Agenda

1. Presentation of the Adopted Annual Financial Statements as per 31 December 2005, the Management Report, and the Approved Consolidated Financial Statements, Group Management Report and the Report of the Supervisory Board
   
   
2. Resolution on the Appropriation of the Balance Sheet Profit for the Financial Year 2005
   
   
3. Resolution on Formal Approval of the Activities of the Executive Board in the Financial Year 2005
   
   
4. Resolution on Formal Approval of the Activities of the Supervisory Board in the Financial Year 2005
   
   
5. Appointment of the Auditor for the Financial Year 2006
   
   
6. New Elections for the Supervisory Board
   
   
7. Resolution to Change the Objects of the Company (Amendment of the Charter)
   
   
8. Authorization of the Executive Board to Increase the Capital Stock (Authorized Capital) of the Company with the Possibility of an Exclusion of Subscription Rights, e.g. if Non-Cash Contributions Are Used (Amendment of the Charter)
   
   
9. Annulment of the Authorized Capital Pursuant to Section 4 Para 5 of the Charter of TUI AG; Authorization of the Executive Board to Increase the Capital Stock (Authorized Capital) with the Possibility of an Exclusion of Subscription Rights Pursuant to Section 186 Para 3 Sentence 4 AktG (Amendment of the Charter)
   
   
10. Annulment of the Existing Authorization to Issue Bonds with Conversion Rights and/or Warrants and Annulment of the Conditional Capital Pursuant to Section 4 Para 7 of the Charter of TUI AG; New Authorization to Issue Bonds with Conversion Rights, Warrants, Special Dividend Rights and/or Dividend Bonds (or Combinations of these Instruments) with the Possibility of an Exclusion of Subscription Rights Pursuant to Section 186 Para 3 Sentence 4 AktG et al. and Creation of a New Conditional Capital (Amendment of the Charter)
    
    
11. Resolution Regarding the Voting Procedure for the Supervisory Board (Amendment of the Charter)
    
    
12. Resolution on the New Structure of the Remuneration for Supervisory Board Members from the Financial Year 2006 (Amendment of the Charter)
    
    
13. Resolution on a Change of the Notice Period for Calling the General Meeting (Amendment of the Charter)
    
    
14. Resolution on the Authorization of the Chairman of the Meeting to Reasonably Limit the Shareholders’ Speaking Time and Time to Ask Questions (Amendment of the Charter)
    
    
15. Resolution on the New Authorization to Acquire and Use own Shares under Section 71 Para 1 Number 8 AktG, and on the Exclusion of the Subscription Right
    
    

1. Presentation of the Adopted Annual Financial Statements as per 31 December 2005, the Management Report, and the Approved Consolidated Financial Statements, Group Management Report and the Report of the Supervisory Board

2. Resolution on the Appropriation of the Balance Sheet Profit for the Financial Year 2005

The Executive Board and the Supervisory Board propose that the amount of € 193,064,082.75 out of the balance sheet profit totalling € 195,500,000.00 be used to pay a dividend of € 0.77 per no-par value share on the capital stock of € 640,987,649.75 existing as per 31 December 2005. The remaining amount of € 2,435,917.25 will be carried forward on new account.

3. Resolution on Formal Approval of the Activities of the Executive Board in the Financial Year 2005

The Supervisory Board and the Executive Board propose that the activities of the Executive Board be formally approved.

4. Resolution on Formal Approval of the Activities of the Supervisory Board in the Financial Year 2005

The Executive Board and the Supervisory Board propose that the activities of the Supervisory Board be formally approved.

5. Appointment of the Auditor for the Financial Year 2006

The Supervisory Board proposes that PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Hanover, be appointed as Auditors for the financial year 2006.

6. New Elections for the Supervisory Board

The term of office of all members of the Supervisory Board will end upon the end of the General Meeting on 10 May 2006, and at the same time the new term of office will begin. It will expire at the end of the fifth Annual General Meeting following the election – i.e. in the year 2011.

According to section 11 of the Charter of TUI AG in conjunction with sections 96 para 1, 101 para 1 AktG and section 7 para 1 of the Act on the Codetermination of Employees of 4 May 1976, the Supervisory Board consists of ten members of the Supervisory Board each from the shareholders and from the employees. The shareholders’ representatives are elected by the General Meeting. In accordance with the Corporate Governance Code, Clause 5.4.3 (as amended on 2 June 2005), it is intended that a separate election for each candidate will be held. The General Meeting is not bound by nominations in electing the shareholders’ representatives.

The elections for the ten Supervisory Board members representing the employees will be held on 5 April 2006.

The Supervisory Board proposes that the following shareholders’ representatives be elected to the Supervisory Board for the new term of office:

Jean Claude Baumgarten, London, Great Britain
President of World Travel & Tourism Council
more...

Jella Susanne Benner-Heinacher, Meerbusch
Solicitor,
Managing Director of Deutsche Schutzvereinigung für Wertpapierbesitz e. V.
more...

Sepp Dieter Heckmann, Hanover
Chairman of the Executive Board of Deutsche Messe AG
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Dr. Jürgen Krumnow, Königstein
ex. Member of the Executive Board of Deutsche Bank AG
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Dr. Dietmar Kuhnt, Essen
ex. Chairman of the Executive Board of RWE AG
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Roberto López Abad, Alicante, Spain
Chief Executive of Caja de Ahorros del Mediterráneo
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Dr. h.c. Abel Matutes Juan, Ibiza, Spain
Chairman of Fiesta Hotels & Resorts
more...

Carmen Riu Güell, Playa de Palma, Spain
Entrepreneur
more...

Dr. Manfred Schneider, Leverkusen
Chairman of the Supervisory Board of Bayer AG
more...

Dr. Franz Vranitzky, Vienna, Austria
Chancellor (retrd.) of the Republic of Austria
more...

Disclosure pursuant to section 125 para 1 sentence 3 AktG
The shareholder representatives nominated for election to the Supervisory Board are members of other Supervisory Boards required by law to be set up and of comparable Boards of domestic and foreign companies:^*

^* Information refers to 31 December 2005 or date of resignation from the Supervisory Board of TUI AG in 2005
¹⁾ Chairman
²⁾ Deputy Chairman
^a) Membership in Supervisory Boards required by law
^b) Membership in comparable Boards of domestic and foreign companies

Further information about the shareholders' representatives nominated for election to the Supervisory Board are available here.

7. Resolution to Change the Objects of the Company (Amendment of the Charter)

In view of the sale of participations already completed or to be completed shortly, the definition of the objects of the Company in section 3 of the Charter must be changed. In addition, the new text is intended to take account of the greater significance of shipping, here especially container shipping, for the Group as a whole.

In section 3 para 1 of the Charter, the references to the processing and trading of commodities and to the production of industrial components and systems will be deleted. Shipping will be named as a major pillar of the Group, with the same weight as the tourism business, and container shipping will be mentioned separately.

The Executive Board and the Supervisory Board propose that section 3 para 1 of the Charter be newly worded as follows:

‘The objects of the Company are to engage on a commercial basis in the tourism and the shipping business (including all associated services and project developments), the acquisition of interests in enterprises active in tour operating, commercial air transportation and passenger shipping as well as goods shipping (especially container shipping) and container transport industry, the hotel industry, the leisure business and travel agents as well as other services, namely in its own facilities or in facilities of affiliated companies, as well as the coordination of affiliated companies under a centralized management.‘

8. Authorization of the Executive Board to Increase the Capital Stock (Authorized Capital) of the Company with the Possibility of an Exclusion of Subscription Rights, e.g. if Non-Cash Contributions Are Used (Amendment of the Charter)

The Executive Board was authorized by shareholders’ meeting of 18 May 2004, item 9 on the Agenda, to increase the capital stock of the Company with the approval of the Supervisory Board by issuing registered shares with a possibility of the exclusion of subscription rights for non-cash contributions (authorized capital in the amount of € 170,000,000.00).

This authorization was fully made use of through the capital increase in September 2005.

It is therefore proposed to pass a resolution for a new authorized capital in order to continue to provide a reliable planning basis to the Executive Board as well as the possibility to adjust the equity position of the Company to the business requirements also in the future.

The Executive Board and the Supervisory Board propose that the following resolution be adopted:

a) The Executive Board is authorized to increase the capital stock of the Company in time up to 9 May 2011 with the approval of the Supervisory Board by issuing, once or several times, new registered shares for cash or non-cash contributions, but in total by a maximum of € 246,000,000.00. The shareholders are in principle to be granted a subscription right. The shares could also be acquired by one or several financial institutions together with the obligation to offer these shares to the shareholders for subscription. However, the Executive Board is authorized to exclude the shareholders’ subscription right with the approval of the Supervisory Board to the extent necessary to grant a subscription right to the holders of convertible or option rights issued or still to be issued by TUI AG or by its subsidiaries, as they would be entitled to after the exercise of the conversion or option right or the fulfillment of the conversion obligation. Furthermore, fractions can be exempted from the shareholders’ subscription right. In addition, the Executive Board can exclude the shareholders’ subscription right with the approval of the Supervisory Board to the extent that the increase in capital is made for non-cash contributions for the purpose of acquiring undertakings, parts of undertakings, participations in undertakings, or other assets. However, in this case, the Executive Board will only make use of an amount of up to max. 20% of the capital stock existing at the time of the entry into force of the authorization or, if this value is lower, at the time at which the authorization is made use of. The increase in capital for non-cash contributions is thus limited to a maximum of € 128,000,000.00. The Executive Board is also authorized to determine the further details of the increase in capital and its implementation with the approval of the Supervisory Board.

b) A new authorized capital is created in the amount of € 246,000,000.00. For this, a new para 8 is inserted into section 4 of the Charter:

‘The Executive Board is authorized to increase the capital stock of the Company in time up to 9 May 2011 with the approval of the Supervisory Board by issuing, once or several times, new registered shares for cash or non-cash contributions, but in total by a maximum of € 246,000,000.00 (in words: two hundred and forty-six million euros). The shareholders are in principle to be granted a subscription right. The shares could also be acquired by one or several financial institutions together with the obligation to offer these shares to the shareholders for subscription. However, the Executive Board is authorized to exclude the shareholders’ subscription right with the approval of the Supervisory Board to the extent necessary to grant a subscription right to the holders of convertible or option rights issued or still to be issued by TUI AG or by its subsidiaries, as they would be entitled to after the exercise of the conversion or option right or the fulfillment of the conversion obligation. Furthermore, fractions can be exempted from the shareholders’ subscription right. In addition, the Executive Board may exclude the shareholders’ subscription right with the approval of the Supervisory Board to the extent that the increase in capital for non-cash contributions is made for the purpose of acquiring undertakings, parts of undertakings, participations in undertakings, or other assets. However, in this case, the Executive Board may only make use of an amount of up to max. 20% of the capital stock existing at the time of the entry into force of the authorization or, if this value is lower, at the time at which the authorization is made use of. The increase in capital for non-cash contributions is thus limited to a maximum of € 128,000,000.00. The Executive Board is also authorized to determine the further details of the increase in capital and its implementation with the approval of the Supervisory Board.‘

9. Annulment of the Authorized Capital Pursuant to Section 4 Para 5 of the Charter of TUI AG; Authorization of the Executive Board to Increase the Capital Stock (Authorized Capital) with the Possibility of an Exclusion of Subscription Rights Pursuant to Section 186 Para 3 Sentence 4 AktG (Amendment of the Charter)

The Executive Board was authorized by resolution of the General Meeting of 18 May 2004, item 10 of the Agenda, to increase the capital stock of the Company with the approval of the Supervisory Board by issuing registered shares with the possibility of an exclusion of subscription rights pursuant to section 186 para 3 sentence 4 AktG. This authorization was partly made use of through the increase in capital in September 2005.

It is therefore proposed to annul the remaining authorized capital and to pass a resolution for a new authorization for a higher authorized capital to continue to provide the necessary instruments for raising capital to the Executive Board and to enable the Executive Board to also adjust the equity position of the Company to the business requirements in the future.

The Executive Board and the Supervisory Board propose that the following resolution be adopted.

a) The authorization of the Executive Board pursuant to section 4 para 5 of the Charter of TUI AG to increase the capital stock in the time up to 17 May 2009 by up to € 32,806,465 (rounded off) (authorized capital) is revoked.

b) The Executive Board is authorized to increase the capital stock of the Company in the time up to 9 May 2011 with the approval of the Supervisory Board by issuing new registered shares for cash contributions, once or several times, in total by up to € 64,000,000.00. The shareholders are in principle to be granted a subscription right. The shares could also be acquired by one or several financial institutions together with the obligation to offer these shares to the shareholders for subscription. The Executive Board can with the approval of the Supervisory Board exclude the shareholders’ subscription right if the issue amount of the new shares is insignificantly lower than the market price for the new shares with the same terms of issue which have already been issued. The number of new shares must not, together with the shares issued or sold on the basis of an authorization to sell pursuant to secs. 71 para 1 no. 8 sentence 5, 186 para 3 sentence 4 AktG during the term of this authorization up to the time at which it is exercised, exceed the limit of 10% of the capital stock set out in section 186 para 3 sentence 4 AktG. For the purpose of this limitation, shares are to be taken into account which were issued or are to be issued on the basis of bonds with conversion or option rights or conversion obligations issued pursuant to section 186 para 3 sentence 4 AktG during the time in which this authorization is effective up to the time at which it is made use of. The Executive Board may also exclude the shareholders' subscription right in respect of fractional amounts with the approval of the Supervisory Board. The Executive Board is furthermore authorized to determine the further details of the increase in capital and its implementation with the approval of the Supervisory Board.

c) A new authorized capital in the amount of € 64,000,000.00 is created. For this, section 4 para 5 of the Charter is newly worded as follows:

’The Executive Board is authorized to increase the capital stock of the Company in the time up to 9 May 2011 with the approval of the Supervisory Board by issuing new registered shares for cash contributions, once or several times, in total by up to € 64,000,000.00 (in words: sixty-four million euros). The shareholders are in principle to be granted a subscription right. The shares could also be acquired by one or several financial institutions together with the obligation to offer these shares to the shareholders for subscription. The Executive Board can with the approval of the Supervisory Board exclude the shareholders’ subscription right if the issue amount of the new shares is insignificantly lower than the market price for the new shares with the same terms of issue which have already been issued. The number of new shares must not, together with the shares issued or sold on the basis of an authorization to sell pursuant to secs. 71 para 1 no. 8 sentence 5, 186 para 3 sentence 4 AktG during the term of this authorization up to the time at which it is exercised, exceed the limit of 10% of the capital stock set out in section 186 para 3 sentence 4 AktG. For the purpose of this limitation, shares are to be taken into account which were issued or are to be issued on the basis of bonds with conversion or option rights or conversion obligations issued pursuant to section 186 para 3 sentence 4 AktG during the time in which this authorization is effective up to the time at which it is made use of. The Executive Board may also exclude the shareholders' subscription right in respect of fractional amounts with the approval of the Supervisory Board. The Executive Board is authorized to determine the further details of the increase in capital and its implementation with the approval of the Supervisory Board.’

10. Annulment of the Existing Authorization to Issue Bonds with Conversion Rights and/or Warrants and Annulment of the Conditional Capital Pursuant to Section 4 Para 7 of the Charter of TUI AG; New Authorization to Issue Bonds with Conversion Rights, Warrants, Special Dividend Rights and/or Dividend Bonds (or Combinations of these Instruments) with the Possibility of an Exclusion of Subscription Rights Pursuant to Section 186 Para 3 Sentence 4 AktG et al. and Creation of a New Conditional Capital (Amendment of the Charter)

The Executive Board was authorized by resolution of the General Meeting of 18 May 2004, item 11 of the Agenda, to issue, with the approval of the Supervisory Board, bonds with conversion and/or option rights with a maximum maturity of 30 years. To make the possibility to issue convertible bonds and/or warrant-linked bonds more flexible and to adjust to the capital stock as increased by the rights issue in the year 2005 and to create the possibility to issue instruments with a profit-related return on the capital invested, it is proposed to the General Meeting that a new authorization be granted to issue convertible bonds, warrant-linked bonds, special dividend rights and/or dividend bonds (or any combination of these instruments), and to create a new conditional capital which is to serve to service the convertible bonds and/or warrant-linked bonds or to perform conversion obligations arising from this new authorization. It is to be possible also to issue finance instruments without any maximum maturity. The current authorized limit of € 1,000,000,000.00 is to remain in force. To ensure that the authorized amount can be fully used also in view of later convertible bond or warrant-linked bond price adjustments, the conditional capital which serves to service convertible bonds and warrant-linked bonds is to be increased to € 100,000,000.00.

Upon the entry into force of this resolution, the current authorization and the conditional capital existing for this purpose will be annulled.

The Executive Board and the Supervisory Board propose that the following resolution be adopted:

a) Annulment of the authorization of 18 May 2004

The authorization to issue convertible bonds and/or warrant-linked bonds granted by resolution of the General Meeting of 18 May 2004 as well as the conditional capital in the amount of € 70,000,000.00 are annulled.

The annulment of the authorization and of the conditional capital shall become effective as soon as the authorization proposed under b) and the new conditional capital in accordance with the resolution to be adopted in accordance with c) has become effective.

b) Authorization to issue convertible bonds, warrant-linked bonds, special dividend rights and/or dividend bonds

aa) Nominal amount, duration of the authorization, number of shares, maturity

The Executive Board is authorized to issue, with the approval of the Supervisory Board, convertible bearer or registered bonds, warrant-linked bonds, special dividend rights or dividend bonds (or combination of these instruments) (together ‘bonds‘), once or several times in the time up to 9 May 2011, with or without a limitation of maturity, with a total amount of up to € 1,000,000,000.00, and to grant the holders of bonds convertible or option rights to shares of the Company with a pro rata amount of the capital stock of up to € 100,000,000.00 pursuant to the bond terms. The bonds can also be issued for non-cash contributions.

The bonds may be denominated in euros or in the legal tender of any other OECD member state, limited to the equivalent euro amount. The bonds may also be issued by undertakings wholly owned or indirectly owned by the Company; in this case the Executive Board is authorized with the consent of the Supervisory Board to assume for the Company a guarantee for the bonds and to grant the holders of such bonds conversion or option rights for new shares in the Company.

bb) Grant of the subscription right, exclusion of subscription right

In principle the shareholders have a subscription right for the bonds. The bonds can also be taken by one or several credit institutions with the obligation to offer to the shareholders for subscription. However, the Executive Board is authorized to exclude, with the approval of the Supervisory Board, the shareholders’ subscription right for the bonds:

- for fractional amounts;

- to the extent necessary to grant the holders of conversion or option rights for shares of the Company or the holders of convertible bonds with a conversion obligation, a subscription right as they would be entitled to after the exercise of these rights or, as the case may be, the performance of the conversion obligations;

- if convertible or warrant-linked bonds (or special dividend rights or dividend bonds with a conversion right, option right or conversion obligation) are issued for cash payment, and the issuing price does not fall far short of the theoretical market value of the bond as determined according to generally accepted methods of the mathematics of finance. This authorization to exclude the subscription right applies only to bonds with rights (or, as the case may be, conversion obligations) for shares with a pro rata amount totaling up to no more than 10% of the capital stock either at the time of the entry into force or of the exercise of this authorization. The sale of own shares shall count for the purposes of this limitation provided the sale takes place during the term of this authorization up to the time at which it is made use of with an exclusion of the subscription right pursuant to section 186 para 3 sentence 4 AktG. Furthermore, the shares issued during the term of this authorization up to the time until it is made use of with the authorized capital, excluding the subscription right pursuant to section 186 para 3 sentence 4 AktG, shall count for the purposes of this limitation;

- If bonds are issued for non-cash contributions, provided the value of the non-cash contributions is reasonable in proportion to the market value of the bonds to be determined in accordance with the preceding provision.

If special dividend rights or dividend bonds without a conversion right, option right or conversion obligation are issued, the Executive Board is authorized, with the approval of the Supervisory Board, to exclude the shareholders’ subscription right altogether, if these special dividend rights or dividend bonds are issued as debenture-like securities, i.e. no membership rights in the Company are granted, no right to participate in the liquidation proceeds is acquired, and the amount of the yield is not calculated on the basis of the amount of the annual profit, the balance-sheet profit or the dividends. Moreover, in this case, the yield and the issue amount of the special dividend rights or the dividend bonds must be in line with the current market conditions for comparable fund-raising at the time of the issue.

cc) Conversion right, conversion duty

If bonds are issued with a conversion right, the creditors can convert their bonds into shares in the Company in accordance with the bond terms. The proportionate amount of the capital stock attributable to the shares to be issued in the event of conversion must not exceed the nominal value of the bond or a lower issuing price. The conversion ratio is determined by the nominal amount of a bond divided by the fixed conversion price for a new share in the Company. The conversion ratio can also be determined by dividing the issue amount of a bond (which is below the nominal amount) by the fixed conversion price for a new share in the Company. The conversion ratio may be rounded up or down to a whole number. Moreover, an additional cash payment may be fixed. Furthermore, it may be provided that fractions be combined and/or compensated for in cash. The bond terms can also provide for a variable conversion ratio.

The bond terms may also provide for a conversion obligation. In this case, the Company can be given the right in the bond terms to entirely or partly compensate in cash for any difference between the nominal amount of the convertible bonds and the stock exchange price for the shares to be fixed in the bond terms, at the time of the compulsory conversion, but at least 80% of the stock exchange price for the shares determining the minimum conversion price pursuant to ee), multiplied by the conversion ratio. The above provisions shall apply analogously if the conversion right or the conversion obligation relates to a special dividend right or to a dividend bond.

dd) Option right

If warrant-linked bonds are issued, one or several warrants are to be attached to each bond, entitling the holder to subscribe to shares in the Company in accordance with the warrant terms to be fixed by the Executive Board. The conversion ratio can be rounded up or down to an option ratio with a whole number. It may be provided that fractions be combined and/or compensated for in cash. The proportionate amount of the capital stock attributable to the shares to be issued per bond must not exceed the nominal amount of the warrant-linked bond. The same shall apply if warrants are attached to a special dividend right or to a dividend bond.

ee) Conversion/option price, dilution protection

The conversion or option price to be fixed per share must amount either to at least 80% of the average stock exchange price for the shares in the Company – closing rate in XETRA (or any comparable follow-up system) – on the ten trading days preceding the day of the adoption of the resolution by the Executive Board to issue the convertible or warrant-linked bonds, or at least 80% of the average stock exchange price for the shares of the Company – closing rate in XETRA trading (or any comparable follow-up system) – during the days on which the subscription rights are traded on the Frankfurt stock exchange, with the exception of the last two trading days for the subscription rights.

Without prejudice to section 9 para 1 AktG, the bond terms which grant or stipulate a conversion right, a conversion obligation and/or an option right, can include dilution protection provisions in case, during the conversion or option period and granting a subscription right to its shareholders, the Company increases its capital stock or issues further convertible or warrant-linked bonds or grants or guarantees other convertible or option rights or constitutes conversion obligations, without granting the holders of convertible or option rights respectively the holders of bonds with conversion obligations a subscription right to the same extent as they would be entitled to after exercising the conversion or option rights or, as the case may be, after the fulfillment of a conversion obligation. The bond terms may also provide for value-preserving adjustments of the conversion or option rights, in particular in the event of a capital reduction, a share split or a special dividend or other measures which can dilute the value of the conversion or option rights.

ff) Further possible terms

The bond terms for bonds which grant or stipulate a conversion right, a conversion obligation and/or an option right can stipulate in each case that, in the event of the conversion or the exercise of the option, the own shares of the Company can be granted. Furthermore, the terms may provide for the Company to pay the value in cash to the holders of the conversion or option rights or to the holders who are obliged to convert instead of granting shares in the Company. Moreover, the bond terms can provide for the numbers of shares to be subscribed to in the event of the exercise of the conversion or option rights or after conversion obligations are fulfilled, or as the case may be, a conversion right in this respect to be variable and/or that the conversion or option price can be changed during the term within a range to be fixed by the Executive Board, depending on the development of the share price or in consequence of dilution protection provisions.

gg) Authorization to fix further bond terms

The Executive Board is authorized to fix, with the approval of the Supervisory Board, the further details of the issuance and features of the bonds, especially the interest rate, the nature of the yield, the issuing price, maturity, the denomination, the conversion or option price, and the conversion or option period. In the event of an issue by group member companies, the Executive Board is additionally required to agree with the organs of the group member companies issuing the convertible and/or warrant-linked bonds.

c) Conditional Capital Increase

The capital stock is conditionally increased by up to € 100,000,000.00 through the issue of up to 39,116,600 registered no-par value shares carrying dividend rights from the beginning of the financial year in which they are issued. The conditional increase in capital serves to grant shares to the holders of convertible and/or option rights respectively to the holders who are obliged to convert from bonds issued in accordance with the above authorization, as soon as they are issued for payment in cash.

The new shares will be issued for the conversion or option price to be fixed in accordance with the above authorization. The conditional increase in capital is to be carried out only insofar as conversion or option rights under bonds issued for payment in cash are exercised, or conversion obligations under such bonds are fulfilled, and insofar as no other forms of performance are used to service the bonds.

The Executive Board is authorized, with the approval of the Supervisory Board, to fix the further details of the conditional increase in capital.

d) Amendment of the Charter

Section 4 para 7 of the Charter (conditional capital in the amount of € 70,000,000.00) is repealed and replaced by the following new para 7:

‘The capital stock is conditionally increased by up to € 100,000,000.00 (in words: one hundred million euros) through the issue of up to 39,116,600 registered no-par shares carrying a dividend right from the beginning of the financial year in which they are issued. The conditional increase in capital shall be put into effect only insofar as the holders of conversion or option rights respectively the holders who are obliged to convert under conversion and/or warrant-linked bonds, dividend bonds and/or special dividend rights (or combinations of these instruments) issued by the Company or by undertakings directly or indirectly controlled by it on the basis of the resolution granted the authorization adopted at the General Meeting of 10 May 2006 for cash payment in the time up to 9 May 2011 exercise their conversion or option rights or insofar as conversion obligations under such bonds are fulfilled, provided no other forms of performance are used to service the bonds. The Executive Board is authorized to fix, with the approval of the Supervisory Board, the further details of the conditional increase in capital.‘

e) Commercial Register Application

To ensure that the annulment of the current conditional capital of € 70,000,000.00 will not become effective without being replaced by the new conditional capital in accordance with the above resolution, the Executive Board is instructed to make an application to the commercial register for an entry to be made showing the annulment of the conditional capital in the amount of € 70,000,000.00 only if an entry is made at the same time for the new conditional capital in the amount of € 100,000,000.00.

11. Resolution Regarding the Voting Procedure for the Supervisory Board (Amendment of the Charter)

The Supervisory Board and its committees are to be allowed to adopt resolutions not only when all members are present at a meeting, but also in writing, by telephone or telegraph and per fax or email, provided this is ordered by the chairman of the Supervisory Board.

Since the entry into force of the Act on Registered Shares and to Facilitate the Exercise of Voting Rights (NaStraG) in January 2001, section 108 para 4 AktG has granted companies the right to issue rules of procedure for the Supervisory Board allowing resolutions to be adopted in other ways than by way of voting by members personally present at a meeting, without any separate approval of the members of the Supervisory Board being required. The Executive Board and the Supervisory Board hope that such a flexibilization of the voting procedure will shorten the reaction time of the Supervisory Board and thus give the Company more options for action in situation requiring speedy decisions.

The Executive Board and the Supervisory Board propose that section 16 para 1 of the Charter be newly worded as follows:

‘The Supervisory Board can adopt resolutions also in writing, by telegraph, telephone or by fax or email if this is ordered by the chairman of the Supervisory Board.‘

12. Resolution on the New Structure of the Remuneration for Supervisory Board Members from the Financial Year 2006 (Amendment of the Charter)

The Executive Board and the Supervisory Board propose that section 18 of the Charter be newly worded as follows:

„(1) In addition to the reimbursement of the expenses, which shall also include the value added tax on their remuneration, the members of the Supervisory Board shall receive

(a) fixed remuneration in the amount of € 40,000 to be paid after the end of the financial year;

(b) remuneration oriented by the short-term profit of the Company (short-term variable remuneration) in the amount of € 100 per € 0.01 of the profit per share shown in the consolidated financial statements for the last financial year (profit per share); the profit per share will be calculated as the quotient of the annual Group net profit to which the shareholders of TUI AG are entitled and the amount of shares with dividend entitlements at the end of the financial year;

(c) remuneration related to the long-term success of the Company (long-term variable remuneration). The long-term variable remuneration shall consist of a base amount of € 20,000 per year and will be granted for the current financial year for the first time beginning with the financial year 2006. This base amount shall be paid after the end of the third financial year following the grant and shall increase or decrease to the extent that the profit per share for the third financial year following the grant changes, expressed in percent, compared to the financial year for which the amount was granted.

If a member ceases to belong to the Supervisory Board before the end of the assessment period, the profit per share in the financial year in which the member ceases to belong to the Supervisory Board shall determine the long-term variable remuneration.

(d) The remuneration pursuant to 1 (b) and (c) shall be payable after the end of the General Meeting which decides on formal approval of the actions of the members of the Supervisory Board in the last financial year.

(2) The chairman shall receive the triple amount, his deputy and the other members of the Presiding Committee one and a half times the amount of the remuneration pursuant to 1(a) to (c).

(3) The members of the Audit Committee shall for their services receive a further remuneration, in addition to the remuneration pursuant to 1(a) to (c), payable after the end of the financial year in the amount of € 20,000, the chairman of the Audit Committee shall receive the triple amount.

(4) The remuneration relates in each case to a full financial year. For parts of a financial year or a shortened financial year, the remuneration shall be paid pro rata temporis. In case of a shortened financial year the comparability must be ensured by the calculation of values adjusted accordingly.

(5) The members of the Supervisory Board shall be included in a pecuniary damage liability insurance for bodies and certain management members (so called D&O insurance) maintained by the Company in its own interests in a reasonable amount, if such insurance is maintained. The premiums for this shall be paid by the Company.’

In accordance with the recommendations of the German Corporate Governance Code (as amended on 2 June 2005), the remuneration for the members of the Supervisory Board is to contain a profit-oriented element in addition to the fixed remuneration. The profit-oriented remuneration is to contain elements relating to the long-term success of the Company.

The proposed remuneration structure for the members of the Supervisory Board of TUI AG consists of a fixed element which represents half of the remuneration, and a variable element which represents the other half; one half of the variable remuneration is a short-term component and the other half a long-term component.

The fixed remuneration is intended as reasonable compensation for the supervisory and advisory work of a member of the Supervisory Board, and to provide an incentive to win sufficiently qualified personalities for the responsible position of a Supervisory Board member.

The short-term variable remuneration depends on the profit per share shown in the consolidated annual accounts for the preceding business year (profit per share). This is a deviation from the previous practise where the variable remuneration was tied to the dividend, as on the one hand the dividends do not always reflect the success of the Company and, on the other hand, the Supervisory Board has the power to take decisions on the amount of the dividends and to thereby possibly influence its own remuneration.

Finally, the long-term variable remuneration is to be oriented by the development of the profit per share, and thus by the interests of the shareholders for whom an increase in the profit per share will generally also mean an increase in the value of the shares held by them.

The remuneration for the chairman of the Supervisory Board and the chairman of the Audit Committee is increased to the triple amount of the remuneration for a member according to para 1 (a) to (c) as consideration for the chairman’s greater workload.

13. Resolution on a Change of the Notice Period for Calling the General Meeting (Amendment of the Charter)

The notice period for calling the General Meeting was changed from at least one month to at least 30 days by the Act on the Integrity of Undertakings and to Modernize the Right of Avoidance (‘UMAG‘) (section 123 para 1 AktG). The corresponding provision in the Charter of TUI AG in section 20 is to reflect the amendment of the law and to be newly worded.

The Executive Board and the Supervisory Board propose that section 20 para 1 of the Charter be newly worded as follows:

‘The General Meeting must be called at least 30 days before the day by the end of which the shareholders must register as far as a shorter term is legally not allowed.‘

14. Resolution on the Authorization of the Chairman of the Meeting to Reasonably Limit the Shareholders’ Speaking Time and Time to Ask Questions (Amendment of the Charter)

By amending section 131 para 2 AktG, the UMAG intended to create a possibility to prevent abuses of the right to demand information and the right to speak at the General Meeting, and to improve the quality of the deliberations at the General Meeting. By bringing the General Meeting to an end within a reasonable and acceptable time, the attractivity of the General Meeting for seriously interested shareholders is to be increased. The chairman of the meeting is to have the right to reasonably limit the time for questions and the speaking time of each shareholder.

The Executive Board and the Supervisory Board propose that a new sentence 2 be inserted into section 22 para 2 of the Charter, as follows:

‘He can reasonably limit the time for questions and the speaking time of a shareholder and shall in particular have the right, at the beginning of the General Meeting or during its course, to set a reasonable time limit for the entire General Meeting, for each item on the agenda, or for individual speakers and questions.‘

15. Resolution on the New Authorization to Acquire and Use own Shares under Section 71 Para 1 Number 8 AktG, and on the Exclusion of the Subscription Right

To acquire its own shares, the Company requires specific authorization for this by the General Meeting, unless expressly authorized by law. As the authorization resolved by the General Meeting on 11 May 2005 will expire on 10 November 2006, a resolution is to be proposed to the General Meeting to again authorize the Company to acquire own shares.

The Executive Board and the Supervisory Board therefore propose that the following resolution be adopted:

a) TUI AG is authorized to acquire own shares with a volume of up 10% of its current capital stock. Together with other own shares held by the Company or attributable to it pursuant to secs. 71a et seq. AktG, the acquired shares must at no time account for more than 10% of the capital stock. The authorization must not be used for the purpose of trading in its own shares.

b) The authorization can be made use of entirely or partly, once or several times, pursuing one or several purposes, by the Company or by third parties for the account of the Company. The authorization will be effective until 9 November 2007. This authorization replaces the authorization for the acquisition of own shares granted by the General Meeting of TUI AG on 11 May 2005.

c) The acquisition is made at the option of the Executive Board through the stock exchange or by means of a public purchase offer or by means of a public invitation to the shareholders to submit a sales offer.

- If the acquisition of the shares takes place through the stock exchange, the amount per share paid by the Company (without ancillary acquisition costs) must not exceed or fall short of the rate in XETRA trading (or a comparable follow-up system) determined through the opening auction on the trading day by more than 5%.

- If the acquisition is made through a public purchase offer or a public invitation to submit a sales offer, the purchase price being offered or the maximum and minimum value of the purchase price range per share (without ancillary acquisition costs) must not exceed or fall short of the average of the closing rate in XETRA trading (or a comparable follow-up system) on the three trading days before the day of the public announcement of the offer or, as the case may be, the public invitation to submit a sales offer, by more than 10%. If, after the publication of a public purchase offer or the public invitation to submit a sales offer, substantial deviations from the relevant rate arise, the purchase offer or, as the case may be, the invitation to submit such a sales offer can be adjusted. In this case, the average rate on the three trading days prior to the public announcement will determine any adjustment. The purchase offer or, as the case may be, the invitation to submit such a sales offer can set out further conditions. If the purchase offer is oversubscribed or, in the case of an invitation to submit a sales offer, not all offers among several equivalent offers are accepted, the shares are to be allocated on a pro rata basis. The terms of the offer may provide for the preferential acceptance of a small number of up to a maximum of 100 shares per shareholder.

d) The Executive Board is authorized to use shares in the Company acquired on the basis of this authorization for all purposes allowed by law, in particular also for the following purposes:

aa) The shares can be called in, with the approval of the Supervisory Board, without any further resolutions being required by a General Meeting. They can also be called in through the simplified procedure without any capital reduction by means of an adjustment of the proportionate arithmetic amount of the other shares in the capital stock of the Company. The decision to call in the shares can be limited to a part of the acquired shares. If the shares are called in through the simplified proceedings, the Executive Board is authorized to adjust the number of the shares in the Charter.

bb) The shares can also be sold in other ways than through the stock exchange or through a public offering to all shareholders, if these shares are sold for cash payment at a price which does not fall far short of the stock exchange price of shares in the Company with identical features at the time of the sale. In this case, the number of shares to be sold together with the new shares issued on the basis of authorizations to increase the capital with an exclusion of the subscription right pursuant to section 186 para 3 sentence 4 AktG or on the basis of a conditional capital pursuant to sections 221 para 4, 186 para 3 sentence 4 AktG for bonds issued during the term of this authorization or in the time until it is made use of with conversion or option rights or, as the case may be, conversion duties must not exceed 10% in total of the capital stock at the time of this authorization or at the time at which it is made use of.

cc) The shares can, with the approval of the Supervisory Board, be sold for non-cash contributions, especially also in connection with the acquisition of undertakings, parts of undertakings, participations, or other assets, and in connection with mergers and acquisitions.

dd) The shares can also be used to fulfil conversion or option rights or for conversion obligations from convertible or warrant-linked bonds issued by the Company or its group member companies (or special dividend rights or dividend bonds with conversion rights, option rights or conversion obligations).

e) The authorization in d), bb) to dd) also comprises the use of shares in the Company which were acquired on the basis of section 71 d sentence 5 AktG.

f) The authorization in d) can be made use of once or several times, partly or entirely, individually or jointly, the authorizations in d), bb) to dd) also through dependent undertakings or undertakings majority owned by the Company or by third parties acting for their account or for the account of the Company.

g) The shareholders' subscription right to these own shares is excluded insofar as these shares are used in accordance with the authorization in d), bb) to dd) above.

Report of the Executive Board to the Annual General Meeting Pursuant to Sections 203 Para 2 Sentence 2, 186 Para 4 Sentence 2 AktG on Item 8 of the Agenda (Authorized Capital of € 246,000,000.00)

The Executive Board made use, with the approval of the Supervisory Board, of the authorization to increase the capital stock of the Company by issuing registered shares (authorized capital of € 170,000,000.00 according to the resolution adopted by the General Meeting on 18 May 2004 under Item 9 of the Agenda), and fully made use of it through the increase in capital in September 2005.

The new authorized capital in the amount of € 246,000,000.00 is proposed as TUI must also be able in the future to adjust its equity at any time to the business requirements. The Executive Board therefore considers it to be its duty to ensure that the Company will always be able to use the necessary instruments for raising capital, regardless of any concrete plans to do so. As decisions to cover capital requirements must generally be taken speedily, it is important for the Company not to depend in this on the rhythm of the Annual General Meeting. The law takes account of these requirements through the instrument of the ’authorized capital’. The most common occasions on which an authorized capital is used is the need to strengthen the equity basis and to finance the acquisition of participations.

Whenever the authorized capital is used through a cash capital increase, the shareholders in principle have a subscription right.

However, it is to be possible to exclude the subscription right to the extent necessary to be able to grant the holders of warrant-linked or convertible bonds (or, as the case may be, special dividend rights or dividend bonds with a conversion right, option right or conversion obligation) which already exist or are to be issued in the future a subscription right to new shares, if the bond terms provide for this. Such bonds generally provide for dilution protection in that a subscription right to new shares can be granted to the bond holders in any subsequent issue of shares with a subscription right for the shareholders, instead of a reduction of the option or conversion price. The holders of the bonds are thus put into the same position which they would be in if they had already exercised their option or conversion right or, as the case may be, if a conversion obligation had been fulfilled. The advantage is that the Company – as opposed to dilution protection through a reduction of the option or conversion price – can achieve a higher issuing price for the shares to be issued upon conversion or the exercise of the option.

Furthermore, the Executive Board with approval of the Supervisory Board can exempt fractions from the shareholders' subscription right. This makes it possible to make use of the authorization through round amounts, facilitating an issue. These shares, exempt from the subscription right as the so-called ‘free peak‘, are used in a beneficial manner for the Company.

The shareholders' subscription right can also be excluded with the approval of the Supervisory Board in the event of an increase in capital for non-cash contributions. In this case, the Executive Board will make use of the authorization to exclude the shareholders' subscription right only up to an amount of no more than 20% of the capital stock existing at the time of the entry into force of the authorization or, if this value is lower, at the time at which the authorization is made use of. The increase in capital for non-cash contributions is thus limited to a maximum of € 128,000,000.00. This enables the Executive Board to use shares of the Company in suitable individual cases to acquire companies, parts of companies, participations or other assets (e.g. hotels, ships or planes). In some cases, shares rather than money are demanded as valuable consideration for a takeover. The possibility to be able to offer shares in the Company as valuable consideration thus provides an advantage in competition for interesting acquisition targets, as well as the necessary flexibility to benefit from opportunities which arise for the acquisition of companies, parts of companies, participations or other assets without affecting its liquidity situation. The use of shares for such purposes can also be advantageous in the light of an optimal financing structure. The Company suffers no disadvantage from this, as the issue of shares for non-cash contributions requires the value of the non-cash contribution to be reasonable in relation to the value of the share.

The Executive Board is also authorized to use this authorized capital in cases where the Company initially undertook to pay money, e.g. as payment for an acquisition target, to subsequently issue shares instead of paying money to grant shares in the Company to the holders of such (certificated or non-certificated) monetary claims against the Company, with hindsight either entirely or partly instead of payment of money. This gives the Company additional flexibility.

Furthermore, it is to be possible to use this authorized capital, with an exclusion of the subscription right, to service bonds with conversion or option rights respectively to grant conversion obligations for which the subscribers did not make any cash contribution, but a non-cash contribution. This also makes it possible to use convertible and warrant-linked bonds as an acquisition currency in connection with the acquisition of companies, parts of companies, participations or other assets, which additionally increases the chances of prevailing in competition for an interesting acquisition opportunity.

The Executive Board will carefully consider in each case whether to make use of the authorization to increase the capital with an exclusion of the shareholders' subscription right. The Executive Board will do so only if the Executive Board and the Supervisory Board deem this to be in the interests of the Company and thus of its shareholders.

The Executive Board will report to the General Meeting on each concrete case in which the proposed authorization is made use of.

Report of the Executive Board to the Annual General Meeting on the Exclusions of the Subscription Right Provided for in Items 9, 10 and 15 of the Agenda Pursuant to Section 186 Para 4 Sentence 2, 203 Para 2 Sentence 2 and Section 71 Para 1 Number 8 Sentence 5 AktG

The authorizations in Items 9, 10 and 15 of the Agenda each provide for the possibility, on the basis of the provisions in section 186 para 3 sentence 4 AktG, to increase the capital, to issue convertible or warrant-linked bonds or to sell own shares which were acquired, excluding the shareholders' subscription right provided the statutory limit of 10% of the capital stock applicable in such cases is not – in total – exceeded.

The Executive Board will make use of any such authorization only in such a way that the limit of 10% of the capital stock in total, set out in section 186 para 3 sentence 4 AktG, is not exceeded. Regardless of whether the authorizations are made use of with the possibility of the exclusion of the subscription right individually or cumulatively, the limit of 10% of the capital stock for an exclusion of the subscription right pursuant to the provisions in section 186 para 3 sentence 4 AktG is not to be exceeded in total. The different proposed authorizations with the possibility to exclude the subscription right pursuant to section 186 para 3 sentence 4 AktG exclusively serve the purpose of giving the Executive Board the possibility to use the best suitable instrument in each concrete situation, observing the interests of the shareholders and of the Company, but not to repeatedly make use of the various possibilities to exclude the subscription right under these authorizations in order to exclude the shareholders' subscription right to an extent going beyond the limit of 10% of the capital stock set out in section 186 para 3 sentence 4 AktG.

Report on Item 9 of the Agenda (Authorized Capital of € 64,000,000.00)

The Executive Board made use of the authorization, with the approval of the Supervisory Board, to increase the capital stock of the Company by issuing registered shares (authorized capital in the amount of € 45,600,000.00 in accordance with the resolution adopted at the General Meeting of 18 May 2004, Item 10 of the Agenda), and partly made use thereof through the capital increase in September 2005. For this reason, a new authorized capital in the amount of € 64,000,000.00 is proposed.

If this authorized capital is used, it is to be possible to exclude the subscription right with the approval of the Supervisory Board if the new shares are issued in the event of a cash capital increase pursuant to section 186 para 3 sentence 4 AktG for an amount which does not fall far short of the stock exchange price. This authorization enables the Company to quickly and flexibly react to market opportunities in its various fields of business and if need be to also very quickly cover capital requirements which may arise. The exclusion of the subscription right makes it possible not only to react more speedily but also to place the shares for a price as close as possible to the then current market price, i.e. without the mark-down which is generally necessary in a rights issue. This results in greater issue proceeds for the benefit of the Company. In addition, such a placement can help to win new shareholder groups. When making use of the authorization, the Executive Board will fix the mark-down as low as possible under the market conditions prevailing at the time of the placement. The mark-down from the stock exchange price at the time of the use of this authorized capital will in no case exceed 5% of the stock exchange price at that time. The shares issued with an exclusion of the subscription right pursuant to section 186 para 3 sentence 4 AktG must not exceed – in total – 10% of the capital stock, neither at the time of the entry into force of the authorization nor at the time at which it is made use of. Own shares which are sold count for the purposes of this limitation provided they are sold during the term of this authorization up to the time at which it is made use of with an exclusion of the subscription right pursuant to section 186 para 3 sentence 4 AktG. Furthermore, shares issued or to be issued to service bonds with conversion or option rights or a conversion obligation count for the purposes of this limitation, provided the bonds are issued during the term of this authorization up to the time at which it is made use of with an exclusion of the subscription right by analogous application of section 186 para 3 sentence 4 AktG. This requirement takes account of the shareholders' need for dilution protection for their shareholdings in compliance with the statutory provisions. The limitation of the scope of the increase in capital without a subscription right gives every shareholder in principle the possibility to acquire the shares necessary to maintain his participation quota through the stock exchange subject to similar conditions. It is thus ensured that, in line with the statutory weighing of interests in section 186 para 3 sentence 4 AktG, the financial and voting interests are reasonably preserved whenever this authorized capital is used with an exclusion of this subscription right, while at the same time opening up further room for manoeuvre by the Company in the interests of all shareholders.

The possibility for the Executive Board to exclude the subscription right with the approval of the Supervisory Board in respect of fractions facilitates the handling of a rights issue if fractions arise because of the issue volume or to present a practicable subscription ratio.

Report on Item 10 of the Agenda (Authorization to Issue Convertible Bonds, Warrant-Linked Bonds, Special Dividend Rights and/or Dividend Bonds)

The Executive Board is currently authorized, by resolution adopted at the Annual General Meeting of 18 May 2004, Item 11 of the Agenda, to issue bonds with conversion or option rights to registered shares in the Company, with the approval of the Supervisory Board once or several times in the time up to 17 May 2009 with a maturity of up to 30 years. The Executive Board has so far not made use of this authorization.

In addition to the classic possibilities of procurement of outside capital and of equity capital, the issue of convertible bonds, warrant-linked bonds, special dividend rights and/or dividend bonds (or combinations of these instruments) (together ‘bonds‘) provides the possibility for TUI AG to use attracting financing alternatives on the capital market, depending on the market situation. In particular, the authorization to issue profit-related or profit-oriented instruments such as special dividend rights and dividend bonds extends the existing possibilities of TUI AG to strengthen its financial resources through the issue of so-called hybrid financing instruments and to thereby create the preconditions for the future business development. For this reason, it is proposed to the General Meeting to grant a new authorization to issue convertible bonds, warrant-linked bonds, special dividend rights and/or dividend bonds (or combinations of these instruments). The proposed new authorization is intended to achieve both an adjustment to the current market practises and a further flexibilization. On the whole, it is to be possible to issue bonds up to a total nominal amount of € 1,000,000,000.00, granting a subscription right to up to 39,116,600 registered no-par shares in TUI AG.

The issue of convertible bonds, warrant-linked bonds, special dividend rights and/or dividend bonds (or combinations of these instruments) makes it possible to raise outside capital on attractive terms. Depending on the bond terms, this capital can be classified both for rating purposes and for balance-sheet purposes as equity or as near-equity resources. The conversion or option premiums which are obtained as well as the equity classification enhance the capital basis of the Company and thus enable it to use attractive financing possibilities. The further possibilities which are envisaged in addition to granting convertible and/or option rights, namely to impose conversion obligations or to combine convertible bonds, warrant-linked bonds, special dividend rights and/or dividend bonds, extend the range of possibilities regarding the details of these financing instruments. As financing forms have become common the area of the so-called hybrid financing instruments which have an unlimited term, the authorization sets aside the current limitation of maturity for bonds with conversion or option rights respectively conversion obligations. The authorization gives the Company also the necessary flexibility to place the bonds itself or through participation companies in which it directly or indirectly holds a majority. Bonds can be denominated in euros or in the legal tender of any OECD member state.

To be able to adequately use the spectrum of the possible capital market instruments which represent conversion or option rights respectively conversion obligations, it appears appropriate to maintain the admissible issue volume in the new authorization in the amount of € 1,000,000,000.00 and to fix the conditional capital which serves to fulfil the conversion and option rights at € 100,000,000.00. This ensures that this authorization can be fully made use of. The number of shares which are needed to fulfil conversion and option rights respectively conversion obligations under a bond with a particular issue volume generally depends on the stock exchange price for the TUI share at the time of the issue of the bond. If a sufficient amount of conditional capital is available, the possibility to completely make use of the authorization to issue conversion or option bonds is secured.

In principle, a subscription right must be granted to the shareholders when convertible or warrant-linked bonds, special dividend rights and dividend bonds are issued. If convertible and/or warrant-linked bonds (or, as the case may be, special dividend rights or dividend bonds with a conversion or option right) are to be issued, the Executive Board is to be authorized, by analogous application of section 186 para 3 sentence 4 AktG, to exclude this subscription right with the approval of the Supervisory Board if the issuing price does not fall far short of the market value of the bonds. This can help to enable the Company to benefit on short notice from favourable stock market conditions and to quickly and flexibly place a bond on attractive terms. The stock markets have become far more volatile. Whether the best possible issue result can be achieved will therefore increasingly depend on whether the Company can react quickly to market developments. Favourable and competitive conditions can generally be fixed only if the Company is not bound for an excessively long offering period. To ensure the attractiveness of the conditions and thus the chances of success for the issue during the entire offering period, a significant security mark-down will generally have to be made for a rights issue. Although section 186 para 2 AktG now allows the subscription price to be published (and thus the bond terms for bonds with conversion or option rights) up to the third last day of the subscription period, the volatility of the stock markets even then represents a market risk for several days, resulting in security mark-downs in determining the bond terms, and thus in non-competitive terms. Because of the uncertainty regarding the exercise of a subscription right, an alternative placement with third parties is more difficult or involves greater expense. Finally, if the Company grants a subscription right, the duration of the subscription period prevents it from reacting on short notice to a change of the market situation, which can result to unfavourable conditions for the procurement of capital by the Company.

The shareholders' interests are preserved in that the bonds must not be issued essentially below market value. The market value is to be determined in accordance with the recognized principles of the mathematics of finance. For this, the Executive Board will generally obtain an expert opinion from an experienced investment bank or Audit Company. In fixing the price, the Executive Board will take account of the capital market situation in each case and keep the mark-down from the market value as small as possible. The arithmetic value of a subscription right will thus be practicably zero so that the shareholders cannot sustain any financial disadvantage worth mentioning from the exclusion of the subscription right. Moreover, the shareholders have the possibility to maintain their share of the capital stock of the Company through an acquisition to the stock exchange subject to almost identical terms. Their financial interests are thus preserved in a fair and reasonable manner.

The authorization to exclude the subscription right pursuant to section 186 para 3 sentence 4 AktG applies only to bonds with rights to shares which represent no more than 10% of the capital stock, neither at the time of the entry into force of the authorization nor at the time of its exercise. Own shares sold during the term of this authorization up to the time at which it is made use of with an exclusion of the subscription right pursuant to section 186 para 3 sentence 4 AktG count for the purposes of this limitations. Furthermore, shares issued during the term of this authorization up to the time at which it is made use of from the authorized capital with an exclusion of the subscription right pursuant to section 186 para 3 sentence 4 AktG also count for the purposes of this limitation.

This attributability is intended to protect the shareholders' interests in the smallest possible dilution of their participation.

If special dividend rights or dividend bonds without a conversion right, option right or conversion obligation are issued, the Executive Board is authorized, with the approval of the Supervisory Board, to entirely exclude the shareholders' subscription right, if these special dividend rights or dividend bonds are debenture-like securities, i.e. no membership rights are granted in the Company, no participation in the liquidation proceeds is granted, and the amount of the yield is not calculated on the basis of the annual profit, the balance-sheet profit or the dividend. In addition, it is necessary for the yield and the issue amount of the special dividend rights or the dividend bonds to be in line with the market conditions for comparable fund raising at the time of the issue. If these preconditions are fulfilled, no disadvantages arise for the shareholders from the exclusion of the subscription right, as the special dividend rights or the dividend bonds grant no membership rights and also no participation in the liquidation proceeds or in the profit of the Company. Although it is possible to provide for the yield to depend on the existence of an annual profit, a balance-sheet profit or a dividend, it would be inadmissible to provide for a higher annual profit, a higher balance-sheet profit or a higher dividend to result in a higher yield. Thus, the issue of the special dividend rights or dividend bonds neither changes nor dilutes the voting right or the shareholders' participation in the Company or its profits. In addition, because of the terms of issue in line with the market situation, which is required by mandatory law in the event of such an exclusion of the subscription right, the subscription right has no value worth mentioning.

Both of the above possibilities to exclude the subscription right give the Company the flexibility to quickly react to favourable market situations, and enable it to flexibly use a low interest level or a favourable demand situation on short notice for an issue. The crucial aspect here is that, as opposed to an issue of bonds with a subscription right, the issuing price can be fixed only directly prior to the placement, avoiding an increase risk of a price change for the duration of a subscription period, and maximizing the issue proceeds in the interests of all shareholders. Moreover, the elimination of the run-up period involved in the subscription right provides further benefits both in respect of the costs for raising the funds and in respect of the placement risk. A placement without a subscription right can reduce the safety margin which is otherwise necessary, likewise the placement risk, and the raising of funds is possible at a lower price for the benefit of the Company and its shareholders.

The Executive Board is also authorized to exempt fractions from the subscription right with the approval of the Supervisory Board. Such fractions can arise from the amount of the issue volume and to present a practicable subscription ratio. In this case, the exclusion of the subscription right facilitates the handling of the capital measure.

Furthermore, the Executive Board is to have the possibility, with the approval of the Supervisory Board, to exclude the shareholders' subscription right in order to grant the holders of conversion or option rights or of bonds involving conversion obligations a subscription right to the extent that they would have such a right after exercising their conversion or option rights or, as the case may be, after the fulfilment of a conversion obligation. This offers the possibility, instead of reducing the option or conversion price, to grant the holders of option or conversion rights already existing at that time a subscription right as dilution protection. It is in line with the market standard to issue bonds with such dilution protection.

Bonds can also be issued for non-cash contributions, provided that is in the interests of the Company. In this case, the Executive Board is authorized, with the approval of the Supervisory Board, to exclude the shareholders' subscription right, provided the value of the non-cash contributions is fair and reasonable in relation to the theoretic market value of the bond to be determined in accordance with the recognized principles of the mathematics of finance. This opens up the possibility to use the bonds in suitable cases also as an acquisition currency, for example in connection with the acquisition of companies, parts of companies, participations or other assets (e.g. hotels, ships or planes). For example, the need may well arise in negotiations to offer valuable consideration not by payment of money, but in some other form. The possibility to offer bonds as valuable consideration thus represents an advantage in competition for interesting acquisition targets, and creates the necessary freedom of action to benefit from opportunities to acquire companies, parts of companies, participations or other assets while preserving the available liquidity. This can also make sense in the light of an optimal financing structure.

The Executive Board will in each case carefully examine whether to make use of the authorization to issue convertible bonds and/or warrant-linked bonds (or, as the case may be, special dividend rights or dividend bonds with a conversion right, option right or conversion obligation) for non-cash contributions with an exclusion of the subscription right. The Executive Board will do so only if this is in the interests of the Company and thus of the shareholders.

The proposed conditional capital serves to service the conversion or option rights issued with the convertible or warrant-linked bonds or special dividend rights or dividend bonds or to fulfil conversion obligations for shares of the Company, provided the bonds were issued for cash contributions. Instead, other forms of performance can also be used.

Conversion or option rights respectively conversion obligations arising from bonds issued for non-cash contributions can on the other hand not be serviced out of the conditional capital. For this, it is necessary either to use own shares or to make an increase in capital for non-cash contributions. For an increase in capital for non-cash contributions, the authorized capital according to the resolution to be adopted under Item 8 of the Agenda is available. As a non-cash contribution, the claim arising from the bond is to be brought in, the determination of its value extending to the question whether the claim is valuable and whether the non-cash contribution was equivalent to the issuing price.

Report on Item 15 of the Agenda (Authorization to Acquire and Use own Shares)

The proposal in Item 15 of the Agenda provides for an authorization to acquire own shares pursuant to section 71 para 1 no. 8 AktG in the amount of up to 10% of the capital stock, limited to a period of 18 months.

TUI AG adopted a resolution at the Annual General Meeting of 11 May 2005 for an authorization to acquire own shares, limited to the time up to 9 November 2006. Because of the expiry of this authorization in the current financial year, this resolution including the authorization is to be annulled with effect from the entry into force of the new authorization to be granted at this Annual General Meeting.

In addition to an acquisition through the stock exchange, the Company is to be given the possibility to acquire own shares through a public purchase offer to be addressed to the shareholders of the Company or through the public invitation to the shareholders to submit an offer for the purchase of shares. The principle of equal treatment set out in the Stock Corporation Act must be observed. In the case of a public invitation to submit an offer, the addressees of the invitation can decide how many shares and – if a price range is fixed – at what price they wish to offer them to the Company. If a public purchase offer is oversubscribed or, in the case of an invitation to submit an offer for the purchase of shares, not all offers among several equivalent offers can be accepted, the shares are to be allocated on a pro rata basis. However, it is to be possible to provide for the preferential acceptance of a small member or of small parts of offers up to a maximum of 100 shares. This possibility serves to avoid fractions in determining the quotas to be acquired as well as small remaining shareholdings, and thus to facilitate the technical handling. The purchase price which is offered or the minimum and maximum value of the purchase price range offered per share (without ancillary acquisition costs) must not exceed or fall short of by more than 10% the average closing price in XETRA trading (or a comparable follow-up system) on the three trading days preceding the day of the public announcement of the offer or, as the case may be, the public invitation to submit a sales offer. If a substantial deviation from the relevant price arises after the publication of a public purchase offer or after the public invitation to submit a sales offer, the average price on the three trading days preceding the public announcement or offer can instead be used. The purchase offer or, as the case may be, the invitation to submit a sales offer can provide for further terms to be applicable.

The own shares which are acquired may be used for all purposes admissible by law, in particular also the following:

The proposed resolution contains the authorization to sell the previously acquired own shares outside the stock exchange for cash payment with an exclusion of the subscription right. A precondition for this is that the shares are sold at a price which does not fall far short of the stock exchange price of shares in the Company with the same features at the time of the sale. This authorization makes use of the possibility to simplify the exclusion of subscription rights allowed under section 71 para 1 no. 8 AktG and, analogously, section 186 para 3 sentence 4 AktG. The shareholders' interest in dilution protection is taken account of the prohibition of selling the shares for a price which falls far short of the relevant stock exchange price. The final determination of the sales price for the own shares is made just before the sale. The Executive Board will keep a possible mark-down from the stock exchange price as low as possible in accordance with the market conditions prevailing at the time of the placement. The mark-down form the stock exchange price at the time at which the authorization is made use of will in no case exceed 5% of the then current stock exchange price. The authorization applies subject to the proviso that the shares sold with an exclusion of the subscription right pursuant to section 186 para 3 sentence 4 AktG must not exceed – in total – 10% of the capital stock, neither at the time of the entry into force of this authorization nor at the time of its exercise. The exercise of this authorization shall only occur in the way that the border of 10% of the capital stock which is determined by section 186 para 3 sentence 4 AktG must be adhered in total, i.e. by inclusion of the possible exercise of the proposed authorizations under item 9 and 10. The shareholders in principles have the possibility to maintain their participation quota by purchasing TUI shares through the stock exchange. The authorization is in the interests of the Company because it provides a greater degree of flexibility. It makes it possible in particular to issue shares specifically to cooperation partners.

The sale of own shares can, with the approval of the Supervisory Board, also be made for non-cash contributions with an exclusion of the shareholders' subscription right. The Company is thereby enabled to offer own shares directly or indirectly as valuable consideration in connection with mergers or in connection with the acquisition of companies, parts of companies, participations or other assets (e.g. hotels, ships or planes). International competition and the globalization of the economy frequently require valuable consideration to be paid in such transactions in the form of shares. The authorization proposed here is intended to give the Company the necessary flexibility to quickly and flexibly benefit both nationally and internationally from opportunit