Demag Cranes AG has a subscribed capital (share capital) of EUR 21,172,993 as at 30 September 2010, divided into 21,172,993 no-par-value bearer shares. There are no different classes of shares. Each share has one vote at general meetings. In all other respects, the rights and obligations attaching to each share are as stipulated in the German Stock Corporations Act (AktG).

Shares in Demag Cranes AG are not subject to any restrictions on voting rights under the Articles of Association or by law at the balance sheet date. No restrictions on voting rights resulting from agreements between shareholders are known to the Management Board.

By notification of 21 May 2010 in accordance with Section 21 (1) of the German Securities Trading Act (WpHG), Demag Cranes AG was informed that Cevian Capital II Master Fund LP, Camena Bay, Cayman Islands, holds 10.07 percent of the voting rights in Demag Cranes AG. Cevian Capital II GP Limited, St. Helier, Jersey, Channel Islands, informed Demag Cranes AG by notification of 21 May 2010 in accordance with Section 21 (1) of the Securities Trading Act that the voting rights of Cevian Capital II Master Fund LP are attributable to it under Section 22 (1), first sentence, item 1 of the Securities Trading Act. No other direct or indirect holdings in the Company’s share capital that relate to more than ten percent of voting rights are known to the Management Board.

None of the shares issued by Demag Cranes AG carries special rights with regard to control of the Company.

No information is available on the exercise of voting rights on shares under an employee share scheme where the rights are not directly exercised by employees.

The statutory governing and representative body of Demag Cranes AG is the Management Board. Under Article 6 (1) of the Articles of Association, the Management Board consists of at least two members. The size of the Management Board is otherwise decided by the Supervisory Board. The Supervisory Board may appoint deputy members of the Management Board. If the Supervisory Board does not nominate a Management Board member as CEO, the Management Board elects a spokesperson from among its number.

The Management Board of the Company currently consists of CEO Aloysius Rauen, Rainer Beaujean and Thomas H. Hagen.

Appointment and replacement of Management Board members takes place on the basis of Sections 84 and 85 of the German Stock Corporations Act (AktG) and Section 31 of the German Co-determination Act (MitbestG). In accordance with Section 84, AktG, members of the Management Board are appointed by the Supervisory Board for terms not exceeding five years. Management Board members may also be reappointed or their terms extended in increments not exceeding five years. The contracts with current members of the Management Board expire as follows:

Aloysius Rauen: 30 April 2012
Rainer Beaujean: 30 September 2014
Thomas H. Hagen: 30 September 2014

Extension of terms and reappointment require a new resolution of the Supervisory Board, which can normally be adopted no earlier than one year before the end of the current term. The Supervisory Board may revoke the appointment of a member of the Management Board before the end of the member’s term of office for cause, for example, in the event of gross breach of duty or of a vote of no confidence at a general meeting. The Company is represented by two Management Board members or by one Management Board member acting jointly with an authorised signatory (Prokurist).

In accordance with Section 179, AktG, amendments to the Articles of Association normally require a resolution of the general meeting. In departure from this general rule, amendments that solely affect the wording of the Articles of Association may be adopted by the Supervisory Board. The Company’s Articles of Association provide that, unless otherwise stipulated by law, general meeting resolutions require a simple majority of votes cast and, if the law stipulates a majority of represented capital, a simple majority of the share capital represented at the time of the vote.

Under Article 4 (5) of the Articles of Association, the Management Board is authorised subject to Supervisory Board approval to increase the Company’s share capital by issuing new no-par-value bearer shares for cash or non-cash consideration in one or more issues up to a total of EUR 10,586,496 by or before 18 May 2011 (Authorised Capital); this is equivalent to 50 percent of the current share capital. The new shares may be taken up by one or more financial institutions determined by the Management Board subject to an undertaking that the shares will be offered to existing shareholders (indirect rights issue).

In certain circumstances and subject to Supervisory Board approval, the Management Board is authorised to exclude existing shareholders’ statutory right of pre-emption:

• When issuing shares for non-cash consideration in order to provide shares for the purpose of acquiring a business, part of a business or ownership interests in a business or for the purpose of issuing shares to employees of the Company or to employees of its affiliates, in accordance with the law;
• To the extent needed to provide holders of warrants or convertible bonds issued by the Company or its subsidiaries with rights to new shares in the amount they would be entitled to on exercise of the right of purchase or conversion or on discharge of the conversion obligation or obligation to sell;
• To exclude any fractional amount arising in a rights issue;
• When issuing shares for cash consideration provided that, in accordance with Section 203 (1) and (2) and the fourth sentence of Section 186 (3) of the German Stock Corporations Act (AktG), the issue price of the new shares is not significantly lower than the stock market price, at the time the final issue price is set by the Management Board, of existing listed shares of the same class and carrying the same rights and provided that the new shares for which the right of pre-emption is excluded do not together comprise more than ten percent of the share capital at the time they are issued. The ten percent maximum is reduced by any sales governed by the fifth sentence of Section 71 (1) 8 and the fourth sentence of Section 186 (3), AktG comprising sales of shares to the exclusion of existing shareholders’ right of pre-emption during the lifetime of the authorisation and by any issues governed by Section 221 (4) and the fourth sentence of Section 186 (3), AktG comprising issues of shares in respect of which a right of conversion or purchase or a conversion obligation or obligation to sell exists by virtue of a convertible and/or warrant-linked bond issued since the granting of the authorisation to the exclusion of existing shareholders’ right of pre-emption.

The Management Board is authorised subject to Supervisory Board approval to decide the remaining details of the increase in share capital and its conduct, including the nature of rights attached to shares and the conditions of share issue.

By resolution of the Company’s Annual General Meeting of 2 March 2010, the Management Board of Demag Cranes AG is further authorised, subject to Supervisory Board approval, to issue convertible and/or warrant-linked bearer bonds (collectively ‘bonds’) with limited or unlimited maturities up to an aggregate face value of EUR 210,000,000 on one or more occasions by or before 1 March 2015 and to give the bondholders conversion rights and/or options (including with an attached conversion obligation) to no-par-value bearer shares in the Company making up a maximum EUR 4,200,000 portion of the share capital in accordance with the detailed terms and conditions of the convertible or warrant-linked bond issue. The bonds are required to be issued solely for cash.

The bonds may be denominated in euros or – up to the equivalent of the stipulated maximum amount – in a foreign currency that is legal tender, for example, the currency of an OECD country. The bonds may also be issued by a Group company managed by the Company; in such instances, the Management Board may, subject to Supervisory Board approval, guarantee the bonds on the Company’s behalf and give bondholders conversion rights and/or options (including with an attached conversion obligation) to no-par-value bearer shares in the Company. The issues must be divided into individual bonds.

In a warrant-linked bond issue, one or more warrants are attached to each bond, granting the bondholder an option to subscribe for no-par-value shares in the Company according to the terms and conditions of the option as laid down by the Management Board. The option lifetime must not exceed the maturity of the warrant-linked bond issue.

In a convertible bond issue, bondholders are given the right to convert their bonds into no-par-value bearer shares in the Company in accordance with the detailed terms and conditions of the convertible bond as laid down by the Management Board. The conversion ratio is arrived at by dividing the face value of a bond, or the issue price if lower, by the stipulated conversion price for a no-par-value bearer share in the Company. The conversion ratio may be rounded up or down to the nearest integer; an additional cash payment may also be stipulated if applicable.

The convertible bond terms and conditions may further stipulate a conversion obligation at maturity (or earlier). The portion of the share capital made up by Company shares issued on conversion of each bond must not exceed the face value of the bond.

The terms and conditions of the convertible and/or warrant-linked bonds may give the Company a right to grant bond creditors new shares or treasury shares in the Company instead of all or part of any amount due. Subject to more detailed provisions laid down in the bond terms and conditions, the value of such shares is determined as the arithmetic mean, rounded up to the nearest full cent, of closing auction prices for the same class of Company shares in Xetra trading (or a functionally equivalent successor trading system) on Frankfurt Stock Exchange on the last three trading days before notice of conversion or exercise.

The terms and conditions of the convertible or warrant-linked bonds may further provide on each occasion for treasury shares in the Company to be granted on conversion or exercise. They may also provide that instead of granting holders of convertible or warrant-linked bonds shares in the Company, the Company may pay bondholders the equivalent value in cash. Subject to more detailed provisions laid down in the bond terms and conditions, the consideration for each share is determined as the arithmetic mean, rounded up to the nearest full cent, of closing auction prices for the same class of Company shares in Xetra trading (or a functionally equivalent successor trading system) on Frankfurt Stock Exchange on the last three trading days before notice of conversion or exercise.

The stipulated conversion or exercise price on each occasion must be at least 80 percent of the arithmetic mean of the closing auction prices for the same class of Company shares in Xetra trading (or a functionally equivalent successor trading system) on Frankfurt Stock Exchange from the start of the subscription period to the third day (inclusive) before announcement of the final terms and conditions in accordance with the second sentence of Section 186 (2) of the German Stock Corporations Act (AktG).

For the event that during the conversion or exercise period the Company conducts a rights issue for existing shareholders or issues further convertible or warrant-linked bonds or grants or guarantees conversion rights or options and does not give existing holders of conversion rights or options a corresponding subscription right of the scope they would be entitled to after exercising their conversion rights or options or meeting their conversion obligations, or increases the share capital out of retained earnings, the terms and conditions of the convertible and/or warrant-linked bonds must ensure that there is no effect on the economic value of existing conversion rights and/or options by providing for a modification of the conversion rights and/or options to maintain that value unless such modification is already required by law. The same applies mutatis mutandis upon a decrease in share capital, other corporate measures, restructuring, change of control, extraordinary dividend or other similar measures that may dilute the share value.

Company shareholders normally have pre-emptive rights; that is, convertible and/or warrant-linked bonds must normally be offered to them. The bonds may also be bought by one or more banks provided they are then offered to shareholders. If bonds are issued by a Group company, the Company must ensure that subscription rights are granted to Company shareholders.

The Management Board may, subject to Supervisory Board approval, exclude shareholders’ pre-emptive rights to bonds if after due appraisal it finds the issue price not to be significantly below the bonds’ theoretical market value as determined by generally accepted financial mathematical methods. The authorisation to exclude shareholders’ pre-emptive rights is limited, however, to bonds with a conversion right or option (including with an attached conversion obligation) to shares making up no more than ten percent of the share capital when the authorisation takes effect or, if smaller, of the share capital when the authorisation is exercised. The ten percent maximum must be determined taking into account: any amount of share capital relating to (i) shares issued during the lifetime of the authorisation under the fourth sentence of Section 186 (3), AktG to the exclusion of existing shareholders’ pre-emptive rights and (ii) shares sold during the lifetime of the authorisation out of repurchased treasury stock other than on the stock market or by way of an offer to all shareholders with the fourth sentence of Section 186 (3), AktG applying mutatis mutandis; any fractional amounts resulting from the subscription ratio; and any amount needed so that it is possible to give holders of previously issued conversion rights or options a subscription right of the scope they would be entitled to as shareholders after exercising their conversion rights or options or meeting their conversion obligations.

The Management Board is authorised, subject to Supervisory Board approval and where applicable in agreement with the boards of bond-issuing Group companies, to decide the remaining details of the bond issues and terms, including interest rates and how interest is applied, issue price, term to maturity and denomination, anti-dilution provisions, conversion or option periods and conversion or exercise price.

In conjunction with granting the Management Board authorisation to issue bonds, conditional authority was given to increase the Company’s share capital by up to EUR 4,200,000 by issuing up to 4,200,000 new no-par-value bearer shares each comprising one euro of share capital (‘Conditional Capital’). The conditional authority to issue shares is to be used for granting shares to holders of or creditors under convertible and/or warrant-linked bonds issued with the above authorisation. Shares are to be issued under the conditional authority solely to the extent that conversion rights and/or options are exercised or conversion obligations under such bonds are fulfilled and the Conditional Capital is needed for the purpose according to the terms and conditions of the convertible and/or warrant-linked bonds. The new shares are to be issued at the exercise or conversion price determined in accordance with the above authorisation. The new shares are entitled to dividends from the start of the financial year they are issued on exercise of conversion rights or options or on fulfilment of conversion obligations. The Management Board is authorised subject to Supervisory Board approval to decide the remaining details with regard to issuing shares under the conditional authority.

The Company made no use of its authorisation to issue convertible and/or warrant-linked bonds in financial year 2009/2010; no shares were issued out of the Conditional Capital.

Authorisation granted by resolution of the Annual General Meeting 2009 allowing Demag Cranes to purchase its own shares expired on 2 September 2010 and has not been renewed.

Demag Cranes AG has a revolving credit facility in the amount of EUR 325.0 million (including a EUR 115.0 million ancillary facility) under which it is stipulated that all amounts under the loan agreements can be called due with immediate effect in the event of a change of control of Demag Cranes AG or in the event of the acquisition, by a third party or by multiple parties acting in concert, of more than 50 percent in issued voting shares in Demag Cranes AG.

Demag Cranes AG is not party to any other significant agreement that takes effect, alters or terminates upon a change of control of the Company following a takeover bid.

The contracts of the Management Board members provide for a special termination right on the part of the Management Board members in the event of a change of control which can be exercised within six months of the change of control. On exercising this right, the Management Board members continue to receive their fixed salary until the end of the contract term. In addition, they receive a target bonus pro rata temporis from the date the termination takes effect to the end of the contract term, assuming 100 percent target attainment. The compensation payments to be made in this respect may not exceed two times the total annual compensation.

Further information on the contracts of Management Board members is provided in the Remuneration Report.