................................................ 14 
2.        Shareholders and Stock Exchange Trading ............................................................................. 14 

VI.       Corporate Bodies ...................................................................................................................... 15 

1.        Management Board .................................................................................................................. 15 
2.        Supervisory Board .................................................................................................................... 16 
3.        Committees ............................................................................................................................... 17 
4.        German Corporate Governance Code ..................................................................................... 17 
5.        Employees and Co-determination ............................................................................................ 17 

C.        Principle Aspects of the Conversion .................................................................................... 19 

I.        Reasons for the Conversion ..................................................................................................... 19 

II.       Alternatives to the Conversion .................................................................................................. 19 

III.      Estimated Costs of the Conversion .......................................................................................... 20 

D.        Implementation of the Conversion ....................................................................................... 21 

I.        Preparation of the Conversion Plan.......................................................................................... 21 

II.       Conversion Audit ...................................................................................................................... 21 

III.      Annual General Meeting of Shareholders´ of PUMA AG ......................................................... 22 

IV.       Procedure for the Involvement of Employees in PUMA SE ..................................................... 22 

V.        Registration of the Conversion into PUMA SE ......................................................................... 23 

1.        Filing and Registration with the Commercial Register.............................................................. 23 
2.        Establishment of the First Board of PUMA SE and Appointment of Managing Directors ........ 24 

E.        Explanations of the Conversion Plan and the SE-Articles of Association ....................... 26 

I.        Comments on the Conversion Plan .......................................................................................... 26 

1.        Conversion of PUMA AG into PUMA SE (Section 1 of the Conversion Plan).......................... 26 
Conversion Report                                                                                                                   page 3 of 68



2.      Effectiveness of the Conversion (Section 2 of the Conversion Plan) ....................................... 26 
3.      Company Name, Registered Office, Subscribed Capital and SE-Articles of Association, No
        Cash Exit Offer (Section 3 of the Conversion Plan) ................................................................. 26 
4.      Holders of Special Rights and Holders of Other Securities (Section 4 of the Conversion Plan)
        .................................................................................................................................................. 27 
5.      No Special Advantages (Section 5 of the Conversion Plan) .................................................... 29 
6.      Corporate Bodies (Section 6 of the Conversion Plan).............................................................. 29 
7.      Information on the Procedure of the Employee Involvement (Section 7 of the Conversion Plan)
        .................................................................................................................................................. 30 
8.      Other Consequences of the Conversion for the Employees and their Representative Bodies
        (Section 8 of the Conversion Plan) ........................................................................................... 38 
9.      Financial Year, Auditor (Section 9 of the Conversion Plan) ..................................................... 39 
10.     Costs (Section 10 of the Conversion Plan)............................................................................... 39 

II.     Explanation of the SE-Articles of Association .......................................................................... 39 

1.      Company Name, Registered Office, Financial Year (Section 1 of the SE-Articles of
        Association) .............................................................................................................................. 39 
2.      Corporate Purpose (Section 2 of the SE-Articles of Association) ............................................ 39 
3.      Notifications (Section 3 of the SE-Articles of Association) ....................................................... 39 
4.      Subscribed Capital (Sections 4 of the SE-Articles of Association) ........................................... 40 
5.      Shares (Section 5 of the SE-Articles of Association) ............................................................... 40 
6.      Corporate Bodies (Section 6 of the SE-Articles of Association) ............................................... 40 
7.      The Board (Sections 7 through 12 of the SE-Articles of Association) ...................................... 41 
8.      The Managing Directors (Sections 13 through 15 of the SE-Articles of Association) .............. 44 
9.      The General Meeting (Section 16 through 19 of the SE-Articles of Association)..................... 45 
10.     Annual Financial Accounts (Section 20 of the SE-Articles of Association) .............................. 47 
11.     Allocation of net Profit (Section 21 of the SE-Articles of Association) ...................................... 47 
12.     Formation Expenses (Section 22 of the SE-Articles of Association) ........................................ 47 
13.     Benefits (Section 23 of the SE-Articles of Association) ............................................................ 47 

F.      Comparison between PUMA AG and PUMA SE, particularly Taking into Account the
        Legal Position of the Shareholders ...................................................................................... 48 

I.      Introduction and legal Basis ..................................................................................................... 48 

II.     General Provisions ................................................................................................................... 49 

1.      Subscribed Capital, Shares ...................................................................................................... 49 
2.      Registered Office ...................................................................................................................... 49 
3.      German Corporate Governance Code (DCGK) ....................................................................... 50 
4.      Notification Requirements......................................................................................................... 50 

III.    Formation of the Company ....................................................................................................... 50 

IV.     Legal Relations of the Company and the Shareholders ........................................................... 51 

V.      Organizational Constitution of the Company: Two-tier system – one-tier system.................... 51 

1.      Board (Verwaltungsrat) ............................................................................................................. 52 
Conversion Report                                                                                                          page 4 of 68



2.       Managing Directors (Geschäftsführende Direktoren) ............................................................... 57 
3.       General Meeting of Shareholders............................................................................................. 58 

VI.      Annual Financial Statements/Consolidated Financial Statements ........................................... 63 

VII.     Capital Procurement and Capital Reduction ............................................................................ 64 

VIII.    Invalidity of Resolutions of the General Meeting of Shareholders and of the Approved Annual
         Financial Statements/Special Audit because of Impermissible Undervaluation....................... 64 

1.       Invalidity of Resolutions of the General Meeting of Shareholders ........................................... 64 
2.       Invalidity and Challenging of the Election of Board Members .................................................. 64 
3.       Invalidity of the Approved Annual Financial Statements .......................................................... 65 
4.       Special Audit because of an Impermissible Undervaluation .................................................... 65 

IX.      Winding Up and Declaration of Nullity in Respect of the Company ......................................... 66 

X.       Affiliated Companies ................................................................................................................. 66 

XI.      Criminal Law and Civil Penalty Provisions ............................................................................... 66 

G.       Effects of the Conversion ...................................................................................................... 67 

I.       Other Corporate Law Effects .................................................................................................... 67 

1.       Legal Effects of the Conversion................................................................................................ 67 
2.       Dividend Entitlements ............................................................................................................... 67 

II.      Accounting and Tax Continuity ................................................................................................. 67 

III.     Effects of the Conversion on the Shares and Stock Exchange Trading .................................. 68 

1.       Effects on the Shares of PUMA AG.......................................................................................... 68 
2.       Effects on the Stock Exchange Trading ................................................................................... 68 
Conversion Report                                                                page 5 of 68




Preface of the Chairman of the Supervisory Board and the
Chairman of the Management Board of PUMA AG

To our shareholders:
In recent years, PUMA has grown very successfully as a desirable and sustainable sport-
lifestyle company. The management board (Vorstand) and the supervisory board (Aufsichts-
rat) of PUMA AG propose a further consistent step in the development of PUMA AG and ask
for your approval in the annual general meeting on 14 April 2011 of the conversion of PUMA
AG into a European Stock Corporation (Societas Europaea, SE).
Since the inception of the business in 1924 and the first official registration as a company in
1948 PUMA has undergone several changes in its legal form. The original commercial busi-
ness of an entrepreneurship was transformed into a limited liability company and later into a
stock corporation. In 1986, PUMA AG became a publicly listed company.
PUMA today has more than 9,300 employees. More than 30% thereof are employed in the
member states of the European Union and the signatory states of the European Economic
Area. The proposed conversion of PUMA AG into a European Stock Corporation marks a
further step in the Company’s development following the successful expansion of the
Groups’ international activities and the strong growth in recent years.
PUMA AG will continue to have its registered office in Germany. The management board and
the supervisory board of PUMA AG are committed to this country and the company’s historic
roots.
The conversion will preserve the legal and economic identity of the company. The participa-
tions held in the company by the shareholders will remain unchanged.
By way of the conversion, the management board and the supervisory board propose to
change PUMA AG’s current two-tier board structure, with a management board (Vorstand)
and a supervisory board (Aufsichtsrat), into the internationally common structure of a one-tier
board (Verwaltungsrat). As such, it enables to achieve corporate flexibility, while maintaining
the current level of employee co-determination of one-third. Employee representatives in the
Board of PUMA SE will represent all PUMA Group employees in the member states of the
European Union and the signatory states to the European Economic Area. The conversion
facilitates the development of an open and international corporate culture and, thereby, the
implementation of PUMA’s five-year-strategic company plan.
The management board and the supervisory board are convinced that the conversion - com-
bined with the long-term strategy focused on profitable growth and sustainability - will further
promote PUMA’s successful path into the future.




François-Henri Pinault                          Jochen Zeitz
Chairman of the Supervisory Board of            Chairman of the Management Board of
PUMA AG                                         PUMA AG
Conversion Report                                                                page 6 of 68




A.     Introduction

PUMA AG (“PUMA AG” or the “Company”) is a German Stock Corporation, incorporated in
accordance with German laws with its registered office in Herzogenaurach, Germany, regis-
tered with the commercial register of the local court (Amtsgericht) of Fuerth under the regis-
tration number HRB 3175.
The management board and supervisory board propose to the general meeting of PUMA AG
to convert PUMA AG by way of change of the legal form into a European Stock Corporation
(Societas Europaea, SE) pursuant to Art. 2 para. 4 in connection with Art. 37 of the Council
Regulation (EC) no. 2157/2001 of 8 October 2001 on the Statute of a European Company
(SE-Regulation/Verordnung über das Statut der Europäischen Gesellschaft, “SE-VO”) in con-
nection with the Law for the Implementation of Council Regulation (EC) number 2157/2001 of
8 October 2001 on the Statute of a European Company of 22 December 2004 (SE Imple-
mentation Act/SE-Ausführungsgesetz, “SEAG”) (the “Conversion”).
The Conversion is based on the conversion plan, which has been prepared by the manage-
ment board (Vorstand) of PUMA AG according to Art. 37 para. 4 SE-VO and which has been
notarized on 28 January 2011 (role of deeds 147/2011 of notary public Markus Kühnlein,
Herzogenaurach) (the “Conversion Plan”). The draft SE-Articles of Association have been
notarized as an attachment to the Conversion Plan (the “SE-Articles of Association”).
The Conversion Plan needs to be consented and the SE-Articles of Association need to be
approved by the general meeting of PUMA AG (Art. 37 para. 7 SE-VO) (the “Conversion
Resolution”).
Prior to the decision of the AGM, one or several independent expert auditors (conversion
auditors) have to certify in accordance with Art. 37 para. 6 SE-VO, that the Company has net
assets at least equivalent to the sum of its subscribed share capital plus its capital reserves
which are neither distributable pursuant to statutory provisions nor to the articles of associa-
tion. The regional court (Landgericht) of Nuernberg-Fuerth has chosen and appointed De-
loitte & Touche GmbH Wirtschaftsprüfungsgesellschaft, Berlin, Mr. Reinhard Scharpenberg,
as independent expert auditors in this respect. The independent expert auditors have ac-
complished their audit and certified on 28 January 2011 that PUMA AG holds net assets ne-
cessary for the capital maintenance requirements according to Art. 37 para. 6 SE-VO (the
“Net Assets Certificate”).
A conversion according to Art. 37 SE-VO is based on the principle of legal and economic
continuity of the legal entity prior to and after the change of the legal form (Rechtsträgeriden-
tität). The legal participations of the shareholders in PUMA AG remain unchanged.
The involvement of the employees in an SE with registered seat in Germany, i.e. each pro-
cedure including the information, the consultation and the co-determination, by way of which
employees are able to influence the decision-making of the Company, is subject to the provi-
sions of the Act on the Participation of Employees in European Company of 22 December
2004 (SE Employee Participation Act/SE-Beteiligungsgesetz, “SEBG”) which implements
council directive 2001/86/EC of 8 October 2001, supplementing the statute for the European
Conversion Report                                                             page 7 of 68



Company with regard to the involvement of employees into German law (“SE Employee In-
volvement Directive”). In addition, provisions implementing the SE Employee Directive into
the local law of the member states of the European Union (“EU States”) and of the signatory
states of the European Area (“EEA States”, together the “EU and EEA States”), in which
subsidiaries and business establishments of PUMA AG have employees, apply to the em-
ployee participation in PUMA SE.
In the framework of the Conversion, an employee involvement procedure (the “Employee
Involvement Procedure”) according to SEBG has to be accomplished, during which
representatives of employees employed within the EU and EEA States negotiate with the
management board of PUMA AG an agreement concerning the involvement of employees of
PUMA SE (the “Employee Involvement Agreement”). The employees are represented by a
special negotiating body (the “Special Negotiating Body”). In case, the Special Negotiating
Body and the management board of PUMA AG cannot mutually agree on an Employee In-
volvement Agreement, statutory provisions apply. The German One-Third-Co-Determination
Act (Drittelbeteiligungsgesetz, “DrittelbG”), which currently applies to PUMA AG, will not be
applicable to PUMA SE.
The management board of PUMA AG has prepared this conversion report (the “Report”) in
accordance with Article 37 para. 4 SE-VO. In the Report, explanations and the reasons shall
be given for the legal and economic aspects of the Conversion and the effects for the share-
holders and employees of the change of the legal form of a German Stock Corporation (Ak-
tiengesellschaft, “AG”) into the legal form of an SE shall be stated.
The Report includes information on PUMA AG (Chapter B.), principle aspects of the Conver-
sion (Chapter C.), the implementation of the Conversion (Chapter D.), explanations of the
Conversion Plan and the SE-Articles of Association (Chapter E.) and the comparison be-
tween PUMA AG and PUMA SE, particularly taking into account the legal position of the
shareholders (Chapter F.) as well as effects of the Conversion (Chapter G.), including other
corporate law effects, the accounting and tax effects and the consequences for PUMA AG’s
stock exchange trading.
Conversion Report                                                             page 8 of 68




B.     PUMA AG


I.     Overview of PUMA AG and PUMA Group
PUMA AG is the operating holding company of the PUMA Group of companies. PUMA AG
and its group companies are hereinafter also referred to as “PUMA Group”.


II.    History
The formation of PUMA is more than 80 years ago. In 1924, brothers Rudolf und Adolf
Dassler founded the company “Gebrüder Dassler Schuhfabrik” (Dassler Brothers Shoe Fac-
tory) in Herzogenaurach, Germany. In 1948 Rudolf Dassler separated his business activities
from the ones of his brother and founded the PUMA Schuhfabrik Rudolf Dassler. PUMA fo-
cused on the production and delivery of sporting shoes and equipment. In 1952, Rudolf
Dassler developed the so-called “SUPER ATOM” and its enhanced version “BRASIL” in
1953, a special football shoe with screw in studs. In 1960, PUMA was the first shoe manu-
facturer to use the technologically advanced vulcanization production technique. In 1968,
PUMA’s running shoe “MEXICO 1968” amazed with its innovative brush soles.
PUMA has always been focused on supporting outstanding single athletes; hereunder foot-
ball stars like Pelé, Diego Maradona and Lothar Matthäus as well as further top athletes like
Michael Schumacher and Usain Bolt.
From the 1960ies onwards, PUMA constantly expanded its international reach. This was in-
itially done by way of setting up subsidiaries and entering into license agreements.
Since 2000, PUMA acquired the following sports brands: The Tretorn group, mainly produc-
ing foot and rainwear, in the year 2001, the Brandon companies specialized in corporate
merchandise in 2009, a 50.1% majority stake in the Dobotex group, active in the sport socks
production 2009 and the brand Cobra Golf, a leading golf equipment manufacturer, in April
2010.
A further milestone was PUMA’s stock exchange listing at Frankfurt and Munich stock ex-
change in 1986 following the conversion into a German stock corporation (Aktiengesell-
schaft).
In 1993, when PUMA AG passed through deep crises, Jochen Zeitz was appointed chairman
of the management board of PUMA AG at the age of thirty, becoming the youngest chairman
in Germany to head a public company. Since his appointment, Jochen Zeitz has successfully
restructured the company. He managed to turn PUMA AG from a low price brand into a pre-
mium sport lifestyle company and one of the top three brands in the sporting goods industry
by sticking to a long-term development plan he introduced at his beginning. The consolida-
tion strengthened PUMA’s position as the leading sport lifestyle company in the long run and
created a platform for the further global expansion of the company and the implementation of
its strategy.
Conversion Report                                                                page 9 of 68



In 2007, the French luxury group PPR acquired more 60% of the PUMA shares by way of
public tender offer. Today, PPR holds 71,58% of the PUMA AG shares still via its 100% sub-
sidiary SAPARDIS S.A..


III.   Registered Office, Financial Year and Corporate Purpose
PUMA AG has its registered office in Herzogenaurach, Germany. Its business address is
Würzburger Str. 13, 91074 Herzogenaurach, Germany. It is registered with the commercial
register of the local court in Fuerth, Germany, under the registration number HRB 3175.
The financial year of PUMA AG corresponds to the calendar year.
The corporate purpose of PUMA AG is, pursuant to Section 2 para. 1 of its articles of associ-
ation, the production and merchandising of shoes, apparel and sporting equipment of all
kinds.
The Company may according to Section 2 para. 2 of its articles of association enter into all
transactions and undertake all measures which appear appropriate to serve the purpose of
the Company. The Company is also authorised to establish, acquire and hold an interest in
other enterprises of a similar or related kind - or, in exceptional cases, of a different kind -
and may manage such enterprises directly or may limit itself to the management of its inter-
est therein. The company may enter into joint venture or co-operation agreements and may
allocate its operations in whole or in part among its affiliates.
Conversion Report                                                       page 10 of 68




IV.   Participations and Business Activities


1.    Participations
The affiliates of the PUMA Group, domiciled in the EU and EEA States can be seen in the
following Structure Chart.
Conversion Report                                                                  page 11 of 68




2.     Business Activities and Key Financial Data of PUMA Group
PUMA Group is a sport and lifestyle company with more than 9,300 employees worldwide.
Approx. 3,300 employees, representing more than 30% of the total workforce, are employed
in the EU and EEA States.


a)     Corporate Strategy and Business Fields
With the objective of being "The Most Desirable and Sustainable Sportlifestyle Company”,
PUMA's position as one of the few, true multi-category brands has been strengthened. The
opportunities offered by the sport-lifestyle market have been systematically exploited in all
categories and regions. As a multi-category supplier, PUMA is active in categories and busi-
ness fields that suit its unique brand positioning, and in which permanent value increases
can be achieved. PUMA is positioned as a sport-lifestyle brand that takes pleasure in com-
bining sports and lifestyle influences and which strives to contribute to a better world. Its
sport performance and lifestyle labels include categories such as football, running, motor-
sports, golf and sailing. PUMA’s “Black Label” features collaborations with renowned de-
signer labels such as Alexander McQueen, Yasuhiro Mihara and Sergio Rossi.
The above-mentioned brand positioning has been supported by selectively expanding the
existing product categories, by regional expansion and by expansion with non-PUMA brands.
Besides PUMA, the PUMA Group owns the brands Cobra Golf and Tretorn.
Cobra Golf is a leading golf equipment manufacturer, committed to providing superior-quality,
high performance products for golfers of all abilities. Cobra golf clubs offer golfers a competi-
tive performance advantage and functionality through innovative design, such as nine point
face technology, adjustable flight technology and baffler rail technology. Cobra Golf is a ma-
jor brand of COBRA-PUMA GOLF, which became a corporate division of PUMA North
America in April 2010.
Tretorn is casually refined and stylishly understated. Established by Henry Dunker in Hel-
singborg, Sweden at the end of the 19th century, Tretorn takes inspiration from its Scandina-
vian roots and carries a distinct vitality of spirit throughout its collection of leisure shoes, rub-
ber boots and tennis balls. Tretorn’s expertise in rubber-made products demonstrates a con-
sistent commitment to quality and brand over hype, offering a collection appreciated by cus-
tomers with a practical sensibility and a lifestyle largely enjoyed outside. Tretorn is part of
PUMA Group since 2001, the Swedish outdoor specialist being the first of several acquisi-
tions of PUMA AG.
With effect as of 1 January 2009, PUMA AG acquired Brandon Company AB. Brandon Com-
pany AB, based in Gothenburg, has specialized in branded corporate merchandising and
experience marketing solutions for its clients, including blue-chip companies.
Also as of 1 January 2009 PUMA AG became majority shareholder of Dobotex International
BV. Dobotex International is an exclusive licensing partner of various worldwide brands in
fashion, sport and sport-lifestyle segments, which was founded in 1979 and is located in ‘s-
Conversion Report                                                                page 12 of 68



Hertogenbosch, the Netherlands. Dobotex International develops, produces and distributes
socks and bodywear for PUMA and socks for Tommy Hilfiger.


b)     Key Figures of PUMA Group for the Financial Years 2008 through 2010

           Key Figures in mn. EUR                        2008        2009         2010

           Turn-Over                                   2,524.2     2,447.3      2,706.4

           Gross Profit                                1,306.6     1,243.1      1,344.8

           Operational Results (EBIT)                    325.4       146.4       306.8

           Group Earnings                                231.6        77.3       202.2

           Number of Employees at the End of the                                 9,697
                                                        10,069       9,646
           Year

           Return on Equity                             19.8%        7.0%        14.6%

           Cash-flow Return on Investment (CFROI)       21.7%       14.9%        15.6%




aa)    The Year 2008
The year 2008 was marked by major sporting events. PUMA was able to capitalize on these
events and continued to fortify its position as a desirable sport-lifestyle brand. In autumn
2008 in connection with the global financial crisis, the world economy began to slow down
significantly. Despite the decline in consumer spending, PUMA succeeded in posting new
record sales. Global brand sales rose by 1.1% to almost EUR 2.8 billion. Consolidated sales
grew by 6.3% to over EUR 2.5 billion. Consolidated sales thus grew for the fourteenth con-
secutive year, and ten of these years saw double-digit growth. The operating profit before
special items totaled EUR 325.4 million or 12.9% of sales.


bb)    The Year 2009
As a consequence of the financial crisis and its impact on the global economy, the year 2009
proved to be very challenging for all market participants. Despite the global recession and
only a few major sporting events, PUMA succeeded in standing its ground in the difficult
market environment. The performance of Usain Bolt at the World Athletics Championships in
Berlin, where he broke the 100m and 200m world records, proved to be a particular highlight
for the PUMA brand.
In view of the emerging economic deceleration, PUMA had already implemented measures
pro-actively in the previous year so as to ensure the Company’s high profitability also in the
future. To this end, the management implemented a cost reduction program in 2009, which
will annually reduce the initially planned costs. One-off expenses in the amount of EUR 127.8
million serve to optimize the retail operations portfolio, the global organizational structure and
the operational processes.
Conversion Report                                                                               page 13 of 68



Global brand sales decreased by 5.8% to approx. EUR 2.6 billion. Consolidated sales
dropped by 3.1% to approx. EUR 2.5 billion. The operating profit before special items totaled
EUR 146.4 million or 6.0% of sales, compared to 12.9% in the previous year.


cc)    The Year 2010
In 2010 global brand sales increased by 9.8% and were close to EUR 2.9 billion Consoli-
dated sales increased by 10.6% in Euro terms to over EUR 2,7 billion.
The operating profit rose by 110.0% to EUR 306.8 million or 11.3% of sales, and thereby
came close to the results of 2008.


dd)    Key Figures of PUMA Group in the Business Fields
                                             2008                     2009                     2010
         PUMA Group Development
                                         (in mn. EUR)             (in mn. EUR)             (in mn. EUR)

       Sales

       Brand Sales                               2,767.9                 2,607.6                  2,862.1

       Consolidated Sales                        2,524.2                 2,447.2                  2,706.4

       Footwear                                  1,434.3                 1,321.7                  1,424.8

       Apparel                                    899.3                    846.2                    941.8

       Accessories                                190.6                    279.4                    340.3

       Result of Operations

       Gross Profit                              1,306.6                 1,243.1                  1,344.8

       Royalty and commission
                                                    25.7                    20.6                     19.1
       income




c)     Key Figures of PUMA AG for the Financial Years 2008 through 2010

       Key Figures in mn. EUR            2008                   2009                     2010

       Turn-Over                                        360.2                    286.4               300.0

       Profit from Ordinary Business                    187.2                     93.1               162.6
       Activities

       Annual Surplus                                   172.8                     79.7               119.5

       Number of Employees at the End                    869                      717                     706
       of the Year

       Return on Equity on Annual Sur-              39.1%                    23.9%                  25.5%
       plus
Conversion Report                                                            page 14 of 68



V.     Share Capital and Shareholders


1.     Share Capital
PUMA AG’s share capital amounts to EUR 38,611,107.84 and is divided into 15,082,464 no
par-value shares (Stückaktien) with the same pro-rata amounts in the subscribed share capi-
tal of EUR 2.56. The shares are bearer shares (Inhaberaktien).
According to Section 4 para. 2 and para. 5 of PUMA AG’s articles of association, the share
capital is contingently increased by up to EUR 3,916,800, divided into up to 1,530,000 no-par
value bearer shares with a pro-rata amount of the share capital attributable to each share of
EUR 2.56 (“Contingent Capital 2001”) and by up to EUR 1,536,000 divided into up to
600,000 new no-par value bearer shares with a pro-rata amount of the share capital attri-
butable to each share of EUR 2.56 (“Contingent Capital 2008”).
The Contingent Capital 2001 was created for the exercise of option rights, which were issued
under a stock option plan in accordance with the resolution adopted by the General Meeting
on 10 May 2001 (the “Stock Option Plan 2001”). The option rights issued on the basis of the
Stock Option Plan 2001 cannot be exercised any more. Consequently, it is envisaged to
cancel the Contingent Capital 2001 in due course after the Conversion becoming effective.
The Contingent Capital 2008 solely serves the purpose of granting subscription rights (stock
options) to members of the Management Board of PUMA AG and further executive staff of
the Company and subordinate affiliated entities, including members of management bodies,
in Germany and abroad, in accordance with the provisions set forth in the authorizing resolu-
tion of the General Meeting on 22 April 2008 (the “Stock Option Plan 2008”).
According to Section 4 paras. 3 and 4 of PUMA AG’s articles of association, the manage-
ment board is authorized to increase the share capital of PUMA AG by up to
EUR 7,500,000.00, by issuing, once or several times, up to 2,929,687 new no par-value
bearer shares with a pro-rata amount attributable to each share of EUR 2.56 against contri-
butions in cash (Authorized Capital I) and by up to another total of EUR 7,500,000.00, by
issuing, once or several times, up to 2,929,687 new no-par value bearer shares with a pro-
rata amount attributable to each share of EUR 2.56 against contributions in cash or in kind
(Authorized Capital II).


2.     Shareholders and Stock Exchange Trading
71.58% of the subscribed share capital in PUMA AG is held by SAPARDIS S.A., a 100%
subsidiary of PPR S.A., Paris.
Apart from PPR, based on the information available to PUMA AG, BlackRock Inc. and Bear
Sterns Int. Ltd. each hold more than 3% and Morgan Stanley holds more than 5% of PUMA
AG’s subscribed capital.
To PUMA AG’s knowledge, the remaining share capital is in free float.
The shares of PUMA AG are listed at the Frankfurt Stock Exchange (Frankfurter Wertpa-
pierbörse) in the M-DAX segment and are traded in Frankfurt am Main and Munich as well as
Conversion Report                                                                     page 15 of 68



on the electronic platform XETRA of the German Stock Exchange (Deutsche Börse AG). The
International Securities Identification Number (ISIN) of the PUMA shares is DE0006969603.


VI.       Corporate Bodies
The corporate bodies of PUMA AG are the management board (Vorstand), the supervisory
board (Aufsichtsrat) and the general meeting of the shareholders (Hauptversammlung). The
competences of these corporate bodies are stipulated in the German Stock Corporation Act
(Aktiengesetz, “AktG”), the articles of association of PUMA AG and in the rules of procedure
for the management board and the supervisory board. PUMA AG’s two-tier structure with a
management board and a supervisory board is mandatory according to the AktG. A member
of the management board cannot, at the same time, be a member of the supervisory board.
Pursuant to its articles of association, PUMA AG is represented by two members of the
management board or by one member of the management board together with a “Prokurist”
(a holder of a general power of attorney on behalf of the Company).


1.        Management Board
The management board conducts the business of PUMA AG and represents the Company
vis-à-vis third parties. The management board of PUMA AG consists of four ordinary mem-
bers and two deputy members within the meaning of Section 94 AktG. The management
board is collectively responsible for running the company’s business in accordance with the
articles of association of PUMA AG and the rules of procedure of the management board.
Without prejudice to the collective responsibility of the management board, each member of
the board bears individual responsibility for the remit he or she has been allocated, although
all members of the management board are obliged at all times to subordinate the interest of
their remit to the overall well-being of PUMA AG.
The management board has to report to the supervisory board on a regular basis, regarding,
in particular, the business policy and strategies, the profitability of the business, the ongoing
operation of the business and all other transactions which may be of significant importance
for the profitability and liquidity of PUMA AG and PUMA Group.

        Name           Position      Year of Ap-                      Responsibility/
                                     pointment                            Task

     Jochen Zeitz       CEO             1993                 Chairman of Management Board

 Melody Harris-      Deputy CEO                      Deputy Chairwoman of the Management Board,
                                        2008
  Jensbach                                                           Products

                       Member                      Finances, Controlling, Legal, Operations, Logistics, IT
     Klaus Bauer                        2009
                                                                 and Human Resources

 Stefano Caroti        Member           2008                       Wholesale and Retail

     Reiner Seiz    Deputy Member       2008                    Supply Chain-Management

Antonio Michele     Deputy Member
                                        2008                       Brand and Marketing
    Bertone
Conversion Report                                                                           page 16 of 68



2.       Supervisory Board
The supervisory board appoints the members of the management board and consults with
and supervises the management board with regard to the management of the Company.
Generally, the supervisory board may not assume any management functions. However, the
articles of association and the rules of procedure of the management board provide that the
management board may not carry out certain transactions without the approval of the super-
visory board.
The composition of the supervisory board of PUMA AG is governed by the provisions of AktG
and the DrittelbG. According to these provisions, two-thirds of the members are elected by
the shareholders and one-third by the employees. Currently the supervisory board consists
of six members, out of which four are representatives of the shareholders and two represent-
atives of the employees.
The following persons are members of the supervisory board of PUMA AG:

         Name                                Year of
                              Position                                  Other Memberships
(Practiced Profession)                       Election


                                              2007       Boucheron Holding S.A., Paris/France; Yves Saint
                                                           Laurent S.A.S., Paris/France; Gucci Group NV,
 François-Henri Pinault                                  Amsterdam/The Netherlands; FNAC S.A., Ivry sur
(Chairman of the Board        Chairman,                  Seine/France; SAPARDIS S.A., Paris/France; Soft
 and CEO (Président-         Shareholder                Computing S.A., Paris/France; Christie’s International
 Directeur Général) of      Representative              Ltd., London /UK; Sowind Group S.A., La Chaux-de-
PPR S.A., Paris/France)                                  Fonds/Switzerland; Bouygues S.A., Paris/France;
                                                               Artemis S.A., Paris/France; CFAO S.A.,
                                                                           Sèvres/France

                            Deputy Chair-     1993          Nobia AB, Stockholm/Sweden; Bastec AB,
    Thore Ohlsson
                             man, Share-                Malmö/Sweden; Elite Hotels AB, Stockholm/Sweden;
 (President of Elimexo
                            holder Repre-                Tretorn AB, Stockholm/Sweden; T. Frick AB, Vel-
AB, Falsterbo/Sweden)
                              sentative                     linge/Sweden; T.M.C. AB, Skanör/Sweden

  Jean-François Palus                         2007
(Deputy CEO and Chief                                   Gucci Group NV, Amsterdam/The Netherlands; CFAO
Financial Officer (Direc-    Shareholder                S.A., Sèvres/France; Conforama Holding S.A., Longes
 teur Général Délégué /     Representative                   Marne la Vallée/France; FNAC S.A., Ivry sur
 Directeur Financier) of                                     Seine/France; SAPARDIS S.A., Paris/France
PPR S.A., Paris/France)

   Grégoire Amigues                           2007
 (Director (Directeur du
                             Shareholder                  SAPARDIS S.A., Paris/France; LUMINOSA S.A.,
 Plan et de la Stratégie)
                            Representative                               Paris/France
    of PPR S.A., Pa-
       ris/France)

      Erwin Hildel                            2002                              ___
                             Employees’
   (Head of Ordering
                            Representative
Processing Department)

   Oliver Burkhardt                           2007                              ___
(User and System Sup-        Employees’
 port/Multi Media Spe-      Representative
        cialist)
Conversion Report                                                             page 17 of 68



3.     Committees
Depending on the specifics of PUMA AG and the number of members of the supervisory
board of PUMA AG, the supervisory board shall, according to Section 8 of its current rules of
procedure, constitute certain committees with sufficient expertise from its midst. They shall
serve to increase the efficiency of the supervisory board’s work and the handling of complex
issues. The respective committee chairmen shall report regularly to the supervisory board on
the work of the committees.
The rules of procedure foresee to set up an audit committee, which is responsible for the
supervision of the process of financial accounting, the efficiency of the internal control sys-
tem, the risk management system as well as the internal audit system. In accordance with
Section 100 para. 5 AktG at least one member of the audit committee shall be independent
and shall have expert knowledge regarding financial accounting or auditing. The supervisory
board’s proposal concerning the vote of the auditor that shall be put to vote at the sharehold-
ers’ meeting, shall be based on the audit committee’s recommendation, if such recommen-
dation is made.
The supervisory board shall also form a nomination committee composed exclusively of
shareholder representatives. Its responsibility is to propose suitable candidates to the super-
visory board for recommendation to the general meeting.
Subjects like the strategy of the Company, the compensation of the members of the man-
agement board, investments and financing of PUMA AG could, to the extent legally per-
missible, also be transferred to a committee. In this respect, the supervisory board has
formed a personnel committee to deal with the compensation of the members of the man-
agement board. Finally, the supervisory board is entitled to constitute a committee for pre-
paring its meetings and, to the extent legally permissible, taking decisions instead of the su-
pervisory board.


4.     German Corporate Governance Code
Effective implementation of the German Corporate Governance Code is an important ele-
ment of PUMA AG’s corporate policy. Pursuant to Section 161 AktG, the management board
and supervisory board of PUMA AG have to declare on an annual basis that the recommen-
dations of the "Government Commission on the German Corporate Governance Code"
(Deutscher Corporate Governance Kodex, “DCGK”) published by the Federal Ministry of Jus-
tice in the official section of the electronic Federal Gazette (elektronischer Bundesanzeiger)
have been and are being complied with or which of the recommendations have not or are not
being applied and why not. In compliance with statutory law, the declaration is permanently
accessible to the shareholders (Declaration of Conformity, Entsprechenserklärung) on the
website of PUMA AG under www.puma.com under “ABOUT PUMA”.


5.     Employees and Co-determination
As per 31 October 2010 PUMA Group has more than 9,300 employees worldwide, approx.
3,300 of these working in the EU and EEA States.
Conversion Report                                                         page 18 of 68



With regard to the election of the two employee representatives on the six-member supervi-
sory board of PUMA AG, which is composed on a one-third co-determination pursuant to
DrittelbG, only the German employees of PUMA Group have the active and passive voting
right in accordance with the provisions of the DrittelbG. There are no further supervisory
boards in the EU and EEA States with situated companies of PUMA Group, in which em-
ployees have participation rights.
At PUMA AG, a works council with 13 members is established based on the rules of the
German Works Council Constitution Act (Betriebsverfassungsgesetz, BetrVG).
Two works councils are in place at Austria PUMA Dassler Ges.m.b.H., one representing
white-collar employees having five members and the other representing blue-collar em-
ployees with three members.
At PUMA FRANCE SAS, eleven employee representatives have been elected.
In addition, there are two employee representatives at PUMA Nordic AB, four employee rep-
resentatives at PUMA Italy S.r.l. and one employee representative at PUMA Polska Spolka
i.o.o.
Conversion Report                                                               page 19 of 68




C.     Principle Aspects of the Conversion


I.     Reasons for the Conversion
One reason for the change of the legal form from PUMA AG into PUMA SE is that the man-
agement board wishes to emphasize, by way of the Conversion, the importance of PUMA
Group’s European-wide business. The legal form of an SE is the only supranational form
based on European law currently available to a German listed company. It facilitates the de-
velopment of an open and international corporate culture and enables to reflect the interna-
tional alignment of PUMA AG beyond Germany already by referring to the Company’s name.
Apart from the fact that PUMA has its historic and still strong roots in Europe, also in terms of
turnover, Europe continues to be a major market for PUMA covering approximately half of its
worldwide sales.
Another reason for the Conversion is to enable PUMA AG to adjust its current two-tier board
structure with a management board (Vorstand) and a supervisory board (Aufsichtsrat) to the
internationally common one-tier board system with one single board (Verwaltungsrat, the
“Board”). The Board shall direct PUMA AG, establish the general principles of its business
and supervise their implementation by the managing directors (Geschäftsführende Direkto-
ren, the “Managing Directors”). The Managing Directors are responsible for conducting the
ordinary course of business of PUMA SE.
Due to the Conversion, as third reason, the current level of the one-third co-determination
can be maintained, irrespective of future changes of the number of employees. The co-de-
termination will be based on a European-wide employee representation within the Board.
Consequently, the provisions of the German DrittelbG will not apply to PUMA SE. The level
of co-determination will rather be agreed upon in the Employee Involvement Agreement,
which shall be entered into between the management board of PUMA AG and the Special
Negotiating Body (Section 21 para. 6 SEBG, cf. Chapter D. IV. and E. I. No. 7 of this Report).
If an Employee Involvement Agreement cannot be reached the one-third co-determination
will be maintained based on subsidiary provisions in the SEBG. Further on, the employee
representatives will have participation rights not only in a supervising body like the supervi-
sory board of PUMA AG, but rather in a steering body of PUMA SE, the Board.
Considering the given reasons, the change of the legal form into an SE is a further consistent
step in the development of the Company, following the successful expansion of its interna-
tional business and the strong growth in the recent years. It will, together with the long-term
strategy of the company “Back on The Attack 2015”, build the basis for PUMA’s successful
path into the future.


II.    Alternatives to the Conversion
Prior to proposing the change of the legal form, the management board of PUMA AG has
examined alternatives to the Conversion. The result of its examination is that there are no
alternatives, which accommodate the interests of the Company and its shareholders in the
same way.
Conversion Report                                                             page 20 of 68



As a supranational legal form comparable to a German AG and providing the opportunity of a
stock market listing, the SE currently is the only available option for PUMA AG. The SE is a
corporation which both from a financing and a management point of view, is best to accom-
modate the needs of an enterprise with business activities all over the EU - such as PUMA -
and which allows for a stock market listing. Therefore, the SE provides to the internationally
active PUMA Group an opportunity to present itself accordingly.
Therefore, only a conversion of PUMA AG into an SE facilitates the accomplishment of the
aforementioned objectives in the interests of PUMA AG and its shareholders as well as the
PUMA Group.


III.   Estimated Costs of the Conversion
According to the current estimate of the management board, the overall costs of the conver-
sion will be approx. EUR 900,000. This estimate includes, in particular, the costs for prepa-
ratory measures, for the net asset value audit by the court-appointed auditor according to Art.
37 para. 6 SE-VO, for the notarization of the Conversion Plan, for the commercial register
registration, the costs of external advisors, the costs for the holding of the annual general
meeting of shareholders of PUMA AG and the required publications, the costs for the con-
duction of the procedure for the involvement of employees and for the technical change of
the stock listing and trading of “PUMA AG shares” to “PUMA SE shares”.
Conversion Report                                                            page 21 of 68




D.     Implementation of the Conversion


I.     Preparation of the Conversion Plan
Pursuant to Art. 37 para. 4 SE-VO, the management board has to prepare the Conversion
Plan. The SE-VO does not stipulate any requirements as to the content of the Conversion
Plan. To the extent that Art. 37 para. 4 SE-VO stipulates requirements with regard to the
statements relating to the legal and economic aspects, these refer to the conversion report,
i.e. this Report.
As a guideline for the content of the Conversion Plan, the management board has taken re-
course to the requirements set by Art. 20 SE-VO in respect of a merger plan, except where
these are specifically designed to meet the particular requirements of a merger. In accor-
dance with these provisions, the Conversion Plan has to contain stipulations regarding the
name and registered office of the Company and the SE, the SE-Articles of Association and
the Employee Involvement Procedure.
The Conversion Plan prepared by the management board, including the SE-Articles of Asso-
ciation, is explained in more detail in Chapter E. of this Report.
On 28 January 2011, the management board has adopted the Conversion Plan, including the
SE-Articles of Association, in the final version and has had it notarized.
The supervisory board has discussed the Conversion on 14 February 2011. Previously, the
Conversion Plan, including the SE-Articles of Association, and this Report were submitted to
the supervisory board. In its meeting on 14 February 2011, the supervisory board has re-
solved to submit the Conversion Plan, including the SE-Articles of Association, to the annual
general meeting of shareholders of PUMA AG on 14 April 2011, for consent and approval.


II.    Conversion Audit
Pursuant to Art. 15 para. 1 SE-VO in connection with Section 32 AktG, the incorporators
(Gründer) of an SE in general have to prepare a report on its formation (Gründungsbericht).
However, it follows from the rationale of Section 75 para. 2 UmwG that a formation report is
not required in case of a conversion by change of the legal form from one type of a corpora-
tion (Kapitalgesellschaft) into another type of corporation (Kapitalgesellschaft). Section 75
para. 2 UmwG provides that in the case of a merger a formation report and a formation audit
are not required if the transferring entity is a corporation. Accordingly, since PUMA AG as a
corporation is converted into an SE, which also is a corporation, no formation report has to
be prepared.
However, it can be implied from Art. 15 para. 1 SE-VO in connection with Section 33
para. 1 AktG, that a formation audit is to be conducted by the members of the Board of
PUMA SE. It is not required that a formation audit is conducted by external auditors pursuant
to Art. 15 para. 1 SE-VO in connection with Section 33 para. 2 AktG, since the rationale of
Section 75 para. 2 UmwG which was described above also applies in this regard. It is envi-
Conversion Report                                                              page 22 of 68



saged that the formation audit is conducted by the board members after its constitutional
meeting following the resolution of the general meeting on 14 April 2011.
Pursuant to Art. 37 para. 6 SE-VO one or more conversion auditors have to issue the Net
Assets Certificate prior to the consent to the Conversion Plan and the approval of the SE-
Articles of Association by the AGM of PUMA AG certifying that the net assets of the Com-
pany are at least equivalent to its subscribed capital plus those reserves which pursuant to
statutory provisions or the articles of association may not be distributed. By court order dated
6 December 2010, the District Court Nuernberg-Fuerth has appointed Deloitte & Touche
GmbH Wirtschaftsprüfungsgesellschaft, Berlin, Mr. Reinhard Scharpenberg, as conversion
auditor. Deloitte & Touche has issued the Net Assets Certificate pursuant to Art. 37 para. 6
SE-VO on 28 January 2011 with the following certification:
“As a concluding result of our mandatory audit according to article 37 paragraph 6 SE-VO,
based on the charters, books and documents provided and the information and evidences
given, we confirm that PUMA AG has the net assets at least equivalent to its capital plus
those reserves which must not be distributed under the law or the statutes.”


III.   Annual General Meeting of Shareholders´ of PUMA AG
The AGM has to consent to the Conversion Plan and has to approve the Articles of Associa-
tion (Art. 37 para. 7 SE-VO).
Therefore, the management board and the supervisory board of PUMA AG submit the ap-
proval of the Conversion Plan, including the appointment of the auditor for PUMA SE, and of
the SE-Articles of Association, including the appointment of the shareholder representatives
on the Board of PUMA SE, to the AGM.
From the convening of the annual general meeting of the shareholders of PUMA AG, the
Conversion Plan, including the SE-Articles of Association, the Net Assets Certificate issued
by Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft, Berlin, Mr. Reinhard Schar-
penberg, and this Report will be available for inspection at the offices of PUMA AG,
Würzburger Straße 13 and PUMA-WAY 1, 91074 Herzogenaurach, Germany and on PUMA
AG’s website under www.puma.com under “ABOUT PUMA”. Upon request, a copy of these
documents will be sent to each shareholder promptly and free of charge.


IV.    Procedure for the Involvement of Employees in PUMA SE
The Employee Involvement Procedure, provided for in the SEBG, regarding the involvement
of the employees in PUMA SE is to be conducted in the course of the conversion of PUMA
AG into an SE in order to safeguard the rights to participate in the decisions of the Company
acquired by the employees of PUMA AG. The objective of the Employee Involvement Proce-
dure is the conclusion of the Employee Involvement Agreement regarding the involvement of
employees in the SE, i.e., in particular, regarding the participation of the employees in the
Board of PUMA SE and the procedure for the information and consultation of employees
either by establishment of an SE works council or in another way to be agreed upon in the
Employee Involvement Agreement.
Conversion Report                                                             page 23 of 68



For the conduction of the negotiations a Special Negotiating Body is to be established by the
employees. The constitutional meeting of the Special Negotiating Body has taken place on
20 January 2011 in Herzogenaurach, Germany. The Special Negotiating Body has thereu-
pon entered into negotiations with the management of PUMA AG regarding the Employee
Involvement Agreement. By law, the negotiations shall at the latest be finished within six
months following the constitutional meeting of the Special Negotiating Body, with an option
for the negotiating parties to prolong this period by another six months. In case no Employee
Involvement Agreement will be reached within this negotiation period, the statutory regula-
tions by operation of law pursuant to Sections 22 et seq. SEBG apply.
The details of the Employee Involvement Procedure are described in Section 7 of the Con-
version Plan and are commented on in Chapter E. I. No. 7 of this Report.


V.     Registration of the Conversion into PUMA SE
In order to take effect, the Conversion of PUMA AG into PUMA SE will have to be registered
with the commercial register of the local court in Fuerth. Filing for registration will be done
after the AGM has approved the Conversion Plan and after the Employee Involvement Pro-
cedure will have been accomplished.


1.     Filing and Registration with the Commercial Register
The filing of the Conversion for registration with the commercial register has to be made by
the incorporators (Gründer), Board Members and Managing Directors (Art. 15 para. 2 SE-VO
in connection with Section 21 SEAG). In case of a conversion by change of legal form, the
incorporator is the Company itself, represented by its management board.
In connection with the filing, the management board has to declare that an action against the
validity of the Conversion Resolution has not been filed within the applicable period or that
such action has been finally dismissed or withdrawn (so-called negative declaration (Negati-
verklärung), Art. 15 para. 1 SE-VO in connection with Sections 198 para. 3, 16 para. 2
UmwG).
In case of an action against the validity of the Conversion Resolution of the AGM a clearance
procedure (Freigabeverfahren) pursuant to Art. 15 para. 1 SE-VO in connection with Sec-
tions 198 para. 3, 16 para. 3 UmwG may be conducted. This way, upon an application by
PUMA AG, the blockade of the register due to the actions raised may be overcome if the ac-
tions filed are inadmissible or evidently unfounded, lack the necessary quorum of shares
supporting the action or if, in the unbiased opinion of the court in consideration of the mate-
riality of the violations of law alleged in the action, the effectiveness of the Conversion is
deemed to have priority in order to avert the material disadvantages, for the Company and its
shareholders (cf. Section 16 para. 3 sentence 3 UmwG).
Furthermore, PUMA SE may only be registered with the commercial register and thereby be
established, if the Employee Involvement Procedure has been completed (cf. Section 7 of
the Conversion Plan and the related comments in Chapter E. I. No. 7 of this Report). This is
the case if either the Employee Involvement Agreement has been concluded, or if the period
of time for the negotiations of Employment Involvement Agreement has expired without an
Conversion Report                                                             page 24 of 68



agreement having been concluded (Art. 12 para. 2 SE-VO). Negotiations for the Employee
Involvement Agreement have commenced after the constitutional meeting of the Special Ne-
gotiating Body on 20/21 January 2011.
The SE-Articles of Association must not, at any time, be in contradiction to a negotiated Em-
ployee Involvement Agreement (Art. 12 para. 4 SE-VO). In case of such contradiction, the
Articles of Association are to be amended by resolution of the general meeting of PUMA AG.
If the Employee Involvement Agreement will not be concluded, the level of employee partici-
pation which existed at PUMA AG prior to the conversion remains in place (cf. Sections 35
para. 1, 34 para. 1 no. 1 in connection with Section 22 SEBG), only its legal basis will change
from the provisions of the DrittelbG to the SEBG. With regard to the question whether the
existing rights of the employees are maintained, a purely formal test on the basis of quantity
criteria is to be applied. For the purpose of such test, the ratio of the number of employee
representatives on the Board of PUMA SE to the total number of administrative board mem-
bers has to be compared to the ratio of the number of employee representatives on the su-
pervisory board of PUMA AG to the total number of supervisory board members. The pro-
portion of employee representatives on the Board of PUMA SE may not be lower than on the
supervisory board of PUMA AG. The legal basis for this is Section 15 para. 4 no. 1 SEBG,
which does not protect the absolute number of employee representatives, but the percentage
ratio of employee representatives and shareholder representatives. As a consequence, the
Board of PUMA SE is to be composed on the basis of two-thirds shareholder representatives
and one-third employee representatives.
If concluded, the Employee Involvement Agreement, too, has to provide (at least) for a Board
composed on a two-third/one-third basis (Sections 21 para. 6, 15 para. 5 SEBG). The SE-
Articles of Association provide for the composition on a two-third/one-third basis of the Board
with employee representatives.
If all registration requirements have been met, the Conversion is to be registered with the
commercial register at the registered office of PUMA AG. Upon registration, the SE acquires
legal personality (cf. Art. 16 para. 1 SE-VO). However, the principle of identity of the legal
entity (Rechtsträgeridentität) applies, i.e. PUMA AG does not cease to exist, but merely
changes its legal form.


2.     Establishment of the First Board of PUMA SE and Appointment of Managing
       Directors
Upon the effectiveness of the Conversion, the offices of the acting members of the manage-
ment board and of the supervisory board of PUMA AG terminate. PUMA SE shall, other than
PUMA AG, be organized according to the one-tier system with a Board as steering body and
the Managing Directors responsible for the ordinary course of business.


a)     Board of PUMA SE
The first Board of PUMA SE shall consist of nine members (the “Board Members”). Six of the
Board Members will be appointed by the shareholders, the remaining three Board Members
will be determined by the employees.
Conversion Report                                                               page 25 of 68



The shareholder representatives on the first Board of PUMA SE are appointed in Section 7
para. 3 of the Articles of Association. Therefore, upon approval of the Articles of Association
by the AGM on 14 April 2011, the shareholder representatives of the Board are appointed.
The employee representatives of the first Board shall be appointed by the Employee In-
volvement Agreement or, failing the conclusion of an Employment Involvement Agreement,
by statutory appointment rules. Until the Employee Involvement Procedure will be consum-
mated, the employee representatives shall be appointed by way of court order under consid-
eration of the results of the employee involvement procedure at that point in time (Section 30
SEAG, Section 104 AktG).
The following employee representatives will be appointed in accordance with the provisions
to be agreed upon in the Employee Involvement Agreement. If no Employee Involvement
Agreement will be entered into, the statutory provisions of Section 36 SEBG would apply (cf.
Section 7 of the Conversion Plan and Chapter E. I. No. 7 of this Report).
The election of the employee representatives is subject to the provisions of the Employee
Involvement Agreement or, in case no provisions for the election are foreseen, the provisions
of the locally applicable laws. In case, EU and/or EEA States have not implemented any
election provisions, the SE-works council is entitled to determine the employee representa-
tives.
The employee representatives appointed by the employees will be submitted to formal vote
by the next general meeting of PUMA SE, unless the Employee Involvement Agreement pro-
vides otherwise, Art. 43 para. 3 sent. 3 SE-VO. The general meeting of PUMA SE has to
elect the proposed employee candidates submitted to the general meeting, because the
election proposals are binding if made in accordance with the Employee Involvement
Agreement or with locally applicable laws.
The initially appointed Board will constitute itself after the AGM and prior to the filing of the
Conversion with the commercial register for registration, as the Board Members have to sign
the filing of the Conversion with the commercial register; in its constitutional meeting, the
Board will also elect the chairman as well as a deputy chairman of the Board and will appoint
the Managing Directors. Jochen Zeitz is to become chairman of the Board.


b)     Managing Directors of PUMA SE
The first Board of PUMA SE will appoint the Managing Directors (cf. Art. 43 para. 1
sent. 2 SE-VO in conjunction with Section 40 para. 1 sentence 1 SEBG) in its constitutional
meeting. The appointment needs to be made prior to the Conversion becoming effective, as
the Managing Directors have to be included in and have to sign the filing of the Conversion
with the commercial register (Section 21 SEAG). It is intended that the current members of
the Management Board of PUMA AG will become Managing Directors of PUMA SE.
Conversion Report                                                             page 26 of 68




E.     Explanations of the Conversion Plan and the SE-Articles of Association


I.     Comments on the Conversion Plan


1.     Conversion of PUMA AG into PUMA SE (Section 1 of the Conversion Plan)
Section 1 of the Conversion Plan stipulates that PUMA AG is to be converted into a Societas
Europaea (SE) pursuant to Art. 2 para. 4 in connection with Art. 37 SE-VO.
It determines that with Austria PUMA Ges.m.b.H with its registered office in Salzburg, Aus-
tria, established on 29 July 1986 by the Company and registered in the company register
(Firmenbuch) at the registered office of the Austria PUMA Ges.m.b.H under number 58389 t,
PUMA AG has had for 14 years, and thus for more than two years, a subsidiary company
governed by the law of another EU State. The requirement for the conversion into an SE
pursuant to Art. 2 para. 4 SE-VO is thereby fulfilled.
The Conversion Plan further clarifies that the interests held by the shareholders in PUMA AG
continue to exist unchanged after the conversion because of the identity of the legal entity.


2.     Effectiveness of the Conversion (Section 2 of the Conversion Plan)
Section 2 of the Conversion Plan determines that the Conversion will become effective upon
the registration of PUMA SE with the commercial register. The registration may only occur
after the conclusion of the Employee Involvement Procedure. For this purpose, negotiations
have to be conducted with the Special Negotiating Body of the employees on an Employee
Involvement Agreement (cf. Section 7 of the Conversion Plan and No. 7 below).


3.     Company Name, Registered Office, Subscribed Capital and SE-Articles of
       Association, No Cash Exit Offer (Section 3 of the Conversion Plan)
In Section 3, the Conversion Plan stipulates the company name, the registered office and the
articles of association of PUMA SE and clarifies that the applicable legal rules do not provide
for a cash exit offer in case of a conversion of legal form from an AG into an SE.
The future company name of PUMA AG is PUMA SE. This change of the company name is
necessary, because an SE must place the addition "SE" in front of or behind its company
name (Art. 11 para. 1 SE-VO). The registered office of the Company will continue to be si-
tuated in Herzogenaurach, Germany (Section 3 para. 2 of the Conversion Plan).
Section 3 para. 3 of the Conversion Plan contains provisions regarding the subscribed capi-
tal. The subscribed capital of PUMA SE is made up of the subscribed capital of PUMA AG in
the amount existing at the point in time of the registration of the Conversion with the com-
mercial register (the current amount being EUR 38,611,107.84). The shareholders of PUMA
AG will hold an interest in the subscribed capital of PUMA SE in the same extent and with
the same number of no-par value shares as they did in respect of the subscribed capital of
PUMA AG immediately prior to the Conversion becoming effective. The arithmetic portion of
each no-par value share in the subscribed capital is maintained in the way it exists imme-
diately prior to the Conversion becoming effective.
Conversion Report                                                                page 27 of 68



The same applies to the contingent capitals and the authorized capitals existing pursuant to
Section 4 para. 2 through para. 5 of the articles of association of PUMA AG. Section 3 para.
4 of the Conversion Plan underlines this continuity by referring to the SE-Articles of Associa-
tion enclosed to the Conversion Plan. Therefore, Section 3 para. 4 of the Conversion Plan
states that the authorized capitals of PUMA SE (Section 4 para. 3 and para. 4 of the SE-Ar-
ticles of Association), their division and the allocation to the shares correspond to the existing
authorized capitals of PUMA AG at the point in time the conversion will become effective and
that the conditional capitals of PUMA SE (Section 4 para. 2 and para. 5 of the SE-Articles of
Association), which correspond to the amounts stated in the corresponding articles of the
articles of association of PUMA AG at the point in time the Conversion will become effective,
maintain to exist. Therefore, the authorized capitals of up to EUR 7,500,000.00 (Authorized
Capital I) and of up to a further EUR 7,500,000.00 (Authorized Capital II) existing pursuant to
Section 4 para. 3 and para. 4 of the articles of association of PUMA AG correspond, in each
case, to those ones at PUMA SE pursuant to Section 4 para. 3 and para. 4 of the SE-Articles
of Association, respectively. As well, the contingent capitals of EUR 3,916,800.00 (Contin-
gent Capital 2001) and EUR 1,536,000 (Contingent Capital 2008) existing pursuant to Sec-
tion 4 para. 2 and para. 5 of the articles of association of PUMA AG correspond, in each
case, to the future contingent capitals pursuant to Section 4 para. 2 and para. 5, respectively,
of the SE-Articles of Association. Against this background, a parallelism is provided for by the
stipulation in Section 3 para. 4 of the Conversion Plan between the subscribed capital as well
as the amounts of the authorized and contingent capitals of PUMA AG and of PUMA SE.
This is independent of the fact that the Contingent Capital 2001 may be canceled, because it
will not be used any more as the options issued on the basis of the Stock Option Plan 2001
cannot be exercised any longer (cf. Chapter B. V. No. 1 of this Report).
In order to be able to make adjustments, if necessary, to the SE-Articles of Association re-
garding the subscribed capital, the authorized capitals and the conditional capitals, the su-
pervisory board of PUMA AG is entitled and instructed to make any adjustments, if neces-
sary, to the wording of the draft of the SE-Articles of Association prior to the registration of
the Conversion (Section 3 para. 5 of the Conversion Plan).
Finally, Section 3 para. 6 of the Conversion Plan explains that shareholders who object to the
Conversion are not being offered a cash compensation, since no such cash exit offer is pro-
vided for by statutory law in case of a conversion.


4.     Holders of Special Rights and Holders of Other Securities (Section 4 of the Con-
       version Plan)
In application, mutatis mutandis, of the statutory provisions governing the merger plan (cf.
Art. 20 para. 1 lit. f) SE-VO), the Conversion Plan shall set out the rights that will be con-
ferred by the SE to the holders of shares which carry special rights and to the holders of se-
curities other than shares, or, respectively, the measures proposed concerning these per-
sons.
At PUMA AG, there are no shareholders, which carry special rights.
As stipulated in Section 4 of the Conversion Plan, PUMA AG has issued the Stock Option
Plan 2001. The last outstanding option rights issued on the basis of the Stock Option Plan
Conversion Report                                                             page 28 of 68



2001 lapsed in the financial year 2009. Consequently, it is envisaged to cancel the Contin-
gent Capital I in due course after the Conversion becoming effective.
Section 4 para. 2 of the Conversion Plan describes two programs on stock appreciation
rights (SAR) with a term of five years each, which have been implemented by the managing
board with the approval of the supervisory board. The last tranche of stock appreciation
rights under the SAR-Program 2004 was issued in April 2006, the last tranche under the
SAR-Program 2006 in October 2006. The exercise price under the SAR-Program 2004
amounts to EUR 345.46 and the price under the SAR-Program 2006 is EUR 341.02. The
stock appreciation rights will presumably not meet the values. The stock appreciation rights
granted under the SAR-Program 2004 will lapse on 24 April 2011 and those under the SAR-
Program 2006 on 30 September 2011.
Pursuant to the explanations included in Section 4 para. 3 of the Conversion Plan, on the
basis of the resolution adopted by the general meeting of shareholders dated 22 April 2008,
the management board, with the approval of the supervisory board, and, as far as members
of the management board are beneficiaries, exclusively the supervisory board, is authorized
to issue of up to 1,200,000 subscription rights under the Stock Option Plan 2008 to members
of the management board (Group 1) and further executive staff of PUMA AG and subordi-
nated affiliated entities, including members of management bodies, in Germany and abroad
(Group 2) in several tranches until the end of the third month following the termination of the
annual general meeting of the shareholders of PUMA AG in the financial year 2013. The
Stock Option Plan 2008 is a performance share program. Up to 780,000 subscription rights
are attributable to members of Group 1 and 420,000 subscription rights to the members of
Group 2. The Contingent Capital I, which serves the fulfillment of the stock option plan 2008,
allows the issuance of up to 600,000 shares. The subscription rights have a term of five
years following with the date of the issuance of the subscription rights and can be exercised
first after two years following their issuance. The price to be paid for the share to be issued
following an exercise of subscription rights equals the mandatory minimum notional face
value of EUR 2.56 per share. As per 31 December 2010, 376,686 subscription rights have
been issued under the Stock Option Plan 2008, 96,500 of which may be exercised and 3,000
of which have been exercised in 2010.
Section 4 para. 4 of the Conversion Plan further clarifies that as a consequence of the Con-
version, the beneficiaries of the Stock Option Plan 2008 will receive subscription rights for
shares in PUMA SE instead of shares in PUMA AG. The number of shares receivable does
not change because of the Conversion. The contingent capitals which were created in order
to secure the subscription rights under the Stock Option Plans 2001 and 2008 continue to
exist in accordance with Section 4 para. 2 and Section 4 para. 5 of the SE-Articles of Associ-
ation, respectively (cf. Section 3 of the Conversion Plan and No. 3 above). However, as the
option rights issued on the basis of the Stock Option Plan 2001 cannot be exercised any
more, it is envisaged to cancel the Contingent Capital I in due course after the Conversion
will have become effective.
Conversion Report                                                                 page 29 of 68



5.     No Special Advantages (Section 5 of the Conversion Plan)
In accordance with the rules applicable to mergers (Art. 20 para. I lit. g) SE-VO), a provision
concerning special advantages has been included into the Conversion Plan. Special advan-
tages are such advantages which in the course of a conversion are granted to the conversion
auditor(s) issuing the Net Assets Certificate or to the members of the administrative, man-
agement, supervisory or controlling organs of the company undergoing the conversion, i.e.
PUMA AG, pursuant to Art. 37 para. 6 SE-VO.
In the course of the Conversion, no special advantages will be granted, neither to members
of the management board or the supervisory board of PUMA AG nor to members of the
Board or to Managing Directors of PUMA SE or the conversion auditor.
For reasons of legal precaution, it is pointed out in Section 5 para. 2 of the Conversion Plan
that, notwithstanding the statutory competences of the Board of PUMA SE to appoint the
Managing Directors pursuant to Section 40 SEAG, it is to be expected that the acting mem-
bers of the management board of PUMA AG will be appointed Managing Directors of PUMA
SE.
In Section 5 para. 3 of the Conversion Plan, it is in addition clarified that the acting chairman
of the management board of PUMA AG as well as the acting shareholder representatives of
the supervisory board of PUMA AG shall be appointed initial shareholder representatives of
the Board of PUMA SE.
Finally, it is pointed out in Section 5 para. 4 of the Conversion Plan that it is possible that the
current employee representatives in the supervisory board of PUMA AG will be appointed
members (employee representatives) of the Board.


6.     Corporate Bodies (Section 6 of the Conversion Plan)
Section 6 para. 1 of the Conversion Plan denominates as corporate bodies of PUMA SE the
Board and the general meeting. In addition, Section 6 para. 3 states that the Managing Di-
rectors are managing the Company by implementing the principles and guidelines estab-
lished by the Board. By these statements, the option according to Art. 38 lit. b) SE-VO to
choose between a two-tier board governance system and one-tier system has been exer-
cised in favor of the one-tier system.
In line with that, it is stated in Section 6 para. 2 of the Conversion Plan that pursuant to Sec-
tion 7 para. 1 of the SE-Articles of Association (cf. Chapter E. II. No. 7 of this Report) the
Board shall consist of three members in the minimum. In the following, the composition of the
Board and of the first Board of PUMA SE are explained. Accordingly, the shareholder repre-
sentatives of the Board will generally be appointed by the general meeting, with the share-
holder representatives of the first Board being appointed by the Articles of Association.
Concerning the employee representatives of the Board of PUMA SE, Section 6 para. 2 of the
Conversion Plan stipulates that these will generally be appointed by the general meeting
based on binding election proposals made by the employee representatives in accordance
with the Employee Involvement Agreement or, if such agreement will not be entered into, by
subsidiary rules according to the SEBG, whereas the employee representatives of the first
Board of PUMA SE will presumably be appointed by the local court in Fuerth (Amtsgericht
Conversion Report                                                             page 30 of 68



Fuerth) under consideration of the results of the employee participation procedure at that
time in accordance with Sections 30 SEAG, 104 AktG.
Section 6 para. 3 of the Conversion Plan describes that pursuant to Art. 13 para. 1 of the SE-
Articles of Association (cf. Chapter E. II. No. 8 of this Report) the Board shall appoint the
Managing Directors.


7.     Information on the Procedure of the Employee Involvement (Section 7 of the
       Conversion Plan)
Section 7 of the Conversion Plan contains the particulars regarding the Employee Involve-
ment Procedure during the course of the Conversion of PUMA AG into PUMA SE. The pro-
cedure aims at the conclusion of the Employee Involvement Agreement pursuant to the
SEBG and the national statutes transforming the SE Employee Involvement Directive within
the other EU and EEA States in which PUMA Group has business activities. The provision
further contains statements regarding the effects of the Conversion on the employees of
PUMA Group.
The statements contained in the Conversion Plan and the related comments in this Report
can, at least to some extent, only be made from an ex ante perspective. The reason is that
the negotiations between the Special Negotiating Body and the management board of PUMA
AG as regards the Employee Involvement Agreement are currently ongoing. They started on
20/21 January 2011, along with the constitutional meeting of the Special Negotiating Body.
This was within the ten-weeks-period after the proceedings have been initiated with the re-
quired notification of the employees and their representative bodies (cf. Section 12 in con-
nection with Section 11 para. 1 sentence 1 SEBG). The negotiations are expected to be fina-
lized by mutual signing of the Employee Involvement Agreement.


a)     Basic Principles and Terminology (Section 7 para. 1 of the Conversion Plan)
Section 7 para. 1 of the Conversion Plan contains an introductory description of the basic
principles and terminology for the Employee Involvement Procedure in PUMA SE. In order to
safeguard the rights to participate in decisions acquired by the employees of PUMA AG, in
the course of the conversion into an SE, an Employee Involvement Procedure is to be con-
ducted for PUMA SE. The objective is the conclusion of an Employee Involvement Agree-
ment regarding the involvement of employees in the SE, i.e., in particular, regarding the par-
ticipation of the employees in the Board of PUMA SE and the procedure for the information
and consultation of employees either by establishment of an SE works council or in another
way to be agreed upon with the management board of PUMA AG.
The procedure for the involvement of employees is characterized by the principle of protect-
ing the acquired rights of the employees of PUMA AG. An agreement may not result in a re-
duction of the existing participation rights of the employees (Section 15 para. 5 SEBG). The
extent of the involvement of the employees in the SE is determined by the definitions in Sec-
tion 2 para. 8 SEBG which, essentially, follows Art. 2 lit. h) SE-VO with regard to the in-
volvement of employees.
Conversion Report                                                             page 31 of 68



"Involvement of employees" is the collective term for any mechanism - including, in particular,
information, consultation and participation - through which employee representatives may
exercise an influence on decisions to be taken within the company.
"lnformation" in this context means the informing of the SE works council or other employed
representatives by the management of the SE, i.e. the board of PUMA SE, on matters which
concern the SE itself and any of its subsidiaries or establishments situated in another EU
State or EEA State or which exceed the powers of the decision making organs in a single EU
State or EEA State.
"Consultation" means, in addition to employees' representatives expressing an opinion on
matters relevant for the decision-making process, the exchange of views between em-
ployees' representatives and management and a dialogue with the objective of reaching
agreement, however, with the company management remaining free in its decision.
The most far-reaching influence is being conferred by “Participation”, which either refers to
the right to appoint or elect members of the Board or, alternatively, to recommend such
members for appointment or to oppose such recommendations made by a third party.


b)     Current Situation and Consequences of the Conversion (Section 7 para. 2 of the
       Conversion Plan)
Section 7 para. 2 of the Conversion Plan describes the current situation regarding employee
involvement within the PUMA Group and contains information regarding the consequences
of the Conversion.
As the parent company of the PUMA Group, PUMA AG currently has a supervisory board
with six members which is composed following the one-third co-determination principle in
accordance with Sections 4 and 1 para. 1 no. 1 DrittelbG. With regard to the two employee
representatives on the supervisory board of PUMA AG, presently only those employees of
PUMA Group that are employed in Germany have the active and passive voting right in ac-
cordance with the DrittelbG.
The Conversion Plan goes on to explain that upon the effectiveness of the Conversion of
PUMA AG into an SE, the terms of office of the employee representatives as well as the
terms of office of the shareholder representatives on the supervisory board of PUMA AG
terminate. The provisions of the DrittelbG regarding the representation of employees on the
supervisory board of PUMA AG are being replaced by the provisions of the Employee In-
volvement Agreement, and, if no Employee Involvement Agreement will be entered into, by
the provisions of the SEBG (with regard to the other consequences of the change of the legal
form for the employees and their representative bodies, cf. Section 8 of the Conversion Plan
and Chapter E. I. No. 8 of this Report).
The initial shareholder representatives on the new Board of PUMA SE will be appointed in
the SE-Articles of Association and the first employee representatives of the Board will pre-
sumably be appointed by the local court in Fuerth (Amtsgericht Fuerth) as the competent
court for PUMA SE.
Conversion Report                                                             page 32 of 68



c)     Initiation of the Procedure Regarding the Involvement of Employees (Section 7
       para. 3 of the Conversion Plan)
Section 7 para. 3 of the Conversion Plan describes the initiation of the Employee Involve-
ment Procedure in the form of the notification of the employees and their representative bo-
dies involved and by the demand to create the Special Negotiating Body. The notification and
the demand are required by statutory law and also listed in Section 7 para. 3 of the Conver-
sion Plan.
The initiation of the procedure for the involvement of the employees is conducted in accor-
dance with the provisions of the SEBG. The latter require that the management body of the
participating company, i.e. the management board of PUMA AG, requests to establish a
Special Negotiating Body and that it notifies the employee representatives, and, to the ex-
tent, no employee representatives exist, the employees of the involved companies, the con-
cerned subsidiaries or business operations, respectively, about the conversion project. The
procedure is to be initiated - by means of the notification required by law – unrequested and -
at the latest - without undue delay after the management board of PUMA AG has published
the Conversion Plan. The notification can also be made prior to the publication of the Con-
version Plan because Section 4 para. 3 SEBG merely requires that the notification has to be
made by the management board following the publishing of the Conversion Plan at the latest.
The required notification of the employees or their representative bodies concerned, respec-
tively, includes, in particular, (i) the names and structure of PUMA AG, the concerned sub-
sidiaries and concerned business establishments, and their distribution among the member
states; (ii) the bodies representing employees existing within these companies and estab-
lishments; (iii) the number of persons employed in these companies and establishments, and
the total number of persons employed in a given member state determined on the basis the-
reof, and (iv) the number of employees enjoying participation rights in the corporate bodies of
these companies.
Finally, Section 7 para. 3 of the Conversion Plan describes that the management board of
PUMA AG has requested the employee representatives and, to the extent, no employee
representatives exist, the employees of the involved companies, the concerned subsidiaries
or business operations, to establish the Special Negotiating Body and, at the same time, in-
formed about the conversion project.


d)     Establishment of the Special Negotiating Body (Section 7 para. 4 and para. 5 of
       the Conversion Plan)
Section 7 para. 4 and Section 7 para. 5 of the Conversion Plan describe the composition and
establishment of the Special Negotiating Body. It is provided by statutory law that the em-
ployees or their representative bodies involved in the EU and EEA States elect or appoint the
members of the Special Negotiating Body within a period of ten weeks after the initiation of
the procedure by means of the notification required by law of the employees or, respectively,
the employee representatives involved. The Special Negotiating Body is composed of repre-
sentatives of the PUMA Group employees from all EU and EEA States, in which PUMA em-
ployees are employed.
Conversion Report                                                                      page 33 of 68



It is the task of this Special Negotiating Body to negotiate with the management of the SE the
procedural details of the involvement procedure and the determination of the participation
rights of the employees within the SE.
The establishment and composition of the Special Negotiating Body are being described in
Section 7 para. 4 of the Conversion Plan. In principle, they are subject to German law (Sec-
tions 4 to 7 SEBG). The allocation of the seats in the Special Negotiating Body to the indivi-
dual EU States and EEA States in which PUMA Group has employees is governed, in re-
spect of the formation of an SE with its registered office in Germany, by Section 5 para. 1
SEBG: In accordance with the laws, the Conversion Plan describes that the allocation of the
seats follows the basic principle that each EU State and each EEA State in which PUMA
Group has employees is allocated at least one seat. The number of seats allocated to an EU
State or an EEA State is increased by 1 in each case where the number of employees em-
ployed in this member state of the EU or signatory state to the EEA exceeds the thresholds
of 10%, 20%, 30% etc. of all employees of PUMA Group employed in EU and EEA States.
On the basis of the employee figures of PUMA Group in the individual EU and EEA States as
of 31 October 2010, the following allocation of seats applies:



          EU/EEA State            Number     of   Em-    Percentage rounded)   Number of members in the
                                  ployees                of the total number   Special Negotiating Body
                                                         of all employees in
                                                         EU and EEA States

          Austria                                  159                4.75%                          1

          Belgium                                   48                1.43%                          1

          Bulgaria                                  41                1.22%                          1

          Cyprus                                    8                 0.24%                          1

          Czech Republic                           136                4.06%                          1

          Denmark                                   31                0.93%                          1

          Estonia                                   6                 0.18%                          1

          Finland                                   19                0.57%                          1

          France                                  247                 7.38%                          1

          Germany                                 1056              31.53%                           4

          Greece                                  101                 3.02%                          1

          Hungary                                  69                 2.06%                          1

          Ireland1                                  0                 0.00%                          0

          Italy                                    193                5.76%                          1

          Lithuania                                 7                 0.21%                          1

          Malta                                     2                 0.06%                          1


1
    The Irish PUMA subsidiary has no employees.
Conversion Report                                                                page 34 of 68




       EU/EEA State         Number     of   Em-    Percentage rounded)   Number of members in the
                            ployees                of the total number   Special Negotiating Body
                                                   of all employees in
                                                   EU and EEA States

       The Netherlands                      238                 7.11%                          1

       Norway                                25                 0.75%                          1

       Poland                                156                4.66%                          1

       Portugal                               44                1.31%                          1

       Romania                               25                 0.75%                          1

       Slovakia                               18                0.54%                          1

       Slovenia                               1                 0.03%                          1

       Spain                                 148                4.42%                          1

       Sweden                               208                 6.21%                          1

       United Kingdom                        363              10.84%                           2

       Total                                3349                100%                          29


With regard to the election or appointment, respectively, of the members of the Special Ne-
gotiating Body from the EU and EEA States the relevant national provisions of law apply. The
election or appointment of the members, respectively, as well as the establishment of the
Special Negotiating Body is, in principle, the responsibility of the employees, their represent-
ative bodies and of the relevant unions involved.
Pursuant to Section 8 para. 1 sent. 1 SEBG, the members of the Special Negotiating Body
attributable to the employees employed in Germany by PUMA AG and its concerned German
subsidiaries and establishments involved are to be elected by an election body in a secret
and direct election. Pursuant to Section 8 para. 2 sent. 2 SEBG, the representation by the
election body also includes, in principle, those employees who have not elected an employee
representative body in their business operations.
The manner in which the composition of the election body is determined in Germany de-
pends on which employee representative bodies already exist at the transforming company
or a subsidiary or an establishment involved. In principle, those employee representative bo-
dies which, in each case, exist at the highest level of works councils are to assume the task
of the election. If, as is the case with the conversion of PUMA AG into an SE, only one do-
mestic company group participates in the formation of the SE, the election body comprises of
the members of the central works council (Konzernbetriebsrat) or, if there is no central works
council, of the members of the general works council (Gesamtbetriebsrat) or, if there is no
general works council, of the works council or the works councils, respectively.
Since, except for the works council of PUMA AG, there are no other works councils within the
PUMA Group in Germany, the election body responsible for the election of the domestic
members of the Special Negotiating Body is comprised only of the members of the works
council of PUMA AG. Since the maximum number of the members of the election body is
forty (cf. Section 8 para. 6 sent. 1 SEBG) and the number of members of the works council
Conversion Report                                                             page 35 of 68



does not exceed forty, the number of members in the election body is not to be reduced in
accordance to their proportion pursuant to the d’Hondt highest averages method (Section 8
para. 6 sent. 2 SEBG).
For Germany, Section 6 paras. 2 through 4 SEBG provide for the individual requirements
concerning the membership in the Special Negotiating Body.
As regards the election, statutory law in this regard refrains from laying down detailed provi-
sions and confines itself to describing general principles. Thus, at least two thirds of the
members of the election body who represent at least two thirds of the employees have to be
present for the election. The members of the election body have as many votes as they
represent employees.
The employees of the involved companies, concerned subsidiaries and establishments have
carried out elections or appointments according to the applicable provisions of national law.
Due to the four seats in the Special Negotiating Body allocated to Germany one of the four
German members is a union representative elected upon a proposal by a competent union.
Based on the number of members of the Special Negotiating Body allocated to Germany
there was no obligation to elect an executive employee as a member. Therefore, there is no
executive employee amongst the elected members of the Special Negotiating Body for Ger-
many.
The procedure for the establishment of the Special Negotiating Body ends with its constitu-
tional meeting. The management board of PUMA AG has issued an invitation to this meeting
of the Special Negotiating Body after all members had been appointed and not later than ten
weeks after the notification pursuant to Section 4 para. 2 and para. 3 SEBG (cf. Section 12
para. 1, Section 11 para. 1 SEBG). Thereupon, the constitution of the Special Negotiating
Body has taken place on 20 January 2011.
The negotiations may last up to six months in the maximum beginning on the day for which
the management board of PUMA AG has issued the invitation for the constitutional meeting
of the Special Negotiating Body. However, the parties to the negotiation may extend the ne-
gotiation period by mutual consent to a period of up to one year (cf. Section 20 SEBG).
The negotiation procedure takes place also if the requirements are not met by the employees
for reasons within the responsibility for the employees (Section 11 para. 2 sent. 1 SEBG). It
is in the interest of the employees to complete the election or appointment of the members of
the Special Negotiating Body within the ten-week period. Members who are being elected or
appointed during the course of the negotiations may, at any time, participate in the negotia-
tion procedure (Section 11 para. 2 sent. 2 SEBG). However, they must accept the current
status of the negotiations as is at that time. There is no claim for an extension of the six-
month negotiation period (Section 20 SEBG).


e)     Agreement regarding the Involvement of Employees on the Entrepreneurial
       Level (Section 7 para. 6 of the Conversion Plan)
Section 7 para. 6 of the Conversion Plan describes which minimum content an Employee
Involvement Agreement has to contain with regard to involvement on the entrepreneurial
level (unternehmerische Mitbestimmung).
Conversion Report                                                               page 36 of 68



It has at least to contain information regarding the number of employee representatives on
the Board, the procedure according to which these employee representatives are determined
and the rights of such representatives. As required by Art. 43 para. 2 SE-VO, Section 23
para. 1 SEAG, the size of the Board will be determined in the SE-Articles of Association.
Section 7 para. 1 of the SE-Articles of Association (cf. Chapter E. II. No. 7 of this Report)
provides for a Board of at least three members. According to Sections 15 para. 5, 21 para. 6
SEBG, the current level of Board-level employee representation, according to which one-
third of the Board members must be employee representatives, is to be maintained. Accor-
dingly, Section 7 para. 3 of the SE-Articles of Association (cf. Chapter E. II. No. 7 of this Re-
port) provides that - irrespective of Art. 43 para. 3 sent. 3 SE-VO - one-third of the members
of the Board are to be appointed by the general meeting of shareholders upon binding elec-
tion proposals of the employee representatives.
In the Employee Involvement Agreement, only the geographical allocation and the procedure
for the appointment have to be determined. In the event that an Employee Involvement
Agreement will not be concluded, the geographical allocation is made in accordance with the
statutory rules of the SEBG and the laws of the other EU and EEA States implementing the
SE Employee Involvement Directive. With regard to the rights of the employee representa-
tives on the Board, the framework for negotiations is restricted by the right of the Board to
organize its own affairs (Selbstorganisationsrecht).
Section 7 para. 6 further describes the minimum content of the Employee Involvement
Agreement regarding the operational level (betriebliche Mitbestimmung). The Employee In-
volvement Agreement has to contain the procedure for the information and consultation of
employees (Section 21 paras. 1 and 2 SEBG).
Furthermore, it is to be stipulated in the Employee Involvement Agreement whether an SE
works council is to be established for the purpose of the information and consultation of the
employees or not. In case of its establishment, the following has to be stated: the number of
its members and the allocation of seats, the functions and the procedure for its information
and consultation, the frequency of meetings, the financial and material resources to be made
available. Also, the Employee Involvement Agreement needs to provide for the date of entry
into force, its duration and the circumstances in which the agreement is to be re-negotiated
and the procedure to be used in this regard.
Since the parties to the negotiations are under no obligation to establish an SE works coun-
cil, they may also agree on another procedure by which the information and consultation of
the employees is ensured.
Further, it is to be stipulated in the Employee Involvement Agreement that negotiations con-
cerning the involvement of employees in the SE shall be re-opened in case of structural
changes to the SE.


f)     Adoption of Resolutions in the Special Negotiating Body (Section 7 para. 7 of
       the Conversion Plan)
As laid down in Section 7 para. 7 of the Conversion Plan, the conclusion of an Employee
Involvement Agreement requires a resolution adopted by the Special Negotiating Body
Conversion Report                                                              page 37 of 68



which, generally, adopts resolutions by a majority of its appointed members, provided that
this majority also represents a majority of the employees. No resolution may be adopted in
this regard which results in a reduction of employee participation rights (Section 15
para. 5 SEBG). Further, no resolution may be adopted to the effect that no negotiations
should be entered into or that negotiations already entered into should be broken off (Sec-
tion 16 para. 3 SEBG).


g)     Subsidiary Regulation by Operation of Law (Section 7 para. 8 of the Conversion
       Plan)
If no Employee Involvement Agreement will be reached within the negotiation period, statu-
tory rules pursuant to Sections 22 et seq. and Sections 34 et seq. SEBG apply; these rules
could also be agreed upon from the outset as the content of the Employee Involvement
Agreement.
With regard to employee participation on the Board, this would mean that the principle of
employee participation on a one-third co-determination basis existing at the supervisory
board of PUMA AG would also on this basis be continued for the Board of PUMA SE, so that
one-third of the members of the Board of PUMA SE would be employee representatives. The
seats in the Board would be allocated among the Member States according to Section 36
para. 1 SEBG. Thus, the employee representatives would no longer be exclusively elected
by the employees in Germany, but by the employees or their competent representatives in
those EU and EEA States, which are entitled to a seat in the Board of PUMA SE. The elec-
tion process would be governed by the relevant provisions applicable in these countries. If a
Member State that is entitled to a seat on the Board of PUMA SE does not provide for any
such rules on the election or appointment of employee representatives, the SE works council
would appoint the employee representative for the relevant country. Following their election
or appointment, as the case may be, the elected or appointed employee representatives
would then be appointed by the general meeting of PUMA SE to the Board.
A Board composed of nine members in total would be made up of three employee repre-
sentatives and six shareholders’ representatives. Based on the current number of employees
and their distribution by countries and the applicable calculation according to the D’Hondt
method, out of these three seats reserved for employee representatives two would be allo-
cated to employee representatives to be elected in Germany. The last employee representa-
tive seat on the Board of PUMA SE would have to be allocated by the SE Works Council to
another Member state other than Germany to be chosen at the discretion of the SE Works
Council. Given that the next highest number of employees within PUMA Group is employed
in the U.K. an allocation of this last seat to the U.K. appears likely.
With regard to the protection of the right to information and consultation of the employees of
PUMA SE, the subsidiary rules of the SEBG would have the consequence that an SE works
council would have to be established. The SE works council would be responsible for matters
which affect the SE itself, one of its subsidiaries or one of its business operations in another
member state or which go beyond the powers of the competent bodies at the level of the
individual member state. The SE works council would have to be notified and consulted an-
nually with regard to the development of the business situation and the future prospects of
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the SE. Besides, it would have to be notified and consulted in due time with regard to any
extraordinary circumstances. The composition of the SE works council as well as the election
of its members would be determined, in principle, in accordance with the provisions applica-
ble to the composition and appointment of the members of the Special Negotiating Body.


h)     Review at Regular Intervals (Section 7 para. 9 of the Conversion Plan)
Section 7 para. 9 of the Conversion Plan describes the procedure of reviewing the employee
involvement through the SE works council at regular intervals in cases where the subsidiary
regulation by operation of law applies. In this case, every two years during the existence of
the SE, the Managing Directors of the SE have to review whether changes of the SE, its
subsidiaries or its business operations require an alteration of the composition of the SE
works council. Besides, every four years after the establishment of the SE works council, it
has to resolve with the majority of its members whether negotiations shall be re-opened with
regard to an Employee Involvement Agreement or whether the existing regulations are to
remain in place. If a resolution is adopted to enter into negotiations for an Employee In-
volvement Agreement, for the purpose of such negotiations, the SE works council replaces
the Special Negotiating Body in applying the subsidiary provisions of the SEBG.


i)     Costs of the Special Negotiating Body (Section 7 para. 10 of the Conversion
       Plan)
The necessary costs arising from the establishment and operation of the Special Negotiating
Body will be borne by PUMA AG and, after its formation, by PUMA SE. Pursuant to Section 7
para. 10 of the Conversion Plan, the costs to be covered include the material and personnel
expenses incurred in connection with the activities of the Special Negotiating Body, including
travel and subsistence expenses of the members of the Special Negotiating Body and other
costs arising from the negotiations, costs for premises, material resources (e.g. telephone.
telefax, required literature), interpreters and staff required for meetings.


8.     Other Consequences of the Conversion for the Employees and their
       Representative Bodies (Section 8 of the Conversion Plan)
Section 8 describes other consequences of the Conversion for employees and their repre-
sentative bodies. As a general rule, the conversion of PUMA AG into an SE does not have
any consequences for the employees of PUMA Group. Their employment contracts are be-
ing continued as before with the respective group company; in the case of the employees of
PUMA AG, their employment contracts are being continued unchanged with PUMA SE.
The existing operating agreements (Betriebsvereinbarungen) and collective labour agree-
ments (Tarifverträge) remain in force in accordance with the provisions of the respective
agreement.
For the members of bodies representing employees at the operational level at PUMA AG and
within PUMA Group there will be no changes resulting from the Conversion into an SE. The
existing bodies representing employees at the operational level remain in place.
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Further, there are no other measures intended or planned as a consequence of the conver-
sion which would affect the situation of the employees.


9.     Financial Year, Auditor (Section 9 of the Conversion Plan)
Section 9 of the Conversion Plan clarifies that the financial year of PUMA SE remains un-
changed the calendar year as it was with PUMA AG and provides for the appointment of
PricewaterhouseCoopers Aktiengesellschaft, Wirtschaftsprüfungsgesellschaft, Olof-Palme-
Straße 35, 60439 Frankfurt am Main, as auditor for the first financial year of PUMA SE.


10.    Costs (Section 10 of the Conversion Plan)
Section 10 of the Conversion Plan stipulates that the costs arising from setting up the Con-
version Plan and its execution shall be borne by PUMA SE.


II.    Explanation of the SE-Articles of Association
Upon effectiveness of the Conversion, PUMA AG changes its legal form into an SE. The ex-
isting articles of association of PUMA AG will be replaced by the new SE-Articles of Associa-
tion. The SE-Articles of Association are part of the notarized Conversion Plan which is sub-
ject to approval by the general meeting of shareholders of PUMA AG on 14 April 2011.


1.     Company Name, Registered Office, Financial Year (Section 1 of the SE-Articles
       of Association)
The registered office of PUMA SE will be situated in Herzogenaurach, Germany, as is the
case with PUMA AG.
The Company name will, as a consequence of the Conversion, change from “PUMA Aktien-
gesellschaft Rudolf Dassler Sport” to “PUMA SE”. The alteration of the adjunct indicating the
legal form (“SE” instead of “AG”) is a mandatory requirement pursuant to Art.11 para. 1 SE-
VO.
The financial year of PUMA SE corresponds to the calendar year as it was with PUMA AG.


2.     Corporate Purpose (Section 2 of the SE-Articles of Association)
PUMA SE will essentially have the same corporate purpose as PUMA AG. PUMA SE re-
mains active in the production and merchandising of shoes, apparel and sporting equipment
of all kinds.
Section 2 para. 2 of the SE-Articles of Association containing the supplementary measures
is, in comparison to its predecessor in the articles of association of PUMA AG, brought up-to-
date and streamlined with regard to its wording.


3.     Notifications (Section 3 of the SE-Articles of Association)
As is presently the case with PUMA AG, the proclamations of the Company will be made in
the electronic Federal Gazette (elektronischer Bundesanzeiger). Section 27a para. 1 of the
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German Securities Exchange Act (WpHG) shall not be applicable, thereby making use of the
authorization granted by Section 27a para. 3 of the German Securities Trading Act (WpHG).


4.     Subscribed Capital (Sections 4 of the SE-Articles of Association)
Due to the change of legal form under preserving the legal identity of the Company, the
share capital of PUMA SE is made up of the subscribed capital of PUMA AG in the amount
existing at the point in time of the registration of the Conversion with the commercial register
(the current amount being EUR 38,611,107.84 divided into 15,082,464 no par-value shares
(Stückaktien).
The same applies to the contingent capitals and the authorized capitals of PUMA AG, which
will become contingent and authorized capitals of PUMA SE at the point in time of the regis-
tration of the Conversion with the commercial register (the current amounts of the contingent
capitals being EUR 3,916,800.00 (Contingent Capital 2001) and EUR 1,536,000.00 (Contin-
gent Capital 2008) and of the authorized capitals being two times EUR 7,500,000.00 (Au-
thorized Capitals I and II)).
The share capital of PUMA SE will be provided as contribution in kind by way of conversion
of Puma AG into an SE.
If changes will occur to the subscribed capital, the Contingent Capitals 2001 and 2008 and/or
the Authorized Capitals I and II prior to the SE becoming effective, Section 3 para. 5 of the
Conversion Plan provides for the authorization and instruction of the supervisory board of
PUMA AG to make any necessary amendments to the wording of the enclosed SE-Articles of
Association prior to the registration of the Conversion with the commercial register.


5.     Shares (Section 5 of the SE-Articles of Association)
The stipulations regarding the shares in Section 5 of the SE-Articles of Association are iden-
tical to the stipulations in Section 5 of the articles of association of PUMA AG. The shares
are no-par value bearer shares.
According to Section 5 para. 2 of the SE-Articles of Association, in case of a capital increase
the participation of the new shares in profits of the Company may be determined divergent
from the provisions of Section 60 AktG.
PUMA SE is further entitled to determine the form of the share certificates, dividend coupons
and renewal coupons. The same applies to bonds and interest coupons. In the future one-tier
board structure, this entitlement is with the Board. The issuance of share certificates which
embody a series of shares (Sammelurkunde) is expressly forseen in Section 5 para. 4 of the
SE-Articles of Association. The shareholders' right to have their shares embodied in certifi-
cates, however, is excluded.


6.     Corporate Bodies (Section 6 of the SE-Articles of Association)
The SE-VO, pursuant to its Art. 38 lit. b), offers a choice as regards the corporate gover-
nance structure of an SE between the two-tier system providing for a management board
and a supervisory board as well as the one-tier system with a single Board. Section 6 para. 1
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of the SE-Articles of Association denominates the single-tier corporate governance structure.
In addition, Section 6 para. 2 of the SE-Articles of Association states that the Board and the
general meeting of the shareholders are PUMA SE’s corporate bodies. Finally, Section 6
para. 3 of the SE-Articles of Association supplements PUMA’s option for the one-tier system
for PUMA SE by explaining that the Managing Directors will manage the Company as they
implement the principles and guidelines, which the Board has set.


7.     The Board (Sections 7 through 12 of the SE-Articles of Association)


a)     Composition of the Board (Section 7 of the SE-Articles of Association)
According to Section 7 para. 1 of the SE-Articles of Association, the Board shall consist of
three members in the minimum. The actual number of Board Members will finally be decided
by the general meeting, which is responsible for their appointment. This is repeated in Sec-
tion 7 para. 3 of the SE-Articles of Association, which also clarifies that one third of the Board
Members will be employed representatives, to be appointed by the general meeting based
on binding election proposals by employee representation bodies.
The initial shareholder representatives are appointed in Section 7 para. 3 of the SE-Articles
of Association. These will be Jochen Zeitz, François-Henri Pinault, Jean-François Palus,
Grégoire Amigues, Thore Ohlsson and Michel Friocourt. In accordance with applicable sta-
tutory rules Section 30 para. 3 AktG) their term of office shall expire at the end of the general
meeting that resolves on the formal approval of action (Entlastung) for the first financial year
of PUMA SE and, in any event, not later than three years after their appointment.
As statutorily provided for (cf. Section 40 para. 1 sentence 2 SEAG), Section 7 para. 2 of the
SE-Articles of Association foresees that the Board Members who do not serve as Managing
Directors of the Company shall at all times constitute the majority of the Board Members.
Notwithstanding Section 7 para. 3 of the SE-Articles of Association, the term of office of each
Board Member shall expire at the end of the General Meeting that resolves on the formal
approval of action for the fourth financial year after the start of the term of office (not includ-
ing the financial year in which the term of office started) and, in any event, not later than six
years after the Board Member’s appointment. Board Members may be reappointed.
According to Section 7 para. 5 of the SE-Articles of Association Board Members that have
been appointed by the General Meeting, without the General Meeting being bound by elec-
tion proposals, may be removed from office by resolution of the General Meeting adopted
with a three-quarter majority of the votes cast.
A resignation from office for any reason is allowed to each Board Member in accordance with
Section 7 para. 6 of the SE-Articles of Association upon giving one month’s written notice to
the Chairperson of the Board.
Finally, Section 7 para. 7 of the SE-Articles of Association stipulates that the general meeting
is entitled to appoint a substitute Board Member (Ersatzmitglied) to each Board Member,
who becomes a Board Member, if the latter retires prior to the expiry of his or her term of
office. The term of the substitute Board Member expires at the end of the general meeting, in
which a substitute election takes place, but at the latest upon expiry of the term of office of
Conversion Report                                                              page 42 of 68



the retired Board Member. The appointment of substitute Board Members for those Board
Members that have been elected based on binding election proposals shall also take place
upon such binding proposal.


b)     Chairperson, Deputy Chairperson, Rules of Procedure (Section 8 of the SE-Ar-
       ticles of Association)
The Board shall elect a chairperson and a deputy chairperson with their offices correspond-
ing to their offices as Board Members, unless the terms are shortened by the election. If the
Chairperson or the Deputy Chairperson retires from office ahead of time, the Board shall im-
mediately conduct a new election for the remaining term of office of the retiring person.
The Board is entitled and requested to adopt its own rules of procedure according to Sec-
tion 8 para. 2 of the SE-Articles of Association.


c)     Responsibilities of the Board (Section 9 of the SE-Articles of Association)
The responsibilities of the Board are provided for in Section 9 of the SE-Articles of Associa-
tion. The Board is the steering body of an SE having a one-tier corporate governance sys-
tem. Accordingly, the responsibilities of the Board are the direction of the Company, the es-
tablishment of the general principles of its business and the supervision of their implementa-
tion (cf. Section 22 para. 1 SEAG). The Board shall act in accordance with applicable law,
the SE-Articles of Association and with its rules of procedure.
The Board shall supervise the Managing Directors and shall establish their rules of proce-
dure.
Also, Section 9 para. 3 of the SE-Articles of Association stipulates that the Board is autho-
rized to amend the SE-Articles of Association if the amendment only affects the wording.


d)     Meeting and Voting (Section 10 of the SE-Articles of Association)
Section 10 of the SE-Articles of Association regulates the formalities of meetings of the
Board, the quorum and the passing of resolutions by the Board. Board meetings shall gener-
ally be convened by the chairperson in writing, by fax or email, under submission of its
agenda, with a period of notice of at least two weeks.
Principally, resolutions shall be passed in physical Board meetings based on the announced
agenda. Board meetings shall be chaired by the chairperson or, in his or her absence, the
deputy chairperson. A quorum is given, if more than half of the Board Members, including the
Chairperson or, in his or her absence, the deputy chairperson, personally or by way of sub-
mission of his or her written vote participate in the voting. A vote transmitted by fax or email
by one Board member to another Board member for submission in the Board meeting is
deemed a written vote. If a quorum is not reached in a Board meeting, a new meeting with
the same agenda shall be called, which is quorate if at least three members, the majority of
which are not Managing Directors, participate in the vote at the reconvened meeting.
Board meetings may also be held by video or telephone conference or similar means of
communication that enable all Board Members to hear each other and by a combination of a
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physical and non-physical meeting. A Board Member who does not participate in a Board
meeting may be represented by submitting his or her written vote on the agenda items
through another Board Member.
Outside meetings Board resolutions may, if so ordered by the chairperson, be adopted in
writing, by fax, by email, by telephone, by using other forms of communication or by a com-
bination of the foregoing. The chairperson shall confirm in writing all resolutions adopted out-
side of meetings and forward copies of the confirmation to all Board Members.
Resolutions on the agenda not properly announced, can only be passed, if no Board Member
objects to the resolution.
Board resolutions are generally adopted by a majority of the votes cast, excluding absten-
tions from voting (Enthaltungen). If there is a tie in the Board voting, the Chairperson’s vote is
counted twice, or in his absence, the Deputy Chairperson’s vote, unless the Deputy Chair-
person is an employee representative.
Board meetings are to be recorded in English. The minutes shall be signed by the chairper-
son or, in his or her absence, the deputy chairperson.
The Board is represented, also for the implementation of its resolutions, by the chairperson
or, in his or her absence, the deputy chairperson.


e)     Board Committees (Section 11 of the SE-Articles of Association)
Section 11 of the SE-Articles of Association repeats the Board’s entitlement to transfer tasks
and duties, including the adoption of resolutions connected therewith, incumbent upon the
Board to committees appointed from its midst, to the extent such transfer is statutorily per-
missible.
The tasks and duties as well as the internal procedures of the committees shall be deter-
mined by the Board, e.g. by adopting rules of procedures for the committees.


f)     Board Members’ Remuneration (Section 12 of the SE-Articles of Association)
As Section 38 para. 1 SEAG refers to Section 113 AktG, remuneration for Board Members is
confined to the framework of remuneration for supervisory board members according to the
rules of AktG. Accordingly, Section 12 of the SE-Articles of Association determines the re-
muneration for the Board Members, which shall be fixed at EUR 25,000.00 per year.
The fix annual remuneration shall be increased by an additional fixed annual amount of
(i) EUR 25,000.00 for the Chairperson of the Board, (ii) EUR 12,500.00 for the Deputy Chair-
person of the Board, (iii) EUR 10,000.00 for each of the Chairpersons of the general com-
mittee, the personnel committee, the audit committee and the sustainability committee and
(iv) EUR 5,000.00 for each member of the before mentioned committees of the Board.
Additionally, each Board Member shall be entitled to a success-orientated remuneration,
which corresponds to EUR 20.00 per EUR 0.01 of the net profit per share (prior to any dilu-
tion) shown in the consolidated financial statements (Konzernabschluss), which exceeds a
minimum net profit of EUR 16.00 per share. The success-orientated remuneration is capped
at EUR 10,000.00 in the maximum. The Chairperson of the Board is entitled to receive
Conversion Report                                                                 page 44 of 68



double the amounts, i.e. EUR 40.00 per EUR 0.01 of the net profit per share (prior to any
dilution) shown in the consolidated financial statements and EUR 20,000.00 in the maximum,
and the Deputy Chairperson one and a half times the amounts, i.e. EUR 30.00 per EUR 0.01
of the net profit per share (prior to any dilution) shown in the consolidated financial state-
ments and EUR 15,000.00 in the maximum.
It is also clarified, that the remuneration will be paid pro rata calculated on a full month basis,
if a Board Member serves only for a part of a financial year and that adequate expenses will
be reimbursed.
The Company may take out a D&O insurance for the benefit of the Board members.


8.     The Managing Directors (Sections 13 through 15 of the SE-Articles of Associa-
       tion)


a)     Managing Directors (Section 13 of the SE-Articles of Association)
In accordance with Section 40 para. 1 SEAG, Section 13 of the SE-Articles of Association
determines that the Board is responsible for appointing one or more Managing Directors. The
Board is entitled to name one of them as chief executive officer (CEO) and one or two of
them as deputy chief executive officers (deputy CEOs).
In line with Section 40 para. 9 SEAG, the Board may also appoint deputy Managing Directors
in the meaning of Section 94 AktG.
Section 13 para. 3 of the SE-Articles of Association stipulates the responsibility of the Man-
aging Directors, who shall conduct the business of PUMA SE in accordance with applicable
law, the SE-Articles of Association, the Managing Directors’ rules of procedure and the in-
structions of the Board. The Board’s entitlement to adopt rules of procedure for the Managing
Directors is provided for in Section 14 para. 2 of the SE-Articles of Association. Also, the
Board is authorized to issue instructions to the Managing Directors according to Section 44
para. 2 SEAG.
Each Managing Director may, according to Section 13 para. 4 of the SE-Articles of Associa-
tion, be removed from office only for cause (aus wichtigem Grund) within the meaning of
Section 84 para. 3 AktG or in case of a termination of the service contract of the Managing
Director, in each case by a Board resolution adopted with simple majority of the votes cast.


b)     Transactions requiring Board Consent (Section 14 of the SE-Articles of
       Association)
The Managing Directors need to obtain prior approval of the Board for the measures listed in
Section 14 para. 1 of the SE-Articles of Association. These are (i) the acceptance of the
overall business plan as well as of the mid term plan and the annual budget of the Company
and the PUMA Group, (ii) the incurrence of financial obligations or granting of any security
interests in excess of 2.5% of the balance sheet total in any individual case, per annum or in
a series of related cases by the Company or the PUMA Group, (iii) the acquisition or disposal
of a company or a business, of assets or real estate or the commitment to such an acquisi-
tion or disposal with a value in excess of 25% of the budgeted amount approved in the an-
Conversion Report                                                              page 45 of 68



nual budget or, if no amount is approved in the annual budget concerning the transaction in
question, with a value in excess of 2.5% of the balance sheet total in any individual transac-
tion, per annum or in a series of related transactions by the Company or the PUMA Group,
and (iv) the entering into capital expenditure commitments with a value in excess of 25% of
the budgeted amount approved in the annual budget or, if no amount is approved in the an-
nual budget concerning the capital expenditure commitment in question, with a value in
excess of 2.5% of the balance sheet total in any individual commitment, per annum or in a
series of related commitments by the Company or the PUMA Group.
Approvals according to (ii) through (iv) are dispensable if and to the extent such measures
are included in the business plans or the annual budgets.


c)     Proxy (Section 15 of the SE-Articles of Association)
Section 15 of the SE-Articles of Association provides for the principles of PUMA SE’s repre-
sentation by the Managing Directors. Accordingly, the Company is represented by two Man-
aging Directors acting together or by a single Managing Director acting together with a “Pro-
kurist” (a holder of a general power of attorney on behalf of the Company), unless only one
Managing Director is appointed.
The Board is authorized to grant individual Managing Directors the authority to represent the
Company alone and may exempt individual Managing Directors from the limitations of the
prohibition of self-contracting according to Section 181 2nd alternative of the German Civil
Code (Bürgerliches Gesetzbuch, BGB). The representation of PUMA SE vis-à-vis the Man-
aging Directors is with the Board. This is provided for by Section 15 para. 1 of the SE-Articles
of Association referring to Section 41 para. 5 SEAG.
Section 15 para. 2 of the SE-Articles of Association clarifies that deputy Managing Directors
have the same rights as Managing Directors concerning the representation of the Company.


9.     The General Meeting (Section 16 through 19 of the SE-Articles of Association)
Sections 16 through 19 of the SE-Articles of Association provide for the rules determining the
convocation and holding of the general meeting of the shareholders of PUMA SE. The provi-
sions of the articles of association of PUMA AG in this respect were brought up-to-date and
streamlined with regard to its wording.


a)     Location and Convocation (Section 16 of the SE-Articles of Association)
Section 16 of the SE-Articles of Association records that the general meeting shall be held at
PUMA SE’s registered office, in another German city within a radius of 100km or in a city of a
German stock exchange. The general meeting shall, subject to convocation rights of minority
shareholders, be convened by the Board.
The convocation notice must be published at least thirty days before the day by expiry of
which the shareholders must register themselves before the General Meeting for attendance
in accordance with the following Section 17 of the SE-Articles of Association.
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b)     Preconditions for Participation and Exercise of Voting Rights (Section 17 of the
       SE-Articles of Association)
Shareholders are entitled to participate in the general meeting and exercise their voting
rights, if they have registered themselves with the Company in writing or by telefax before the
general meeting.
Shareholders must prove their entitlement to participate and their right to vote. Proof of
shareholding must relate to the beginning of the twenty-first day before the general meeting
and must be given in text form in German or English by the credit-institution at which the se-
curities are deposited.
The registration and the proof of shareholding must be received by PUMA SE at least on the
sixth day before the general meeting.


c)     Procedure for the General Meeting (Section 18 of the SE-Articles of Associa-
       tion)
Section 18 of the SE-Articles of Association provides for the legal basis of the holding of the
general meeting. The chairperson or the deputy chairperson, who shall chair the General
meeting (the “Meeting Chairperson”) will be elected by the Board. The Meeting Chairperson
shall determine the course of the general meeting’s agenda, the type and order of the voting
and an appropriate limit on the time available for speaking and asking questions, for the dis-
cussion on individual agenda items as well as for individual speakers, either at the beginning
or during the course of the general meeting.
As said in Section 18 para. 2 of the SE-Articles of Association, the result of the voting will be
calculated by determining the yes and the no votes. However, the type of determining the
result of the voting will be directed by the Meeting Chairperson.
At the order of the Meeting Chairperson, the General Meeting may, according to Section 18
para. 3 of the SE-Articles of Association, be publicly broadcast in pictures and sound, either
as a whole or partially, including via the Internet.


d)     Voting Rights (Section 19 of the SE-Articles of Association)
According to Section 19 para. 1 of the SE-Articles of Association each non par-value share
confers one vote.
The exercise of the voting right by proxy is allowed if based on a proxy provided in text form.
For banks and financial institutions not holding the shares on their own account, Section 19
para. 2 of the SE-Articles of Association refers to the special rules provided for in Sec-
tion 135 AktG.
The Board may allow shareholders to participate in the general meeting by means of elec-
tronic communication (online participation), if the details of the online participation are in-
cluded in the convocation notice to the general meeting.
Also, the Board may allow shareholders to vote without being present or represented by
proxy in writing or by means of electronic communication (postal vote), if the details of the
postal vote are included in the convocation notice to the general meeting.
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10.    Annual Financial Accounts (Section 20 of the SE-Articles of Association)
The responsibilities of preparing and ascertaining the financial statements of PUMA SE are
allocated in Section 20 of the SE-Articles of Association in line with Section 47 SEAG as fol-
low: The Managing Directors shall prepare the annual consolidated and unconsolidated fi-
nancial statements, the annual report (Lagebericht) and the consolidated annual report (Kon-
zernlagebericht) and promptly submit these to PUMA SE’s auditor and to the Board. Also,
the Board shall be provided with a proposal concerning the allocation of the annual net profit,
if any, that the Board shall recommend to the general meeting. The Board shall record the
results of its review of the financial statements, the annual report and the consolidated an-
nual report in a report to be submitted to the Managing Directors within one month after re-
ceipt of these documents from the Managing Directors.


11.    Allocation of net Profit (Section 21 of the SE-Articles of Association)
Section 21 of the SE-Articles of Association provides for the general rule that the Company’s
annual net profit shall be distributed to the shareholders, unless the general meeting resolves
otherwise.


12.    Formation Expenses (Section 22 of the SE-Articles of Association)
With regard to the conversion of PUMA AG into PUMA SE, the formation expenses of up to
an amount of EUR 3,000,000.00 shall be borne by the Company.


13.    Benefits (Section 23 of the SE-Articles of Association)
Section 23 of the SE-Articles of Association clarifies that notwithstanding the statutory com-
petences of the Board of PUMA SE, it is to be assumed that the acting members of the man-
agement board of PUMA AG will be appointed managing directors of PUMA SE. Current
members of the management board of PUMA AG are Jochen Zeitz, Melody Harris-Jensbach,
Klaus Bauer, Stefano Caroti, Reiner Seiz and Antonio Michele Bertone.
Furthermore it is clarified that the four shareholder representatives of the supervisory board
of PUMA AG, François-Henri Pinault, Jean-François Palus, Grégoire Amigues and Thore
Ohlsson will be appointed initial shareholder representatives of the PUMA SE Board.
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F.     Comparison between PUMA AG and PUMA SE, particularly Taking into Account
       the Legal Position of the Shareholders

The material provisions, statutory law and the articles of association, currently applicable to
PUMA AG, are compared to those provisions which will apply to PUMA SE in the future. In
this regard, particular attention is given to the rights of the shareholders and aspects of cor-
porate governance.


I.     Introduction and legal Basis
The SE is a company in the form of a European Stock Corporation (Art. 1 para. 1 SE-VO),
which has been created by the European legislative body as a supranational legal form by
enacting the SE-VO. The SE-VO is directly applicable law in all EU member states. This en-
sures the European-wide recognition of the SE, regardless of the place of its registered of-
fice. Subject to the provisions of the SE-VO, the SE is treated in each member state as a
stock corporation formed in accordance with the law of the country in which the SE's regis-
tered office is situated (cf. Art. 10 SE-VO). The SE has - as a stock corporation under na-
tional law - legal personality (cf. Art. 1 para. 3 SE-VO). Its capital is divided into shares. The
SE is liable to creditors only with its corporate assets (cf. Art. 1 para. 2 SE-VO).
The SE-VO as EU law prevails over the provisions of national law. However, the provisions
of the SE-VO are not exhaustive. Its limited scope necessitates subsidiary application of na-
tional law provisions. In this regard, the SE-VO uses for the determination of applicable law,
both, the methods of comprehensive reference (Gesamtverweisung) and of transmission
(Sachnormverweisung).
In case of a comprehensive reference, in each case it has to be analyzed in accordance with
the provisions of private international law, which national material provisions of law apply.
Since PUMA SE will be formed in Germany and, in addition, will have its head office in Ger-
many, German material law will apply to PUMA SE.
In case of the method of transmission, however, direct reference is being made to the ma-
terial law of a certain country; with regard to PUMA SE this, too, means the applicable provi-
sions of German law, mainly the AktG. Conflicts of applicable laws are practically excluded
since in accordance with both, the comprehensive reference method and the transmission
method, reference is made to the provisions of German law.
Thus, the rights of the shareholders as well as the corporate governance of PUMA SE with
its registered office in Germany are governed by the provisions of the SE-VO, the SE-Articles
of Association, the SEAG as well as the provisions of law applicable to a German stock cor-
poration (the “German AG”), particularly those of the AktG (cf. e.g. Article 9 para. 1 lit. c) (ii)
SE-VO).
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II.    General Provisions


1.     Subscribed Capital, Shares
The subscribed capital of an SE is made out in EUR (Art. 4 para. 1 SE-VO) as it is with a
German AG. Whereas in the case of a German AG, the minimum nominal amount of the
subscribed capital is EUR 50,000.00 (Section 7 AktG), the subscribed capital of an SE may
not be less than EUR 120,000.00 (Art. 4 para. 2 SE-VO). The subscribed capital of PUMA
AG currently amounts to EUR 38,611,107.84. The subscribed capital of PUMA SE will be the
same amount as the subscribed capital of PUMA AG at the time of the Conversion becoming
effective (cf. Section 3.3 of the Conversion Plan). Thus, the minimum capital of EUR
120,000.00 is exceeded by far.
As a consequence of the transmission provision in Art. 5 SE-VO, the material provisions of
law applicable to a German AG concerning the different features of its shares also apply, in
principle, to an SE situated in Germany. Accordingly, the shares of an SE can either be par-
value shares with minimum nominal amounts (Nennbetragsaktien) or no par-value shares
with a proportioned amount of the subscribed capital as the minimum amount (Stückaktien).
Besides, like with an AG, the shares of an SE may be issued to the bearer (Inhaberaktien) or
may be registered shares (Namensaktien). As is the case with the German AG, registered
shares may be subjected to a transfer restriction (Vinkulierung). The issuance of shares of
different classes, particularly the issuance of preference shares (Vorzugsaktien), is permissi-
ble.
With regard to the features of the shares of PUMA AG no changes occur as a consequence
of the conversion into an SE. As before, the subscribed capital of PUMA SE will be divided
into 15,082,464 no par-value shares. The shares will be bearer shares. Thus, the shares will
not be subject to any transfer restrictions. No preference shares exist. See Chapter G. III.
No. 2 of this Report regarding listing of shares.


2.     Registered Office
The registered office of a German AG is stipulated in its articles of association (Section 5
para. 1 AktG). This also applies to the SE (Art. 9 para. 1 lit. c) (ii) SE-VO in connection with
Section 5 AktG). The registered office has to be within the EU, in the same member state as
its head office (Art. 7 sent. 1 SE-VO). Therefore, the registered office of a German AG as
well as of an SE may only be changed by an alteration of the articles of association (cf. with
regard to the stock corporation Section 179 et seq. and Section 45 AktG, with regard to the
SE Art. 8 SE-VO in connection with Art. 9 para. 1 lit. c) (ii) SE-VO in connection with Section
179 et seq. AktG).
Art. 7 sent. 2 SE-VO further stipulates that national law can prescribe that the registered of-
fice has to be at the place of the head office. Formerly, such prediction was made in Sec-
tion 2 SEAG. However, such provision has been deleted.
For a German AG, a resolution of the general meeting of shareholders to transfer the regis-
tered office to another country constitutes a dissolution of the Company pursuant to Sec-
tion 262 para. 1 no. 2 AktG. In contrast, an SE within the EU may transfer its registered office
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abroad without dissolution. However, Section 12 SEAG requires that in case of a transfer of
the registered office of an SE from Germany to another EU State, adequate cash compensa-
tion has to be offered to the shareholders objecting the resolution of the general meeting.


3.     German Corporate Governance Code (DCGK)
Pursuant to Section 161 AktG, the management board and supervisory board of Iisted stock
corporations have to declare on an annual basis that the recommendations of the "Govern-
ment Commission on the German Corporate Governance Code" published by the Federal
Ministry of Justice in the official section of the electronic Federal Gazette (elektronischer
Bundesanzeiger) have been and are being complied with or which of the recommendations
have not or are not being applied and why not. The declarations have to be made perma-
nently available to the public on the company’s website. The DCGK contains essential provi-
sions regarding management and supervision (company management) and includes stipula-
tions describing mandatory provisions of German statutory law, as well as recommendations
(Empfehlungen) and suggestions (Anregungen). Only the statutory provisions have a binding
character for enterprises. With regard to the recommendations, Section 161 AktG stipulates
that listed companies have to declare on an annual basis whether or not they deviate from
the recommendations and, in case of a deviation, why the deviation is made (Declaration of
Conformity, Entsprechenserklärung, following the system of “comply or explain”).
The SE-VO does not contain any express provisions on the applicability of the DCGK. How-
ever, by virtue of Art. 9 para.1 lit. c) (ii) SE-VO, Section 161 AktG is applicable with the con-
sequence that PUMA SE – as PUMA AG – has to declare on an annual basis whether it
complies with the recommendations of the DCGK.


4.     Notification Requirements
PUMA AG has to recognize notification requirements in respect of voting rights according to
Sections 21 et seq. of the German Securities Trading Act (Wertpapierhandelsgesetz,
WpHG). These also apply to PUMA SE as a listed SE, by virtue of the comprehensive refer-
ence provision in Art. 9 para. 1 lit. c) (ii) SE-VO.


III.   Formation of the Company
The provisions governing the formation of a German AG with the approval of the articles of
association, provisions concerning special advantages and formation expenses, the ap-
pointment of the supervisory board members, management board members and the auditor,
the requirement of a formation report and audit, the filing of the company with the commercial
register, its examination by the court and the registration with the commercial register are laid
down in Sections 23 et seq. AktG. With regard to a change of the legal form, in addition Sec-
tions 190 et seq. German Transformation Act (Umwandlungsgesetz, “UmwG”) apply, which
partly refer back to Sections 23 et seq. AktG.
Since the formation of an SE is governed by the law of the state in which the SE establishes
its registered office (Art. 15 SE-VO) and an SE, upon its formation, is to be regarded as a
stock corporation (cf. Article 3 SE-VO), the formation provisions applicable to the German
AG also in general apply to the formation of PUMA SE. However, for purposes of applying
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these provisions, the founder, i.e. the party conducting the conversion is the company which
is changing its legal form, i.e. PUMA AG.
The mandatory rules of the AktG regarding capital contribution (Kapitalaufbringung) also ap-
ply to the SE (cf. Art. 5 SE-VO). However, these provisions are modified or replaced, respec-
tively, by Article 37 SE-VO for the purposes of a conversion of a stock corporation into an
SE. With regard to the details of the conversion of PUMA AG into PUMA SE, in particular
with regard to the details of the formation, see the statements in Chapter D. of this Report.


IV.    Legal Relations of the Company and the Shareholders
Section 53 a AktG requires the equal treatment of shareholders in equal circumstances. This
principle applies, without restriction, also to the SE (cf. comprehensive reference provision of
Art. 9 para. 1 lit. c) (ii) SE-VO).
The capital maintenance provisions (Kapitalerhaltung) of the Stock Corporation Act also ap-
ply to the SE (cf. transmission provision Art. 5 SE-VO). As a consequence, Section 56 AktG
prohibits the subscription of the company's shares (i.e. treasury shares) by the SE and Sec-
tion 57 AktG prohibits the repayment of contributions by the SE. The utilization of the net in-
come and the setting aside of reserves (Section 58 para. 1 to 3 AktG) as well as the distribu-
tion of profits (Section 58 para. 4 AktG) are also applicable within an SE. Also, advance
payments on account of the balance sheet profits are only permissible in the SE subject to
the requirements of Section 59 AktG.
The distribution of profits generally has to be made pro rata to the shareholding of the share-
holders, whereas the articles of association of the SE - as is the case with a German AG -
may stipulate a different profit distribution for ordinary and preference shares. In the SE, too,
the acquisition of treasury shares is only permissible subject to certain restricting require-
ments (cf. Sections 71 through 71d AktG).


V.     Organizational Constitution of the Company: Two-tier system – one-tier system
A German AG mandatorily has to implement the two-tier-system with a management board
(Vorstand) (Sections 76 et seq. AktG) and a supervisory board (Aufsichtsrat) (Sections 95 et
seq. AktG). No person may, at the same time, be a member of the management board and
the supervisory board of a German AG. The management board has to manage the business
of the company whereas the supervisory board has to supervise the management board.
The management board leads the AG generally in its sole responsibility and is thereby inde-
pendent from the supervisory board (Section 76 para. 1 AktG). However, it is obliged to
make report to the supervisory board, regularly in accordance with Section 90 AktG and in
case of important matters.
The supervisory board has to supervise the management board and is not allowed to as-
sume measures of the management board (Section 111 para. 1 AktG). It is entitled to ap-
prove certain types of business measures of the management board. The entitlement and
the catalogue of measures to be approved by the supervisory board have to be included in
the articles of association or determined by the supervisory board itself (Section 111 para. 4
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sent. 2 AktG). However, the supervisory board may thereby not interfere with the ordinary
course of business transactions, neither directly nor by way of instructions.
In contrast, the SE allows choosing between a two-tier system with a management board
and a supervisory board (cf. Art. 39 et seq. SE-VO in connection with Sections 15 et
seq. SEAG) and a one-tier system with a single administrative organ (cf. Art. 43 et seq. SE-
VO in connection with Sections 20 et seq. SEAG).
In Section 6 para. 1 of the SE-Articles of Association PUMA AG has decided to implement a
one-tier corporate governance system with a single administrative organ, the Board (Ver-
waltungsrat). The decision is supplemented by Section 6 paras. 2 and 3 of the SE-Articles of
Association stating that the Board and the general meeting are the corporate bodies of
PUMA SE and that the managing directors are responsible for managing the Company’s or-
dinary course of business in the framework established by the Board.
The Board shall direct the company, establish the general principles of its business and su-
pervise their implementation. As said, the Board is accompanied by the Managing Directors
(Geschäftsführende Direktoren). Managing Directors may be members of the Board as long
as the majority of Board members consists of Non-Managing Directors, cf. Section 40 para. 1
sent. 2 SEAG. The Managing Directors are responsible for conducting the ordinary course of
business of an SE. They are, contrary to the management board of a German AG, bound by
instructions issued by the Board.


1.     Board (Verwaltungsrat)


a)     Size and Composition of the Board
The size and composition of the Board are stipulated in Sections 23 et seqq. SEAG in con-
nection with Art. 43 et. Seqq. SE-VO. The Board has to have three members in the minimum
and can in case of a subscribed capital of more than EUR 10 Mio. consist of 21 members in
the maximum (Section 23 para. 1 SEAG). It is composed of shareholder representatives and,
to the extent, an Employee Involvement Agreement provides for, or, in its absent, Sections
34 et seqq. SEBG, of employee representatives (Sections 24 para. 1 in connection with 23
para. 2 SEAG). The Board of PUMA SE shall consist of nine members.
Section 25 SEAG regulates a certain procedure on the determination of the composition of
the Board which the chairperson of the Board is entitled to initiate, if he/she is of the opinion
that the Board is not composed properly. The composition of the Board will be audited by
court, if, and to the extent, that Board Members, shareholders, the SE works council and be-
neficiaries pursuant to Section 98 para. 2 no. 4 through 10 AktG file for a respective court
decision. The court procedure is to the broadest extent possible comparable with the proce-
dure on the composition of the supervisory board in a German AG according to Section 99
AktG (Statusverfahren) (cf. Section 26 para. 4 SEAG). If the court procedure is not instituted,
the Board has to be newly implemented by applying the provisions as announced by the
chairperson of the Board in its notification.
The obstacles to become a Board Member provided for in Section 27 SEAG are comparable
to those ones for members of a supervisory board of German AG according to Sections 100
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para. 2 sent. 1 no. 1 – 3 and sent. 2 and 3 and para. 1 sent. 1 AktG. As is in a listed German
AG, one member of a listed SE has to have expert knowledge in accounting and auditing
(cf. Section 27 para. 1 sent. 4 SEAG in connection with Section 100 para. 5 AktG).
The Board will constitute itself after the general meeting and will name a chairperson and at
least one deputy chairperson, who is entitled to assume the rights and duties of the chairper-
son only, if the latter is prevented, Section 34 para. 1 SEAG. The Board may adopt its own
rules of procedure, Section 34 para. 2 SEAG.


b)     Appointment and Dismissal of Board Members, Term of Office
According to Art. 43 para. 3 sent. 1 SE-VO the Board Members will be appointed by the gen-
eral meeting. The initial Board Members may be appointed in the SE-Articles of Association,
Art. 43 para. 3 sent. 2 SE-VO.
Concerning employee representatives, Art. 43 para. 3 sent. 3 SE-VO determines that na-
tional law implementing the SE Employee Involvement Directive remains applicable. Thus
employee representatives will be appointed in accordance with an Employee Involvement
Agreement or, if not existing, with Sections 34 et seqq. SEBG. The first employee
representatives will presumably be appointed by way of court order under consideration of
the results of the employee involvement procedure at that point in time (Section 30 SEAG,
Section 104 AktG).
Shareholders may delegate (entsenden) Board Members into the Board, if determined in the
SE-Articles of Association. Section 28 para. 2 SEAG refers to the requirements on the dele-
gation (Entsendung) of a member into the supervisory board of a German AG according to
Section 101 para. 2 AktG.
Additionally, Section 28 para. 3 SEAG clarifies that deputy Board Members may not be ap-
pointed, but a substitute member (Ersatzmitglied) for each Board Member.
Comparable to Section 104 AktG, a judicial appointment of Board Members is foreseen in
Section 30 SEAG. Thus, upon a respective motion of a Board Member, a shareholder, the
beneficiaries set out in Section 104 para. 1 Sent. 3 AktG or the SE works council the court
has to supplement the Board to meet the number of members required to constitute a quo-
rum, if the Board consists of less than this number of members (Section 30 para. 1 SEAG).
Also, the court has to supplement the Board upon a respective motion, even if the Board still
constitutes a quorum and, in urgent cases, prior to the expiry of the three months period reg-
ularly required for supplementing the Board, because of an insufficiency of members (Sec-
tion 30 para. 2 SEAG). The remaining provisions of Section 104 AktG apply by the reference
provision of Art. 9 para. 1 lit. c) (ii) SE-VO.
Section 29 SEAG provides for the dismissal of Board Members. The provision is to a broad
extent comparable to Section 103 AktG concerning the dismissal of a supervisory board
member of a German AG. According to Section 29 para. 1 SEAG, Board Members that have
been appointed by the general meeting without being bound by election proposals, could be
dismissed by the general meeting with a qualified majority of three-fourth of the votes cast,
unless the SE-Articles of Association provides for a different majority and further require-
ments. Pursuant to Section 7 para. 5 SE-Articles of Association, Board members that have
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been appointed by the general meeting without the general meeting being bound by election
proposals may be removed from office by resolution of the general meeting adopted with a
three-quarter majority of the votes cast. A delegated Board Member can be dismissed and
replaced by a new one by the delegating shareholder at any time, Section 29 para. 2 sent. 1
SEAG. The general meeting is entitled to dismiss a delegated member, if the requirements
for the delegation right according to the SE-Articles of Association ceased to exist, Section
29 para. 2 sent. 2 SEAG. Also, upon filing of the Board, a dismissal of a Board Member by
court is provided for in Section 29 para. 3 SEAG, if a good cause (wichtiger Grund) exists in
the person of the Board Member to be dismissed.
Board Members may have a term of office to be determined in the SE-Articles of Association.
However, according to Art. 46 para. 1 SE-VO, the term may not be longer than six years after
the Board Member’s appointment. Following Art. 46 para. 2 SE-VO Board Members may be
re-appointed one or several times for the period of time provided for in Art. 46 para. 1 SE-
VO. However, the term of office of the first Board Members shall – in accordance with Sec-
tion 30 para. 3 AktG – expire at the end of the general meeting that resolves on the formal
approval of action (Entlastung) for the first financial year of the SE and, in any event, not later
than three years after their appointment.


c)     Responsibility, General Principles of PUMA SE’s business and Supervision
Section 22 SEAG describes the tasks and rights of the Board. According to its para. 1 the
Board shall direct the company, establish the general principles of its business and supervise
their implementation.
The Board has to invite for a general meeting of shareholders, if the well-being of the com-
pany requires to do so, Section 22 para. 2 SEAG, and has to prepare it, mutatis mutandis the
management board’s obligation pursuant to Section 83 AktG to do so in a German AG. The
Board is entitled to transfer certain tasks connected therewith to the Managing Directors.
As the management board of a German AG according to Section 91 AktG, the Board is ob-
liged according to Section 22 para. 3 SEAG, to make sure that the company maintains the
required books and accounts and has to take appropriate action to ensure that developments
threatening the existence of the company will be discovered as early as possible, in particu-
lar to implement a monitoring system (Überwachungssystem).
The Board is, according to Section 22 para. 4 SEAG, entitled to inspect and audit the books
and accounts of the company as well as its assets, in particular the company cash box and
stocks of certificates and goods. The Board places the order to audit the financial and con-
solidated financial accounts of the company with the auditor of the company.
If a loss of half of the subscribed capital of the company becomes apparent during the prepa-
rations of the yearly financial statements or of interim financial statements or is to be duly
assumed, the Board has to invite the general meeting without undue delay and to address
the loss to it, Section 22 para. 5 sent. 1 SEAG. In case of illiquidity or over-indebtedness of
the company, the Board has to file for insolvency proceedings, Section 22 para. 5 sent. 2
SEAG. In addition, the Board has in this case to adhere to the obligations imposed on the
management board of a German AG pursuant to Section 92 para. 2 AktG.
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As a general rule Section 22 para. 6 SEAG stipulates that provisions, which allocate rights or
obligations to the management board or the supervisory board of a German AG, apply muta-
tis mutandis to the Board, unless the SEAG contains specific provisions for the Board and
the Managing Directors.


d)     Authorization to issue Instructions
As the Board is the steering body of an SE with a one-tier system, the Board is entitled to
issue instructions to the Managing Directors for their management of the ordinary course of
business of the SE, Section 44 para. 2 SEAG. The instructions can be included in the rules
of procedure for the Managing Directors and can be issued individually.


e)     Board Meetings, Resolutions
The SEAG does not explicitly stipulate the general responsibility for the convocation of Board
meetings. However, due to the fact that each Board Member may, by nominating the aim and
the reasons, request the chairperson of the Board to call a Board meeting without undue de-
lay according to Section 37 para. 1 SEAG, the general responsibility to do so is also with the
chairperson. If the chairperson doesn’t comply with that request, the Board Member is en-
titled to call the meeting under notice of the facts and circumstances as well as submission of
its agenda himself/herself, Section 37 para. 2 SEAG.
Participation rights of people other than Board Members and Managing Directors in Board
meetings are in general excluded according to Section 36 para. 1 SEAG. An exception can
be made by Board decision for expert auditors and other persons who can provide informa-
tion for the discussion of certain agenda items. If provided for in the articles of association of
the SE, people other than Board Members may participate in Board meetings instead of
Board Members, if they are authorized to do so in writing, Section 36 para. 3 SEAG.
As regards committee meetings, Board Members that are not at the same time members of
the committee are allowed to participate in the committee meeting, unless the chairperson of
the Board determines otherwise, Section 36 para. 2 SEAG.
Generally, resolutions of the Board shall be adopted in physical Board meetings. However,
Section 35 SEAG provides for certain exceptions. According to its para. 1 absent Board
Members are allowed to participate in the adoption of resolutions by way of submission of his
or her written vote through another Board Member or through persons that are allowed to
attend the Board meeting in accordance with Section 109 para. 3 AktG, which is coextensive
with Section 36 para. 3 SEAG. Resolutions passed in writing, by fax, by email, by telephone
or by using other forms of communication for the passing of resolutions are according to
Section 35 para. 2 SEAG permissible, if the procedure is foreseen in the articles of associa-
tion or in the rules of procedure of the Board and no Board Member objects to the procedure
of the adoption. According to Section 35 para. 3 SEAG, in case a Managing Director, who is
at the same time Board Member, is prevented from participating in the passing of a resolu-
tion of the Board due to legal reasons, the chairperson of the Board has a second vote.
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f)     Remuneration of the Board Members, Prohibition of Competition, Granting of
       Loans to Board Members
Remuneration of Board Members, contracts with Board Members and the granting of loans
to Board Members are stipulated in Section 38 SEAG by referring to Sections 113 et
seqq. AktG.
Accordingly, the remuneration of Board Members has to be determined in the SE-Articles of
Association or accorded by resolution of the general meeting. The remuneration shall be
adequate compared to the tasks and duties of the Board Members and the situation of the
SE. In case the remuneration is determined in the SE-Articles of Association, the general
meeting may resolve upon its decrease by way of change of the SE-Articles of Association
with a simple majority of votes cast. With regard to the members of the first Board, these re-
muneration provisions do not apply. Pursuant to Section 113 para. 2 AktG, they receive a
remuneration which is at the discretion of the general meeting resolving upon the ratification
of their actions (Entlastung).


g)     Duty of Care and Liability
Pursuant to Section 39 SEAG in connection with Section 93 AktG Board Members are liable
for the loss sustained by the SE following any breach on their part of the legal, statutory or
other obligations inherent in their duties. Accordingly, the standards of a prudent and con-
scientious business man, the so-called business judgment rule and the provisions governing
the liability of the management board of a German AG in the meaning of Section 93 AktG
apply to the Board of PUMA SE. In addition, Art. 49 SE-VO explicitly stipulates that the Board
Members are under a duty, even after they have left office, not to divulge any information
which they have concerning the SE, the disclosure of which might be prejudicial to the SE’s
interests, except where such disclosure is required.


h)     Committees
The Board is according to Section 34 para. 4 sent. 1 SEAG entitled to transfer tasks and du-
ties incumbent upon it to one or more committees appointed from its midst, in particular to
prepare its discussions and resolutions and to supervise the implementation of its resolu-
tions. Potential committees and details on their rights and duties are provided for in the fol-
lowing sentences of Section 34 para. 4 SEAG, which are comparable to the provisions of the
AktG as regards committees of a supervisory board of a German AG. If the Board creates an
audit committee, such committee statutorily needs to be staffed with a majority of Board
Members which are not, at the same time, Managing Directors (Section 34 para. 4 sent. 5
SEAG). Also, at least one member of the audit committee shall have expert knowledge re-
garding financial accounting or auditing according to Section 100 para. 5 AktG and the chair-
person of the audit committee may not be a Managing Director (Section 34 para. 4 sent. 6
SEAG).
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2.     Managing Directors (Geschäftsführende Direktoren)


a)     Appointment and dismissal of Managing Directors, Term of Office
The Board is entitled to appoint the Managing Directors of the Company (Section 40 SEAG).
Thus, the personnel responsibility of the Board as regards the Managing Directors is compa-
rable to the one of the supervisory board of a German AG concerning the management
board of a German AG. According to Section 40 para. 1 sent. 1 SEAG Board Members may
be appointed Managing Directors as long as the majority of the Board still consists of non-
executive Board Members. The remaining appointment procedure and its requirements are
comparable to the appointment of members of the management board of a German AG.
In the same manner as members of the management board of a German AG, Managing Di-
rectors of an SE can in urgent cases be appointed by court (Section 45 SEAG in connection
with Section 85 AktG).
According to Section 40 para. 5 sent. 1 SEAG Managing Directors can be dismissed by the
Board at any time, unless the SE-Articles of Association provide otherwise.
As regards the service contracts of the Managing Directors, Section 40 para. 5 sent. 2 refers
to the generally applicable rules. With respect to the Managing Directors of PUMA SE, the
SE-Articles of Association provide that Managing Directors can only be dismissed for good
cause (aus wichtigem Grund) or in case of a termination of the service contract of the Man-
aging Director, in each case by a Board resolution adopted with simple majority of the votes
cast, cf. Section 13 para. 4 of the SE-Articles of Association.


b)     Responsibility, Instructions
According to Section 40 para. 2 sent. 1 SEAG, the Managing Directors are responsible for
managing the business of PUMA SE. Other than the management board of a German AG
according to Section 76 AktG, the Managing Directors do not direct the Company in their
sole responsibility. This can be seen from Section 22 para. 1 SEAG when compared with
Section 40 para. 2 sent. 2 SEAG in connection with Section 44 SEAG.
Except as otherwise provided for in the provisions of the SEAG, e.g. Section 21 para. 1
SEAG, filings to the commercial register that are within the responsibility of the management
board of a German AG have to be made by the Managing Directors of an SE (Section 40
para. 2 sent. 4 SEAG and Section 46 SEAG).
If two or more Managing Directors are appointed, they are entitled to adopt its rules of proce-
dure according to Section 40 para. 4 SEAG, unless the articles of association have trans-
ferred the responsibility to the Board – as it is forseen by Section 14.2 of the SE-Articles of
Association – or the Board has already adopted rules of procedure for the Managing Direc-
tors.
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c)     Proxy
The proxy of Managing Directors to represent the Company judicially and extra-judicially ac-
cording to Section 41 SEAG covers the same rights and duties as the proxy of members of
the management board of a German AG according to Section 78 AktG.


d)     Reports to the Board
According to Section 40 para. 6 SEAG reporting requirements of the Managing Directors vis-
à-vis the Board are the same as the management board of a German AG has to fulfill vis-à-
vis the supervisory board, unless the articles of association or the general or particular rules
of procedure provide otherwise, which is not the case.


e)     Obligations in Case of Losses, Over-Indebtedness or Illiquidity
If a loss of half of the subscribed capital of the Company becomes apparent during the prep-
arations of the yearly financial statements or of interim financial statements or is to be duly
assumed as well as in case of illiquidity or over-indebtedness, the Managing Directors have
to report the loss to the chairperson of the Board (Section 40 para. 3 SEAG).


f)     Remuneration, Non-Compete and Loans to Managing Directors
As regards the remuneration of Managing Directors, non-competition provisions and the
granting of loans to Managing Directors, Section 40 para. 7 SEAG refers to Sections 87
through 89 AktG containing those rules for members of the management board of a German
AG.


g)     Duty of Care and Liability
Pursuant to Section 40 para. 8 SEAG in connection with Section 93 AktG Managing Direc-
tors are liable for the loss sustained by the SE following any breach on their part of the legal,
statutory or other obligations inherent in their duties. Accordingly, the standards of a prudent
and conscientious business man, the so-called business judgment rule and the provisions
governing the liability of the management board of a German AG in the meaning of Section
93 AktG apply to the Managing Directors of PUMA SE to the same extent.


h)     Deputy Managing Directors
Section 40 para. 9 SEAG stipulates that all provisions applicable to the Managing Directors
of an SE are also valid with respect to deputy Managing Directors.


3.     General Meeting of Shareholders


a)     Rights of the general meeting
The shareholders of a German AG exercise their rights relating to the matters of the com-
pany in the general meeting of shareholders unless statutory law provides otherwise (Section
118 para. 1 sent. 1 AktG). The members of the management board and the supervisory
Conversion Report                                                                  page 59 of 68



board are supposed to take part in the general meeting (Section 118 para. 3 sent. 1 AktG).
This also applies to the SE (by virtue of Art. 9 para. 1 lit. c) (ii) SE-VO and Art. 53 SE-VO),
with the consequence that the conversion of PUMA AG into an SE does not lead to changes
in this regard.
The general meeting of an SE whose registered office is situated in Germany generally de-
cides on the same matters for which responsibility is given to the general meeting of a Ger-
man AG. These are, in particular, the appointment of the shareholder representatives of the
Board, the utilization of balance sheet profits, the ratification (Entlastung) of the actions of the
members of the management board and the supervisory board, the appointment of the au-
ditor, amendments of the articles of association, capital measures like capital increases and
capital reduction, the appointment of special auditors for the examination of events in con-
nection with the formation or of the management of the company as well as the winding up of
the company (Art. 52 sub-para. 2 SE-VO in connection with Section 119 para. 1 AktG). How-
ever, due to the one-tier board system of PUMA SE, the ratification of the actions applies to
the Board and the Managing Directors and not to the management board and the supervi-
sory board.
The general meeting of a German AG is only allowed to take decisions on the management
of the AG, if it is requested to do so by the management board (cf. Section 119 para. 2
AktG). This also applies to an SE with a one-tier system with its registered office in Germany
(Art. 52 sub-para. 2 SE-VO). Exceptions may apply with regard to the so called Holzmüller
and Gelatine cases, i.e. to structural matters which generally fall within the scope of execu-
tive competence of the management board, but which, because of their importance, affect
the rights of the shareholders to a degree that the management board is not entitled to carry
them out without shareholder approval. Presumably, these case law principles also apply to
an SE with its registered office in Germany (cf. Art. 52 sub-para. 2 SE-VO) with the conse-
quence that in this regard, too, the conversion of PUMA AG into an SE does not lead to
changes.
Besides, the general meeting of a German AG as well as of an SE with its registered office in
Germany decides on matters under transformation law pursuant to the German Transforma-
tion Act (e.g. mergers, divisions, spin-offs, transfers of assets or changes of the legal form).
Pursuant to Art. 52 sub-para. 1 SE-VO the general meeting of an SE is also responsible for
decisions on matters which have been assigned to its responsibility by the SE-VO or by na-
tional legislation implementing the SE Employee Involvement Directive of the member state
in which the SE's registered office is situated. This includes, in particular, the transfer of the
registered office (Art. 8 SE-VO) as well as the reconversion into a national stock corporation
(Art. 66 SE-VO). A resolution on a conversion of an SE into a national stock corporation may
according to Art. 66 its para. 1 SE-VO only be passed after two years following the registra-
tion of the SE with the commercial register or after approval of the first two annual financial
statements, following the resolution of the conversion into an SE.


b)     Annual general meeting
By virtue of the transmission provisions in Art. 52 sub-para. 2 SE-VO and Art. 53 SE-VO, the
rules of the AktG regarding the general meeting of shareholders generally apply, without re-
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striction, also to SE. Thus, also the shareholders of an SE have to hold an annual general
meeting. A change resulting from the conversion of PUMA AG into an SE is that the general
meeting of the SE is to be held within the first six months, and not eight months, of the fol-
lowing financial year, as is the case with the stock corporation (Art. 54 para. 1 SE-VO).
In a German stock corporation, the general meeting of shareholders resolves, within the first
eight month of each financial year, upon the ratification (Entlastung) of the actions of the
management board and the supervisory board, by which it approves the management of the
company by the members of the management board and the supervisory board (cf. Sections
119 para. 1 no. 3, 120 AktG). For an SE, the time period is restricted to six months following
the end of the financial year (Art. 54 sent. 1 SE-VO).
According to Art. 52 sub-para. 2 SE-VO and Section 48 para. 2 SEAG, the annual general
meeting of an SE has to deal with the same matters as the annual general meeting of a
German AG.


c)     Convening of the general meeting
Art. 53, 54 para. 2 SE-VO and Section 48 para. 1 SEAG stipulate the requirements for the
convocation of a general meeting. These are, from a statutory point of view, to the broadest
extent possible comparable with the provisions concerning the calling of the general meeting
of a German AG, except for the right to call the general meeting as stipulated in Art. 54 Para.
2 SE-VO. Since apart from this, the relevant stipulations in the SE-Articles of Association
correspond to those of PUMA AG, the conversion of PUMA AG into an SE does not lead to
any relevant changes in this regard (cf. Sections 16 through 19 of the SE-Articles of
Association as well as Chapter E. II. No. 9 of this Report).


d)     Convening of the General Meeting upon Request of a Minority/Supplementing
       the Agenda upon Request of a Minority
The general meeting of a German stock corporation is to be convened, if shareholders
whose shares, in the aggregate, represent 5% of the subscribed capital, request a convoca-
tion in writing, provided that such minority shareholders state the purpose and reasons for
the request (Sections 122 para. 1 sentence 1 AktG). The shareholders have to prove that
they own the shares for at least three months before the date of the general meeting and that
they continue to hold the shares until the decision on the motion is made (Section 122 para.
1 sent. 3 in connection with Section 142 para. 2 sent.2 AktG). In the same way, shareholders
whose shares, in the aggregate, represent 5% of the subscribed capital or a proportionate
amount of the subscribed capital of EUR 500,000.00 may demand that certain agenda items
for a resolution to be passed by the general meeting be published (Section 122 para. 2 sen-
tence 1 AktG). If the management board denies the demand upon application, a court may
authorize the demanding minority shareholders to convene the general meeting or to publish
the agenda item for the adoption of a resolution (Section 122 para. 3 sentence 1 AktG).
The convening of the general meeting of shareholders of an SE and the drawing-up of the
agenda therefore may be requested by one or more shareholders who together hold at least
5% of the subscribed capital (Art. 55 para. 1 SE-VO, Section 50 para. 1 SEAG). The request
that a general meeting be convened has to state the items to be put on the agenda (Art. 55
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para. 2. SE-VO). Upon a respective request, a court may order the convening of the general
meeting or authorize the shareholders to convene the general meeting, if the general meet-
ing has not been held within two months, at the latest, after the request for convening a gen-
eral meeting has been made (Art. 55 para. 3 SE-VO). In contrast to Sections 122 para. 1
sent. 3, 142 para. 2 sent. 2 AktG, which require a minimum holding period of the shares of
three months before making the request in case of an AG, there is no such condition for the
request in the case of an SE.
The inclusion of one or more additional items on the agenda of the general meeting of an SE
may be requested by one or more shareholders who together hold at least 5% of the sub-
scribed capital or a proportionate amount of EUR 500,000 (Art. 56 SE-VO, Section 50 para. 2
SEAG). The procedures and time limits applicable to such requests are governed by national
law, i.e. presently by the SEAG (cf. Art. 56 sentence 2 SE-VO in connection with Section 50
SEAG).


e)     Organization and Conduct of the General Meeting
With regard to the organization and conduct of the general meeting of an SE, the SE-VO
makes reference, by virtue of its Art. 53 and its Art. 9 para. 1 lit. c) (ii) to the provisions of the
AktG. Consequently, the conversion of PUMA AG into an SE does not lead to changes in this
respect.


f)     Shareholders’ Right to Information, Speaking Right and Right to ask Questions
       in the General Meeting
In order to exercise their membership rights, the shareholders of a German AG require suffi-
cient information about the company. The general basis for this information are the annual
financial statements, including the notes thereto, and the management report of the man-
agement board (Section 175 para. 2 AktG) as well as the report of the supervisory board
(Section 171 para. 2 AktG). In addition, Section 131 AktG grants each shareholder, regard-
less of the percentage of shareholding in the company, a right to receive information in the
general meeting to the extent this is necessary for the appropriate assessment of the
agenda. For specific reasons which are listed in Section 131 para. 3 AktG, the management
board may refuse to give information. For example, such a right to withhold information exists
in cases where divulging the information could lead, in the view of a reasonable business-
man, to a significant disadvantage for the company. The right to receive sufficient information
is also granted to the shareholders of an SE. By virtue of Art. 9 para. 1 lit c)(ii) SE-VO, the
stock corporation law provisions cited above also apply to the SE with the consequence that
following the conversion into PUMA SE the rights of the shareholders to information and to
put questions will be maintained at the same level as within PUMA AG.


g)     Rules of Procedure
The general meeting of a stock corporation may lay down rules of procedure for itself con-
cerning the preparation and conduct of the general meeting with a majority of at least three
quarters of the subscribed capital represented at the casting of votes (Section 129 para. 1
sentence 1 AktG).
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In principle, this also applies to the SE (cf. Art. 53 SE-VO in connection with Section 129
para. 1 AktG). Whereas the AktG requires a majority of three quarters of the represented
subscribed capital for the adoption of a resolution to lay down rules of procedure for the
preparation and conduct of the general meeting, the laying down of such rules of procedure
in an SE requires a majority of three quarters of the votes (validly) cast, since the provisions
of the AktG regarding the applicable majority requirements for resolutions have to be inter-
preted in a manner consistent with the SE. In contrast to the AktG, the SE-VO uses the crite-
rion of votes cast (cf. Art. 57, 58, 59 SE-VO). Since no shares with multiple voting rights ex-
ist, this change has no practical consequences, because in a German AG or SE, respec-
tively, the majority of the subscribed capital is identical to the majority of votes.


h)     Regular Resolutions of the General Meeting (Not Involving an Amendment of
       the Articles of Association)
The adoption of resolutions of the general meeting of a German AG requires the majority of
the votes cast (simple majority of votes), unless a larger majority or additional requirements
are stipulated by statutory law or the articles of association (Section 133 para. 1 AktG).
The resolutions of the general meeting of an SE are adopted by a majority of the votes va-
lidly cast, save where a larger majority is stipulated by the SE-VO or by stock corporation law
(Art. 57 SE-VO).
Therefore, the conversion of PUMA AG into an SE does not lead to changes with regard to
the principle of simple majority of votes for the adoption of resolutions in the general meeting.


i)     Resolutions of the General Meeting Involving Amendments to the Articles of
       association
Resolutions involving amendments to the articles of association of a German AG require a
majority of at least three quarters of the subscribed capital represented at the casting of
votes as well as a simple majority of the votes cast (Sections 179 para. 2, 133 AktG). The
articles of association may stipulate deviating majority requirements, however, with the pro-
viso that in respect of a change of the corporate purpose only a larger majority of the sub-
scribed capital may be stipulated (Sections 179 para. 2 sent. 2 AktG). The articles of associ-
ation of PUMA AG do not contain any deviating majority requirements.
In case of an SE, amendments of the articles of association require a resolution of the gen-
eral meeting adopted with a majority of at least two thirds of the votes cast, provided that the
legal provisions applicable to stock corporations do not stipulate or allow for larger majority
requirements (Art. 59 para. 1 SE-VO). Therefore, according to the prevailing opinion, those
amendments of the articles of association which pursuant to the AktG require a mandatory
majority of the subscribed capital of three quarters now require, in the case of an SE, a ma-
jority of three quarters of the votes (validly) cast.
The articles of association of an SE may stipulate that the simple majority of votes cast is
sufficient for a resolution of the general meeting effecting amendments to the articles of as-
sociation, provided that at least half of the subscribed capital is represented (Section 51
sentence 1 SEAG). This does not apply with regard to an alteration of the corporate purpose,
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a resolution on the transfer of the registered office as well as in cases where a larger majority
of the subscribed capital is required by mandatory statutory law (Section 51 sentence 2
SEAG).
The SE-Articles of Association do not contain such provision. Therefore, the majority re-
quirements for the adoption of shareholder resolutions concerning changes of the articles of
association are for practical purposes the same as with PUMA AG. Amendments to the SE-
Articles of Association will require a three-quarter majority of the votes cast.
Where an SE has two or more classes of shares, every decision by the general meeting is
subject to a separate resolution by the class of shareholders whose specific rights are af-
fected by the decision (Art. 60 para. 1 SE-VO). Where the decision requires a qualified ma-
jority, that majority is also required for a separate resolution (Art. 60 para. 2 SE-VO). There-
fore - as is the case with an AG - the cancellation or limitations of the preference rights of the
preference shares requires a majority of three quarters of the votes cast. Thus, in this regard,
too, there are no changes occurring due to the Conversion, because PUMA has no different
classes of shares and, if so in future, these would be treated the same in the SE as they
would have been in the AG.
Since Art. 60 SE-VO only makes reference to a separate resolution and does not mention a
separate meeting, it is permissible to opt for the conduction of a separate meeting in case of
different classes of shares; there is only one general meeting in the course of which separate
resolutions are being passed.


j)     Special Audit
By virtue of Art. 9 para. 1 lit c) (ii) SE-VO and Art. 52 sub-para. 2 SE-VO, the provisions of an
special audit to a German AG (Sections 142, 258 AktG) apply with the consequences that
the conversion of PUMA AG into an SE does not lead to changes in this regard.


k)     Assertion of Claims for Damages against Corporate Bodies/Shareholder Law-
       suits
The SE-VO and the SEAG do not contain separate provisions regarding the assertion of
claims for damages or shareholder lawsuits. By virtue of Art. 9 para. 1lit c) (ii) SE-VO, the
provisions of the AktG (Sections 147 et seqq. AktG) apply.


VI.    Annual Financial Statements/Consolidated Financial Statements
The preparation of the annual financial statements and the consolidated financial statements,
including related management reports, as well as the auditing and publication of the financial
statements are governed by the legal provisions applicable to a German stock corporation
(Art. 61 SE-VO). In addition, the provisions of German stock corporation law and of the Ger-
man Commercial Code (Handelsgesetzbuch) apply by virtue of Art. 9 para. 1 lit c) (ii) SE-VO
and Art. 52 sub-para. 2 SE-VO, with the consequence that the conversion of PUMA AG into
an SE does not lead to changes in this regard.
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VII.    Capital Procurement and Capital Reduction
Generally, the same stock corporation law provisions regarding capital measures applicable
to a German stock corporation also apply to an SE. To the extent that resolutions for capital
measures of an SE can be adopted with only a simple majority of the subscribed capital pur-
suant to a stipulation in the articles of association, they now only require a simple majority of
the votes cast. However, this only applies if at least half of the subscribed capital is
represented. Otherwise, a majority of two thirds of the votes cast (and not a simple majority
of the votes cast and of the subscribed capital) is required. Those capital measures which
pursuant to the AktG already require mandatory larger majorities for stock corporations (such
as capital increases with an exclusion of the subscription right or capital reductions) also re-
quire, in the case of an SE, a majority of three quarters of the votes cast. The latter also ap-
plies for all capital measures that require a change of the SE-Articles of Association in order
to take effect.


VIII.   Invalidity of Resolutions of the General Meeting of Shareholders and of the Ap-
        proved Annual Financial Statements/Special Audit because of Impermissible
        Undervaluation


1.      Invalidity of Resolutions of the General Meeting of Shareholders
The SE-VO and the SEAG do not contain exclusive provisions regarding the challenging of
resolutions or the examination (by a court) of the legality of the content of resolutions. By
references in Sections 31 through 33 SEAG, the provisions of the AktG regarding the invalid-
ity of resolutions of elections of members of the Board apply. In addition, by references in Art.
9 para. 1 lit c) (ii) SE-VO and in Art. 5 SE-VO, the provisions of the AktG apply regarding the
invalidity of further resolutions of the general meeting (Sections 241 et seqq. AktG).


2.      Invalidity and Challenging of the Election of Board Members
An invalidity of an election of members of the Board by the general meeting can be asserted
pursuant to Section 31 SEAG in cases of severe violations of certain procedure rules ac-
cording to the SE-VO and the AktG and of violations of the composition rules set out in the
SEAG. These cover severe breaches of the provisions of (i) the calling of the general meet-
ing in accordance with Sections 121 paras. 2 and 3 sent. 1 or 4 AktG, (ii) the notarization
requirements of the general meeting’s resolution concerning the Board elections and
(iii) where the resolution has been challenged by a shareholder and been declared void by
the court (Section 241, paras. 1, 2 and 5 AktG) as well as (iv) if the Board has neither been
composed of under observance of the applicable contractual and statutory provisions ac-
cording to Section 24 para. 2 SEAG and Section 25 para. 2 sent. 1 SEAG nor of the court
order in accordance and Section 26 para. 3 SEAG (cf. Chapter F. V. No. 1 a) of this Report),
(v) if the statutory maximum number of Board members in accordance with Section 23 SEAG
is exceeded (cf. Chapter F. V. No. 1 a) of this Report) or (vi) if the elected person is excluded
from overtaking the office as Board member pursuant to Art. 47 para. 2 SE-VO. The void-
ance can be asserted on this legal basis for elections of shareholder representatives of the
Board as well as of employee representatives. The capability of being a party to a court pro-
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ceeding is ruled out by referring to Section 250 AktG and by explicitly assigning it to the SE-
works council. Concerning additional statutory provisions for the court procedure, Section 31
para. 3 SEAG refers to the general principles of the AktG. In addition, Section 31 para. 3
sent. 2 SEAG explicitly stipulates as Section 250 para. 3 sent. 2 AktG does that it is not ex-
cluded that voidance could also be brought forward in another way than by way of a law suit.
Besides, resolutions of an election of shareholder representatives of the Board by the gen-
eral meeting can be challenged pursuant to Section 32 sent. 1 (first half) SEAG under the
same prerequisites as existing for a challenge of an election of a member of a supervisory
board of a German AG pursuant to Section 251 AktG, i.e. based on a violation of applicable
laws of the SE-Articles of Association. In so far, as the election of an employee representa-
tive is concerned, at least in cases where the subsidiary regulation by operation of the SEBG
applies, the unlawful adoption of election proposals for the employee representatives on the
Board may only be asserted pursuant to the national provisions of the member states re-
garding appointments in respect of the seats allocated to them (Section 32 sent. 1 (second
half) SEAG). Therefore, with regard to domestic employee representatives, the election of a
Board Member representing employees may only be challenged pursuant to Section 37 para.
2 SEBG where substantive provisions concerning the right to vote, eligibility for election or
the election procedure have been infringed and such infringement has not been remedied,
unless the result of the vote could not be altered or influenced by the infringement.
According to Section 32 SEAG in connection with Section 251 para. 2 AktG, challenges of
elections of shareholder representatives may be asserted by the shareholders. It is not finally
determined, whether the Board itself (compared to the management board pursuant to Seci-
ton 245 no. 4 AktG in connection with Section 22 para. 6 SEAG) is also entitled to file such
law suit. The elections of employee representatives can be challenged by those persons
mentioned in Section 37 para. 2 in connection with para. 1 SEBG, i.e. employee representa-
tives or a certain number of employees, the SE works council and the Board of the SE.
Any action has to be brought forward within one month following the appointment decision of
the general meeting of shareholders. The court order stating that the resolution is void or has
effectively been challenged has impact vis-à-vis, in particular, all shareholders as well as the
members of the Board and the Managing Directors (Section 33 SEAG in connection with
Section 252 AktG).


3.     Invalidity of the Approved Annual Financial Statements
As the SEAG does not provide for special provisions covering a potential invalidity of the ap-
proved annual financial statements, by virtue of the comprehensive reference provision in
Art. 9 para. 1 lit. c) (ii) SE-VO, the provisions governing the invalidity of the approved annual
financial statements (Sections 256, 257 AktG) apply. Therefore, the Conversion does not
lead to changes.


4.     Special Audit because of an Impermissible Undervaluation
Also, by virtue of the comprehensive reference provision in Art. 9 para. 1 lit. c) (ii) SE-VO, the
provisions governing the special audit because of an impermissible undervaluation (Sec-
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tions 258 through 261a AktG) also apply to the SE. Therefore, the Conversion does not lead
to changes.


IX.    Winding Up and Declaration of Nullity in Respect of the Company
With regard to the winding up, liquidation, insolvency, cessation of payments and similar pro-
cedures, an SE is governed by the legal provisions applicable to a stock corporation; this
includes the provisions relating to the adoption of resolutions by the general meeting (Art. 63
SE-VO) with the consequence that the conversion of PUMA AG into an SE does not lead to
changes.
However, in contrast to a stock corporation, a resolution to transfer the registered office to
another member state does not constitute a winding-up resolution in the case of an SE, since
the transfer of the registered office of an SE into another member is permitted by Art. 8 SE-
VO. The transfer of the registered office is subject to a resolution of the general meeting re-
quiring the same majority applicable to amendments of the articles of association. To any
shareholder whose declaration of objection to the transfer resolution is recorded in the mi-
nutes of the general meeting the SE has to offer to acquire his shares against payment of
adequate cash compensation (Section 12 para. 1 sentence 1 SEAG).
By virtue of the comprehensive reference provision in Art. 9 para. 1 lit. c)(ii) SE-VO and Art.
63 SE-VO, the provisions governing the winding up of stock corporations by a court (Sec-
tions 396 through 398 AktG) also apply to an SE, the registered office of which is situated in
Germany, with the consequence that the conversation of PUMA AG in an SE does not lead
to changes in this regard.


X.     Affiliated Companies
German law on groups of companies is applicable to the SE. Pursuant to the prevailing opi-
nion this also applies to a controlled SE. Therefore, in the event of the conclusion of a control
and/or profit and loss transfer agreement, the outside shareholders are entitled to the rights
to adequate compensation payments which are provided for in the case of a stock corpora-
tion. This also applies in the case of a squeeze-out of minority shareholders against payment
of adequate cash compensation (Sections 327a et seqq. AktG). Therefore – pursuant to the
prevailing opinion – the conversion does not lead to changes.


XI.    Criminal Law and Civil Penalty Provisions
The criminal law and civil penalty provisions under stock corporation law (Sections 399 et
seqq. AktG) also apply to an SE (Section 53 SEAG and Art. 9 para. 1 lit. c)(ii) SE-VO).
Therefore, the conversion does not lead to changes.
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G.     Effects of the Conversion


I.     Other Corporate Law Effects


1.     Legal Effects of the Conversion
The conversion of PUMA AG into PUMA SE will become effective upon the registration of
PUMA SE in the commercial register at the registered office of the Company.
The conversion of PUMA AG into an SE does neither lead to a liquidation of the Company
nor to the formation of a new legal entity (cf. Art. 37 para. 2 SE-VO). Rather, it is a case of
the change of the legal form in the course of which the legal and economic identity are being
maintained. There is no transfer of assets. The interests of the shareholders in the Company
continue to exist because of the principle of legal identity. There is a change of the set of
legal rules applicable to the legal form (discontinuity of constitution, Diskontinuität der Ver-
fassung).
In addition, Art. 37 para. 9 SE-VO expressly stipulates that the rights and obligations of the
company to be converted arising from employment contracts or employment relationships
existing at the point in time of the registration are being transferred, as regards the terms and
conditions of employment, to the SE upon its registration.


2.     Dividend Entitlements
The dividend entitlements of the shareholders do not change by virtue of the conversion of
PUMA AG into PUMA SE. The appropriation of balance sheet profits is decided upon – as is
the case with PUMA AG – by the general meeting of shareholders.
Since the participations held in the Company by the shareholders of PUMA AG continue to
exist unchanged because of the principle of legal identity, the proportions of shareholdings
do not change by virtue of the conversion of PUMA AG into PUMA SE. The shareholders will
receive the same number of shares they held in PUMA AG prior to the conversion becoming
effective. The arithmetic portion of each no-par value share in the subscribed capital is
maintained in exactly the way it existed immediately prior to the conversion becoming effec-
tive.


II.    Accounting and Tax Continuity
The conversion of PUMA AG into an SE does neither lead to a liquidation of the Company
nor to the formation of a new legal entity (Art. 37 para. 2 SE-VO). The legal and economic
identity of the Company will be preserved. With regard to the preparation of and any other
stipulations relating to the annual financial statements and the management report as well as
the consolidated financial statements and the group management report the provisions appli-
cable to a German stock corporation apply (see Chapter E. II. No. 10 of this Report). Thus,
the conversion does not have accounting effects.
PUMA AG expects the Conversion of PUMA AG into an SE to be achieved in a manner
which is neutral from a taxation point of view. Future dividend payments of PUMA SE as well
Conversion Report                                                              page 68 of 68



as transfers of PUMA shares have, in principle, the same tax consequences for the share-
holders of PUMA SE, for the purposes of German income taxation, as dividend payments
and transfers prior to the conversion, unless there is a change of the applicable laws or of the
factual circumstances. The conversion of PUMA AG into an SE does not trigger any signifi-
cant German capital investment tax, sales tax or stamp duty.
It is recommended that the shareholders of PUMA AG consult their tax advisors with regard
to potential tax-relevant circumstances in their individual cases.


III.   Effects of the Conversion on the Shares and Stock Exchange Trading


1.     Effects on the Shares of PUMA AG
As a result of the conversion, the current shareholders of PUMA AG will, by operation of law,
become shareholders of PUMA SE upon the taking effect of the conversion of PUMA AG into
an SE. The shares of PUMA SE will be no-par value shares issued to the bearer.


2.     Effects on the Stock Exchange Trading
The conversion does not affect the stock exchange listing of PUMA AG and not the trading of
the shares of the PUMA AG. The shareholders of PUMA AG continue to be able without
changes, after the conversion of PUMA AG into PUMA SE, to trade their (then) PUMA SE
shares on all stock exchanges on which the shares are currently listed. The conversion does
not affect the inclusion of PUMA SE shares in the above-mentioned stock indexes. No (new)
admission to stock market trading is required for the PUMA SE share, because the conver-
sion does neither lead to a liquidation nor to a re-formation of the Company.


Herzogenaurach/Paris, 14 February 2011


The Management Board of PUMA Aktiengesellschaft Rudolf Dassler Sport



________________________                         ________________________
Jochen Zeitz (Chairman)                          Melody Harris-Jensbach


________________________                         ________________________
Klaus Bauer                                      Stefano Caroti


________________________                         ________________________
Reiner Seiz                                      Antonio Michele Bertone

				
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