As filed with the Securities and Exchange Commission on January 10, 2003
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
Form S-4/F-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CARNIVAL CORPORATION
P&O PRINCESS CRUISES PLC
(Exact name of Registrant as specified in its charter)
Republic of Panama 4600 59-156976
England and Wales 4600 None
(Primary Standard (I.R.S. Employer
(State or other jurisdiction of incorporation Industrial Identification No.)
or organization) Classification Code
Number)
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Carnival Corporation P&O Princess Cruises plc
3655 N.W. 87/th/ Avenue 11-12 Charles II Street
Miami, Florida 33178-2428 London, England SW1 4QU
(305) 599-2600 +44 20 7805 1200
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Arnaldo Perez, Esq. Mona Ehrenreich
General Counsel c/o Princess Cruise
Carnival Corporation Lines, Ltd.
3655 N.W. 87th Avenue 24305 Town Center Drive
Miami, Florida 33178-2428 Santa Clarita, California
(305) 599-2600 91355
(661) 753-0000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-----------------
Mark S. Bergman, Esq. Duncan C. McCurrach, Esq.
Paul, Weiss, Rifkind, Sullivan & Cromwell LLP
Wharton & Garrison LLP 125 Broad Street
Alder Castle, 10 Noble New York, NY 10004
Street (212) 558-4000
London EC2V 7JU
+44 20 7367 1600
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Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
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If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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CALCULATION OF REGISTRATION FEE
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Proposed maximum
Title of each class Amount to be offering price per Proposed maximum
of securities to be registered registered share (2) aggregate offering price
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Carnival Corporation, common stock, par value $0.01 586,773,138(1) $0.76 $445,947,585
--------------------------------------------------- ------------ ------------------ ------------------------
P&O Princess Cruises plc, special voting share 1(4) N/A N/A
--------------------------------------------------- ------------ ------------------ ------------------------
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Title of each class Amount of
of securities to be registered registration fee (3)
------------------------------------------------------------------------
Carnival Corporation, common stock, par value $0.01 $41,028
--------------------------------------------------- --------------------
P&O Princess Cruises plc, special voting share N/A
--------------------------------------------------- --------------------
(1)Represents the number of shares of Carnival Corporation common stock, par
value $0.01 per share, outstanding as of January 9, 2003.
(2)Based on the additional value deemed accruing to the holders Carnival common
stock by reason of the implementation of the dual listed company structure.
This is calculated using the "look through" value per share of P&O Princess,
based on the closing price of $26.00 per share of Carnival common stock on
October 23, 2002, the last business day before announcement of the dual
listed company transaction, of $7.81 per P&O Princess share (calculated
using the exchange ratio of 0.3004 Carnival shares per P&O Princess share),
yielding a premium of $0.76 to the closing middle-market price of $7.05 (the
dollar equivalent of 455 pence per share using the exchange rate of
(Pounds)1.00 = $1.5499 in effect on such day) per P&O Princess share on
October 23, 2002.
(3)Computed in accordance with Rule 457(f) under the Securities Act to be
$41,028, which is equal to the product of the maximum aggregate offering
price and 0.000092.
(4)Represents one special voting share of P&O Princess Cruises plc to be issued
to a special voting trust, beneficial interests in which in the form of
trust shares are to be distributed by way of a dividend to shareholders of
Carnival and paired with shares of Carnival common stock.
The Registrants hereby amend this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrants shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
EXPLANATORY NOTE
This registration statement comprises (i) Carnival's proxy statement with
respect to the special meeting of Carnival shareholders to be held to approve
the dual listed company structure with P&O Princess Cruises plc, (ii)
Carnival's registration statement with respect to shares of Carnival common
stock required to be registered as a result of the implementation of the dual
listed company structure and (iii) P&O Princess Cruises plc's registration
statement with respect to its special voting share that will be created as part
of the dual listed company structure.
The information in this proxy statement/prospectus is not complete and may be
changed. Nether registrant may sell the shares registered under the
registration statement of which this proxy statement/prospectus is a part until
the registration statement filed with the SEC is declared effective. This
document is not an offer to sell securities, and it is not soliciting an offer
to buy securities, in any jurisdiction where the offer or sale is not permitted.
Subject to completion, dated , 2003
[LOGO]
MICKY ARISON
Chairman of the Board
Chief Executive Officer
[ ], 2003
Dear Shareholder:
As you may be aware, Carnival Corporation and P&O Princess Cruises plc have
agreed to combine their businesses strategically under a dual listed company
structure, which we refer to as the Combined Group in the attached proxy
statement/prospectus. The Combined Group will be the largest cruise vacation
group in the world, based on revenues, passengers carried and available
capacity. The Combined Group will operate a combined fleet of 65 cruise ships
and will sail to all major destinations outside the Far East. This is a
significant transaction for Carnival and an important step in our history.
Under the DLC structure, the businesses of Carnival and P&O Princess will be
combined principally through a series of contracts. Each company will continue
to retain its separate legal identity, but the two companies will share a
single senior executive management team, will have identical boards of
directors and will be run as if they were a single economic enterprise. The
economic interests of Carnival and P&O Princess will be aligned under the DLC
structure and they will pursue common objectives.
Following completion of the transactions necessary to complete the DLC
structure, you will continue to own the Carnival shares you currently own, but
these shares will effectively reflect your economic interest in the Combined
Group as a whole. On most matters that affect all of the shareholders of the
Combined Group, you will vote together with the shareholders of P&O Princess on
a combined basis. Carnival shares held by you and other current Carnival
shareholders will represent at least 74% of the total equity and voting power
of the Combined Group. Carnival shares are listed, and will continue to be
listed, on the New York Stock Exchange under the symbol "CCL."
Information about the DLC transaction and proposed amendments to Carnival's
articles of incorporation and by-laws required to implement the DLC structure
is included in the accompanying proxy statement/prospectus. I urge you to read
this material carefully and fully. You should also carefully consider the risk
factors beginning on page 30.
Carnival's management believes that there will be significant benefits in
sharing the best practices of the management teams of Carnival and P&O Princess
across the Combined Group. The DLC transaction will allow the Combined Group to
offer a wider range of vacation choices for its passengers and will enhance its
ability to attract more passengers from land-based vacations. Carnival's board
of directors is asking you to approve the Offer and Implementation Agreement
and related transactions required to effect the DLC transaction, including the
proposed amendments to Carnival's articles of incorporation and by-laws, as
described in more detail in the accompanying proxy statement/prospectus.
We cannot complete the DLC transaction unless you and your fellow shareholders
approve it by a vote of a majority of all outstanding Carnival shares. The
board of directors of Carnival has unanimously approved the DLC transaction and
recommends that you vote FOR the resolutions set out in the notice of the
special meeting.
The board of directors has fixed the close of business on ., 2003 as the record
date for the determination of shareholders entitled to vote at the meeting or
any adjournment of the meeting.
Thank you for your ongoing support and continued interest in Carnival
Corporation.
Sincerely,
[Signature]
Chairman of the Board and
Chief Executive Officer
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the disclosures in this proxy statement/prospectus. Any
representation to the contrary is a criminal offence. This document is not an
offer to sell securities, and it is not soliciting an offer to buy securities,
in any jurisdiction where the offer or sale is not permitted.
This proxy statement/prospectus is dated ., 2003 and is first being mailed to
the shareholders of Carnival on or about . , 2003.
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and financial
information about Carnival and P&O Princess by reference to documents that
Carnival and P&O Princess have previously filed with the SEC and that are not
included in or delivered with this proxy statement/prospectus. You can obtain
documents incorporated by reference, other than certain exhibits to those
documents, by requesting them in writing or by telephone from us or P&O
Princess at the following addresses:
Carnival Corporation
3655 N.W. 87th Avenue
Miami, Florida 33178-2428
Attention: Corporate Secretary
Telephone: (305) 599-2600, Ext. 18018;
P&O Princess Cruises plc
11-12 Charles II Street
London SW1Y 4QU, England.
Attention: Company Secretary
Telephone: +44 20 7805-1200.
You will not be charged for any of these documents that your request. In order
to ensure timely delivery of the documents, any request should be made by .,
2003. See "Where You Can Find More Information."
[LOGO]
3655 N.W. 87TH AVENUE
MIAMI, FLORIDA 33178-2428
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
DATE ., 2003
TIME .
PLACE .
ITEMS OF BUSINESS 1. To consider and approve the Offer and
Implementation Agreement, dated January 8,
2003, between Carnival Corporation and P&O
Princess Cruises plc and the transactions
contemplated by that agreement, as more fully
described in the attached proxy
statement/prospectus;
2. To consider and approve proposed amendments
to the articles of incorporation and by-laws
of Carnival Corporation in connection with
the transactions contemplated by the Offer
and Implementation Agreement, as more fully
described in the attached proxy
statement/prospectus; and
3. To transact such other business as may
properly come before the meeting.
The resolutions in respect of the first two items
of business will be voted on as a group and not
separately. The transactions contemplated by the
Offer and Implementation Agreement will not be
completed and the amendments to Carnival's
articles of incorporation and by-laws will not be
effected unless the resolutions are approved by
the shareholders.
RECORD DATE You are entitled to vote if you were a
shareholder at the close of business on ., 2003.
MEETING ADMISSION Attendance at the meeting is limited to
shareholders and one guest each. Each shareholder
may be asked to present valid picture
identification, such as a driver's license or
passport. Shareholders holding shares in
brokerage accounts (under a "street name") will
need to bring a copy of a brokerage statement
reflecting share ownership as of the record date.
The meeting will begin promptly at [time of day].
VOTING BY PROXY Please submit a proxy as soon as possible so that
your shares can be voted at the meeting in
accordance with your instructions. For specific
instructions, please refer to the Questions and
Answers beginning on page 1 of this proxy
statement/prospectus and the instructions on the
proxy card.
On behalf of the Board of Directors
/s/ ARNALDO PEREZ
--------------------------------------
ARNALDO PEREZ
Senior Vice President,
General Counsel and Secretary
IMPORTANT
A proxy statement/prospectus and proxy card are enclosed. All shareholders
are urged to follow the instructions attached to the proxy card and complete,
sign, date and mail the proxy card promptly. The enclosed envelope for return
of the proxy card requires no postage. Any shareholder attending the meeting
may personally vote on all matters that are considered, in which event the
signed proxy will be revoked.
IT IS IMPORTANT THAT YOUR SHARES BE VOTED
TABLE OF CONTENTS
Page
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QUESTIONS AND ANSWERS 1
About the DLC Transaction 1
About the Special Meeting 7
SUMMARY TERM SHEET FOR THE DLC TRANSACTION 11
Proposals To Be Voted On 11
Parties to the DLC Transaction 12
Carnival 12
P&O Princess 13
Our Reasons for the DLC Transaction 13
The DLC Structure 13
Highlights of the Combined Group 15
Conditions to the DLC Transaction 15
Termination of the Offer and Implementation Agreement 16
Termination Fee 16
No Consideration Payable 16
Required Vote 16
Changes in Rights of Carnival Shareholders 17
Special Voting Entities; Special Voting Shares 17
Trust Shares of Beneficial Interest 17
Accounting Treatment 18
United States Federal Income Tax Consequences 18
Regulatory Approvals 18
No Appraisal Rights 18
Mandatory Exchange 18
Partial Share Offer 19
Arison Family and Associates 19
Cautionary Note Concerning Factors That May Affect Future Results 20
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA OF CARNIVAL 21
SELECTED HISTORICAL FINANCIAL DATA OF P&O PRINCESS 23
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA 25
COMPARATIVE PER SHARE DATA 27
Statement of Operations Data 27
Balance Sheet Data 28
COMPARATIVE STOCK PRICES 29
RISK FACTORS 30
CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS 37
THE SPECIAL MEETING 39
The Proposals 39
Record Date and Voting 39
Required Vote 39
Proxies; Revocation 39
Confidential Voting 40
Other Matters 40
THE DLC TRANSACTION 41
Background to the DLC Transaction 41
Our Reasons for the DLC Transaction 44
The DLC Structure 46
Special Voting Entities; Special Voting Shares 47
Trust Shares of Beneficial Interest 48
Generally 48
Pairing Agreement 49
Voting Trust Deed 50
Page
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No Consideration Payable 50
Required Vote 50
Accounting Treatment 50
United States Federal Income Tax Consequences 50
Regulatory Approvals 51
No Appraisal Rights 51
Takeover Regulation of the Combined Group 51
Existing 4.9% Ownership Limit 52
THE COMPANIES 53
Carnival 53
P&O Princess 54
THE COMBINED GROUP 55
Brands 55
Fleet 56
Lower Berths 57
Strategy 57
Industry Background 59
North America 59
Europe 60
UK 60
Germany 61
Southern Europe 61
South America 61
Australia 61
Characteristics of the Cruise Vacation Industry 61
Competition 62
Employees 63
Board and Management 63
Dividends 63
On-going Reporting 64
Taxation of the Combined Group 64
Taxation of Carnival Shareholders 67
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMBINED GROUP 69
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE COMBINED GROUP 72
CHANGES IN RIGHTS OF CARNIVAL SHAREHOLDERS 82
General 82
Voting Rights 82
Special Voting Shares 84
Reflecting Votes of Carnival Shareholders at P&O Princess Meetings 85
Equalization Share 85
Quorum Requirements 86
Shareholder Action By Written Consent 87
Shareholder Proposals 87
Standard of Conduct for Directors 87
Meetings of the Board of Directors 88
General Meetings of Shareholders 88
Special Meetings of Shareholders 89
Sources and Payment of Dividends 89
Rights of Purchase and Redemption 90
Appraisal Rights 90
Preemptive Rights 91
Amendment of Governing Instruments 91
Stock Class Rights 92
Page
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Rights of Inspection 93
Classification of the Board of Directors 94
Election of Directors 94
Removal of Directors 94
Vacancies on the Board of Directors 95
Indemnification of Directors and Officers 95
Takeover Restrictions 96
Liquidation 97
PROPOSAL NO. 1 APPROVAL OF THE OFFER AND IMPLEMENTATION AGREEMENT 99
The Offer and Implementation Agreement 99
Introduction 99
Generally 100
Conditions to the Offer and Implementation Agreement 100
Other Key Provisions of the Offer and Implementation Agreement 101
Termination of the Offer and Implementation Agreement 103
No Solicitation 104
Mandatory Exchange 105
Governing Law of Offer and Implementation Agreement 106
The Equalization and Governance Agreement 106
General Principles 106
Restrictions on Buy-Backs and Share Issuances 107
Disenfranchisement 107
Liquidation 107
Termination of the Equalization and Governance Agreement 108
Governing Law of Equalization and Governance Agreement 109
Equalization Ratio 109
SVE Special Voting Deed 110
General Provisions 110
Amendments to SVE Special Voting Deed 111
Termination of SVE Special Voting Deed 111
Governing Law of SVE Special Voting Deed 112
Deeds of Guarantee 112
Carnival Deed of Guarantee 112
P&O Princess Deed of Guarantee 113
PROPOSAL NO. 2 APPROVAL OF AMENDMENTS TO CARNIVAL'S ARTICLES OF
INCORPORATION AND BY-LAWS 114
Capitalization 114
Voting Rights 114
Disenfranchisement 114
Special Voting Share 114
Quorum Requirements 115
Shareholder Action By Written Consent 115
Standard of Conduct for Directors 115
Meetings of the Board of Directors 115
General Meetings of Shareholders 115
Special Meetings of Shareholders 116
Sources and Payment of Dividends 116
Preemptive Rights 116
Amendment of Governing Instruments 116
Stock Class Rights 117
Rights of Inspection 117
Election of Directors 117
Removal of Directors 117
Vacancies on the Board of Directors 117
Page
----
Indemnification of Directors and Officers 118
Takeover Restrictions 118
Liquidation 118
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 119
INTERESTS OF CERTAIN PERSONS IN THE PROPOSALS 123
OTHER BUSINESS 123
LEGAL MATTERS 123
EXPERTS 123
WHERE YOU CAN FIND MORE INFORMATION 124
DOCUMENTS INCORPORATED BY REFERENCE 124
ANNEXES
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Annex A-1 Offer and Implementation Agreement
Annex A-2 Form of Equalization and Governance Agreement
Annex A-3 Form of SVE Special Voting Deed
Annex A-4 Form of Carnival Third Amended and Restated Articles of Incorporation
Annex A-5 Form of Carnival Amended and Restated By-Laws
Annex A-6 Form of P&O Princess Amended Memorandum of Association
Annex A-7 Form of P&O Princess Amended Articles of Association
Annex A-8 Form of Carnival Deed of Guarantee
Annex A-9 Form of P&O Princess Deed of Guarantee
Annex A-10 Form of Carnival Deed
Annex A-11 Directors of Carnival and P&O Princess
Annex B Form of Pairing Agreement
Annex C Form of Voting Trust Deed
QUESTIONS AND ANSWERS
This question-and-answer section highlights important information in this proxy
statement/prospectus but does not contain all of the information that is
important to you. You should carefully read this entire proxy
statement/prospectus and the other documents we refer you to for a more
complete understanding of the matters being considered at the special meeting.
Unless the context otherwise requires, references in this proxy
statement/prospectus to "Carnival", "the Company", "we" or "us" are to Carnival
Corporation and its subsidiaries, references to "P&O Princess" are to P&O
Princess Cruises plc and its subsidiaries, and references to "the Combined
Group" are references to the new enterprise resulting from the DLC transaction
between us and P&O Princess.
About the DLC Transaction
Q: Why am I receiving these materials?
A: Our board of directors is providing these materials to you in connection
with our special meeting and the DLC transaction referred to below. As a
shareholder, you are invited to attend the meeting and are requested to vote
on the proposals described in this proxy statement/prospectus.
Q: What am I being asked to vote on?
A: You are being asked to consider and vote upon proposals to implement a dual
listed company, or "DLC", structure with P&O Princess, which we refer to in
this document as the "DLC transaction". These proposals include approval of
an Offer and Implementation Agreement and amendments to our articles of
incorporation and by-laws.
Q: What is the DLC transaction?
A: The DLC transaction is a means of enabling us and P&O Princess to combine
our management and operations as if we were a single economic enterprise,
while retaining our separate legal identities. This will be accomplished
through contractual arrangements and amendments to each company's governing
documents. In addition, the governing documents of the two companies will be
harmonized, to the extent practicable and permitted by law, to ensure our
and P&O Princess' corporate procedures are substantially similar. As part of
the DLC transaction, P&O Princess intends to change its name to Carnival
(UK) plc at the extraordinary general meeting of P&O Princess shareholders.
You will be voting on the changes to our governing documents (our articles
of incorporation and by-laws) to give effect to these arrangements.
Q: What votes are required to approve the DLC transaction?
A: The DLC transaction must be approved by our shareholders and P&O Princess
shareholders. Our shareholders must approve the proposals at the special
meeting by the affirmative vote of a majority of all outstanding Carnival
shares entitled to vote at the special meeting. P&O Princess shareholders
must approve the DLC transaction by not less than three-quarters of the
votes cast at the P&O Princess extraordinary general meeting. Micky Arison,
our Chairman and Chief Executive Officer, other members of the Arison family
and trusts for their benefit have entered into undertakings under which they
will be required to cause shares beneficially owned by them representing
approximately 47% of the voting power of Carnival to vote in favor of the
resolutions required to implement the DLC structure at the special meeting.
These undertakings are irrevocable except in circumstances where the DLC
transaction is withdrawn or lapses.
1
Q: What is P&O Princess?
A: P&O Princess is a global cruise vacation company providing cruises to
Alaska, the Caribbean, Europe, the Mediterranean, the Panama Canal and other
exotic locations. P&O Princess also has a land-based tour operation division
in Alaska. P&O Princess ordinary shares are listed on the London Stock
Exchange, which we refer to in this document as the "LSE", and its American
Depositary Shares are listed on the New York Stock Exchange, which we refer
to in this document as the "NYSE". Both P&O Princess shares and P&O Princess
ADSs trade under the symbol "POC" on their respective exchanges. You can
learn more about P&O Princess by reading the documents P&O Princess has
filed with the SEC. See "Where You Can Find More Information."
Q: Why does Carnival want to implement the DLC transaction?
A: Our board of directors believes the DLC transaction is advantageous for
Carnival and in the best interests of Carnival and its shareholders.
Carnival has agreed to enter into the DLC transaction with P&O Princess in
order to create the Combined Group. The transaction will allow the Combined
Group to offer a wider range of vacation choices for its passengers and is
expected to enhance its ability to attract more passengers from land-based
vacations.
Q: What is the Combined Group?
A: The Combined Group, which reflects the businesses of Carnival and P&O
Princess that will be managed and operated as if they were a single economic
enterprise, will be the largest cruise vacation group in the world, based on
revenue, passengers carried and available capacity. It will have a wide
portfolio of complementary brands, both by geography and product offering,
and will include some of the best known cruise brands globally. As of
January 31, 2003, Carnival, together with P&O Princess, expects to have a
combined fleet of 65 cruise ships offering 99,964 lower berths, with 18
additional cruise ships with 42,260 lower berths scheduled to be added over
the next three and a half years. The Combined Group will be a leading
provider of cruises to all major cruise destinations outside the Far East.
Carnival and P&O Princess together carried approximately 4.7 million
passengers in fiscal 2002.
Q: Will P&O Princess become a subsidiary of Carnival?
A: No. P&O Princess will continue to exist as a separate publicly quoted
company and its shares will continue to be listed on the LSE. However, the
economic interests of Carnival and P&O Princess will be aligned under the
DLC structure and they will pursue common objectives. Our board and the P&O
Princess board will be identical and the Combined Group will be managed by a
single senior executive management team.
Q: Will there be any transfer of assets between us and P&O Princess in
connection with the DLC transaction?
A: No. The implementation of the DLC structure will not involve any transfer of
assets between us and P&O Princess. Following completion of the DLC
transaction, management of the Combined Group will determine whether assets
will be owned by Carnival or P&O Princess as is most efficient and
appropriate under the then prevailing circumstances. The Combined Group will
comprise all of the assets held by P&O Princess and Carnival immediately
prior to the implementation of the DLC transaction. No transfer of assets
between the two companies will affect the equalization ratio or the relative
economic interests of Carnival shareholders and P&O Princess shareholders in
the Combined Group.
2
Q: What will happen to my Carnival shares?
A: Upon completion of the DLC transaction, you will continue to own your
Carnival shares and will keep your existing certificates, if you have any.
Carnival shares will continue to be listed on the NYSE. In connection with
the DLC transaction, Carnival shareholders will receive trust shares of
beneficial interests in a special voting entity in the form of a trust that
we are creating. Following completion of the DLC transaction, Carnival
shares will trade together with the trust shares of beneficial interest in
this special voting trust, which we refer to in this proxy
statement/prospectus as the "P&O Princess Special Voting Trust". Separate
stock certificates will not be issued to represent these trust shares of
beneficial interest; instead, certificates representing your Carnival shares
will also evidence these trust shares of beneficial interest. You should not
turn in your Carnival stock certificates.
Q: What are the trust shares of beneficial interest?
A: The trust shares of beneficial interest will represent an interest in the
P&O Princess Special Voting Trust. The trustee of the P&O Princess Special
Voting Trust will hold the P&O Princess special voting share. This special
voting share is the mechanism by which your votes at Carnival shareholders
meetings will be given effect at the P&O Princess shareholders meetings for
purposes of the joint electorate actions and class rights actions described
below. The trust shares of beneficial interest will entitle you to receive
any distributions made by the trust. However, as the sole purpose of the
trust relates to the holding of the special voting share, it is not expected
to make any distributions.
Q. Will I be voting on the issuance of the trust shares?
A: No. The trust shares will be distributed by way of a dividend declared by
our board of directors.
Q: What will happen to my future dividends?
A: After completion of the DLC transaction, dividends declared by us will
continue to be paid by us to our shareholders and dividends declared by P&O
Princess will continue to be paid by P&O Princess to its shareholders.
However, we will not be able to declare or pay a dividend without an
equivalent dividend (before taxes and other deductions) being declared or
paid by P&O Princess and vice versa. Dividends on both our shares and P&O
Princess shares declared after completion of the DLC transaction will be
paid at about the same time and in equalized amounts. Our payment of
dividends in the future will depend on business conditions, our financial
condition and earnings and the financial condition and earnings of the
Combined Group, the ability of P&O Princess to pay an equivalent dividend
and other factors. It is intended that the first dividend to be paid by the
Combined Group will be declared in April 2003, with a record date in May
2003, and a payment date in June 2003.
Q: Will my voting rights change?
A: Yes. On most matters that affect all of the shareholders of the Combined
Group, shareholders of Carnival and P&O Princess will effectively vote
together as a single decision-making body on matters requiring the approval
of shareholders of either company. These matters will be specified in the
governing documents of each company as "joint electorate actions". Combined
voting will be accomplished through a special voting share, one to be issued
by Carnival and held by a special voting entity
3
set up by P&O Princess, and one to be issued by P&O Princess that will be
held by the special voting entity in the form of a trust formed by Carnival.
Certain matters where the interests of the two shareholder bodies may
diverge will be specified in the governing documents of each company as
"class rights actions". These class rights actions will be voted on
separately by the shareholders of each company. If both groups of
shareholders do not approve a class rights action, that action cannot be
taken by either company.
Q: Will I be asked to vote at P&O Princess meetings?
A: No. Your vote at Carnival shareholder meetings, for purposes of determining
the outcome of combined voting, will automatically be reflected as
appropriate at any parallel P&O Princess shareholders meeting through the
mechanism of the special voting share.
Q: Who will be the directors and senior executive management team of the
Combined Group?
A: We and P&O Princess will be managed and operated as if we were a single
economic enterprise. Although we and P&O Princess will continue to exist as
separate companies with its own board of directors and senior executive
management, the boards and senior executive management of each company will
be identical. The proposed directors of Carnival and P&O Princess following
implementation of the DLC structure are listed under "Directors and
Executive Officers of the Combined Group". In addition to their normal
fiduciary duties to the company and obligation to have regard to the
interests of its shareholders, the directors of each company will be
entitled to have regard to the interests of the other company and its
shareholders. Micky Arison, our Chairman and Chief Executive Officer, will
be the Chairman and Chief Executive Officer of both Carnival and P&O
Princess and Howard S. Frank, our Vice-Chairman and Chief Operating Officer,
will be the Vice-Chairman and Chief Operating Officer of both Carnival and
P&O Princess. The headquarters of the Combined Group will be in Miami,
Florida with a corporate office in London.
Q: How will the directors of Carnival and P&O Princess be elected?
A: Resolutions relating to the appointment, removal and re-election of
directors will be considered as a joint electorate action and voted upon by
the shareholders of each company effectively voting together as a single
decision-making body. No person may be a member of the board of directors of
Carnival or P&O Princess without also being a member of the board of
directors of the other company.
Q: When will we elect the directors of Carnival and P&O Princess?
A: Not later than July 30, 2002, we and P&O Princess will hold annual meetings
at which the re-election of all of the directors will be considered as a
joint electorate action.
Q: What is the Partial Share Offer?
A: In connection with the DLC transaction, we are making a tender offer for up
to 20% of P&O Princess' outstanding shares, which we refer to in this proxy
statement/prospectus as the "Partial Share Offer." The Partial Share Offer
is not being made to you and will not influence whether or not the DLC
transaction will proceed. Any P&O Princess shares that we acquire in the
Partial Share Offer will not give us, or you, additional control over P&O
Princess as those shares, under the terms of the agreements implementing the
DLC transaction, will not have voting rights.
4
Q: What percentage of the Combined Group will be controlled by existing
Carnival shareholders?
A: If the DLC transaction is approved, existing Carnival shareholders will hold
approximately 74% of the equity of the Combined Group following its
implementation. However, to the extent that P&O Princess shares are
exchanged for Carnival shares under the Partial Share Offer, the percentage
of the equity of the Combined Group represented by Carnival shares will
increase. If the Partial Share Offer is taken up in full, approximately 79%
of the equity of the Combined Group will be held through Carnival shares
with the balance of the equity held through P&O Princess shares.
Q: What are the most significant conditions to the DLC transaction?
A: Completion of the DLC transaction is subject to certain conditions being
satisfied or waived on or before September 30, 2003. The most important of
these include:
. approval of the shareholders of each of Carnival and P&O Princess;
. the absence of action, or threatened action, by any governmental
authority that restrains, enjoins or otherwise prohibits the completion
or performance of, or materially adversely affects, the DLC transaction
and the other transactions contemplated by the Offer and Implementation
Agreement;
. effectiveness of the revised governing documents;
. clearance of the DLC transaction under the European Commission merger
regulation and all other relevant regulatory consents or approvals
having been obtained;
. the Partial Share Offer becoming unconditional (other than the condition
regarding closing of the DLC transaction); and
. approval by the NYSE of the listing of either the trust shares of
beneficial interest or the P&O Princess special voting share, subject in
either case only to official notice of issuance.
Q: When do you expect to complete the DLC transaction?
A: We are working to complete the DLC transaction as soon as possible. We hope
to complete the DLC transaction as soon as we can following our special
meeting and the extraordinary general meeting of P&O Princess shareholders,
if the required shareholder approvals are obtained at those meetings. In
addition to shareholder approvals, we must obtain any necessary regulatory
consents and satisfy all of the other closing conditions specified in the
Offer and Implementation Agreement. Subject to these conditions, we expect
completion of the DLC transaction to take place early in the second quarter
of 2003.
Q: What are the tax consequences of the DLC transaction?
A: Although there is no U.S. federal income tax authority addressing the tax
consequences of a DLC transaction, we believe that the DLC transaction
should not give rise to taxable income or gain for Carnival shareholders
that are U.S. holders (as we use this term in this proxy
statement/prospectus) for U.S. federal income tax purposes. However, the
Internal Revenue Service may assert that Carnival shareholders received
taxable income as a result of the various voting and equalization provisions
necessary to implement the DLC structure, including the trust shares. We
believe that such voting and other rights, if any, received by shareholders
are expected to have only nominal value and, therefore,
5
the receipt of such rights by Carnival shareholders would only result in a
nominal amount of income. It is possible, however, that the IRS may disagree
with this conclusion.
Holders of Carnival shares should consult their independent professional
advisers in the light of their particular circumstances as to the U.S.
federal income tax consequences of the DLC transaction, as well as to the
effect of any state, local or applicable foreign tax law.
Q: What accounting treatment and reporting requirements will be applicable to
the Combined Group?
A: We expect that under U.S. GAAP the DLC transaction will be accounted for
using the purchase method of accounting in accordance with Statement of
Financial Accounting Standards No. 141 "Business Combinations". In
accordance with the purchase method of accounting, the P&O Princess U.S.
GAAP accounting policies will be conformed to our accounting policies upon
completion of the DLC transaction.
Following completion of the DLC transaction, P&O Princess will change its
fiscal year end from December 31 to November 30 so that it will be the same
as our current fiscal year end. The Combined Group intends to publish
combined financial statements denominated in U.S. dollars and prepared in
accordance with U.S. GAAP. We expect that these combined financial
statements will be included in a combined annual report. P&O Princess
expects to include summary balance sheet information and summary income
statement information prepared in accordance with UK GAAP, without notes, in
the annual report.
In addition, we and P&O Princess will file periodic and current reports with
the SEC on a joint basis in accordance with the rules applicable to U.S.
domestic reporting companies. The financial statements presented in the
periodic reports will consist of combined financial statements of the
Combined Group prepared in accordance with U.S. GAAP.
Q: What corporate governance require-ments will apply to the Combined Group?
A: We and P&O Princess comply with, and the Combined Group will comply with,
the applicable corporate governance requirements of the Sarbanes-Oxley Act
of 2002 and the NYSE. P&O Princess will also continue to comply with the
rules of the UK Listing Authority and the LSE.
Q: Should I vote?
A: Yes. The proposed DLC transaction is an important step in our history and
your vote is critical to this process. Your board of directors unanimously
believes the DLC transaction is in the best interests of Carnival's
shareholders. Because the proposals contained in this proxy
statement/prospectus require the approval of a majority of all outstanding
shares entitled to vote at the special meeting, and not merely of those
shares voted at the special meeting, your vote is all the more important.
Please complete and send in the proxy card attached to this proxy
statement/prospectus.
Q: Does the Carnival board recommend the DLC transaction?
A: Yes. Our board of directors unanimously recommends that you vote your shares
FOR the proposals necessary to effect the DLC transaction. As of January 9,
2003, our directors and executive officers and their affiliates beneficially
own an aggregate of 234,376,872 Carnival shares, which represents 39.9% of
Carnival's outstanding shares. Our directors and executive officers intend
to vote their Carnival shares FOR the proposals at the special meeting.
6
Q: Does the P&O Princess board recommend the DLC transaction?
A: Yes. The board of directors of P&O Princess has recommended that P&O
Princess shareholders vote in favor of the DLC transaction. As of January 9,
2003, the directors and executive officers of P&O Princess and their
affiliates beneficially own an aggregate of . P&O Princess shares, which
represents . % of P&O Princess' outstanding shares. The P&O Princess
directors and executive officers intend to vote their shares in favor of the
DLC transaction at the P&O Princess extraordinary general meeting.
About the Special Meeting
Q: When and where is the special meeting?
A: The special meeting is scheduled to be held as follows:
Date: ., 2003
Time: .
Place: .
Q: Who can attend the meeting?
A: All shareholders of record as of ., 2003, or their duly appointed proxies,
may attend the meeting, and each may be accompanied by one guest. Seating,
however, is limited. Admission to the meeting will be on a first come, first
served basis. Each shareholder may be asked to present valid picture
identification, such as a driver's license or passport.
If you hold your shares through a stockbroker or other nominee, you will
need to provide proof of ownership by bringing either a copy of the voting
instruction card provided by your broker or a copy of a brokerage statement
showing your share ownership as of ., 2003 together with proof of
identification. Cameras, recording devices and other electronic devices will
not be permitted at the meeting.
Q: What vote will be required to approve the proposals?
A: Approval of the Offer and Implementation Agreement and related amendments to
our articles of incorporation and by-laws will require the vote of the
holders of a majority of our outstanding shares of common stock entitled to
vote on these proposals.
Q: What class of shares are entitled to be voted?
A: We have only one class of common stock outstanding. Each share of our common
stock outstanding as of the close of business on ., 2003, the Record Date,
is entitled to one vote at the special meeting. On the Record Date, we had
approximately . shares of common stock issued and outstanding.
Q: What is the quorum requirement for the meeting?
A: The quorum requirement for holding the meeting and transacting business is a
majority of the outstanding shares entitled to be voted. The shares may be
present in person or represented by proxy at the meeting. Abstentions and
broker non-votes are counted as present for the purpose of determining the
presence of a quorum. Generally, broker non-votes occur when shares held by
a broker for a beneficial owner are not voted with respect to a particular
proposal because (1) the broker has not received voting instructions from
the beneficial owner and (2) the broker lacks discretionary voting power to
vote such shares.
Q: What shares owned by me can be voted?
A: All shares owned by you as of ., 2003, the Record Date, may be voted by you.
These
7
shares include those (1) held directly in your name as the shareholder of
record, including shares purchased through our Dividend Reinvestment Plan
and our Employee Stock Purchase Plan and (2) held for you as the beneficial
owner though a stockbroker, bank or other nominee.
At the close of business on that day, approximately . shares of our common
stock were outstanding.
Q: What is the difference between holding shares as a shareholder of record and
as a beneficial owner?
A: Most of our shareholders hold their shares through a stockbroker, bank or
other nominee rather than directly in their own name. As summarized below,
there are some distinctions between shares held of record and those owned
beneficially.
Shareholder of Record
If your shares are registered directly in your name with our transfer agent,
SunTrust Bank, you are considered, with respect to those shares, the
shareholder of record, and this proxy statement/prospectus is being sent
directly to you by us. As the shareholder of record, you have the right to
grant your voting proxy directly to the persons named in the proxy or to
vote in person at the meeting. We have enclosed a proxy card for you to use.
Beneficial Owner
If your shares are held in a stock brokerage account or by a bank or other
nominee, you are considered the beneficial owner of shares held in street
name, and these proxy materials are being forwarded to you by your broker or
nominee who is considered, with respect to those shares, the shareholder of
record. As the beneficial owner, you have the right to direct your broker on
how to vote and are also invited to attend the meeting. However, since you
are not the shareholder of record, you may not vote these shares in person
at the meeting. Your broker or nominee has enclosed a voting instruction
card for you to use.
Q: How can I vote my shares in person at the meeting?
A: Shares held directly in your name as the shareholder of record may be voted
in person at the special meeting. If you choose to do so, please bring the
enclosed proxy card and proof of identification.
Even if you plan to attend the special meeting, we recommend that you also
submit your proxy as described below so that your vote will be counted if
you later decide not to attend the meeting. Shares held in street name may
be voted in person by you only if you obtain a signed proxy from the record
holder giving you the right to vote the shares. Please refer to the voting
instruction card included by your broker or nominee.
Q: How can I vote my shares without attending the meeting?
A: Whether you hold shares directly as the shareholder of record or
beneficially in street name, you may direct your vote without attending the
meeting. You may vote by granting a proxy or, for shares held in street
name, by submitting voting instructions to your broker or nominee. For
shareholders of record, you may do this by signing your proxy card and
mailing it in the enclosed envelope. If you provided specific voting
instructions, your shares will be voted as you instruct. If you sign but do
not provide instructions, your shares will be voted as described below in
"How are votes counted?".
In most instances, where your shares are held in street name, you will be
able to do this by mail. Please refer to the voting instruction card
included by your broker or nominee.
8
Q: Can I change my vote?
A: You may change your proxy instruction at any time prior to the vote at the
special meeting. For shares held directly in your name, you may accomplish
this by granting a new proxy bearing a later date (which automatically
revokes the earlier proxy) or by attending the special meeting and voting in
person. Attendance at the meeting will not cause your previously granted
proxy to be revoked unless you specifically so request. For shares owned
beneficially by you, you may accomplish this by submitting new voting
instructions to your broker or nominee.
Q: What happens if I do not vote?
A: Your vote is important. We cannot complete the DLC transaction unless the
holders of a majority of the outstanding shares of Carnival common stock
vote ''FOR'' the proposals.
Q: Do I have any appraisal rights if I oppose the proposals?
A: No. Shareholders do not have the right to an appraisal of the value of their
shares in connection with the proposals.
Q: How are votes counted?
A: You may vote "FOR", "AGAINST" or "ABSTAIN" from voting on the proposals set
out in the notice of meeting. If you "ABSTAIN", it has the same effect as a
vote "AGAINST". If you sign your proxy card or broker voting instruction
card with no further instructions, your shares will be voted "FOR" the
proposals set out in the notice of meeting.
Q: What does it mean if I receive more than one proxy or voting instruction
card?
A: It means your shares are registered differently or are in more than one
account. Please provide voting instructions for all proxy and voting cards
you receive.
Q: Where can I find the voting results of the meeting?
A: We will announce preliminary voting results at the meeting and publish final
results via press release.
Q: What happens if additional proposals are presented at the meeting?
A: Other than the proposals described in this proxy statement/prospectus, we do
not expect any matters to be presented for a vote at the special meeting. If
you grant a proxy, the persons named as proxy holders, Micky Arison, our
Chairman of the Board and Chief Executive Officer, and Arnaldo Perez, our
Senior Vice President, General Counsel and Secretary, will have the
discretion to vote your shares on any additional matters properly presented
for a vote at the meeting.
Q: Who will count the vote?
A: A representative of SunTrust Bank, our transfer agent, will tabulate the
votes and act as the inspector of elections.
Q: Is my vote confidential?
A: Proxy instructions, ballots and voting tabulations that identify individual
shareholders are handled in a manner that protects your voting privacy. Your
vote will not be disclosed either within Carnival or to third parties except
(1) as necessary to meet applicable legal requirements, (2) to allow for the
tabulation of votes and certification of the vote, or (3) to facilitate a
successful proxy solicitation by our board of directors. Occasionally,
shareholders provide written comments on their proxy card which are then
forwarded to management.
9
Q: Who will bear the cost of soliciting votes for the meeting?
A: We will pay the entire cost of preparing, assembling, printing, mailing and
distributing this proxy statement/prospectus and soliciting votes for the
meeting. We will also reimburse brokerage houses and other custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses for
forwarding proxy materials to shareholders.
Q: What do I need to do now?
A: You should thoroughly read this proxy statement/prospectus and indicate on
your proxy card how you want to vote your shares of common stock. You should
sign and mail your proxy card in the enclosed envelope as soon as possible
so that your shares of common stock may be represented at the special
meeting on ., 2003. If you sign and send in your proxy card and do not
indicate how you want to vote, your proxy will be counted as a vote "FOR"
the proposals. If you abstain, your failure to vote will have the effect of
a vote against the proposals.
Q: Who do I call if I have questions about the DLC transaction or the special
meeting?
A: [To come]
On behalf of the Board of Directors
Arnaldo Perez
Senior Vice President,
General Counsel and Secretary
Dated: ., 2003
10
SUMMARY TERM SHEET FOR THE DLC TRANSACTION
This summary contains selected information from this proxy statement/prospectus
and may not contain all of the information that is important to you. To
understand the DLC transaction fully and to obtain a more complete description
of its terms, you should carefully read this entire document, including the
Annexes, and the documents to which we refer you. See "Where You Can Find More
Information".
The DLC transaction is a means of enabling us and P&O Princess to combine our
management and operations as if we were a single economic enterprise, while
retaining our separate legal identities. This will be accomplished through
contractual arrangements (addressed in Proposal No. 1) and amendments to each
company's governing documents. In addition, the governing documents of the two
companies will be harmonized, to the extent practicable and permitted by law,
to ensure our and P&O Princess' corporate procedures are substantially similar.
You will be voting on the changes to our governing documents (our articles of
incorporation and by-laws) to give effect to these arrangements (addressed in
Proposal No. 2).
Proposals To Be Voted On
Proposal No. 1--Approval of the Offer and Implementation Agreement (Page 99)
You are being asked to approve the Offer and Implementation Agreement, which is
attached as Annex A, and related transactions required to effect the DLC
transaction. The affirmative vote of the holders of a majority of all
outstanding Carnival shares entitled to vote at the special meeting is required
to approve the Offer and Implementation Agreement.
The Offer and Implementation Agreement sets forth the conditions which must be
satisfied or waived by us and P&O Princess prior to completion of the DLC
transaction and outlines the transactions to be effected at the closing of the
DLC transaction. These include:
.. amendments to our governing documents and the governing documents of P&O
Princess;
.. entry into the Equalization and Governance Agreement between us and P&O
Princess, which will govern the future relationship of Carnival and P&O
Princess under a dual listed company structure;
.. issuance by each of us and P&O Princess of special voting shares; and
.. election of the same individuals as members of the board of directors of
each of Carnival and P&O Princess.
Our board of directors unanimously recommends a vote FOR the approval of the
Offer and Implementation Agreement and related transactions.
Proposal No. 2--Approval of Amendments to Carnival's Articles of
Incorporation and By-laws (Page 114)
You are also being asked to approve the adoption of our Third Amended and
Restated Articles of Incorporation and Amended and Restated By-laws, which are
attached as Annexes A-4 and A-5 to this proxy statement/prospectus. The
affirmative vote of the holders of a majority of all outstanding shares of our
common stock entitled to vote at the special meeting is required to approve the
amendments to our articles of incorporation and by-laws.
Amendments to certain provisions of our existing articles of incorporation and
by-laws are necessary in order to harmonize the governing documents of Carnival
and P&O Princess. Upon completion of the
11
DLC transaction, equivalent changes will be made to the governing documents of
P&O Princess. These proposed amendments depart from our existing articles of
incorporation and by-laws in areas such as the election and removal of
directors, calling of shareholders' meetings, quorum and the vote required to
approve certain matters. We are also eliminating the requirement that our
annual meeting be held in March or April of each year so that we may hold our
annual meeting at the same time P&O Princess holds its annual meeting.
In connection with the DLC transaction, we are increasing our authorized
capital stock to 2,000,000,000 shares, of which 1,959,999,998 are shares of
common stock and 40,000,000 are shares of preferred stock. We will also have
one share of special voting stock, which we refer to in this proxy
statement/prospectus as a special voting share, and one share of special stock,
which we refer to in this proxy statement/prospectus as the equalization share.
If approved, our Third Amended and Restated Articles of Incorporation would
become effective when filed with the Public Registry Office of the Republic of
Panama, which is planned to occur upon completion of the DLC transaction. The
Amended and Restated By-laws would become effective at the same time. Approval
of this proposal is a condition to the parties' obligation to complete the DLC
transaction.
Our board of directors unanimously recommends a vote FOR the amendments to our
articles of incorporation and by-laws.
The proposals relating to the DLC transaction to be approved at the special
meeting will be voted on as a group and not separately. The transactions
contemplated by the Offer and Implementation Agreement will not be completed
and the amendments to our articles of incorporation and by-laws will not be
effected unless both proposals are approved by our shareholders.
Parties to the DLC Transaction
Carnival (Page 53)
We are a global cruise vacation and leisure travel company. We offer a broad
range of cruise brands serving the vacation market through Carnival Cruise
Lines, Holland America Line, Costa Cruises, Cunard Line, Seabourn Cruise Line
and Windstar Cruises. Our various brands operate 45 cruise ships, offering a
total of 67,264 lower berths, in Alaska, Australia, Bahamas, Bermuda, Canada,
the Caribbean, Europe, the Hawaiian Islands, the Mediterranean, the Mexican
Riviera, New England, the Panama Canal, South America and other exotic
destinations worldwide. We have 13 additional cruise ships on order, which will
offer a further 30,580 lower berths. These ships are expected to enter service
over the next three and a half years. In addition to our cruise operations, we
operate a tour business through Holland America Tours which markets sightseeing
tours both separately and as a part of its cruise/tour packages. Holland
America Tours operates 13 hotels in Alaska and the Yukon, two luxury day boats
and a fleet of motorcoaches and railcars. Our business strategy is to use this
wide, diverse range of vacation options to attract passengers from other
land-based vacation choices.
We were incorporated under the laws of the Republic of Panama in November 1974.
Our common stock is listed on the NYSE under the symbol "CCL". Our principal
executive offices are located at Carnival Place, 3655 N.W. 87th Avenue, Miami,
Florida 33178-2428. The telephone number of our principal executive offices is
(305) 599-2600.
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P&O Princess (Page 54)
P&O Princess is a global cruise vacation company operating under the following
brand names: Princess Cruises in North America; P&O Cruises, Ocean Village and
Swan Hellenic in the UK; AIDA and A'ROSA in Germany; and P&O Cruises in
Australia. P&O Princess provides cruises to Alaska, the Caribbean, Europe, the
Mediterranean, the Panama Canal and other exotic destinations. As of January
31, 2003, P&O Princess expects to have a fleet of 20 ocean cruise ships and two
river boats offering a total of 33,100 lower berths, with five additional ocean
cruise ships and two river boats on order as of that date, offering a further
12,080 lower berths. The new ships are expected to be delivered over the next
two years. P&O Princess' tour division, Princess Tours, is a tour operator in
Alaska with five riverside lodges, a fleet of motorcoaches and Midnight Sun
Express rail cars.
P&O Princess was incorporated and registered in England and Wales in July 2000.
P&O Princess ordinary shares are listed on the LSE and P&O Princess ADSs are
listed on the NYSE. Both P&O Princess shares and P&O Princess ADSs trade under
the symbol "POC" on their respective exchanges. P&O Princess' principal
executive offices are located at 11-12 Charles II Street, London SW1Y 4QU,
England. The telephone number of P&O Princess' principal executive offices is
+44 20 7805-1200.
Our Reasons for the DLC Transaction (Page 44)
We have agreed to enter into the DLC transaction with P&O Princess in order to
create the Combined Group, which will reflect the businesses of Carnival and
P&O Princess that will be managed and operated as if they were a single
economic enterprise. The Combined Group will be the largest cruise vacation
group in the world, based on revenue, passengers carried and available
capacity. The DLC transaction will allow the Combined Group to offer a wider
range of vacation choices for its passengers and will enhance its ability to
attract more passengers from land-based vacations. As of January 31, 2003,
Carnival, together with P&O Princess, is expected to have a combined fleet of
65 cruise ships offering 99,964 lower berths and will be a leading provider of
cruises to all major destinations outside the Far East.
The DLC Structure (Page 46)
After giving effect to the DLC transaction, we and P&O Princess each will
remain as a separate publicly quoted company, although we and P&O Princess will
be managed and operated as if we were a single economic enterprise. The
economic interests of us and P&O Princess will be aligned under the DLC
structure and we will pursue common objectives. Some key features of the DLC
structure are listed below.
.. Our shares and, for the foreseeable future, P&O Princess American
Depositary Shares, or ADSs, will continue to be listed on the NYSE and P&O
Princess shares will continue to have their primary listing on the LSE.
.. The implementation of the DLC structure will not involve any transfer of
assets between us and P&O Princess. Following completion of the DLC
transaction, management of the Combined Group will determine whether assets
will be owned by Carnival or P&O Princess as is most efficient and
appropriate under the then prevailing circumstances. The Combined Group
will comprise all of the assets held by P&O Princess and Carnival
immediately prior to the implementation of the DLC transaction. No transfer
of assets between the two companies will affect the equalization ratio or
the relative economic interests of Carnival shareholders and P&O Princess
shareholders in the Combined Group.
13
.. Carnival shareholders will continue to hold their Carnival shares and P&O
Princess shareholders will continue to hold their P&O Princess shares,
unless P&O Princess shareholders elect to exchange their P&O Princess
shares (up to a maximum of 20% of the outstanding shares of P&O Princess)
for Carnival shares in the Partial Share Offer. If the full 20% is tendered
in the Partial Share Offer, approximately 79% of the equity of the Combined
Group will be held through Carnival shares and the balance will be held
through P&O Princess shares.
.. The economic and voting interests represented by an individual share in
each company will be equalized based on a ratio, which we refer to in this
proxy statement/prospectus as the "equalization ratio." The equalization
ratio will initially be 0.3004 Carnival shares for each P&O Princess share
and P&O Princess ADS. Upon completion of the DLC transaction, P&O Princess
will reorganize and consolidate its share capital so that the equalization
ratio will be one Carnival share for each P&O Princess share.
.. The equalization ratio is subject to adjustment in a limited number of
circumstances, as described in the section of this proxy
statement/prospectus entitled "The Equalization and Governance
Agreement--Equalization Ratio."
.. As a result of the 1:1 equalization ratio, one Carnival share will have the
same rights to distributions of income and capital and voting rights as one
P&O Princess share. Carnival and P&O Princess shareholders initially will
receive equal quarterly dividends. If the equalization ratio is adjusted to
a value other than 1:1, Carnival and P&O Princess shares will no longer
have equivalent rights, as described in the section of this proxy
statement/prospectus entitled "The Equalization and Governance
Agreement--Equalization Ratio."
.. On most matters that affect all shareholders of the Combined Group,
Carnival and P&O Princess shareholders will vote together as a single body.
These matters are called joint electorate actions.
.. On specified matters where the interests of Carnival shareholders may
differ from the interests of P&O Princess shareholders, each shareholder
body will vote separately as a class. These matters are called class rights
actions. No class rights action may be implemented unless approved by both
shareholder bodies, which means that each shareholder body has a veto with
respect to class rights actions.
.. We and P&O Princess each will continue to have separate boards of
directors, but the boards and senior executive management of both companies
will be identical. In addition to their normal fiduciary duties to the
company and obligation to have regard to the interests of its shareholders,
the directors of each company will be entitled to have regard to the
interests of the other company and its shareholders.
.. We and P&O Princess will execute cross-guarantees regarding all debt
incurred after implementation of the DLC structure by either company as if
we and P&O Princess were a single economic enterprise.
.. Takeover restrictions will be in place so that, generally, no person will
be able to obtain control over the Combined Group without making an offer
to the shareholders of both companies on equivalent terms.
.. Neither Carnival nor P&O Princess will be able to issue any shares carrying
voting rights to the other, except on a pre-emptive basis to all
shareholders, for two years following the date on which the DLC structure
is implemented. After expiration of the initial two year period, for each
of the subsequent three years neither Carnival nor P&O Princess may issue
shares carrying voting rights to the other company, except on a pre-emptive
basis to all shareholders, in excess of 5% per year of the issued or
outstanding shares (calculated as at the first day in such annual period).
Thereafter, there will be no restriction on the issuance of shares carrying
voting rights to the other company or any of that company's subsidiaries.
These restrictions may be varied by a class rights action.
.. Shares held by one company in the other will not have voting rights unless
such company holds 90% or more of the outstanding shares of the other.
14
Highlights of the Combined Group (Page 55)
The Combined Group will be the leading global cruise vacation operator with
brands appealing to the widest target audience, focused on sourcing passengers
from developed vacation markets where cruising is one of the largest and
fastest growing vacation alternatives. We expect to market certain of the
Combined Group's brands to enter into and expand developing vacation markets.
In pursuit of this strategy, the companies of the Combined Group will seek to:
.. Build on brand strengths
The Combined Group will have some of the most widely recognized cruise
brands in North America, Europe, South America (primarily Brazil and
Argentina) and Australia and will be a leading provider of cruise vacations
to all of the key cruise destinations outside the Far East. We expect the
Combined Group to continue to grow its brands and broaden and develop the
range of its destinations, itineraries, tours and vacation alternatives.
.. Increase global presence
The Combined Group will be one of the leading cruise vacation companies in
the UK, Germany and southern Europe, which are three of the largest vacation
markets outside of North America. We believe that the brand offering and
diversified fleet of the Combined Group will enable it to accelerate the
entry of cruising into existing and new geographical vacation markets.
.. Maximize growth through strategic deployment of its brands and fleet
The Combined Group expects to strategically deploy its diversified fleet in
order to increase its global reach and enter new and developing markets.
Such strategic deployment is expected to allow the Combined Group to appeal
to the largest target audience with brands, products and itineraries with
the widest appeal in a particular geographic region.
.. Realize cost savings
Carnival and P&O Princess expect that the combination will generate cost
savings, which are expected to come from the sharing of best practices of
the management teams across the Combined Group, achieving operating
efficiencies in such areas as purchasing and rationalizing support
operations in locations served by both companies.
Conditions to the DLC Transaction (Page 100)
Completion of the DLC transaction is subject to certain conditions being
satisfied or waived on or before September 30, 2003. The most important of
these include:
.. approval of the shareholders of each of Carnival and P&O Princess;
.. the absence of action, or threatened action, by any governmental authority
that restrains, enjoins or otherwise prohibits the completion or
performance of, or materially adversely affects, the DLC transaction and
the other transactions contemplated by the Offer and Implementation
Agreement;
.. effectiveness of the revised governing documents of each of Carnival and
P&O Princess;
.. clearance of the DLC transaction under the European Commission merger
regulation and all other relevant regulatory consents or approvals having
been obtained;
.. the Partial Share Offer becoming unconditional (other than the condition
regarding completion of the Offer and Implementation Agreement); and
.. approval by the NYSE of the listing of either the trust shares of
beneficial interest or the P&O Princess special voting share, subject in
either case only to official notice of issuance.
15
Termination of the Offer and Implementation Agreement (Page 103)
The Offer and Implementation Agreement may be terminated, and the DLC
transaction abandoned, before the DLC transaction is scheduled to be completed
if the P&O Princess board and Carnival board mutually agree to do so. In
addition, the Offer and Implementation Agreement may be terminated, and the DLC
transaction abandoned by action of either the Carnival board or the P&O
Princess board, as applicable, if:
.. the DLC transaction is not completed by September 30, 2003;
.. any governmental authority of competent jurisdiction has issued a final,
non-appealable order permanently restraining, enjoining or otherwise
prohibiting completion of the DLC transaction or materially adversely
affecting the DLC transaction;
.. the shareholders of either party fail to approve the DLC transaction at the
relevant shareholders' meeting called for the purpose of considering and
voting upon the DLC transaction and other transactions necessary to
complete the DLC transaction;
.. the board of directors of the other party, at any time prior to the
relevant shareholders' meeting, withdraws or adversely modifies its
approval or recommendation of the DLC transaction or has resolved to take
such action, or has failed to reconfirm such approval or recommendation at
the request of the other party;
.. the board of directors of the other party has recommended a superior
acquisition proposal to its shareholders; or
.. the other party materially breaches any representation, warranty, covenant
or agreement contained in the Offer and Implementation Agreement that
causes the failure of certain conditions to closing and such breach cannot
be or has not been cured prior to termination.
Neither party may terminate the Offer and Implementation Agreement if that
party has breached in any material respect its obligations under the Offer and
Implementation Agreement and such breach contributed to the failure of the DLC
transaction to be completed.
Termination Fee (Page 104)
In certain circumstances, if the Offer and Implementation Agreement is
terminated, a termination fee of $49.4 million, representing 1% of P&O
Princess' market capitalization at the close of business on January 7, 2003,
will be required to be paid by Carnival or P&O Princess.
No Consideration Payable
There is no consideration payable to us or you in connection with the DLC
transaction. The consideration exchanged between us and P&O Princess will be
the execution and delivery by each company of the agreements required to
implement the DLC structure, including certain cross-guarantees regarding
future debt of either company.
Required Vote
Approval of the Offer and Implementation Agreement (Proposal 1) and related
transactions required to effect the DLC transaction, including the proposed
amendments to our articles of incorporation and by-laws (Proposal 2), requires
the affirmative vote of a majority of all outstanding Carnival shares entitled
to vote at the special meeting.
16
Changes in Rights of Carnival Shareholders (Page 82)
In order to harmonize the governing documents of Carnival and P&O Princess and
give effect to the DLC structure, it is necessary to amend certain provisions
of our existing articles of incorporation and by-laws. You are being asked to
approve these amendments at the special meeting. The most important of these
changes include:
.. equalizing the economic and voting rights of shareholders of both companies
based on the equalization ratio;
.. providing that Carnival and P&O Princess shareholders vote together as a
single body on most matters, except where the interests of the Carnival
shareholders diverge from the interests of the P&O Princess shareholders or
where the matter is procedural or technical;
.. authorizing a special voting share as a means to implement the new voting
arrangements;
.. requiring any resolutions, other than resolutions relating to procedural or
technical matters, to be voted on by the shareholders of both Carnival and
P&O Princess;
.. authorizing the Carnival board to consider the interests of both Carnival
and P&O Princess and their shareholders; and
.. adding additional takeover provisions so that, generally, no person will be
able to obtain control over the Combined Group without making an offer to
the shareholders of both companies on equivalent terms.
Special Voting Entities; Special Voting Shares (Page 47)
As a mechanism to effect the new voting arrangements resulting from the DLC
structure, two new special voting entities will be formed:
.. The Carnival Special Voting Entity (which will hold the special voting
share to be voted at Carnival shareholders meetings, in order to give
effect to the outcome of votes at a parallel P&O shareholders meeting for
purposes of joint electorate actions and class rights actions) is a company
whose shares will be held legally and beneficially owned by ., an
independent trustee company incorporated in England and Wales.
.. The P&O Princess Special Voting Trust (the trustee of which will hold the
special voting share to be voted at the P&O Princess shareholders meetings,
in order to give effect to the outcome of votes at a parallel Carnival
shareholders meeting for purposes of joint electorate actions and class
rights actions) will be a ..
On completion of the DLC transaction, Carnival will issue the Carnival special
voting share to the Carnival Special Voting Entity, and the P&O Princess
special voting share will be transferred to the trustee of the P&O Princess
Special Voting Trust.
Trust Shares of Beneficial Interest (Page 48)
Trust shares of beneficial interest in the P&O Princess Special Voting Trust
will be transferred to Carnival. Immediately following this transfer, Carnival
will distribute the trust shares of beneficial interest in the P&O Princess
Special Voting Trust by way of a dividend to Carnival shareholders of record at
the close of business on . 2003. Separate certificates will not be issued to
represent these trust shares of beneficial interest in the P&O Princess Special
Voting Trust; instead, the trust shares of beneficial interest will be paired
with, and evidenced by, certificates representing Carnival shares pursuant to a
pairing agreement to be entered into between Carnival and the P&O Princess
Special Voting Trust at closing of the DLC transaction.
17
Following completion of the DLC transaction, Carnival shares will trade in
units consisting of one Carnival share and one trust share of beneficial
interest in the P&O Princess Special Voting Trust. The trust shares of
beneficial interest in the P&O Princess Special Voting Trust will entitle
Carnival shareholders to receive any distributions made by the P&O Princess
Special Voting Trust. As the sole purpose of the P&O Princess Special Voting
Trust relates to the holding of the P&O Princess special voting share, it is
not expected to make any distributions.
The P&O Princess special voting share will be voted based upon the outcome of
voting at the relevant parallel meeting of Carnival shareholders, based on the
votes cast by Carnival shareholders voting their Carnival shares.
Accounting Treatment (Page 50)
We expect to account for the DLC transaction as a purchase by Carnival of P&O
Princess. We also expect that under U.S. GAAP the DLC transaction will be
accounted for using the purchase method of accounting in accordance with
Statement of Financial Accounting Standards No. 141 "Business Combinations". In
accordance with the purchase method of accounting, the P&O Princess U.S. GAAP
accounting policies will be conformed to our accounting policies upon
completion of the DLC transaction.
United States Federal Income Tax Consequences (Page 50)
Although there is no U.S. federal income tax authority addressing the tax
consequences of a DLC transaction, we believe that the DLC transaction should
not give rise to taxable income or gain for U.S. Carnival shareholders that are
U.S. holders for U.S. federal income tax purposes. However, the IRS may assert
that U.S. Carnival shareholders received taxable income as a result of the
various voting and equalization provisions necessary to implement the DLC
structure, including the trust shares. We believe that such voting and other
rights, if any, received by shareholders are expected to have only nominal
value and, therefore, the receipt of such rights by U.S. Carnival shareholders
would only result in a nominal amount of income. It is possible, however, that
the IRS may disagree with this conclusion.
Holders of Carnival shares should consult their independent professional
advisers in the light of their particular circumstances as to the U.S. federal
income tax consequences of the DLC transaction, as well as to the effect of any
state, local or applicable foreign tax law.
Regulatory Approvals (Page 51)
The DLC transaction is conditioned upon the receipt of certain regulatory
approvals and consents. We have received clearance from the U.S. Federal Trade
Commission for the DLC transaction and we have submitted a renotification to
the European Commission for clearance of the combination. We expect to receive
a clearance decision from the European Commission during the first quarter of
2003.
No Appraisal Rights (Page 51)
You have no right to an appraisal of the value of your shares in connection
with the DLC transaction.
Mandatory Exchange (Page 105)
In certain limited circumstances following implementation of the DLC structure,
P&O Princess shares, other than those held by us, may be subject to a mandatory
exchange for Carnival shares at the then prevailing equalization ratio. A
mandatory exchange can occur if there is a change in applicable tax
18
laws, rules or regulations that the board of directors of P&O Princess
reasonably determines is reasonably likely to have a material adverse effect on
the Combined Group and the exchange is approved by 66 2/3% of the shareholders
of P&O Princess and Carnival voting on a joint electorate action. A mandatory
exchange can also be triggered if there is a change in the applicable non-tax
laws, rules or regulations, as a result of which the board of directors of P&O
Princess reasonably determines that it is reasonably likely that all or a
substantial portion of the agreements that give effect to the DLC structure are
unlawful, illegal or unenforceable. Were either of these changes to occur, we
would issue additional shares to deliver to P&O Princess shareholders and we
would own 100% of P&O Princess. Your Carnival shares will not be subject to any
mandatory exchange for P&O Princess shares.
Partial Share Offer
In connection with the DLC transaction, we are making a Partial Share Offer to
P&O Princess shareholders to exchange all or part of their P&O Princess shares
for Carnival shares, subject to an aggregate maximum of 20% of P&O Princess'
outstanding shares. The Partial Share Offer is not being made to you. If the
DLC transaction is not completed due to lack of shareholder approval or for any
other reason, the Partial Share Offer will not be completed. The Partial Share
offer is designed to allow those P&O Princess shareholders who would prefer to
hold their interests in the Combined Group through Carnival shares listed on
the NYSE to exchange P&O Princess shares for Carnival shares if the DLC
transaction is completed. To the extent P&O Princess shares are exchanged in
the Partial Share Offer, the aggregate equity interests in the Combined Group
held through Carnival shares immediately after completion of the DLC
transaction will increase from approximately 74% to a maximum of approximately
79%. In no event will the take up of the Partial Share Offer affect the
equalization ratio.
Arison Family and Associates
Micky Arison (our Chairman and Chief Executive Officer, who will also become
the Chairman and Chief Executive Officer of P&O Princess following completion
of the DLC transaction), other members of the Arison family and trusts for
their benefit have entered into undertakings under which they will be required
to cause shares beneficially owned by them representing approximately 47% of
the voting rights in Carnival to vote in favor of the proposals at the special
meeting. These undertakings are irrevocable except in circumstances where the
DLC proposal is withdrawn or lapses.
Following completion of the DLC transaction, Micky Arison, other members of the
Arison family and trusts for their benefit will beneficially own shares
representing approximately 35% of the combined voting power of the outstanding
shares of the Combined Group. There are certain restrictions on their ability
to increase their aggregate holdings beyond 40% of the voting power of the
Combined Group, unless they acquire additional shares or voting power by making
comparable offers to acquire all the equity of the Combined Group.
We are, and following implementation of the DLC structure the Combined Group
will be, capable of carrying on its operations independently of this group of
controlling shareholders. Carnival has a policy of dealing with affiliated
entities (which would include the controlling shareholders and entities
controlled by them) on an arm's-length basis and it may not engage in business
transactions with any affiliate on terms and conditions less favourable to
Carnival than the terms and conditions available at the time for comparable
transactions with unaffiliated persons. On completion of the DLC transaction,
P&O Princess will adopt a similar policy on transactions with this group of
controlling shareholders so that, following implementation of the DLC
structure, any business transactions between the Combined Group and this group
of controlling shareholders will be at arm's length and on normal commercial
terms.
19
Cautionary Note Concerning Factors That May Affect Future Results (Page 37)
Certain statements contained in this proxy statement/prospectus are
"forward-looking statements" that involve risks, uncertainties and assumptions
with respect to us and P&O Princess and therefore, the Combined Group,
including certain statements concerning the transactions described in this
proxy statement/prospectus, future results, plans and goals and other events
which have not yet occurred. You can find many (but not all) of these
statements by looking for words like "will," "may," "believes," "expects,"
"anticipates," "forecasts," "future," intends," "plans" and "estimates" and for
similar expressions.
Because forward-looking statements involve risks and uncertainties, there are
many factors that could cause the transactions described in this proxy
statement/prospectus not to occur and/or each of our, P&O Princess' and the
Combined Group's actual results, performance or achievements to differ
materially from those expressed or implied in this proxy statement/prospectus.
These factors include, but are not limited to, regulatory and shareholder
approvals of the DLC transaction, achievement of expected benefits from the DLC
transaction, risks associated with the combination of Carnival's and P&O
Princess' businesses by means of a DLC structure and liquidity and index
inclusion as a result of the implementation of the DLC structure, including a
possible mandatory exchange.
20
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA OF CARNIVAL
The selected consolidated financial data presented below for fiscal 1997
through 2001 and as of the end of each such fiscal year are derived from
Carnival's audited consolidated financial statements and should be read in
conjunction with the audited consolidated financial statements and the related
notes, including those incorporated in this proxy statement/prospectus by
reference to Carnival's Annual Report on Form 10-K for the year ended November
30, 2001. The unaudited selected consolidated financial data of Carnival set
forth below for the nine months ended August 31, 2002 and August 31, 2001 and
as of the end of each such period are derived from Carnival's unaudited
consolidated financial statements for the nine months ended August 31, 2002 and
August 31, 2001, and should be read in conjunction with those consolidated
financial statements and the related notes, including those which are
incorporated in this proxy statement/prospectus by reference to Carnival's
Quarterly Report on Form 10-Q for the quarter ended August 31, 2002. In the
opinion of Carnival's management, the unaudited financial data of Carnival for
August 31, 2002 and 2001 includes all normal and recurring adjustments that are
considered necessary for the fair presentation of the results for the interim
periods. All the adjustments are of a normal recurring nature, except for our
impairment charge adjustments as noted below. Results for the nine months ended
August 31, 2002 do not necessarily indicate what the results for the full year
will be. Carnival's consolidated financial statements have been prepared in
accordance with U.S. GAAP, using Carnival's accounting policies. See "Where You
Can Find More Information About Carnival ".
Nine Months Ended
August 31, Years Ended November 30,
- ------------------------ ---------------------------------------------------------
2002/(a)/ 2001/(a)/ 2001/(a)/ 2000 1999 1998 1997
- --------- --------- --------- --------- --------- --------- ---------
(unaudited)
(U.S. dollars in thousands, except per share and operating data)
Statement of operations data:
Revenues 3,332,588 3,576,649 4,535,751 3,778,542 3,497,470 3,009,306 2,447,468
Operating income before (loss)
income from affiliated operations 854,647 816,218 935,755 945,130 943,941 819,792 660,979
Operating income 854,647 772,194 891,731 982,958 1,019,699 896,524 714,070
Net income/(b)/ 824,605/(c)/ 809,888/(c)/ 926,200/(c)/ 965,458 1,027,240 835,885 666,050
Earnings per share/(b)(d)/:
Basic 1.41 1.39 1.58 1.61 1.68 1.40 1.12
Diluted 1.40 1.38 1.58 1.60 1.66 1.40 1.12
Dividends declared per share/(d)/ .315 .315 .420 .420 .375 .315 .240
Cash from operations 1,168,427 1,105,549 1,238,936 1,279,535 1,329,724 1,091,840 877,580
Capital expenditures 1,022,464 713,328 826,568 1,003,348 872,984 1,150,413 497,657
Other operating data:
Available lower berth days 15,842 15,500 20,685 15,888 14,336 12,237 10,992
Passengers carried 2,640 2,596 3,385 2,669 2,366 2,045 1,945
Occupancy percentage/(e)/ 106.3% 107.0% 104.7% 105.4% 104.3% 106.3% 108.3%
As of August 31, As of November 30,
-------------------------- ----------------------------------------------------------
2002/(a)/ 2001/(a)/ 2001/(a)/ 2000/(a)/ 1999 1998 1997
- ---------- ---------- ---------- --------- --------- --------- ---------
(unaudited)
(U.S. dollars in thousands)
Balance sheet and other
data:
Total assets 12,196,722/(f)/ 11,275,806/(f)/ 11,563,552/(f)/ 9,831,320 8,286,355 7,179,323 5,426,775
Long-term debt, excluding
current portion 3,044,488 2,478,482 2,954,854 2,099,077 867,515 1,563,014 1,015,294
Total shareholders' equity 7,291,703 6,546,416 6,590,777 5,870,617 5,931,247 4,285,476 3,605,098
Debt to capital/(g)/ 29.6% 28.9% 31.1% 28.6% 15.3% 27.6% 23.0%
--------
(a)From June 1997 through September 28, 2000, Carnival owned 50% of Costa
Cruises. On September 29, 2000, Carnival completed the acquisition of the
remaining 50% interest in Costa. Carnival accounted for this transaction
using the purchase accounting method. Prior to the fiscal 2000 acquisition,
Carnival accounted for its 50% interest in Costa using the equity
21
method. Commencing in fiscal 2001, Costa's results of operations have been
consolidated in the same manner as Carnival's other wholly owned
subsidiaries. Carnival's November 30, 2000 and subsequent consolidated
balance sheets include Costa's balance sheet. All statistical information
prior to 2001 does not include Costa. See Notes 4 and 5 in Carnival's 2001
consolidated financial statements, which are incorporated by reference in
this proxy statement/prospectus.
(b)Effective December 1, 2001, Carnival adopted Statement of Financial
Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets", which requires that companies stop amortizing goodwill and requires
an annual, or when events or circumstances dictate a more frequent,
impairment review of goodwill. Accordingly, as of December 1, 2001, Carnival
no longer amortizes its goodwill. If goodwill had not been recorded for
periods prior to December 1, 2001, Carnival's adjusted net income and
diluted earnings per share would have been as follows:
Nine Months
Ended August 31, Years Ended November 30,
--------------- -----------------------------------------
2002 2001 2001 2000 1999 1998 1997
------- ------- ------- ------- --------- ------- -------
(unaudited)
(U.S. dollars in thousands, except per share data)
Net income 824,605 809,888 926,200 965,458 1,027,240 835,885 666,050
Goodwill amortization -- 15,493 25,480 23,046 20,666 17,074 12,897
------- ------- ------- ------- --------- ------- -------
Adjusted net income 824,605 825,381 951,680 988,504 1,047,906 852,959 678,947
------- ------- ------- ------- --------- ------- -------
Adjusted diluted earnings per share 1.40 1.41 1.62 1.64 1.70 1.43 1.14
------- ------- ------- ------- --------- ------- -------
(c)Carnival net income for fiscal 2001 and for the nine months ended August 31,
2002 and August 31, 2001 includes impairment charges of $140 million, $20
million and $101 million, respectively, and the nine months ended August 31,
2001 and fiscal 2001 includes a non-operating net gain of $101 million from
the sale of Carnival's investment in Airtours. In addition, Carnival's
fiscal 2002 third quarter interim net income included a $34 million income
tax benefit as a result of a new Italian investment incentive, which allows
Costa to receive an income tax benefit based on its fiscal 2002 investment
in new ships. See Notes 4 and 5 in Carnival's 2001 consolidated financial
statements, which are incorporated by reference in this proxy
statement/prospectus.
(d)All 1998 and 1997 per share amounts have been adjusted to reflect a
two-for-one stock split effective June 12, 1998.
(e)In accordance with cruise industry practice, occupancy percentage is
calculated based upon two passengers per cabin even though some cabins can
accommodate three or more passengers. The percentages in excess of 100%
indicate that more than two passengers occupied some cabins.
(f)Effective December 1, 2000, we adopted SFAS No. 133, which requires that all
derivative instruments be recorded at fair value on Carnival's consolidated
balance sheet. Total assets at November 30, 2001, August 31, 2002 and August
31, 2001 include $567 million, $266 million and $427 million, respectively,
which represents the fair value of hedged firm commitments. See Note 2 in
Carnival's 2001 consolidated financial statements, which are incorporated by
reference in this proxy statement/prospectus.
(g)Represents the ratio of total debt to the sum of total debt and
shareholders' equity.
22
SELECTED HISTORICAL FINANCIAL DATA OF P&O PRINCESS
The selected financial data of P&O Princess presented below for fiscal 1997
through 2001 and as of the end of each such fiscal year are derived from P&O
Princess' audited consolidated financial statements and should be read in
conjunction with the audited consolidated financial statements and notes to
those accounts incorporated by reference in this proxy statement/prospectus.
The unaudited financial data of P&O Princess set forth below for the nine-month
periods ended September 30, 2002 and September 30, 2001 and as of the end of
each such period are derived from P&O Princess' unaudited consolidated
financial statements for the nine months ended September 30, 2002 and September
30, 2001, and should be read in conjunction with those consolidated financial
statements and the notes to those accounts, which are incorporated by reference
in this proxy statement/prospectus. Results for the nine months ended September
30, 2002 do not necessarily indicate what the results for the full year will be.
P&O Princess' consolidated financial statements are presented on the basis that
P&O Princess' cruise business and subsidiaries were part of its business and
subsidiaries for all years presented or, if not owned by P&O Princess at all
times during such period, from the date such businesses and subsidiaries were
acquired by P&O Princess and/or until the date on which P&O Princess disposed
of them, as applicable.
P&O Princess' consolidated financial statements have been prepared using P&O
Princess' accounting policies in accordance with UK GAAP, which differ in some
respects from U.S. GAAP. The notes to the P&O Princess audited consolidated
financial statements, which are included in its Annual Report on Form 20-F for
the year ended December 31, 2001 and are incorporated by reference in this
proxy statement/prospectus, provide a description of the principal differences
between U.S. GAAP and UK GAAP as they relate to P&O Princess and a
reconciliation to U.S. GAAP of certain financial statement items.
Nine Months Ended
September 30, Years ended December 31, (restated)/(2)/
----------------------- ------------------------------------------------
2001
2002 (restated)/(2)/ 2001 2000 1999/(1)/ 1998/(1)/ 1997/(1)/
-------- -------------- -------- -------- -------- -------- --------
(unaudited)
(U.S. dollars in millions, except per share and per ADS information)
Selected profit and loss
information:
UK GAAP
Turnover 1,956.2 1,965.7 2,451.0 2,423.9 2,111.6 1,852.4 1,654.1
Net operating costs (1,591.9) (1,635.6) (2,089.7) (2,050.8) (1,723.3) (1,509.2) (1,369.2)
-------- -------- -------- -------- -------- -------- --------
Group operating profit 364.3 330.1 361.3 373.1 388.3 343.2 284.9
Share of operating results of joint
ventures 0.2 0.3 0.1 0.5 -- 0.3 --
-------- -------- -------- -------- -------- -------- --------
Total operating profit 364.5 330.4 361.4 373.6 388.3 343.5 284.9
Non-operating profit/(loss) 1.2 (1.9) (1.9) (6.5) (4.8) -- (21.1)
-------- -------- -------- -------- -------- -------- --------
Profit on ordinary activities before
interest 365.7 328.5 359.5 367.1 383.5 343.5 263.8
Net interest and similar items (55.5) (44.3) (58.0) (49.1) (25.7) (31.4) (20.9)
-------- -------- -------- -------- -------- -------- --------
Profit on ordinary activities before
taxation 310.2 284.2 301.5 318.0 357.8 312.1 242.9
Taxation/(2)/ (15.5) 82.6 81.7 (57.2) (73.6) (88.8) (40.4)
-------- -------- -------- -------- -------- -------- --------
Profit on ordinary activities after
taxation 294.7 366.8 383.2 260.8 284.2 223.2 202.5
Equity minority interests (0.1) -- (0.1) (2.6) (0.5) -- --
-------- -------- -------- -------- -------- -------- --------
Profit for the financial year
attributable to shareholders 294.6 366.8 383.1 258.2 283.7 223.2 202.5
-------- -------- -------- -------- -------- -------- --------
23
Nine Months Ended
September 30, Years ended December 31,
----------------- ------------------------------------------------
2002 2001 2001 2000 1999/(1)/ 1998/(1)/ 1997/(1)/
----- ----- ----- ----- -------- -------- --------
(unaudited)
(U.S. dollars in millions, except per share and per ADS information)
Basic earnings per ordinary share
(cents) 42.6 53.0 55.4 38.1 41.7 32.8 29.7
Diluted earnings per share (cents) 42.3 53.0 55.2 38.1 41.7 32.8 29.7
Basic earnings per ADS (cents) 170.0 212.0 221.6 152.4 166.8 131.2 111.8
Diluted earnings per ADS (cents) 169.0 212.0 220.8 152.4 166.8 131.2 111.8
Fixed charge cover/(3)/ 4.7 4.9 3.8 4.8 8.7 6.6 7.2
Dividend per share (cents) 9.0 9.0 12.0 12.0 -- -- --
Dividend per ADS (cents) 0.36 0.36 48.0 48.0 -- -- --
U.S. GAAP
Net income/(4)(5)/ 283.7 458.5 425.2 253.7 267.7 222.4 186.2
Basic earnings per share (cents) 41.0 66.2 61.5 37.1 39.3 32.6 27.3
Diluted earnings per share (cents) 40.7 66.2 61.2 37.1 39.3 32.6 27.3
Basic earnings per ADS (cents) 164.0 264.8 246.0 148.4 157.1 130.5 109.3
Diluted earnings per ADS (cents) 162.8 264.8 244.8 148.4 157.1 130.5 109.3
--------
(1)Prior to the de-merger of P&O Princess from The Peninsular and Oriental
Steam Navigation Company in 2000, no combined financial statements had been
prepared for the companies and businesses comprising P&O Princess. The
financial information for fiscal years 1997, 1998 and 1999 has been
extracted from KPMG Audit Plc's accountants' report on P&O Princess
contained in the listing particulars dated September 26, 2000 which were
prepared for the de-merger.
(2)At January 1, 2002, P&O Princess adopted FRS 19. The 2001 balance sheet was
restated to reflect full provision for deferred tax, an increase in deferred
tax liabilities of $108.1 million. The tax credit for the comparative data
nine months to September 30, 2001 has been increased by $96.8 million to
reflect the elimination of the majority of future potential tax liabilities,
upon P&O Princess' election to enter the UK tonnage tax regime. The profit
and loss account and balance sheet information for each of the four years
ended December 31, 2000 have also been restated for the adoption of
Financial Reporting Standard 19: Deferred Tax.
(3)Defined as profit before fixed charges (excluding capitalized interest) and
taxation divided by fixed charges. Fixed charges consist of the net interest
expense in the profit and loss account, interest capitalized in respect of
ships and other fixed assets and an estimate of the interest implicit in
operating lease rentals.
(4)At January 1, 2001, P&O Princess adopted SFAS No. 133. The cumulative effect
of the change in this accounting policy at that date was a charge of $9.0
million, which is included in net income for fiscal 2001. The basic and
diluted earnings per share for fiscal 2001 is after the cumulative effect of
the change in this accounting principle.
(5)Under U.S. GAAP, the nine months ended September 30, 2002 and the year ended
December 31, 2001 include $0.24 per share related to the reversal of
existing deferred tax liabilities which are no longer needed upon P&O
Princess' entry into the UK tonnage tax regime.
At September 30, At December 31,
------------------ ------------------------------------------------
2002 2001 2001 2000 1999 1998 1997
-------- -------- -------- -------- -------- -------- --------
(unaudited)
(U.S. dollars in millions)
Selected balance sheet information:
UK GAAP
Fixed assets 5,214.3 4,399.2 4,418.3 3,959.5 3,258.3 2,949.7 2,150.5
Current assets 581.2 453.5 451.4 649.3 406.7 382.4 330.9
-------- -------- -------- -------- -------- -------- --------
Total assets 5,795.5 4,852.7 4,869.7 4,608.8 3,665.0 3,332.1 2,481.4
-------- -------- -------- -------- -------- -------- --------
Other creditors and provisions (898.9) (755.8) (847.0) (1,190.4) (1,343.8) (1,494.4) (960.7)
Creditors: amounts falling due after one year (2,015.9) (1,475.1) (1,393.1) (1,062.7) (216.7) (139.7) (171.9)
-------- -------- -------- -------- -------- -------- --------
Total liabilities (2,914.8) (2,230.9) (2,240.1) (2,253.1) (1,560.5) (1,634.1) (1,132.6)
Equity minority interests (0.3) (0.3) (0.2) (0.2) (7.7) -- --
-------- -------- -------- -------- -------- -------- --------
Consolidated shareholders' funds 2,880.4 2,621.5 2,629.4 2,355.5 2,096.8 1,698.0 1,348.8
-------- -------- -------- -------- -------- -------- --------
U.S. GAAP
Total assets 5,863.4 4,974.2 4,996.3 4,460.7 3,571.3 3,252.1 2,401.9
Long-term obligations (2,068.4) (1,670.7) (1,641.8) (1,275.5) (416.1) (296.8) (278.3)
Consolidated shareholders' funds 2,789.0 2,588.7 2,551.8 2,296.3 2,006.8 1,622.0 1,273.3
24
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA
The following selected unaudited pro forma financial data give pro forma effect
to the DLC transaction, after giving effect to the pro forma adjustments
described in the notes accompanying the unaudited pro forma financial
information of the Combined Group included in this proxy statement/prospectus.
We have prepared the unaudited pro forma financial information from, and you
should read the data in conjunction with, the historical consolidated financial
statements, including the related notes, of Carnival and P&O Princess that we
have incorporated by reference in this proxy statement/prospectus.
We have prepared the following unaudited pro forma financial data in accordance
with U.S. GAAP and in accordance with Carnival's accounting policies under U.S.
GAAP. U.S. GAAP differs in certain respects from UK GAAP, and Carnival's
accounting policies under U.S. GAAP differ in certain respects from P&O
Princess' accounting policies under UK GAAP and U.S. GAAP. The notes to the P&O
Princess audited consolidated financial statements, which are included in its
Annual Report on Form 20-F for the year ended December 31, 2001 and
incorporated by reference in this proxy statement/prospectus, describe the
principal differences between U.S. GAAP and UK GAAP as they relate to P&O
Princess.
The unaudited pro forma statements of operations for the nine months ended
August 31, 2002 and for the year ended November 30, 2001 have been prepared as
if the DLC transaction had occurred on December 1, 2000. The unaudited pro
forma balance sheet data as of August 31, 2002 have been prepared as if the DLC
transaction had occurred on that date. See "Unaudited Pro Forma Financial
Information."
Selected Unaudited Pro Forma Financial Data For The Combined Group in U.S. GAAP
(U.S. Dollars In Millions, Except Per Share Data)
Pro Forma Combined Statement of Operations Data:
For the Nine
Months For the Year
Ended Ended
August 31, November 30,
2002 2001
------------ ------------
Revenues 5,285.8 6,980.5
Costs and expenses
Operating (2,928.6) (4,045.3)
Selling and administrative (690.1) (984.6)
Depreciation and amortization (406.2) (516.3)
Impairment charge (20.0) (140.4)
-------- --------
(4,044.9) (5,686.6)
-------- --------
Operating income before loss from affiliated operations 1,240.9 1,293.9
Loss from affiliated operations, net -- (44.0)
-------- --------
Operating income 1,240.9 1,249.9
Nonoperating (expense) income
Net interest expense (121.6) (140.0)
Other (expense) income (4.0) 106.7
Income tax benefit 21.0 166.3
-------- --------
(104.6) 133.0
-------- --------
Income before cumulative effect of change in accounting principle 1,136.3 1,382.9
Cumulative effect of change in accounting principle -- (9.0)
-------- --------
Net income 1,136.3 1,373.9
======== ========
Earnings per share
Basic earnings per share before cumulative effect of change in accounting
principle 1.43 1.74
Diluted earnings per share before cumulative effect of change in
accounting principle 1.42 1.74
25
Pro Forma Combined Balance Sheet Data:
August 31,
2002
----------
Assets
Current assets
Cash and cash equivalents 1,511.4
Short-term investments 47.0
Accounts receivable, net 258.8
Inventories 171.2
Prepaid expenses and other 206.9
Fair value of hedged firm commitments 97.0
--------
Total current assets 2,292.3
Property and Equipment, Net 14,317.5
Goodwill and Intangible Assets, Net 4,356.2
Other Assets 298.7
Fair Value of Hedged Firm Commitments 180.3
--------
21,445.0
========
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt 101.3
Accounts payable 442.7
Accrued liabilities 659.3
Customer deposits 1,164.6
Dividends payable 61.6
Fair value of derivative contracts 208.4
--------
Total current liabilities 2,637.9
Long-Term Debt 5,121.9
Deferred Income and Other Long-Term Liabilities 239.2
Fair Value of Derivative Contracts 184.2
Shareholders' Equity 13,261.8
--------
21,445.0
========
26
COMPARATIVE PER SHARE DATA
The following table sets forth selected historical and pro forma per share data
for Carnival and historical and pro forma equivalent per share data for P&O
Princess prepared in accordance with U.S. GAAP. The unaudited pro forma net
income and book value data give effect to the transaction as if it was
completed on August 31, 2002 for balance sheet purposes and December 1, 2000
for statement of operations purposes and are based on the unaudited pro forma
combined financial information of Carnival and P&O Princess prepared in
accordance with U.S. GAAP included in this proxy statement/prospectus. The
unaudited pro forma per share data should be read in conjunction with the
historical audited and unaudited consolidated financial statements and related
notes of Carnival included in "Selected Historical Financial and Operating Data
of Carnival" and the historical audited and unaudited consolidated financial
statements and related notes of P&O Princess included in "Selected Historical
Financial Data of P&O Princess". The P&O Princess pro forma equivalent per
share data were calculated by multiplying the Carnival pro forma per share data
by an exchange ratio of 0.3004.
The unaudited pro forma combined per share data may not be indicative of the
operating results or financial position that would have occurred if the DLC
transaction had been completed at the beginning of the period indicated, and
may not be indicative of future operating results or financial position.
Statement of Operations Data:
For the Nine
For the Year Months
Ended Ended
November 30, August 31,
2001 2002
------------ -------------
(U.S. dollars)
CARNIVAL--HISTORICAL
Net income per share:
Basic 1.58 1.41
Diluted 1.58 1.40
Cash dividends per share 0.42 0.315
CARNIVAL--PRO FORMA
Net income per share:
Basic 1.74 1.43
Diluted 1.74 1.42
Cash dividends per share 0.42 0.315
For the Nine
For the Year Months
Ended Ended
December 31, September 30,
2001 2002
------------ -------------
(U.S. dollars)
P&O PRINCESS--HISTORICAL
Net income per share before cumulative effect of change in accounting principle/(1)/:
Basic 0.628 0.410
Diluted 0.625 0.407
Cash dividends per share 0.12 0.09
For the Nine
For the Year Months
Ended Ended
November 30, August 31,
2001 2002
------------ ------------
(U.S. dollars)
P&O PRINCESS--PRO FORMA EQUIVALENT
Net income per share:
Basic 0.52 0.43
Diluted 0.52 0.43
Cash dividends per share 0.126 0.095
27
Balance Sheet Data:
At August 31, 2002
---------------------------
Historical Pro Forma
------------- -------------
(U.S. dollars)
CARNIVAL
Book value per share 12.43 16.63
Pro Forma
Historical at Equivalent at
September 30, August 31,
2002 2002
------------- -------------
(U.S. dollars)
P&O PRINCESS
Book value per share 4.03 5.00
--------
/(1)/The year ended December 31, 2001 includes $0.24 per share related to the
reversal of existing deferred tax liabilities, which are no longer needed
upon P&O Princess' entry into the UK tonnage tax regime.
28
COMPARATIVE STOCK PRICES
The following table sets out (i) the closing middle-market quotations for P&O
Princess shares as derived from the London Stock Exchange Daily Official List,
(ii) the closing price per P&O Princess ADSs as reported on the NYSE Composite
Transactions Tape, (iii) the closing stock price of Carnival shares as reported
on the NYSE Composite Transactions Tape, (iv) the "equivalent per ordinary
share price" (as defined below) of P&O Princess shares and (v) the "equivalent
per ADS price" (as defined below) of P&O Princess ADSs on:
.. November 19, 2001 (the last business day prior to the date of the
announcement that P&O Princess and Royal Caribbean announced that they had
entered into an agreement to implement a dual listed company structure);
.. October 23, 2002 (the last business day prior to the public announcement of
pre-conditional proposal for the DLC transaction and the Partial Share
Offer); and
.. . 2003 (the latest practicable date prior to the mailing of this document).
The "equivalent per ordinary share price" of the P&O Princess shares and the
"equivalent per ADS price" of P&O Princess ADSs represents the value that would
have been received by a P&O Princess shareholder accepting the Partial Share
Offer for each P&O Princess share or P&O Princess ADS at these prices of
Carnival shares, calculated by multiplying the applicable middle-market
quotation for Carnival shares by 0.3004 and 1.2016, respectively, which is the
fraction of a Carnival share being offered in exchange for each of the issued
P&O Princess shares and P&O Princess ADSs, respectively, in the Partial Share
Offer.
P&O
P&O Princess
P&O P&O Carnival Princess equivalent
Princess Princess common equivalent per ADS
ordinary ADSs shares per ordinary price
shares (in U.S. (in U.S. share price (in U.S.
(in pence) dollars) dollars) (in pence) dollars)
---------- -------- -------- ------------ ----------
November 19, 2001 317.0 18.10 26.11 554.5 31.37
October 23, 2002 455.0 29.35 26.00 504.3 31.24
. 2003 . . . . .
29
RISK FACTORS
In addition to the other information contained in or incorporated by reference
into this proxy/prospectus (including the risk factors contained in Carnival's
Annual Report on Form 10-K for the year ended November 30, 2001 and P&O
Princess' Annual Report on Form 20-F for the year ended December 31, 2001), you
should consider the following risk factors before deciding how to vote on the
DLC transaction.
Risks relating to the DLC transaction
Benefits from the DLC structure may not be achieved to the extent or within the
time period currently expected, which could eliminate, reduce and/or delay the
improvements in cost savings and operational efficiencies expected to be
generated by the DLC structure.
Following completion of the DLC transaction, we and P&O Princess will be
managed as if we were a single economic enterprise. We expect the combination
of Carnival and P&O Princess under the DLC structure to enable us to achieve
cost savings through synergies as well as enhanced operational efficiencies.
However, we may encounter substantial difficulties during this process that
could eliminate, reduce and/or delay the realization of the cost savings and
synergies that we currently expect. Among other things, these difficulties
could include:
.. loss of key employees;
.. inconsistent and/or incompatible business practices, operating procedures,
information systems, financial controls and procedures, cultures and
compensation structures between us and P&O Princess;
.. unexpected integration issues and higher than expected integration costs; and
.. the diversion of management's attention from day-to-day business as a result
of the need to deal with integration issues.
As a result of these difficulties, the actual cost savings and synergies
generated by the DLC structure may be less, and may take longer to realize,
than we currently expect.
The structure of the DLC transaction involves risks not associated with the
more common ways of combining the operations of two companies and these risks
may have an adverse effect on the economic performance of the companies and/or
their respective share prices.
The DLC structure is a relatively uncommon way of combining the management and
operations of two companies and it involves different issues and risks than
those associated with the other more common ways of effecting such a
combination, such as a merger or exchange offer to create a wholly owned
subsidiary. In the DLC transaction, the combination will be effected primarily
by means of contracts between us and P&O Princess and not by operation of a
statute or court order. The legal effect of these contractual rights may be
different than the legal effect of a merger or amalgamation under statute or
court order and there may be difficulties in enforcing these contractual
rights. In addition, the contracts will be enforceable only by the companies
and not directly by their shareholders. The Combined Group will maintain two
separate public companies and comply with both Panamanian corporate law and
English company and securities laws and different regulatory and stock exchange
requirements in the UK and the U.S. This is likely to require more
administrative time and cost than is currently the case for each company, which
may have an adverse effect on the Combined Group's operating efficiency.
30
The shares of Carnival and P&O Princess may not trade in line with the
equalization ratio.
The economic interests of the shares of Carnival and P&O Princess will be
contractually aligned in accordance with the equalization ratio. However,
because the shares of the two companies will remain outstanding, will not be
exchangeable for each other at the option of the shareholder and will primarily
trade in separate markets with different characteristics and in different
currencies, the relative market prices of the shares of Carnival and P&O
Princess may not exactly reflect the equalization ratio. P&O Princess shares
could trade at a discount to the Carnival shares because P&O Princess shares
will represent between 21% and 26% of the equity of the Combined Group.
Changes under the Internal Revenue Code, applicable U.S. income tax treaties,
and the uncertainty of the DLC structure under the Internal Revenue Code may
adversely affect the U.S. federal income taxation of the U.S. source shipping
income of the Combined Group.
We and P&O Princess believe that substantially all of the U.S. source shipping
income of each of Carnival and P&O Princess qualifies for exemption from U.S.
federal income tax, either under:
. Section 883 of the Internal Revenue Code;
. as appropriate in the case of P&O Princess and its UK resident
subsidiaries, under the U.S.-UK Income Tax Treaty; or
. other applicable U.S. income tax treaties,
and should continue to so qualify after completion of the DLC transaction.
There is, however, no existing U.S. federal income tax authority that directly
addresses the tax consequences of implementation of a dual listed company
structure such as the DLC structure for purposes of Section 883 or any other
provision of the Internal Revenue Code or any income tax treaty and,
consequently, the matters discussed above are not free from doubt. See "The
Combined Group--Taxation of the Combined Group--U.S. Taxation."
To date no final U.S. Treasury regulations or other definitive interpretations
of the relevant portions of Section 883 have been promulgated, although
regulations have been proposed. Any such final regulations or official
interpretations could differ materially from our interpretation of this
Internal Revenue Code provision and, even in the absence of differing
regulations or official interpretations, the Internal Revenue Service might
successfully challenge either or both Carnival's and P&O Princess' current
interpretation of Section 883. In addition, the provisions of Section 883 are
subject to change at any time by legislation. Moreover, changes could occur in
the future with respect to the trading volume or frequency of Carnival shares
and/or P&O Princess shares on their respective exchanges or with respect to the
identity, residence, or holdings of Carnival's and/or P&O Princess' direct or
indirect shareholders that could affect the eligibility of Carnival and its
subsidiaries and/or certain members of the P&O Princess Group otherwise
eligible for the benefits of Section 883 to qualify for the benefits of Section
883 exemption. Accordingly, it is possible that Carnival and its subsidiaries
and/or certain members of the P&O Princess Group whose tax exemption is based
on Section 883 may lose their exemption from U.S. federal income tax on
U.S.-source shipping income. If any such corporation were not entitled to the
benefits of Section 883, it would be subject to U.S. federal income taxation on
a portion of its income, which would reduce the net income of such corporation.
As used in this proxy statement/prospectus, "P&O Princess Group" means P&O
Princess, its subsidiaries and its subsidiary undertakings.
As noted above, P&O Princess believes that substantially all of the U.S. source
shipping income of P&O Princess and its UK resident subsidiaries qualifies for
exemption from U.S. federal income tax under the U.S.-UK Income Tax Treaty. The
U.S.-UK Income Tax Treaty has been renegotiated and signed but is pending
ratification by the U.S. P&O Princess believes that substantially all of the
U.S. source shipping income of the companies referred to above should qualify
for exemption from U.S. federal income tax under such treaty if, and as of
when, the pending treaty comes into force. In
31
addition, certain companies of the Combined Group may rely on other U.S. income
tax treaties for similar exemptions from U.S. taxation on U.S. source shipping
income. We and P&O Princess do not believe that the DLC transaction will affect
the ability of these corporations to continue to qualify for such treaty
benefits. There is, however, no authority that directly addresses the effect,
if any, of DLC arrangements or the availability of benefits under the treaties
and, consequently, the matter is not free from doubt.
These treaties may be abrogated by either applicable country, replaced or
modified with new agreements that treat shipping income differently than under
the agreements currently in force. If any of the corporations discussed in the
paragraph above that currently qualify for exemption from U.S. source shipping
income under any applicable U.S. income tax treaty do not qualify for benefits
under the existing treaties or if the existing treaties are abrogated, replaced
or materially modified in a manner adverse to the interests of any such
corporation and, with respect to U.S. federal income tax only, such corporation
does not qualify for Section 883 exemption, such corporation may be subject to
U.S. federal income taxation on a portion of its income, which would reduce the
net income of any such corporation.
A small group of shareholders will collectively own approximately 35% of the
total combined voting power of the outstanding shares of the Combined Group and
may be able to effectively control the outcome of shareholder voting.
A group of shareholders, comprising certain members of the Arison family,
including Micky Arison, and trusts established for their benefit, which
currently beneficially owns approximately 47% of the voting power of Carnival,
will own shares entitled to cast approximately 35% of the total combined voting
power of the outstanding shares of the Combined Group. Depending upon the
nature and extent of the shareholder vote, this group of shareholders may have
the power to effectively control, or at least to influence substantially, the
outcome of shareholder votes and therefore the corporate actions requiring such
votes.
Following completion of the DLC transaction, fewer shares of P&O Princess will
be required to approve resolutions at P&O Princess shareholder meetings than
would otherwise be the case because:
. P&O Princess shares acquired by Carnival in the Partial Share Offer
(potentially up to 20% of its outstanding shares) or otherwise generally
will not have voting rights; and
. votes at P&O Princess shareholder meetings generally will be carried out
based on the percentage of shares voting, rather than based on the
number of shares outstanding.
Provisions in the Carnival and P&O Princess governing documents may prevent or
discourage takeovers and business combinations that shareholders in the
Combined Group might consider in their best interests.
Our articles and by-laws and P&O Princess' articles will contain provisions
that may delay, defer, prevent or render more difficult a takeover attempt that
shareholders in the Combined Group might consider to be in their best
interests. For instance, these provisions may prevent shareholders in the
Combined Group from receiving a premium to the market price of Carnival shares
and/or P&O Princess shares offered by a bidder in a takeover context. These
additional takeover restrictions provide, generally, that no person will be
able to obtain control of the Combined Group without making an offer to the
shareholders of both companies on equivalent terms. Even in the absence of a
takeover attempt, the existence of these provisions may adversely affect the
prevailing market price of Carnival shares or P&O Princess shares if they are
viewed as discouraging takeover attempts in the future.
32
Specifically, our articles of incorporation contain provisions that prevent
third parties, other than the Arison family and trusts for their benefit, from
acquiring beneficial ownership of more than 4.9% of the outstanding Carnival
shares without the consent of our board of directors and provide for the lapse
of rights, and sale, of any shares acquired in excess of that limit. In
addition, our and P&O Princess' governing documents will contain provisions
that would apply some of the anti-takeover protections provided by the UK
Takeover Code to both companies. No third party, other than the Arison family
and trusts for their benefit, may acquire more than 30% of the voting power of
one company without making an equivalent offer for the other company. Our
articles and by-laws will provide that Carnival shareholders cannot act by
written consent. The combined effect of these provisions may preclude third
parties from seeking to acquire a controlling interest in either company in
transactions that shareholders might consider to be in their best interests and
may prevent them from receiving a premium above market price for their shares.
These provisions may only be amended by both sets of shareholders, voting
separately as a class, in a class rights action.
Risks relating to the Combined Group's businesses
The Combined Group may lose business to competitors throughout the vacation
market.
The Combined Group will operate in the vacation market, and cruising is one of
many alternatives for people choosing a vacation. The Combined Group will
therefore risk losing business not only to other cruise lines, but also to
other vacation operators that provide other leisure options, including hotels,
resorts and package holidays and tours.
The Combined Group will face significant competition from other cruise lines,
both on the basis of cruise pricing and also in terms of the nature of ships
and services it will offer to cruise passengers. The Combined Group's principal
competitors within the cruise vacation industry will include:
.. Royal Caribbean, which owns Royal Caribbean International and Celebrity
Cruises;
.. Norwegian Cruise Line and Orient Line;
.. Disney Cruise Line;
.. MyTravel's Sun Cruises, Thomson, Saga and Fred Olsen in the UK;
.. Festival Cruises, Hapag-Lloyd, Peter Deilmann and Phoenix Reisen in
Germany; and
.. Festival Crusies, Mediterranean Shipping Cruises, Royal Olympic Cruise Line
and Louis Cruise Line in southern Europe;
.. Crystal Cruises;
.. Radisson Seven Seas Cruise Line; and
.. Silversea Cruises.
The Combined Group will also compete with land-based vacation alternatives
throughout the world, including, among others, resorts and hotels located in
Las Vegas, Nevada, Orlando, Florida, various Caribbean, Mexican, Bahamian and
Hawaiian Island destination resorts and numerous vacation destinations
throughout Europe and the rest of the world.
In the event that the Combined Group does not compete effectively with other
vacation alternatives and cruise companies, its results of operations and
financial condition could be adversely affected.
33
Overcapacity within the cruise and competing land-based vacation industry could
have a negative impact on net revenue yields, increase operating costs, result
in ship asset impairments and could adversely affect profitability.
Cruising capacity has grown in recent years and we and P&O Princess expect it
to continue to increase over the next three and a half years as all of the
major cruise vacation companies are expected to introduce new ships. In order
to utilize new capacity, the cruise vacation industry will need to increase its
share of the overall vacation market. The overall vacation market is also
facing increases in land-based vacation capacity, which also will impact the
Combined Group. Failure of the cruise vacation industry to increase its share
of the overall vacation market could have a negative impact on the Combined
Group's net revenue yields. Should net revenue yields be negatively impacted,
the Combined Group could experience an adverse effect on its results of
operations and financial condition including ship asset impairments. In
addition, increased cruise capacity could impact the Combined Group's ability
to retain and attract qualified crew at competitive costs and, therefore,
increase the Combined Group's shipboard employee costs.
The international political and economic climate and other world events
affecting safety and security could adversely affect the demand for cruises and
could harm the Combined Group's future sales and profitability.
Demand for cruises and other vacation options has been, and is expected to
continue to be, affected by the public's attitude towards the safety of travel,
the international political climate and the political climate of destination
countries. Events such as the terrorist attacks in the U.S. on September 11,
2001 and the threat of additional attacks, or the outbreak of hostilities or
war or concerns that hostilities or war might break out, together with the
resulting political instability and concerns over safety and security aspects
of traveling, have had a significant adverse impact on demand and pricing in
the travel and vacation industry and may continue to do so in the future.
Demand for cruises is also likely to be increasingly dependent on the
underlying economic strength of the countries from which cruise companies
source their passengers. Economic or political changes that reduce disposable
income or consumer confidence in the countries from which the Combined Group
will source its passengers may affect demand for vacations, including cruise
vacations, which are a discretionary purchase. Decreases in demand could lead
to price discounting which, in turn, could reduce the profitability of its
business.
The Combined Group may not be able to obtain financing on terms that are
favorable or consistent with its expectations.
Access to financing for the Combined Group will depend on, among other things,
the maintenance of strong long-term credit ratings. Our debt is currently rated
"A" by Standard & Poor's, "A2" by Moody's Investor Services and "A" by
FitchRatings. P&O Princess' debt is currently rated "BBB" by Standard & Poor's,
"Baa3" by Moody's and "BBB+" by FitchRatings. As a result of the DLC
transaction, the debt rating of the Combined Group may be downgraded from our
current ratings.
We believe our current external sources of liquidity and cash on hand, together
with forecasted cash flows from future operations, will be sufficient to fund
most or all of the capital projects, debt service requirements, dividend
payments, working capital and other firm commitments of the Combined Group.
The forecasted cash flow from operations for the Combined Group, as well as the
credit ratings of each of us and P&O Princess, may be adversely affected by
various factors, including, but not limited to, declines in customer demand,
increased competition, the deterioration in general economic and business
conditions, terrorist attacks, ship incidents, adverse media publicity and
changes in fuel prices, as well as other factors noted under these risk factors
and the "Cautionary Note Concerning Factors That May Effect Future Results"
section below. To the extent that the Combined Group is required, or chooses,
to fund future cash requirements, including future shipbuilding commitments,
from sources other than cash flow from operations, cash on hand and current
external sources of
34
liquidity, the Combined Group will have to secure such financing from banks or
through the offering of debt and/or equity securities in the public or private
markets.
The future operating cash flow of the Combined Group may not be sufficient to
fund future obligations, and the Combined Group may not be able to obtain
additional financing, including financing for the refinancing of existing P&O
Princess debt, if necessary, at a cost that meets its expectations.
Accordingly, the financial results of the Combined Group could be adversely
affected.
Conducting business internationally can result in increased costs.
The Combined Group will operate the businesses of Carnival and P&O Princess
internationally and plans to continue to develop its international presence.
Operating internationally exposes the Combined Group to a number of risks,
including:
.. currency fluctuations;
.. interest rate movements;
.. the imposition of trade barriers and restrictions on repatriation of
earnings;
.. political risks;
.. risk of increases in duties, taxes and governmental royalties; and
.. changes in laws and policies affecting cruising, vacation or maritime
businesses or the governing operations of foreign-based companies.
If the Combined Group is unable to address these risks adequately, its results
of operations and financial condition could be adversely affected.
Accidents and other incidents at sea or adverse publicity concerning the cruise
industry or the Combined Group could affect the Combined Group's reputation and
harm its future sales and profitability.
The operation of cruise ships involves the risk of accidents, illnesses,
mechanical failures and other incidents at sea, which may bring into question
passenger safety, health and security and thereby adversely affect future
industry performance. Incidents involving passenger cruise ships could occur
and could adversely affect future sales and profitability. In addition, adverse
media publicity concerning the vacation industry in general or cruise industry
or the Combined Group in particular could impact demand and, consequently, have
an adverse impact on the Combined Group's profitability.
Operating and financing costs are subject to many economic and political
factors that are beyond the Combined Group's control, which could result in
increases in operating and financing costs.
Some of the Combined Group's operating costs, including fuel, insurance and
security costs, are subject to increases because of market forces and economic
or political instability beyond the Combined Group's control. In addition,
interest rates and the Combined Group's ability to secure debt or equity
financing, including in order to finance the purchase of new ships, are
dependent on many economic and political factors. Actions by U.S. and non-U.S.
taxing jurisdictions could also cause an increase in the Combined Group's
costs. Increases in operating and financing costs could adversely affect the
Combined Group's results because the Combined Group may not be able to recover
these increased costs through price increases of its cruise vacations.
35
Environmental and health, safety and security legislation and regulation could
affect operations and increase operating costs.
Some environmental groups have lobbied for more stringent regulation of cruise
ships. Some groups also have generated negative publicity about the cruise
industry and its environmental impact. The U.S. Environmental Protection Agency
is considering new laws and rules to manage cruise ship waste. Alaskan
authorities are currently investigating an incident that occurred in August
2002 on board Holland America's Ryndam involving a wastewater discharge from
the ship. As a result of this incident, various Ryndam ship officers have
received grand jury subpoenas from the U.S. Attorney's office in Alaska. If the
investigation results in charges being brought, sanctions could include a
prohibition of operations in Alaska's Glacier Bay National Park and Preserve
for a period of time. Stricter environmental and health, safety and security
legislation and regulations could affect the cruise industry in general or the
Combined Groups operations in particular, and increase the cost of compliance
and adversely affect the cruise industry in general or the Combined Group's
operations in particular.
Pursuant to a settlement with the U.S. government in April 2002, we pled guilty
to certain environmental violations. We were sentenced under a plea agreement
pursuant to which we paid fines to the U.S. government and other parties. We
were also placed on probation for a term of five years. Under the terms of the
probation, any future violation of environmental laws by us may be deemed a
violation of probation. In addition, we were required as a special term of
probation to develop, implement and enforce a worldwide environmental
compliance program. We are in the process of implementing the environmental
compliance program and expect to incur higher environmental compliance costs in
2003 and beyond as a result of the program.
The Combined Group's costs of complying with current and future environmental,
health, safety and security laws, or liabilities arising from past or future
releases of, or exposure to, hazardous substances or to vessel discharges,
could materially adversely affect the Combined Group's business, results of
operations or financial condition.
Delays in ship construction and problems encountered at shipyards could reduce
the Combined Group's profitability.
The construction of cruise ships is a complex process and involves risks
similar to those encountered in sophisticated construction projects, including
delays in completion and delivery. In addition, industrial actions and
insolvency or financial problems of the shipyards building the Combined Group's
ships could also delay or prevent the delivery of its ships under construction.
These events could adversely affect the Combined Group's profitability to the
extent they are not mitigated by contractual provisions, insurance or
performance and refund guarantees obtained by the Combined Group.
36
CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS
Certain statements contained in this proxy statement/prospectus are
"forward-looking statements" that involve risks, uncertainties and assumptions
with respect to us and P&O Princess and our respective subsidiaries and
therefore, the Combined Group, including certain statements concerning the
transactions described in this proxy statement/prospectus, future results,
plans and goals and other events which have not yet occurred. These statements
are intended to qualify for the safe harbors from liability provided by Section
27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S.
Securities Exchange Act of 1934, as amended. You can find many (but not all) of
these statements by looking for words like "will," "may," "believes,"
"expects," "anticipates," "forecast," "future," "intends," "plans" and
"estimates" and for similar expressions.
Because forward-looking statements involve risks and uncertainties, there are
many factors that could cause the transactions described in this proxy
statement/prospectus not to occur and/or each of our, P&O Princess' and the
Combined Group's actual results, performance or achievements to differ
materially from those expressed or implied in this proxy statement/prospectus.
These factors include, but are not limited to:
.. regulatory and shareholder approvals of the DLC transaction;
.. achievement of expected benefits from the DLC transaction;
.. risks associated with the combination of Carnival's and P&O Princess'
businesses by means of the DLC structure;
.. liquidity and index inclusion as a result of the implementation of the DLC
structure, including a possible mandatory exchange;
.. risks associated with the uncertainty of the tax status of the DLC
structure;
.. general economic and business conditions which may impact levels of
disposable income of consumers and the net revenue yields for the cruise
brands of Carnival, P&O Princess and the Combined Group;
.. conditions in the cruise and land-based vacation industries, including
competition from other cruise ship operators and other vacation
alternatives and increases in capacity offered by cruise ship and
land-based vacation alternatives;
.. the impact of operating internationally;
.. the international political and economic climate, armed conflict, terrorist
attacks and other world events and negative media publicity and their
impact on the demand for cruises;
.. accidents and other incidents at sea affecting the health, safety and
security of passengers;
.. the ability of Carnival, P&O Princess and the Combined Group to implement
their shipbuilding programs and brand strategies and to continue to expand
their businesses worldwide;
.. the ability of Carnival, P&O Princess and the Combined Group to attract and
retain shipboard crew;
.. the ability to obtain financing on terms that are favorable or consistent
with Carnival's, P&O Princess' and the Combined Group's expectations;
.. the impact of changes in operating and financing costs, including changes
in foreign currency and interest rates and security, fuel, food and
insurance costs;
.. changes in the tax, environmental and other regulatory regimes under which
each company operates; and
.. the ability of a small group of shareholders effectively to control the
outcome of shareholder voting.
37
These risks and other risks are detailed in the section entitled "Risk Factors"
and in our and P&O Princess' SEC reports. That section and those reports
contain important cautionary statements and a discussion of many of the factors
that could materially affect the accuracy of each company's forward-looking
statements and/or adversely affect their respective businesses, results of
operations and financial positions, which statements and factors are
incorporated in this proxy statement/prospectus by reference.
We caution the reader that these risks may not be exhaustive. We and P&O
Princess operate in a continually changing business environment, and new risks
emerge from time to time. We cannot predict such risks nor can we assess the
impact, if any, of such risks on our business, P&O Princess' business or the
business of the Combined Group or the extent to which any risk, or combination
of risks may cause actual results to differ from those projected in any
forward-looking statements. Accordingly, forward-looking statements should not
be relied upon as a prediction of actual results. Subject to any continuing
obligations under applicable law or any relevant listing rules, we and P&O
Princess expressly disclaim any obligation to disseminate, after the date of
this proxy statement/prospectus, any updates or revisions to any such
forward-looking statements to reflect any change in expectations or events,
conditions or circumstances on which any such statements are based.
38
THE SPECIAL MEETING
The Proposals
This proxy statement/prospectus is being furnished to you in connection with
the solicitation of proxies by our board of directors for use at a special
meeting to be held on . , 2003, at 10:00 a.m., New York City time, at [ ].
The purpose of the special meeting is for you to consider and vote upon
proposals to approve:
.. the Offer and Implementation Agreement, dated as of January 8, 2003, by and
between Carnival and P&O Princess; and
.. our Third Amended and Restated Articles of Incorporation and Amended and
Restated By-laws.
This proxy statement/prospectus and the enclosed form of proxy are first being
mailed to you on or about ., 2003.
Record Date and Voting
The holders of record of Carnival common stock as of the close of business on
the record date, which was ., 2003, are entitled to receive notice of, and to
vote at, the special meeting. On the record date, there were . shares of
Carnival common stock outstanding.
The holders of a majority of the shares of Carnival common stock outstanding on
.., 2003, represented in person or by proxy, will constitute a quorum for
purposes of the special meeting. A quorum is necessary to hold the special
meeting.
You may vote your shares of Carnival common stock in any of four ways:
.. by completing, signing, dating and returning the enclosed proxy card by
mail; or
.. by appearing and voting in person by ballot at the special meeting.
Required Vote
Each share of Carnival common stock which is outstanding on the record date
entitles its holder to one vote at the special meeting. Completion of the DLC
transaction requires the adoption of both proposals at the special meeting by
the affirmative vote of the holders of a majority of the outstanding shares of
Carnival common stock.
Because the vote is based on the number of shares of Carnival common stock
outstanding rather than on the number of votes cast, failure to vote your
shares is effectively a vote against the DLC transaction. In addition, although
treated as shares that are present and entitled to vote at the special meeting
for purposes of determining whether a quorum exists, abstentions and "broker
non-votes" will have the same effect as votes against adoption of the proposals.
Proxies; Revocation
If you vote your shares of Carnival common stock by signing a proxy, your
shares will be voted at the special meeting as you indicate on your proxy card.
If no instructions are indicated on your signed proxy card, your shares of
Carnival common stock will be voted "FOR" the adoption of the proposals.
You may revoke your proxy at any time before the proxy is voted at the special
meeting. A proxy may be revoked prior to the vote at the special meeting in any
of three ways:
.. by submitting a written revocation dated after the date of the proxy that
is being revoked to the Secretary of Carnival at 3655 N.W. 87th Avenue,
Miami, Florida 33178-2428;
39
.. by submitting a later--dated proxy relating to the same shares to the
Secretary of Carnival by mail; or
.. by appearing and voting in person by ballot at the special meeting.
Attendance at the special meeting will not, in itself, constitute revocation of
a previously granted proxy. If you do not hold your shares of Carnival common
stock in your own name, you may revoke or change a previously given proxy by
following the instructions provided by the bank, broker or other party that is
the registered owner of the shares.
We will pay the entire cost of preparing, assembling, printing, mailing and
distributing these proxy materials and soliciting votes for the meeting. We
will also reimburse brokerage houses and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy
materials to shareholders.
Confidential Voting
It is our policy that all proxies, ballots and tabulations that identify the
vote of individual shareholders are kept confidential. Your vote will not be
disclosed within Carnival or to third parties, except as necessary to meet
legal requirements, allow for tabulation and certification of votes, facilitate
a successful proxy solicitation by our board of directors or where shareholders
submit comments with their proxy.
Other Matters
Our board of directors is not aware of any business to be acted upon at the
special meeting other than the proposals relating to the DLC transaction. If
other matters are duly brought before the special meeting, or any adjournments
or postponements of the special meeting, the persons appointed as proxies will
have discretion to vote or act on these matters according to their best
judgment.
40
THE DLC TRANSACTION
Background to the DLC Transaction
In the past, both P&O Princess and Carnival have sought to identify, explore
and, where appropriate, implement strategies to develop and broaden their
cruise product offerings. The senior management of each company has regularly
reviewed with its board of directors the strategic objectives of its company
and the possible means of achieving those objectives. Both management teams
have regularly updated their boards on the changing structure and dynamics of
the cruise industry and the overall vacation market.
In the summer of 2001, Mr. Peter Ratcliffe, Chief Executive Officer of P&O
Princess, met with Mr. Richard Fain, Chairman and Chief Executive Officer of
Royal Caribbean. During these meetings, the possibility of a business
combination between P&O Princess and Royal Caribbean was discussed. In
subsequent meetings, senior executives of the two companies discussed the
changes and developments in their respective companies, and in the cruise
industry generally, particularly in light of the events of September 11, 2001
and their effect on the global vacation market, and continued to explore a
business combination of the two companies.
On September 24, 2001, during the early stages of the discussions between P&O
Princess and Royal Caribbean, Mr. Howard Frank, Vice Chairman and Chief
Operating Officer of Carnival, made a telephone call to Mr. Ratcliffe in which
he inquired whether P&O Princess would be interested in pursuing discussions
towards a business combination with Carnival. Given that P&O Princess' share
price was at or near its all time low at the time of the call, P&O Princess did
not follow up on this call.
On November 20, 2001, P&O Princess and Royal Caribbean announced that they had
entered into agreements to implement a dual listed company transaction. Those
agreements, which were not publicly available at that time, included
non-solicitation provisions restricting P&O Princess and Royal Caribbean from
entering into discussions with other purchasers except in specified
circumstances involving a purchaser's offer determined by the relevant board to
be a Superior Proposal as explained below.
On December 13, 2001, following the announcement of the Royal Caribbean
transaction, Carnival submitted a detailed private proposal to the P&O Princess
board regarding an offer to acquire P&O Princess. The offer was for 200 pence
in cash and 0.1361 Carnival shares per P&O Princess share valuing each P&O
Princess share at 450 pence on that date. Carnival also proposed the
possibility of effecting a combination via alternative structures, including a
dual listed company structure. The P&O Princess board carefully considered
Carnival's proposal with its legal and financial advisers and, at its meeting
on December 15, 2001, the P&O Princess board determined that Carnival's
proposal was not more favorable from a financial point of view to P&O Princess'
shareholders than the transaction with Royal Caribbean and was not reasonably
likely to be consummated (that is, it was not a "Superior Proposal" as defined
under P&O Princess' agreement with Royal Caribbean).
On December 16, 2001, P&O Princess announced that its board had concluded that
the Royal Caribbean transaction was the more attractive alternative for P&O
Princess shareholders, because it believed that Carnival's cash and share
pre-conditional proposal was less favorable financially to P&O Princess
shareholders and would face greater execution risk than the Royal Caribbean
transaction. In response to P&O Princess' rejection of its proposal, Carnival
publicly announced a pre-conditional offer for all of the issued share capital
of P&O Princess on the same terms as its December 13 proposal.
On December 19, 2001, P&O Princess announced that, in light of Carnival's offer
and in order to give its shareholders time to consider fully their
alternatives, it would hold an extraordinary general meeting to vote on the
Royal Caribbean transaction on February 14, 2002.
41
Carnival announced on December 24, 2001 that it had made the necessary U.S.
antitrust filings in relation to its offer for P&O Princess.
On December 27, 2001, P&O Princess mailed its circular to its shareholders with
respect to the Royal Caribbean transaction and made its implementation
agreement and Joint Venture Agreement with Royal Caribbean publicly available,
including the non-solicitation provisions described above.
On January 6, 2002, Carnival sent a letter to the P&O Princess board requesting
a meeting with P&O Princess to discuss Carnival's offer and seeking clarity on
a number of issues in connection with the Royal Caribbean transaction,
including further details regarding termination of the Joint Venture Agreement.
P&O Princess responded by letter on January 8, 2002. In its response, P&O
Princess referred Carnival to the publicly available agreements between P&O
Princess and Royal Caribbean and informed Carnival that those agreements
prevented P&O Princess from discussing any acquisition proposal with Carnival
that was not a Superior Proposal and that its board continued to believe that
Carnival's proposal was neither financially superior to the Royal Caribbean
transaction nor deliverable. Consequently, P&O Princess declined Carnival's
request for a meeting.
Mr. Ratcliffe publicly clarified on January 10, 2002 that P&O Princess could
unilaterally terminate the Joint Venture Agreement with Royal Caribbean in
January 2003 at no cost as long as no change of control of P&O Princess had
been completed prior to the termination date. On January 10, 2002, Carnival
sent another letter to the P&O Princess board asking it for further
clarification of this statement.
On January 17, 2002, Carnival indicated in a letter to P&O Princess that
Carnival would, subject to certain conditions, be willing to increase its
pre-conditional offer to a 250 pence in cash and 0.1380 Carnival shares for
each P&O Princess share, valuing each P&O Princess share at 500 pence. After
reviewing Carnival's new proposal in detail with its advisors, the P&O Princess
board reaffirmed its view that Carnival's revised proposal was not a Superior
Proposal and that, accordingly, P&O Princess continued to be unable to meet
with Carnival to discuss its proposal without breaching its contractual
obligations to Royal Caribbean.
On January 30, 2002, Carnival announced a revised offer of 0.2684 Carnival
shares for each P&O Princess share, valuing each P&O Princess share at 515
pence per share on that date. The revised offer included a partial cash
alternative of 250 pence for each P&O Princess share, pre-conditional on
financing being arranged on terms satisfactory to Carnival by no later than the
date of posting of the offer document.
On January 31, 2002, Carnival wrote to P&O Princess shareholders urging them to
vote to adjourn the extraordinary general meeting scheduled for February 14,
2002. Carnival suggested this adjournment in order to postpone the vote on the
Royal Caribbean transaction until the various antitrust authorities could rule
on both transactions.
The P&O Princess board carefully reviewed Carnival's revised offer with its
legal and financial advisers and, at its meeting on February 3, 2002,
determined that Carnival's revised offer, as revised, was not a Superior
Proposal on both value and deliverability grounds. P&O Princess publicly
announced its board's conclusions on February 4, 2002 and, under its
contractual obligations to Royal Caribbean, remained unable to meet with
Carnival. Carnival responded by restating its commitment to proceed with its
revised offer and to obtain the necessary regulatory approvals in the U.S. and
Europe.
On February 7, 2002, Carnival announced the terms of a further increased offer
of 0.3004 Carnival shares for each P&O Princess share, valuing each P&O
Princess share at 550 pence per share on that date, and again raised the
possibility of alternative structures, including a dual listed company
42
structure. Carnival's increased offer was pre-conditional only on the receipt
of regulatory approval. The increased offer included a partial cash alternative
of 250 pence for each P&O Princess share, pre-conditional on the availability
of financing on terms satisfactory to Carnival.
The P&O Princess board carefully reviewed the increased offer with its legal
and financial advisers and, at its meeting on February 8, 2002, the P&O
Princess board determined that it was not a Superior Proposal. On February 8,
2002, P&O Princess announced that it continued to recommend that its
shareholders approve the dual listed company transaction with Royal Caribbean.
While the P&O Princess board acknowledged the improvement of Carnival's
increased offer in terms of value, it noted that it remained concerned about
the structure and deliverability of the Carnival transaction.
P&O Princess convened its extraordinary general meeting with respect to the
Royal Caribbean transaction on February 14, 2002. Before resolutions to approve
the Royal Caribbean transaction were voted upon, P&O Princess shareholders
proposed and passed a resolution to adjourn the meeting. The Chairman of P&O
Princess then announced that the meeting would be adjourned for an indefinite
period.
On February 27, 2002, Carnival announced that it had formally notified its
proposed combination with P&O Princess to the European Commission for review
under the EC Merger Regulation. The EC cleared the proposed combination on July
24, 2002.
On October 4, 2002, the U.S. Federal Trade Commission voted not to oppose
Carnival's acquisition of P&O Princess or the Royal Caribbean transaction. As a
result, the only pre-condition to Carnival's increased offer was satisfied.
Following the Federal Trade Commission announcement, P&O Princess re-examined
Carnival's increased offer, including Carnival's prior proposal to enter into a
dual listed company transaction with P&O Princess as an alternative to the
share exchange offer. After consulting with its financial and legal advisers,
at its meeting on October 4, 2002 the P&O Princess board determined that
Carnival's dual listed company proposal was more favorable from a financial
point of view to P&O Princess' shareholders than the transaction with Royal
Caribbean and was reasonably likely to be consummated given that all regulatory
clearances had been obtained. On October 4, 2002, P&O Princess announced that
its board had determined Carnival's dual listed company proposal to be a
Superior Proposal and that it was willing and able under its agreement with
Royal Caribbean to enter into talks with Carnival to discuss this proposal.
On October 11, 2002, executives of Carnival and P&O Princess met together with
their respective advisers to discuss a combination of their companies through a
dual listed company structure. Discussions also focused on a partial share
offer to be launched in conjunction with seeking shareholder approval for the
dual listed company structure that would permit P&O Princess shareholders who
wished to exchange some of their P&O Princess shares for Carnival shares to do
so. On the same date, Carnival and P&O Princess entered into a confidentiality
agreement that contemplated the exchange of confidential information between
them.
Executives of Carnival and P&O Princess and their respective advisers continued
to meet throughout the weeks of October 14, and October 21, 2002. During this
time, the boards of directors of Carnival and P&O Princess each held meetings,
at which their respective management teams and advisers provided updates on the
discussions to date and on the strategic implications and possible benefits and
risks of the dual listed company transaction involving the two companies.
On October 24, 2002, Carnival issued a press release announcing its
pre-conditional offer to enter into the DLC transaction based on the form of
agreements and instruments that it had negotiated with P&O Princess. In order
for P&O Princess to be able to accept this offer, its board had to withdraw its
43
recommendation of the Royal Caribbean transaction within 48 hours of Carnival's
announcement and not subsequently reinstate such recommendation, the Royal
Caribbean transaction had to be voted down by P&O Princess shareholders or
otherwise abandoned, the Joint Venture Agreement had to terminate at no cost
(other than the break fee under its implementation agreement with Royal
Caribbean), the P&O Princess board of directors had to approve and recommend
the DLC transaction by January 10, 2003, and P&O Princess had to enter into the
negotiated form of the offer and implementation agreement by January 10, 2003.
The DLC proposal included the Partial Share Offer for up to, in aggregate, a
maximum of 20% of the issued share capital of P&O Princess.
On October 25, 2002, the P&O Princess board held a meeting to consider the
announcement of the DLC proposal and decided to withdraw its recommendation of
the Royal Caribbean dual listed company transaction. Subsequent to that
meeting, P&O Princess announced that its board welcomed Carnival's announcement
of its dual listed company proposal and had determined that the DLC proposal
would be financially superior for P&O Princess shareholders compared with the
Royal Caribbean dual listed company transaction. It also announced that its
board had withdrawn its recommendation of the Royal Caribbean dual listed
company transaction.
P&O Princess also entered into an agreement with Royal Caribbean on October 25,
2002 which terminated the implementation agreement with Royal Caribbean
immediately, terminated the Joint Venture Agreement on January 1, 2003 as long
as no change of control of P&O Princess occurred prior to this date, and
provided mutual releases from liabilities arising under the two agreements.
Pursuant to the agreement, P&O Princess paid Royal Caribbean $62.5 million as a
break fee under its implementation agreement with Royal Caribbean. The P&O
Princess board announced that it would formally consider satisfaction of the
remaining pre-conditions to the DLC proposal, including entry into an offer and
implementation agreement with Carnival, in early January 2003.
On October 29, 2002, Lord Sterling of Plaistow, Chairman of P&O Princess, sent
a letter to P&O Princess shareholders informing them of the announcement of the
DLC proposal, the withdrawal of the P&O Princess board's recommendation of the
Royal Caribbean transaction and the subsequent arrangements with Royal
Caribbean for, among other things, the termination of existing agreements
between them. Lord Sterling also informed P&O Princess shareholders that he no
longer intended to reconvene the adjourned extraordinary general meeting
convened on February 14, 2002 to approve the dual listed company combination
with Royal Caribbean.
On January 2, 2003, P&O Princess announced that the Joint Venture Agreement had
been terminated, and Carnival issued a press release acknowledging and
welcoming the termination of the Joint Venture Agreement.
On January 7, 2003, the P&O Princess board approved the DLC transaction and
agreed to recommend to the P&O Princess shareholders that they vote in favor of
the resolution to implement the DLC structure. Later that day, the senior
executive management teams of P&O Princess and Carnival and their respective
advisors finalized the agreements and documentation to implement the DLC
structure. In the early morning of January 8, 2003, Carnival and P&O Princess
signed the Offer and Implementation Agreement. P&O Princess then issued a press
release announcing that its board had agreed and recommended the DLC
transaction and that P&O Princess had signed the Offer and Implementation
Agreement. Carnival issued a press release announcing the execution of the
Offer and Implementation Agreement, acknowledging P&O Princess' announcement of
its board's recommendation and setting forth its offer to enter into the DLC
transaction based on the Offer and Implementation Agreement and related
agreements and instruments and the terms of the Partial Share Offer.
Our Reasons for the DLC Transaction
We have agreed to enter into the DLC transaction with P&O Princess in order to
create the Combined Group. We believe the principal benefits of the creation of
the Combined Group are as follows:
44
Complementary well-known brands operating globally
The Combined Group will be the largest cruise vacation group in the world,
based on revenues, passengers carried and available capacity. It will have a
wide portfolio of complementary brands, both by geography and product offering,
and will include some of the best known cruise brands globally. The combination
will allow the Combined Group to offer a wider range of vacation choices for
its passengers and is expected to enhance its ability to attract more
passengers from land-based vacations.
The Combined Group's brands will include Carnival Cruise Lines, Princess
Cruises, Holland America Line, P&O Cruises, Costa Cruises, Cunard Line,
Seabourn Cruise Line, Windstar Cruises, AIDA, A'ROSA, Swan Hellenic, Ocean
Village and P&O Cruises (Australia). The Combined Group will serve all of the
key cruising destinations outside the Far East, including the Caribbean,
Alaska, Australia, Europe, New England, Canada, Bahamas, Bermuda, the Hawaiian
islands, the Mediterranean, the Mexican Riviera, the Panama Canal, South
America and other exotic destinations worldwide.
Benefits of sharing best practices and generating cost savings
The Combined Group will be managed as if the two companies were a single
economic enterprise by a single senior executive management team and identical
boards of directors.
Carnival and P&O Princess expect that the combination will generate cost
savings, which are expected to come from the sharing of best practices of the
management teams across the Combined Group, achieving operating efficiencies in
such areas as purchasing and rationalising support operations in locations
served by both companies.
Financial flexibility and access to capital markets
The Combined Group will have substantial financial flexibility, with strong
operating cash flow, low leverage and a strong balance sheet, and expects to
maintain a strong investment grade credit rating.
The Combined Group is also expected to have greater access to capital markets.
Carnival's shares will remain listed on the NYSE and are expected to continue
to be included in the S&P 500. P&O Princess' shares will remain listed on the
LSE and are expected to remain eligible for inclusion in the FTSE series of
indices and are expected to continue to be included with full weighting in the
FTSE 100.
High quality combined fleet to enhance growth within the cruise industry
Upon completion of the DLC transaction, the Combined Group expects to operate a
fleet of 65 cruise ships with an aggregate capacity of 99,964 lower berths.
Carnival and P&O Princess together have an additional 18 new cruise ships on
order, with an aggregate capacity of 42,260 lower berths, scheduled for
delivery in the next three and a half years. Carnival and P&O Princess also
expect that the Combined Group will have one of the youngest and most modern
fleets in the cruise industry, with an average vessel age (weighted by lower
berths) of 7.5 years expected as of January 31, 2003.
The Combined Group expects to deploy its diversified fleet strategically in
order to increase its global reach and enter new and developing markets. This
strategic deployment is expected to allow the Combined Group to appeal to the
largest target audience by providing brands, products and itineraries with the
widest appeal in a particular geographic region.
45
Continued participation in the global cruise industry for P&O Princess
shareholders as a result of the DLC structure
Following the implementation of the DLC structure, P&O Princess is expected to
remain included in the FSTE 100. This will allow P&O Princess shareholders who
are required, or wish, to hold shares in a UK-listed company included in the
FTSE indices to continue to do so, and, as a result, to continue to participate
as a shareholder in the global cruise industry through P&O Princess. A share
acquisition or exchange offer or other more common means of combining the
businesses of Carnival and P&O Princess in which all P&O Princess shareholders
would receive Carnival shares, which are not eligible for inclusion in the FTSE
series of indices, and/or a partial cash alternative would not have afforded
all P&O Princess shareholders this opportunity. Additionally, the Partial Share
Offer for up to 20% of P&O Princess' outstanding shares allows those P&O
Princess shareholders who would prefer to participate in the Combined Group by
holding shares in a U.S. listed company the opportunity to do so.
The DLC Structure
After giving effect to the DLC transaction, we and P&O Princess each will
remain as separate listed companies, although we and P&O Princess will be
operated as if we were a single economic enterprise. The economic interests of
us and P&O Princess will be aligned under the DLC structure and we will pursue
common objectives. Some key features of the DLC structure are listed below.
.. Our shares and, for the foreseeable future, P&O Princess ADSs will continue
to be listed on the NYSE and P&O Princess shares will continue to have
their primary listing on the LSE.
.. The implementation of the DLC structure will not involve any transfer of
assets between us and P&O Princess. Following completion of the DLC
transaction, management of the Combined Group will determine whether assets
will be owned by Carnival or P&O Princess as is most efficient and
appropriate under the then prevailing circumstances. The Combined Group
will comprise all of the assets held by P&O Princess and Carnival
immediately prior to the implementation of the DLC transaction. No transfer
of assets between the two companies will affect the equalization ratio or
the relative economic interests of Carnival shareholders and P&O Princess
shareholders in the Combined Group.
.. Carnival shareholders will continue to hold their Carnival shares and P&O
Princess shareholders will continue to hold their P&O Princess shares,
unless P&O Princess shareholders elect to exchange their P&O Princess
shares (up to a maximum of 20% of the outstanding shares of P&O Princess)
for Carnival shares in the Partial Share Offer. If the full 20% is tendered
in the Partial Share Offer, approximately 79% of the equity of the Combined
Group will be held through Carnival shares and the balance will be held
through P&O Princess shares.
.. The economic and voting interests represented by an individual share in
each company will be equalized based on a ratio, which we refer to in this
proxy statement/prospectus as the "equalization ratio." The equalization
ratio will initially be 0.3004 Carnival shares for each P&O Princess share.
Upon completion of the DLC transaction, P&O Princess will reorganize and
consolidate its share capital so that the equalization ratio will be one
Carnival share for each P&O Princess share.
.. The equalization ratio is subject to adjustment in a limited number of
circumstances, as described in the section of this proxy
statement/prospectus entitled "Equalization and Governance
Agreement--Equalization Ratio".
.. As a result of the 1:1 equalization ratio, one Carnival share will have the
same rights to distributions of income and capital and voting rights as one
P&O Princess share. Carnival and P&O Princess shareholders initially will
receive equal quarterly dividends. If the equalization ratio is adjusted to
a value other than 1:1, Carnival and P&O Princess shares will no longer
have equivalent rights as described in the section of this proxy
statement/prospectus entitled "Equalization and Governance
Agreement--Equalization Ratio".
46
.. On most matters that affect all shareholders of the Combined Group,
Carnival and P&O Princess shareholders will vote together as a single body,
these matters are called joint electorate actions.
.. On specified matters where the interests of Carnival shareholders may
differ from the interests of P&O Princess shareholders, each shareholder
body will vote separately as a class. These matters are called class rights
actions. No class rights action may be implemented unless approved by both
shareholder bodies, which means that each shareholder body has a veto with
respect to class rights actions.
.. We and P&O Princess each will continue to have separate boards of
directors, but the boards and senior executive management of both companies
will be identical. In addition to their normal fiduciary duties to the
company and obligation to have regard to the interests of its shareholders,
the directors of each company will be entitled to have regard to the
interests of the other company and its shareholders.
.. We and P&O Princess will execute cross-guarantees regarding all debts
incurred after implementation of the DLC structure owed by either company
as if we and P&O Princess were a single economic enterprise.
.. Takeover restrictions will be in place so that, generally, no person will
be able to obtain control over the Combined Group without making an offer
to the shareholders of both companies on equivalent terms.
.. Neither Carnival nor P&O Princess will be able to issue any shares carrying
voting rights to the other, except on a pre-emptive basis to all
shareholders, for two years period following the date on which the DLC
structure is implemented. After expiration of the initial two year period,
for each of the subsequent three years neither Carnival nor P&O Princess
may issue shares carrying voting rights to the other company or any of that
company's subsidiaries, except on a pre-emptive basis to all shareholders,
in excess of 5% per year of the issued or outstanding shares (calculated as
at the first day in such annual period). Thereafter, there will be no
restriction on the issuance of shares carrying voting rights to the other
company or any of that company's subsidiaries. These restrictions may be
varied by a class rights action.
.. Shares held by one company in the other will not have voting rights unless
such company holds 90% or more of the outstanding shares in the other.
Special Voting Entities; Special Voting Shares
As a mechanism to effect the new voting arrangements resulting from the DLC
structure, two new special voting entities will be formed. The Carnival Special
Voting Entity (which will hold the Carnival special voting share to be voted at
Carnival shareholders meetings, in order to give effect to the outcome of votes
at a parallel P&O Princess shareholders meeting for purposes of joint
electorate actions and class rights actions) will be a company whose shares
will be held legally and beneficially owned by ., an independent trustee
company incorporated in England and Wales. The P&O Princess Special Voting
Trust (the trustee of which will hold the P&O Princess special voting share to
be voted at P&O Princess shareholders meetings, in order to give effect to the
outcome of votes at a parallel Carnival shareholders meeting for purposes of
joint electorate actions and class rights actions) will be a ..
The Carnival Special Voting Entity will be present by a corporate
representative or by proxy at any Carnival shareholder meeting at which a
resolution relating to a joint electorate action and/or class rights action is
to be considered. The trustee of the P&O Princess Special Voting Trust will be
present by a representative or by proxy at any P&O Princess shareholder meeting
at which a resolution relating to a joint electorate action and/or a class
rights action is to be considered.
For joint electorate actions, the Carnival special voting share will represent
the number of votes cast at the parallel meeting of P&O Princess shareholders
(as adjusted by the equalization ratio and rounded up to the nearest whole
percentage) and the P&O Princess special voting share will represent the
47
number of votes cast at the parallel meeting of Carnival shareholders (as
adjusted by the equalization ratio).
For class rights actions, the Carnival Special Voting Entity and the trustee of
the P&O Princess Special Voting Trust, as holders of the special voting shares
will only vote if the proposed action has not been approved at the parallel
meeting of the shareholders of the other company. In that event, the special
voting shares will represent that number of votes equal to the largest whole
percentage that is less than the percentage of the number of votes (or, in the
case of a special resolution of P&O Princess shareholders, such percentage less
one vote) necessary to defeat the resolution at the meeting of shareholders of
the other company, if the total number of votes capable of being cast by all
outstanding shares (and any other shares able to vote) were cast in favour of
the resolution. In most cases, this will be 49%. The special voting shares will
not represent any votes on matters of a procedural or technical nature. The
special voting shares will have the right to return at par on liquidation
ranking behind the common shares.
The SVE Special Voting Deed, which Carnival, P&O Princess, the Carnival Special
Voting Entity, the trustee of the P&O Princess Special Voting Trust and the
legal and beneficial owner of the Carnival Special Voting Entity will enter
into as part of the DLC transaction, which is attached to this proxy
statement/prospectus as Annex A-3, will regulate the manner in which the
Carnival Special Voting Entity and the trustee of the P&O Princess Special
Voting Trust will exercise the votes attaching to the Carnival special voting
share and the P&O Princess special voting share.
Other than the creation and distribution of the trust shares of beneficial
interest in the P&O Princess Special Voting Trust described below, the Carnival
Special Voting Entity and the trustee of the P&O Princess Special Voting Trust
will be prohibited from dealing with the special voting share held by them, or
with any interest in or right attaching to the special voting share, unless
such dealing has been approved by each of the Carnival board and P&O Princess
board in its sole and absolute discretion and the transferee has agreed to be
bound by the SVE Special Voting Deed. The Carnival board and P&O Princess board
can require the Carnival Special Voting Entity and the trustee of the P&O
Princess Special Voting Trust to transfer the special voting shares to a new
person nominated by the boards if the SVE Special Voting Deed terminates or if
they want to replace the trustee company owning the shares in the Carnival
Special Voting Entity and the trustee of the P&O Princess Special Voting Trust.
It has been agreed that P&O Princess will pay the Carnival Special Voting
Entity fees and expenses incurred in the performance of its obligations under
the DLC structure and that Carnival will pay the trustee of the P&O Princess
Special Voting Trust fees and expenses incurred in the performance of its
obligations under the DLC structure.
Trust Shares of Beneficial Interest
Generally
On completion of the DLC transaction, Carnival will issue the Carnival special
voting share to the Carnival Special Voting Entity and the P&O Princess special
voting share will be transferred to the trustee of the P&O Princess Special
Voting Trust. Trust shares of beneficial interest in the P&O Princess Special
Voting Trust will be transferred to Carnival. Immediately following this
transfer, Carnival will distribute the trust shares of beneficial interest by
way of dividend to Carnival shareholders of record at the close of business on
.., 2003. Separate certificates will not be issued to represent these trust
shares of beneficial interest; instead, the trust shares of beneficial interest
will be paired with and evidenced by certificates representing Carnival shares
pursuant to a pairing agreement to be entered into between Carnival and the
trustee of the P&O Princess Special Voting Trust at closing of the DLC
transaction.
48
Following completion of the DLC transaction, Carnival shares will trade
together with trust shares of beneficial interest in the P&O Princess Special
Voting Trust. The trust shares of beneficial interest in the P&O Princess
Special Voting Trust will entitle Carnival shareholders to receive any
distributions made by the P&O Princess Special Voting Trust. As the sole
purpose of the P&O Princess Special Voting Trust relates to the holding of the
P&O Princess special voting share, it is not expected to make any
distributions. See "The DLC Transaction--Changes in Rights of Carnival
Shareholders--Special Voting Shares" for a discussion of the rights of the
special voting shares.
The P&O Princess special voting share will be voted based upon the outcome of
voting at the relevant parallel meeting of Carnival shareholders, based on the
number of votes cast by Carnival shareholders voting their Carnival shares.
Pairing Agreement
At the closing of the DLC transaction, we will enter into a pairing agreement
with the trustee of the P&O Princess Special Voting Trust and a transfer agent.
The pairing agreement is attached as Annex B to this proxy
statement/prospectus. Pursuant to the pairing agreement:
.. trust shares and Carnival shares will not be transferable unless the
transferee acquires the same number of trust shares and Carnival shares;
.. Carnival and the trustee of P&O Princess Special Voting Trust will not agree
to any transfer of trust shares without the corresponding Carnival shares;
.. trust shares and Carnival shares will not be represented by separate
certificates, but by one certificate of Carnival common stock, which will
represent an equal number of Carnival shares and trust shares; and
.. upon each additional issuance of Carnival shares, including pursuant to the
exercise of any existing option or convertible security, the P&O Princess
Special Voting Trust will issue an equal number of additional trust shares.
After the effective date of the pairing agreement:
.. if Carnival declares or pays any distribution consisting in whole or in part
of Carnival shares, or subdivides or combines Carnival shares, then the P&O
Princess Special Voting Trust will effect corresponding adjustments to
maintain the pairing relationship of one Carnival share to each trust share;
.. if Carnival otherwise reclassifies the Carnival shares, then the P&O
Princess Special Voting Trust will effect such transactions as are necessary
to maintain the pairing relationship of the securities into which one
Carnival share was so reclassified to each trust share; and
.. if Carnival cancels or retires any Carnival shares, the trustee of the P&O
Princess Trust will cancel or retire the corresponding trust shares.
49
Voting Trust Deed
The voting trust deed of the P&O Princess Special Voting Trust will reflect the
terms of the pairing agreement. The voting trust deed is attached as Annex C to
this proxy statement/prospectus. The trust property will consist of the P&O
Princess special voting share, all payments or collections in respect of the
P&O Princess special voting share and all other property from time to time
deposited in the trust. The voting trust deed will provide that at every
meeting of P&O Princess shareholders at which a resolution relating to a joint
electorate action or a class rights action is to be considered, the trustee of
the P&O Princess Special Voting Trust will be present by corporate
representative or by proxy. The trustee will not have any discretion as to how
the P&O Princess special voting share is to be voted at any P&O Princess
shareholders meeting. The trustee will cause the trust to vote the P&O Princess
special voting share at any P&O Princess shareholders meeting in accordance
with the requirements of the P&O Princess articles, the SVE Special Voting Deed
and the DLC equalization principles (in effect, to reflect the outcome of votes
at parallel Carnival shareholders meetings for purposes of joint electorate
actions and class rights actions).
The P&O Princess Special Voting Trust will have a single class of trust shares
of beneficial interest. Each trust share will represent a fractional, undivided
interest in the trust property. The trust will be authorized to issue an
unlimited amount of trust shares.
No Consideration Payable
There is no consideration payable to Carnival or Carnival shareholders in
connection with the DLC transaction. The consideration exchanged between
Carnival and P&O Princess is the execution and delivery by each company of the
agreements required to implement the DLC structure, including the Deeds of
Guarantee described in "Proposal No. 1--The Offer and Implementation
Agreement--Deeds of Guarantee".
Required Vote
Approval of the Offer and Implementation Agreement (Proposal 1) and related
transactions required to effect the DLC transaction, including the proposed
amendments to the articles of incorporation and by-laws of Carnival (Proposal
2), requires the affirmative vote of a majority of all outstanding shares
Carnival shares entitled to vote at the special meeting.
Accounting Treatment
We expect to account for the DLC transaction as a purchase by Carnival of P&O
Princess. We also expect that under U.S. GAAP the DLC transaction will be
accounted for using the purchase method of accounting in accordance with
Statement of Financial Accounting Standards No. 141 "Business Combinations". In
accordance with the purchase method of accounting, the P&O Princess U.S. GAAP
accounting policies will be conformed to our accounting policies upon
completion of the DLC transaction.
United States Federal Income Tax Consequences
Although there is no U.S. federal income tax authority addressing the tax
consequences of a DLC transaction, we believe that the DLC transaction should
not give rise to taxable income or gain for U.S. Carnival shareholders that are
U.S. holders for U.S. federal income tax purposes. However, the IRS may assert
that U.S. Carnival shareholders received taxable income as a result of the
various voting and equalization provisions necessary to implement the DLC
transaction, including the trust shares. We believe that such voting and other
rights, if any, received by shareholders are expected to have only nominal
value and, therefore, the receipt of such rights by U.S. Carnival shareholders
would only result in a nominal amount of income. It is possible, however, that
the IRS may disagree with this conclusion. For general information on the
application of current U.S. tax laws applicable to Carnival shareholders that
are U.S. holders in respect of the DLC transaction, see "The Combined
Group--Taxation of the Combined Group--U.S. Taxation."
50
Holders of Carnival shares should consult their independent professional
advisers in the light of their particular circumstances as to the U.S. federal
income tax consequences of the DLC transaction, as well as to the effect of any
state, local or applicable foreign tax law.
Regulatory Approvals
The DLC transaction is conditioned upon the receipt of certain regulatory
approvals and consents. We have received clearance from the U.S. Federal Trade
Commission for the DLC transaction and have submitted a renotification to the
European Commission for clearance of the combination. We expect to receive a
clearance decision from the European Commission during the first quarter of
2003.
No Appraisal Rights
The holders of Carnival common stock have no right to an appraisal of the value
of their shares in connection with the DLC transaction.
Takeover Regulation of the Combined Group
Following completion of the DLC transaction, Carnival and P&O Princess will
remain separately listed companies and will remain subject to any takeover laws
and rules applicable in their jurisdiction of organization, subject to
provisions in the Carnival articles and the P&O Princess articles, which are
intended to have the effect of:
.. recognizing the substantive effect of the DLC transaction, which is that
the two companies should be regarded as a combined enterprise that will be
managed by a single senior executive management team, have aligned economic
interests and pursue common objectives; and
.. respecting the acquisition limits under the UK Takeover Code.
The UK Takeover Panel has confirmed that, on the basis of information available
to it, upon completion of the DLC transaction, neither P&O Princess nor
Carnival will be a company to which the UK Takeover Code applies. The Takeover
Code provides a number of protections for shareholders, particularly in
relation to mandatory offers where a person or group of persons acting in
concert acquires in excess of 30% of the voting rights of a company.
Provisions will be included in the governing documents of Carnival and P&O
Princess in order to replicate certain of the protections provided by the UK
Takeover Code for companies listed on the LSE.
Control threshold
Under the P&O Princess articles and the Carnival articles, there will be a
limit that effectively prevents a person (together with any concert parties)
from (a) acquiring, or acquiring voting control over, 30% or more of the
combined votes which could be cast on a joint electorate action or (b) if such
person(s) already holds not less than 30%, but not more than 50%, of the
combined votes which would be cast on a joint electorate action, acquiring, or
acquiring voting control over, any shares which increase the percentage of
votes which such person(s) could cast on a joint electorate action, except as
described below.
Equivalent opportunities
If a person (together with any concert parties) exceeds either of the limits
described above then, under the Carnival articles and the P&O Princess
articles, that person will lose all rights attached to such shares as described
below unless that person makes, or announces a binding intention to make,
equivalent offers for both companies of the Combined Group within 10 days of
exceeding either limit and such offers are made to both Carnival shareholders
and P&O Princess shareholders within 28 days of making such an announcement. In
summary, the equivalent offers (and any increase or extension thereof) must:
.. be made to all holders of Carnival shares and P&O Princess shares at or
about the same time;
51
.. comply with all applicable laws and rules which would govern an offer for
the Carnival shares and which would govern an offer for the P&O Princess
shares; and
.. be determined by the P&O Princess board and Carnival board to be equivalent
with respect to consideration (including taking into account any existing
share price disparity), terms and conditions of offer, information with
respect to such offer and time to consider the offer for both the Carnival
shareholders and the P&O Princess shareholders, both in relation to an
initial offer and any increase or extensions.
Due to the variety of takeover procedures and structuring mechanisms for such a
transaction and the different takeover regimes applicable to both companies the
concept of equivalence has not been defined in the Carnival or P&O Princess
articles. It is expected that the boards of Carnival and P&O Princess,
considering applicable rules and regulations promulgated under the Exchange Act
and, where relevant, in consultation with the UK Takeover Panel, will determine
whether the offers are equivalent. In any event, such determination would be
made on a case-by-case basis.
Each group of shareholders will be provided equivalent treatment and
opportunities and therefore will be entitled to make its own decision as to
whether the relevant offer is accepted. The completion of such transaction
would require both offers to become unconditional.
Breach of limits
Under the Carnival articles and the P&O Princess articles, if a person exceeds
either limit described above without making an equivalent offer for all
Carnival shares and P&O Princess shares, then, under the Carnival articles and
the P&O Princess articles, such excess shares will be transferred to a trustee
to be held in trust for a charitable organization. Such transfer may be
effected by the relevant board of the company concerned. The person who
originally beneficially owned those shares in breach of the prescribed
ownership limit will lose rights to income and any voting rights on those
shares. The trustee may then be required by the relevant board to transfer such
shares to another person, including (subject to applicable law and regulation)
the relevant company.
Exclusions to the ownership threshold
The provisions and restrictions described above will not apply to:
.. any buy-back;
.. any acquisition of shares if the restrictions are prohibited by applicable
law and regulations;
.. any acquisition by members of the Arison family and trusts for their
benefit provided their holdings do not increase by more than 1% of the
voting power of the Combined Group in any period of twelve consecutive
months, subject to their combined shareholdings not exceeding 40% of the
voting power of the Combined Group. Any transfers of shares among members
of the Arison family and trusts for their benefit are also not subject to
the provisions and restrictions described above; and
.. any acquisition pursuant to a mandatory exchange.
Existing 4.9% Ownership Limit
In order to qualify as a publicly-traded corporation under Section 883, the
Carnival articles also contain provisions that prevent third parties, other
than the Arison family and trusts for their benefit, from acquiring beneficial
ownership of more than 4.9% of the outstanding Carnival shares without the
consent of the Carnival board of directors and provide for the lapse of rights,
and sale, of any shares acquired in excess of that limit. The combined effect
of these provisions precludes a third party from acquiring control of a
controlling interest in either company or the Combined Group. These provisions
may only be amended by both sets of shareholders, voting separately as a class,
in a class rights action.
52
THE COMPANIES
Carnival
We are a global cruise vacation and leisure travel company. We offer a broad
range of cruise brands serving the vacation market through Carnival Cruise
Lines, Holland America Line, Costa Cruises, Cunard Line, Seabourn Cruise Line
and Windstar Cruises. Our various brands operate 45 cruise ships, offering a
total of 67,264 lower berths, in Alaska, Australia, Bahamas, Bermuda, Canada,
the Caribbean, Europe, the Hawaiian Islands, the Mediterranean, the Mexican
Riviera, New England, the Panama Canal, South America and other exotic
destinations worldwide. We have 13 additional cruise ships on order, which will
offer a further 30,580 lower berths. These ships are expected to enter service
over the next three and a half years. In addition to our cruise operations, we
operate a tour business through Holland America Tours, which markets
sightseeing tours both separately and as a part of its cruise/tour packages.
Additional summary information about our cruise brands is as follows:
NUMBER OF PASSENGER
CRUISE BRAND SHIPS CAPACITY/(1)/ PRIMARY LOCATION OF PASSENGERS
------------ --------- ------------ ------------------------------
CCL 18 38,348 North America
Holland America 11 14,460 North America
Costa 8 10,770 Europe/North and South America
Cunard 2 2,458 Europe/North America
Seabourn 3 624 North America
Windstar 3 604 North America
--------- ------------
45 67,264
--------
(1)In accordance with cruise industry practice, all passenger capacities are
measured in lower berths calculated based on two passengers per cabin even
though some cabins can accommodate three or more passengers.
Our cruise operations had worldwide cruise passengers, passenger capacity and
occupancy as follows/(1)/:
FISCAL YEAR CRUISE PASSENGERS PASSENGER CAPACITY/(2)/ OCCUPANCY/(3)/
----------- ------------------------- ------------------------- -------------------------
2002 3,459,000 67,264 105.2%
2001 3,385,000 58,346 104.7%
2000 2,669,000 48,196 105.4%
1999 2,366,000 43,810 104.3%
1998 2,045,000 39,466 106.3%
--------
(1)Information presented is as of the end of our fiscal year for passenger
capacity. Costa's passengers, capacity and occupancy are included in 2001
and 2002, but not included in prior years.
(2)Excludes Windstar Cruises' 148 passenger capacity ship, Wind Song, which was
removed from service in December 2002.
(3)In accordance with cruise industry practice, occupancy is determined based
on double occupancy per cabin even though some cabins can accommodate three
or more passengers. Accordingly, the percentages in excess of 100% indicate
that more than two passengers occupied some cabins.
We were incorporated under the laws of the Republic of Panama in November 1974.
Our common stock is listed on the NYSE under the symbol "CCL". Our principal
executive offices are located at Carnival Place, 3655 N.W. 87th Avenue, Miami,
Florida 33178-2428. The telephone number of our principal executive offices is
(305) 599-2600.
53
P&O Princess
P&O Princess is a global cruise vacation company operating under the following
brand names: Princess Cruises in North America; P&O Cruises, Ocean Village and
Swan Hellenic in the UK; AIDA and A'ROSA in Germany; and P&O Cruises in
Australia. P&O Princess provides cruises to Alaska, the Caribbean, Europe, the
Mediterranean, the Panama Canal and other exotic destinations. As of January
31, 2003, P&O Princess expects to have a fleet of 20 ocean cruise ships and two
river boats offering a total of 33,100 lower berths, with five additional ocean
cruise ships and two river boats on order as of that date, offering a further
12,080 lower berths. The new ships are expected to be delivered over the next
two years. P&O Princess' tour division, Princess Tours, is a tour operator in
Alaska with five riverside lodges, a fleet of motorcoaches and Midnight Sun
Express rail cars. P&O Princess also owns P&O Travel, a business to business
travel agency, which is responsible for the purchasing of part of P&O Princess'
air travel requirements.
Additional summary information as expected at January 31, 2003 about P&O
Princess' cruise brands is as follows:
PRIMARY LOCATION OF
CRUISE BRAND/(1)/ NUMBER OF SHIPS PASSENGER CAPACITY/(2)/ PASSENGERS
----------------- ------------------------- ------------------------- -------------------------
Princess Cruises 11 19,920 North America
P&O Cruises (UK) 4 7,170 United Kingdom
Swan Hellenic 1 360 United Kingdom
AIDA 2 2,460 Germany
A'ROSA 1 1,590 Germany
A'ROSA (river cruises) 2 400 Germany
P&O Cruises (Australia) 1 1,200 Australia
------------------------- -------------------------
22 33,100
--------
(1)Ocean Village, a new UK cruise brand, is expected to commence passenger
service in May 2003.
(2)In accordance with cruise industry practice, all passenger capacities are
measured in lower berths calculated based on two passengers per cabin even
though some cabins can accommodate three or more passengers.
P&O Princess' cruise operations had worldwide cruise passengers, passenger
capacity and occupancy as follows:
FISCAL YEAR CRUISE PASSENGERS PASSENGER CAPACITY OCCUPANCY
----------- ------------------------- ------------------------- -------------------------
2002 [ ] [ ] [ ]
2001 1,028,000 9,465 100.0%
2000 930,000 8,731 99.3%
1999 758,000 7,133 100.0%
1998 634,000 6,307 98.3%
1997 /(1)/ 5,781 98.8%
--------
(1)Not available.
P&O Princess was incorporated and registered in England and Wales in July 2000.
P&O Princess ordinary shares are listed on the LSE and P&O Princess ADSs are
listed on the NYSE. Both P&O Princess shares and P&O Princess ADSs trade under
the symbol "POC" on their respective exchanges. P&O Princess' principal
executive offices are located at 11-12 Charles II Street, London SW1Y 4QU,
England. The telephone number of P&O Princess' principal executive offices is
+44 20 7805-1200.
54
THE COMBINED GROUP
The description of the Combined Group assumes completion of the DLC
transaction. The DLC transaction is conditioned on certain events, including
approval by the shareholders of both Carnival and P&O Princess.
The implementation of the DLC structure will involve a strategic combination of
the businesses of Carnival and P&O Princess. The two companies will have a
single senior executive management team and identical boards of directors, and
will be operated as if they were a single economic enterprise.
The Combined Group will be the largest cruise vacation group in the world,
based on revenues, passengers carried and available capacity. It will have a
wide portfolio of complementary brands, both by geography and product offering,
and will include some of the best known cruise brands globally. We believe that
the combination will allow the Combined Group to offer a wider range of
vacation choices for its passengers and will enhance its ability to attract
passengers from land-based vacations to cruise vacations.
The Combined Group will have a combined fleet of 65 cruise ships offering
99,964 lower berths, with 18 additional cruise ships with 42,260 lower berths
scheduled to be added over the next three and a half years, and will be a
leading provider of cruises to all major cruise destinations outside the Far
East. The Combined Group will have one of the youngest fleets among the major
cruise vacation operators, with an expected average age of 7.5 years as of
January 31, 2003. The Combined Group will also operate two private destination
ports of call in the Caribbean for the exclusive use of its passengers and two
river boats, and will offer land-based tour packages as part of its vacation
product alternatives. Carnival and P&O Princess together carried approximately
4.7 million passengers in fiscal 2002.
On a pro forma basis in accordance with U.S. GAAP, the Combined Group would
have reported revenues of $7.0 billion and net income of $1.4 billion for the
fiscal year ended November 30, 2001 and revenues of $5.3 billion and net income
of $1.1 billion for the nine months ended August 31, 2002. On the same basis,
the Combined Group would have reported shareholders' equity of $13.3 billion as
at August 31, 2002.
Brands
The Combined Group will offer thirteen complementary brands with leading
positions in North America, the UK, Germany, Italy, France, Spain, Brazil,
Argentina and Australia. These brands operate itineraries in the following
regions: Alaska, Australia, Bahamas, Bermuda, Canada, the Caribbean, Europe,
the Hawaiian Islands, the Mediterranean, the Mexican Riviera, New England, the
Panama Canal, South America and other exotic destinations worldwide.
55
The Combined Group's principal brands will include:
Carnival Cruise Lines -- primarily marketed in North America
Princess Cruises
Holland America Line
Cunard Line
Windstar Cruises
Seabourn Cruise Line
P&O Cruises (UK) --primarily marketed in the United Kingdom
Swan Hellenic
Ocean Village
AIDA --primarily marketed in Germany
A'ROSA
Costa Cruises --primarily marketed in southern Europe, Germany, North
America and South America (primarily Brazil and
Argentina)
P&O Cruises (Australia) --primarily marketed in Australia
Both Carnival and P&O Princess have historically managed their brands on a
decentralized basis. The Combined Group intends to take a similar approach
while integrating certain back office activities and taking other steps to
achieve economies of scale and cost synergies.
Fleet
The Combined Group will operate a fleet of 65 cruise ships with an aggregate
capacity of 99,964 lower berths. Carnival and P&O Princess together have an
additional 18 cruise ships on order, with an aggregate capacity of 42,260 lower
berths, scheduled for delivery during the next three and a half years. In
addition, the Combined Group will operate two river boats on the Danube and
will have two new river boats on order representing a further 400 lower berths.
As of January 31, 2003, the fleet of the Combined Group (excluding river boats)
is expected to have an average vessel age (weighted by lower berths) of 7.5
years and an average vessel size of approximately 1,540 lower berths. Based on
the existing fleet and announced additions and withdrawals, and excluding river
boats, the average vessel age (weighted by lower berths) of the Combined
Group's fleet will be 8.7 years at November 30, 2006 and its average vessel
size will have increased to approximately 1,720 lower berths.
The table below summarizes the Combined Group's fleet capacity measured in
lower berths by brand as expected at January 31, 2003 and the projected fleet
capacity at November 30, 2006, taking into account existing cruise ships on
order and announced transfers and withdrawals. In accordance with industry
practice, capacity is based on two passengers occupying the lower berths in
each cabin, even though some cabins can accommodate more than two passengers.
56
Lower Berths
Capacity
expected at Projected
January 31, Vessel Announced Announced capacity at
Brands 2003 additions withdrawals/(4)/ transfers Nov 30, 2006
------ ---- --------- ---------------- --------- ------------
Carnival Cruise Lines 38,348 11,046 -- -- 49,394
Princess Cruises 19,920 10,410 -- (3,600) 26,730
Holland America Line 14,460 7,392 -- -- 21,852
Cunard Line 2,458 4,588 -- -- 7,046
Windstar Cruises 604 -- -- -- 604
Seabourn Cruise Line 624 -- -- -- 624
P&O Cruises (UK) 7,170 -- -- 560 /(3)/ 7,730
Swan Hellenic/(1)/ 360 676 (360) -- 676
Ocean Village/(2)/ -- 170 -- 1,450 1,620
Costa Cruises 10,770 7,554 -- -- 18,324
AIDA 2,460 1,270 -- -- 3,730
A'ROSA 1,590 -- -- 1,590 3,180
P&O Cruises (Australia) 1,200 -- -- -- 1,200
A'ROSA (River Cruises) 400 400 -- -- 800
------- ------ ---- ------ -------
Total 100,364 43,506 (360) -- 143,510
--------
(1)The charter for the 360-berth Minerva ends in April 2003. The ship will be
replaced by a new chartered ship, Minerva II, which was built in 2001 and
has 676 lower berths.
(2)Arcadia, which is currently sailing in the P&O Cruises (UK) fleet, is due to
be transferred to Ocean Village in the second quarter of 2003. Her refit
will result in the creation of an additional 170 lower berths.
(3)This figure reflects the net result of the transfer of Adonia, with 2,010
lower berths, from the Princess fleet to the P&O Cruises (UK) fleet in the
second quarter of 2003 and the redeployment of Arcadia, with 1,450 lower
berths, to the Ocean Village fleet in the second quarter of 2003.
(4)The Combined Group is expected to withdraw additional capacity from service
through 2006.
Strategy
Carnival and P&O Princess operate multi-brand strategies that are intended to
differentiate themselves from their competitors and provide products and
services appealing to the widest possible target audience across all segments
of the vacation industry.
Having established the contemporary Carnival Cruise Lines brand in 1972,
Carnival entered the premium/luxury segment with the acquisition of Holland
America Line/Windstar Cruises in 1989. Carnival has continued to acquire and
build brands and expand its geographic reach, through the further acquisition
of the ultra luxury Seabourn brand, the contemporary European brand Costa
Cruises and the premium/luxury British brand Cunard. These six brands are
managed by four distinct management groups which operate on a decentralized
basis. Carnival has found this decentralized management approach to be highly
successful and expects the Combined Group to be managed in a similar fashion.
Similarly, P&O Princess has established a multi-brand strategy targeting a wide
customer base. From established positions in the UK and Australian cruise
industries, P&O Princess improved its position in the North American cruise
industry in the 1970s and 1980s through the acquisitions of Princess Cruises
and Sitmar Cruises and in Germany through the acquisition in 1999 of a majority
stake in AIDA Cruises, one of the best known cruise brands in Germany. P&O
Princess acquired the remainder of AIDA Cruises in 2000 and commenced the
operation of a new German brand, A'ROSA, in 2002. In the UK, P&O Princess has
recently launched Ocean Village, a new brand for the contemporary segment.
The Combined Group's will seek to be the leading global cruise vacation
operator with brands appealing to the widest target audience, focused on
sourcing passengers from developed vacation markets where cruising is one of
the fastest growing vacation alternatives. Carnival and P&O Princess
57
also expect to market certain of the Combined Group's brands to enter into and
expand developing vacation markets. In pursuit of this strategy, the companies
of the Combined Group will seek to:
Build on brand strengths
The Combined Group will have some of the most widely recognized cruise brands
in North America, Europe, South America (primarily Brazil and Argentina) and
Australia and will be a leading provider of cruise vacations to all of the key
cruise destinations outside the Far East, including Alaska, Australia, Bahamas,
Bermuda, Canada, the Caribbean, Europe, the Hawaiian Islands, the
Mediterranean, Mexican Riviera, New England, the Panama Canal, South America
and other exotic destinations worldwide. Carnival and P&O Princess intend to
continue to grow the Combined Group's brands and broaden and develop the range
of destinations, itineraries, tours and vacation alternatives offered by the
Combined Group. The Combined Group intends to provide greater choice and
options for its passengers among these well-recognized brands in order to
continue to attract passengers from the wider vacation market.
Increase global presence
It is expected that the brand offerings and diversified fleet of the Combined
Group will enable it to accelerate the entry of cruising into existing and new
geographical vacation markets.
We believe that there is a significant opportunity to continue to build the
Combined Group's presence in the relatively under-developed cruise vacation
industry within continental Europe. The Combined Group will be one of the
leading cruise vacation companies in the UK, Germany and southern Europe, which
are three of the largest vacation markets outside of North America. In the UK,
P&O Cruises and Cunard are two of the most recognized brands. AIDA is one of
the best known cruise brands in Germany, and Costa is one of the most widely
recognized cruise brands in Europe.
Maximize growth through strategic deployment of its brands and fleet
The Combined Group expects to strategically deploy its diversified fleet in
order to increase its global reach and enter new and developing markets. Such
strategic deployment is expected to allow the Combined Group to appeal to the
largest target audience with brands, products and itineraries with the widest
appeal in a particular geographic region.
Carnival and P&O Princess have traditionally constructed purpose-built ships
for each of their brands, consistent with the passenger demographics and
product features of the particular brand. In addition, in order to take
advantage of the rapidly expanding demand in Europe for cruises, several
vessels have been transferred within the Carnival and P&O Princess groups over
the last several years. For example, Carnival's Tropicale was transferred to
Costa and now operates as the Costa Tropicale and Holland America's Westerdam
was transferred to Costa and now operates as the Costa Europa. P&O Princess has
successfully deployed vessels in order to build its brands in the UK and
Australia and to launch a new brand in Germany. For instance, in 2002 P&O
Princess transferred the Ocean Princess and the Crown Princess to the P&O
Cruises (UK) and A'ROSA brands in the UK and Germany, respectively, and intends
to transfer the Sea Princess to the P&O Cruises (UK) fleet in 2003. In 2000,
Princess Cruises' Sky Princess was redeployed to P&O Cruises (Australia) and
now operates as the Pacific Sky.
We expect the Combined Group to continue to explore opportunities to utilize
its vessels in such a manner consistent with providing the overall best return
for the Combined Group.
58
Realize cost savings.
Carnival has consistently been one of the most efficient cruise operators in
the cruise vacation industry. Carnival believes it has been able to achieve
these efficiencies through its decentralized management approach, economies of
scale, highly experienced management team and the ability to disseminate best
practices across its operating companies. Since its demerger from The
Peninsular and Oriental Steam Navigation Company in October 2000, P&O Princess
has pursued a cost reduction program aimed at bringing its cost structure more
into line with other major cruise operators. This program is expected to have
enabled underlying costs to be reduced by 13% per available berth day over two
years.
We expect that the combination will generate cost savings, which are expected
to come from the sharing of best practices of the management teams across the
Combined Group, achieving operating efficiencies in such areas as purchasing
and rationalizing support operations in locations served by both companies.
Industry Background
Since 1970, cruising has been one of the fastest growing segments of the
vacation market. According to Cruise Lines International Association, or CLIA,
a leading industry trade group, in 1970 approximately 0.5 million North
American-sourced passengers took cruises of two consecutive nights or more.
CLIA estimates that this number reached approximately 7.4 million passengers in
2002, an average compound annual growth rate of approximately 9% since 1970.
Outside North America, the principal sources of passengers for the industry are
the UK, Germany, Italy, France, Spain and Australia. In all of these areas,
cruising represents a smaller proportion of the overall vacation market than it
does in North America but, based on industry data, is generally experiencing
higher growth rates.
Cruising offers a broad range of products to suit vacationing passengers of
many ages, backgrounds and interests. Cruise brands can be broadly divided into
the contemporary, premium and luxury segments. The Combined Group will have
significant product offerings in each of these segments. The contemporary
segment is the largest segment and typically includes cruises that last seven
days or less, have a more casual ambience and are less expensive than premium
or luxury cruises. The premium segment is smaller than the contemporary segment
and typically includes cruises that last from seven to 14 days. Premium cruises
emphasize quality, comfort, style and more destination- focused itineraries and
the average pricing on these cruises is typically higher than those in the
contemporary segment. The luxury segment is the smallest segment and is
typically characterized by smaller vessel size, very high standards of
accommodation and service, generally with higher prices than the premium
segment. Notwithstanding these marketing segment classifications, there is
overlap and competition among cruise segments.
The Combined Group will provide cruise vacations in some of the largest
vacation markets in the world: North America, the UK, Germany and southern
Europe. A brief description of the principal vacation regions in which the
Combined Group intends to operate is provided below.
North America
The largest vacation and cruise market in the world is North America. According
to CLIA, approximately 7.4 million North American passengers took cruises for
two consecutive nights or more in 2002.
59
Estimates of North American-sourced cruise passengers and the number of lower
berths marketed to North Americans compiled by CLIA over the period 1997 to
2002 are set out below:
North
American Lower Berths
Cruise Marketed to North
Calendar Year Passengers/(1)/ Americans/(2)/
1997 5,051,000 118,000
1998 5,428,000 138,000
1999 5,894,000 149,000
2000 6,882,000 166,000
2001 6,906,000 176,000
2002 7,400,000 193,000
--------
(1)Based on passengers carried for at least two consecutive nights for the
calendar year (2002 preliminary data).
(2)As of the end of the calendar year. These figures include some ships which
are marketed in North America and elsewhere.
The principal itineraries visited by North American cruise passengers in 2002
were the Caribbean, Bahamas and Mexico. In addition, North American cruise
passengers visited Alaska, Bermuda, Europe, the Mediterranean, the Panama Canal
and other exotic locations, including South America, Africa, the South Pacific,
the Orient and India.
Based on the number of ships that are currently on order worldwide and
scheduled for delivery between 2002 and 2006, Carnival and P&O Princess expect
that the net capacity serving North American consumers will increase
significantly over the next several years. Projections compiled by CLIA
indicate that by the end of 2003, 2004 and 2005, North America will be served
by approximately 187,197 and 199 ships, respectively, having an aggregate
passenger capacity of approximately 213,000, 236,000 and 240,000 lower berths,
respectively. These figures include some ships that are expected to be marketed
in North America and elsewhere.
Europe
We estimate that Europe is one of the largest vacation markets, but cruising in
Europe has achieved a much lower penetration rate than in North America. We
estimate that approximately 2.3 million European-sourced passengers took cruise
vacations in 2002 compared to approximately 7.4 million North American-sourced
passengers. However, from 1990 to 2002, the number of cruise passengers sourced
from Europe has been growing faster than the number of cruise passengers
sourced from North America. From 1997 through 2001, the rate at which European
vacationers took a cruise grew at a compound annual growth rate of 11% compared
to an 8% growth rate with respect to North American cruise vacationers. With
respect to the European countries from which the most cruise passengers are
sourced, from 1997 through 2001 the compound annual growth rate in cruise
passengers was 10% in the UK, 14% in France, 8% in Germany and 8% in Italy.
Cruise vacation companies are continuing to expand their offerings in Europe.
For example, more cruise vacations were marketed to European passengers in 2002
than in 2001. We expect that a number of additional new or existing ships will
be introduced into Europe over the next several years.
We also believe that Europe will represent a significant area for the growth
for the Combined Group because, among other things, the vacation markets in
Europe are large but the level of penetration of cruising is low.
UK
The UK is one of the largest sources for cruise passengers in the world.
According to the Passenger Shipping Association, approximately 0.8 million UK
passengers took cruises in 2001. UK cruising was relatively under-developed as
a vacation option until the mid-1990s, but has since been one of the
60
fastest growing regions in the world. The number of cruise passengers carried
in the UK increased by a compound annual growth rate of approximately 10%
between 1997 and 2001. The main destination for UK cruise passengers is the
Mediterranean. Other popular destinations for UK cruise passengers include the
Caribbean, the Atlantic Islands (including the Canary Islands and the Azores)
and Scandinavia. The Combined Group will have two of the most widely recognized
brands in the UK-P&O Cruises and Cunard.
Germany
Germany is one of the largest sources for cruise passengers in continental
Europe with approximately 0.4 million on cruise passengers in 2001. German
cruising exhibited a compound annual growth rate in the number of passengers
carried of approximately 8% between 1997 and 2001. We believe that German
cruising is an underdeveloped market for the cruise industry. The main
destinations visited by German cruise passengers are the Mediterranean and the
Caribbean. Other popular destinations for German cruise passengers include
Scandinavia and the Atlantic Islands. The Combined Group will have three brands
marketed in Germany: AIDA, A'ROSA and Costa.
Southern Europe
The main regions in southern Europe for cruise passengers are Italy, France and
Spain. Together, these countries generated approximately 0.6 million cruise
passengers in 2001. Cruising in Italy, France and Spain exhibited a compound
annual growth rate in the number of passengers carried of approximately 14%
between 1997 and 2001. We believe that these regions are also relatively
underdeveloped markets for the cruise industry. The Combined Group intends to
increase its penetration in Southern Europe through Costa Cruises, the largest
and one of the most recognized cruise brands marketed in Europe.
South America
Cruising has been marketed in South America for many years, although the region
remains in an early stage of development. Cruises from South America typically
occur during the southern hemisphere summer months of November through March,
and are primarily seven to nine days in duration. The Combined Group expects
its presence in this region will be primarily represented through the Costa
brand, which currently operates two vessels in this region Costa Classica and
Costa Tropicale, offering approximately 2,324 lower berths.
Australia
Cruising in Australia is relatively small but well established. We estimate
that approximately 0.1 million Australians took cruise vacations in 2001.
Cruising in Australia is mainly comprised of Sydney round-trip cruises, and a
smaller fly-cruise option. The Combined Group expects to continue to serve this
region through the P&O Cruises (Australia) brand, which currently operates
Pacific Sky and, for a portion of the year, Pacific Princess in this region,
and through the Cunard Line, which markets its world cruises in Australia.
Characteristics of the Cruise Vacation Industry
Strong growth
Cruise vacations have experienced significant growth in recent years. The
number of new cruise ships currently on order from shipyards indicates that the
growth in supply of cruise capacity is set to continue for a number of years.
As a result of this continuing growth in supply, continued growth in demand
across the industry, particularly in North America, will be required in order
to take up this
61
increase in supply. Given the historical growth rate of cruising and the
relative low penetration levels in major vacation markets (as highlighted in
more detail below), the Combined Group believes that there are significant
areas for growth.
Wide appeal of cruising
Cruising appeals to a broad demographic range of vacationers. Industry surveys
estimate that the principal passengers for cruising in North America (defined
as households with income of $40,000 or more headed by a person who is at least
25 years old) now comprise approximately 128 million people. About half of
these individuals have expressed an interest in a cruise as a vacation
alternative.
Relatively low penetration levels
North America has the highest cruising penetration rates per capita.
Nevertheless, CLIA estimates that only 15% of the U.S. population has ever
taken a cruise. In the UK, where there has been significant expansion in the
number of cruise passengers carried over the last five years, cruising
penetration levels per capita are only approximately three-fifths of those of
North America. In the principal vacation regions in continental Europe,
cruising penetration levels per capita are approximately one-fifth of those in
North America. Elsewhere in the world cruising is at an early stage of
development and has far lower penetration rates.
Satisfaction rates
Cruise passengers tend to rate their overall satisfaction with a cruise-based
vacation higher than comparable land-based hotel and resort vacations. In North
America, industry studies indicate that cruise passengers experience a high
level of satisfaction with their cruise product, with 69% of cruisers finding
the value of the cruise vacation experience to be as good as, or better than,
the value of other vacations.
Competition
Carnival and P&O Princess compete, and the Combined Group will compete, both
with a wide array of land-based vacation alternatives and with other cruise
lines for consumers' disposable leisure time dollars.
The Combined Group will compete with land-based vacation alternatives
throughout the world, including, among others, resorts and hotels located in
Las Vegas, Nevada, Orlando, Florida, various Caribbean, Bahamian and Hawaiian
Island destination resorts and numerous vacation destinations throughout Europe
and the rest of the world. Specifically, the Combined Group's land-based
competitors include, among many others, MyTravel, Club Mediterranee, GoGo
Tours, Fairfield Communities Vacation Ownership Club, First Choice, Harrah's
Entertainment, Hilton Hotels, Hyatt Hotels, Kuoni Travel, Mandalay Resort
Group, Disney, Universal Studios, Marriott International Resorts and the
Marriott Vacation Ownership Club, MGM Grand, Nouvelle Frontieres, Perillo
Tours, Ritz-Carlton Hotels, Saga Tours, Six Flags, Starwood Hotels and Resorts,
Sandals Resorts, Sun City Resorts, Thomas Cook, Thomson Travel Group, Trafalgar
and TUI, as well as various other theme parks.
The Combined Group's primary cruise competitors in the contemporary and/or
premium cruise segments for North American-sourced passengers will be Royal
Caribbean, which owns Royal Caribbean International and Celebrity Cruises, Star
Cruises plc, which owns Norwegian Cruise Line and Orient Lines, and Disney
Cruise Line.
62
The Combined Group's primary cruise competitors for European-sourced passengers
will be My Travel's Sun Cruises, Fred Olsen, Saga and Thomson in the UK;
Festival, Hapag-Lloyd, Peter Deilmann and Phoenix in Germany; and Mediterranean
Shipping Cruises, Royal Olympic Cruise Line, Louis Cruise Line and Festival
Cruises in southern Europe. The Combined Group will also compete for passengers
throughout Europe with Norwegian Cruise Line, Royal Caribbean International and
Celebrity Cruises.
The Combined Group's primary competitors in the luxury cruise segment for its
Cunard, Seabourn and Windstar brands will include Crystal Cruises, Radisson
Seven Seas Cruise Line, and Silversea Cruises.
The Combined Group's brands will also compete with similar or overlapping
product offerings across all of the Combined Group's segments.
Employees
The Combined Group is expected to have approximately 11,300 full and
part-time/seasonal employees engaged in shoreside operations upon
implementation of the DLC structure. Carnival and P&O Princess will also
employ, in the aggregate, approximately 45,300 officers, crew and staff on its
combined fleet of 65 cruise ships and two river boats. A significant proportion
of employees that work in Carnival's and P&O Princess' ship, hotel, and motor
coach operations are unionized and/or are party to collective bargaining
agreements. We consider our respective employee and union relations generally
to be good. The Combined Group is expected to source its shipboard officers
from Italy, Holland, the UK and Norway. The remaining crew positions are manned
by persons from around the world. The Combined Group is expected to utilize
various manning agents in many countries and regions to help secure its
shipboard employees. Carnival and P&O Princess believe that employees of the
Combined Group will benefit from a larger operating platform and a business of
greater international size and scope. Carnival and P&O Princess do not expect
that there will be significant redundancies arising from the implementation of
the DLC structure.
Board and Management
Carnival and P&O Princess will be managed and operated as if they were a single
economic enterprise. Although each of Carnival and P&O Princess will continue
to exist as a separate company with its own board of directors and senior
executive management, the boards and senior executive management of each
company will be identical. The proposed directors of Carnival and P&O Princess
following implementation of the DLC structure are listed under "Directors and
Executive Officers of the Combined Group". In addition to their normal
fiduciary duties to the company and obligation to have regard to the interests
of its shareholders, the directors of each company will be entitled to have
regard to the interests of the other company and its shareholders. Micky
Arison, the Chairman and Chief Executive Officer of Carnival, will be Chairman
and Chief Executive Officer of both Carnival and P&O Princess and Howard S.
Frank, the Vice Chairman and Chief Operating Officer of Carnival, will be the
Vice Chairman and Chief Operating Officer of both Carnival and P&O Princess.
Peter Ratcliffe, P&O Princess' Chief Executive Officer, will be an executive
director of both Carnival and P&O Princess. In addition, Gerald R. Cahill, the
Chief Financial Officer of Carnival, will be the Chief Financial Officer of
both Carnival and P&O Princess. The Combined Group expects to take advantage of
the best management practices across the two companies. The headquarters of the
Combined Group will be in Miami with a corporate office in London.
Dividends
Following completion of the DLC transaction, P&O Princess shareholders will
continue to receive dividends declared by P&O Princess and Carnival
shareholders will continue to receive dividends
63
declared by Carnival. Dividends in respect of both P&O Princess shares and
Carnival shares declared after completion of the DLC transaction will be paid
at about the same time and in equalized amounts in accordance with the
equalization ratio disregarding any amounts required to be deducted or withheld
in respect of taxes and the amount of any applicable tax credits.
Carnival will continue to pay dividends in U.S. dollars. P&O Princess
shareholders will continue to have the option to elect to receive dividends in
U.S. dollars or pounds sterling in accordance with P&O Princess' existing
procedures.
It is intended that the first dividend to be paid by the Combined Group will be
declared in April 2003, with a record date in May 2003 and a payment date in
June 2003.
On-going Reporting
We expect that the DLC transaction will be accounted for under U.S. GAAP using
the purchase method of accounting in accordance with Statement of Financial
Accounting Standards No. 141 "Business Combinations". In accordance with the
purchase method of accounting, the P&O Princess U.S. GAAP accounting policies
will be conformed to Carnival's accounting policies upon completion of the DLC
transaction.
Following implementation of the DLC structure, P&O Princess will change its
fiscal year end to November 30 so that it will be the same as Carnival's
current fiscal year end. The Combined Group intends to publish combined
financial statements denominated in U.S. dollars and prepared in accordance
with U.S. GAAP. We expect that these combined financial statements will be
included in a combined annual report. P&O Princess also expects to include
summary balance sheet information and summary income statement information
prepared in accordance with UK GAAP, without notes, in the annual report. P&O
Princess shareholders will be able to request an additional document containing
P&O Princess financial statements prepared in accordance with UK GAAP, which
together with the other published information would constitute the full annual
report and financial statements.
We and P&O Princess will file periodic and current reports with the SEC on a
joint basis in accordance with the rules applicable to U.S. domestic reporting
companies. The financial statements presented in the periodic reports will
consist of combined financial statements of the Combined Group prepared in
accordance with U.S. GAAP.
Taxation of the Combined Group
UK Taxation
Following the DLC transaction, P&O Princess will continue to be tax resident in
the UK and should continue to qualify for the UK tonnage tax regime in respect
of its relevant shipping profits.
In order for the tonnage tax regime to apply to relevant shipping profits, it
is necessary, among other matters, that the strategic and commercial management
of P&O Princess vessels currently within the tonnage tax regime remain located
in the UK. We believe that after implementation of the DLC transaction,
sufficient strategic and commercial management activities will remain located
in the UK to satisfy this test.
P&O Princess has been advised by its tax advisers that the DLC transaction
should not affect the application of the motive test exemption to the UK's
controlled foreign company rules, which currently applies to the non-UK
resident Princess Cruises brand vessel owning and operating subsidiaries.
64
U.S. Taxation
Exemption under Section 883 of the Internal Revenue Code
In general, under Section 883, certain non-U.S. corporations are not subject to
U.S. federal income tax or branch profits tax on certain U.S. source income
derived from the international operation of a ship or ships. Carnival and many
of its ship owning and operating subsidiaries are non-U.S. corporations that
are organized in foreign countries that the Internal Revenue Service has
recognized as having granted an equivalent exemption to U.S. corporations for
the purposes of Section 883 and that derive income from sources within the
United States. In addition, certain members of the P&O Princess Group are
organised in foreign countries that the Internal Revenue Service has recognized
as having granted an equivalent exemption to U.S. corporations for the purposes
of Section 883 and which derive income from sources within the United States.
A foreign corporation will qualify for the benefits of Section 883 if, in
relevant part, (i) the foreign country in which the foreign corporation is
organized grants an equivalent exemption to corporations organized in the
United States and (ii) either (a) more than 50% of the value of the
corporation's stock is owned, directly or indirectly, by individuals who are
residents of that country or of another foreign country that grants an
equivalent exemption to corporations organized in the United States referred to
as the "stock ownership test" (such individuals are referred to as "Qualified
Shareholders") or (b) the foreign corporation meets the publicly-traded test
described below. In addition, to the extent a foreign corporation's shares are
owned by a direct or indirect parent corporation which itself meets the
publicly-traded test, then in analyzing the stock ownership test with respect
to such subsidiary, stock owned directly or indirectly by such parent
corporation will be deemed owned by individuals resident in the country of
incorporation of such parent corporation.
A company whose shares are considered to be "primarily and regularly traded on
an established securities market" in the U.S., the UK or another qualifying
jurisdiction will meet the publicly-traded test (the "publicly-traded test").
Pursuant to recently revised proposed Treasury Regulations issued under Section
883, stock will be considered "primarily traded" on one or more established
securities markets if, with respect to each class of stock of the particular
corporation, the number of shares in each such class that are traded during a
taxable year on any such market exceeds the number of shares in each such class
traded during that year on any other established securities market. Stock of a
corporation will be generally considered "regularly traded" on an established
securities market under the proposed regulations if (i) one or more classes of
stock of the corporation that, in the aggregate, represent more than 50% of the
total combined voting power of all classes of stock of such corporation
entitled to vote and of the total value of the stock of such corporation are
listed on such market; and (ii) with respect to each class relied on to meet
the more than 50% requirement in (i) above, (x) trades in each such class are
effected, other than in de minimis quantities, on such market on at least 60
days during the taxable year, and (y) the aggregate number of shares in each
such class of the stock that are traded on such market during the taxable year
is at least 10% of the average number of shares of the stock outstanding in
that class during the taxable year. A class of stock that otherwise meets the
requirements outlined in the preceding sentence is not treated as meeting such
requirements for a taxable year if, at any time during the taxable year, one or
more persons who own, actually or constructively, at least 5% of the vote and
value of the outstanding shares of the class of stock, own, in the aggregate,
50% or more of the vote and value of the outstanding shares of the class of
stock (the "5% Override Rule"). However, the 5% Override Rule does not apply
(a) where the foreign corporation establishes that Qualified Shareholders own
sufficient shares of the closely-held block of stock to preclude non-Qualified
Shareholders of the closely-held block of stock from owning 50% or more of the
total value of the class of stock for more than half of the taxable year; or
(b) to certain investment companies provided that no person owns, directly or
through attribution, both 5% or more of the value of the outstanding interests
in such investment company and 5% or more of the value of the shares of the
class of stock of the foreign corporation.
65
Carnival will continue to qualify as a publicly-traded foreign corporation for
these purposes after the DLC transaction and, consequently its foreign
subsidiaries that are organized in foreign jurisdictions that grant an
equivalent exemption will, subject to the discussion in the following
paragraph, continue to qualify for Section 883 benefits. P&O Princess believes
that it also should continue to qualify as a publicly-traded foreign
corporation for these purposes after the DLC transaction and, consequently,
that, if relevant, certain members of the P&O Princess Group that are organised
in foreign jurisdictions that grant an equivalent exemption should, subject to
discussion in the following paragraph, continue to qualify for Section 883
benefits.
It is possible that the Combined Group may be characterized for U.S. federal
income tax purposes as a partnership between Carnival and P&O Princess or,
conceivably, among their shareholders, notwithstanding the express intention of
the parties that the DLC structure shall not constitute a partnership or other
similar entity for any purpose. While either such characterization could affect
the technical application of certain rules, neither should have a material
impact under Section 883 or applicable U.S. income tax treaties, as appropriate.
In addition, the DLC structure has a number of features, including the special
voting share and other features with respect to which there is limited or no
authority under the Internal Revenue Code or applicable U.S. income tax
treaties. Although the IRS could take a different position, Carnival and P&O
Princess believe that the special voting share structure is not inconsistent
with the publicly-traded test of Section 883 and that the DLC transaction
should not adversely affect the abilities of Carnival and P&O Princess, nor the
abilities of their respective subsidiaries, to qualify for the benefits of
Section 883 or the applicable U.S. income tax treaties, as appropriate.
Exemption under Applicable Income Tax Treaties
Article 8 of the UK-U.S. Income Tax Treaty provides substantially the same
exemption from tax for UK resident companies for U.S. source shipping income as
Section 883. P&O Princess and its UK resident subsidiaries should continue to
qualify for such benefits after the DLC transaction has been completed.
Although the UK-U.S. Income Tax Treaty has been renegotiated and signed (though
it still has not entered into force as it is pending ratification by the U.S.),
the provisions of Article 8, as renegotiated, are essentially the same as the
provisions in the existing treaty. Unlike the current treaty, however, the
pending UK-U.S. Income Tax Treaty contains a Limitations on Benefits article
that requires one of certain alternative tests to be satisfied in order for a
party to be eligible for benefits under the treaty. P&O Princess believes that
it and its UK resident subsidiaries should satisfy the Limitation on Benefits
article if, and as of when, the pending treaty comes into force. The pending
treaty also contains other limitations that would deny the availability of
treaty benefits for income earned through certain entities. While these other
limitations would apply to income earned through certain P&O Princess entities,
P&O Princess believes, based on its current circumstances, that it will be able
to reorganize as necessary such that the relevant U.S. source shipping income
should qualify for an exemption from U.S. federal income tax, either under the
pending treaty or pursuant to Section 883.
In addition, certain members of the Combined Group rely on other U.S. income
tax treaties for similar exemptions from U.S. taxation on U.S. source shipping
income. We do not believe that the DLC transaction will affect the ability of
these corporations to continue to qualify for such treaty benefits.
There is, however, no authority that directly addresses the impact of a DLC
arrangement or the availability of benefits under Section 883 or any applicable
U.S. income tax treaty and, consequently, the matters discussed above are not
entirely free from doubt.
Taxation in the Absence of an Exemption under Section 883 or Any Applicable
U.S. Income Tax Treaty.
Shipping income that is attributable to transportation of passengers which
begins or ends in the U.S. is considered to be 50% derived from U.S. sources.
Shipping income that is attributable to transportation of passengers which
begins and ends in foreign countries is considered 100% derived from foreign
sources and not subject to U.S. federal income tax. Shipping income that is
attributable to the
66
transportation of passengers which begins and ends in the U.S. without stopping
at an intermediate foreign port is considered to be 100% derived from U.S.
sources.
The legislative history of the transportation income source rules suggests that
a cruise that begins and ends in a U.S. port, but that calls on more than one
foreign port, will derive U.S. source income only from the first and last legs
of the cruise. Because there are no regulations or other IRS interpretations of
these rules, the applicability of the transportation income source rules in the
aforesaid manner is not free from doubt.
In the event that Carnival or P&O Princess or any of their respective
subsidiaries were to fail, in part or in whole, to meet the requirements of
Section 883 of the Internal Revenue Code or Article 8 of the UK-U.S. Income Tax
Treaty or other applicable U.S. income tax treaty, as appropriate, then the
non-exempt U.S. source shipping income would be subject to either the 4% of
gross income tax regime of Section 887 of the Internal Revenue Code (the "4%
tax regime") or the net income and branch profits tax regimes of Section 882
and Section 884 of the Internal Revenue Code (collectively, the "net tax
regime").
The net tax regime is only applicable where the relevant foreign corporation
has (or is considered to have) a fixed place of business in the U.S. that is
involved in the earning of U.S.-source shipping income and substantially all of
this shipping income is attributable to regularly scheduled transportation.
Under the net tax regime, U.S.-source shipping income, net of applicable
deductions, would be subject to a corporate tax of up to 35% and the net
after-tax income would be potentially subject to a further branch tax of 30%.
In addition, interest paid by these corporations (if any) would generally be
subject to a 30% branch interest tax.
Under the 4% tax regime, which should be the tax regime applicable to vessel
owning subsidiaries, the U.S. source shipping income of each of the vessel
owning subsidiaries would be subject to a 4% tax imposed on a gross basis
(without benefit of deductions). Under the 4% tax regime, the maximum effective
rate of tax on shipping income of these subsidiaries attributable to
transportation that either begins or ends in the U.S. would not exceed 2%.
Taxation of Carnival Shareholders
The following is a summary of the principal U.S. federal income tax
consequences generally applicable to a U.S. holder (as defined below) of
Carnival shares with respect to the DLC transaction. This summary is based upon
existing U.S. federal income tax law, including the Internal Revenue Code of
1986, as amended (the "Internal Revenue Code"), proposed, temporary and final
Treasury Regulations, administrative pronouncements, and judicial decisions, as
in effect as of the date hereof, all of which are subject to change, possibly
with retroactive effect. Carnival has not and will not seek a ruling from the
United States Internal Revenue Service ("IRS") with respect to the U.S. federal
income tax consequences described below and, as a result, there can be no
assurance that the IRS will agree with, or that a court will uphold, any of the
conclusions set forth herein.
This summary assumes that each of the Carnival shares has been held as a
capital asset as defined in Section 1221 of the Internal Revenue Code in the
hands of the U.S. holder at all relevant times. This summary assumes that
Carnival is not a "controlled foreign corporation," "foreign personal holding
company" or "passive foreign investment company" ("PFIC") for U.S. federal
income tax purposes. This summary does not address state, local or foreign tax
consequences to U.S. holders, nor does this summary discuss all the tax
consequences that may be relevant to a U.S. holder in light of such holder's
particular circumstances or to U.S. holders subject to special rules, including
certain financial institutions, regulated investment companies, insurance
companies, dealers in securities, tax exempt organizations, persons who hold
Carnival shares as part of a position in a "straddle" or "appreciated financial
position" or as part of a "hedging" or "conversion" transaction, persons that
own or have
67
owned, actually or constructively, 10% or more of the Carnival shares, persons
who acquired their Carnival shares through the exercise or cancellation of
employee stock options or otherwise as compensation for services, U.S. holders
whose functional currency is not the U.S. dollar and holders of Carnival shares
that are not U.S. holders. This summary does not address U.S. tax
considerations that may apply to Carnival shareholders that are not U.S.
holders.
A "U.S. holder" is a holder of Carnival shares who or that is for U.S. federal
income tax purposes (i) a citizen or individual resident of the United States,
(ii) a corporation or other entity taxable as a corporation organized under the
law of the United States or any political subdivision thereof (including the
States and the District of Columbia), (iii) an estate or trust defined in
Section 7701(a)(30) of the Internal Revenue Code, or (iv) any other person that
is subject to U.S. federal income tax on its worldwide income.
Although there is no U.S. federal income tax authority addressing the tax
consequences of a DLC transaction, Carnival believes that the DLC transaction
should not give rise to taxable income or gain for U.S. Carnival shareholders
for U.S. federal income tax purposes. However, the IRS may assert that U.S.
Carnival shareholders received taxable income as a result of the various voting
and equalization provisions necessary to implement the DLC transaction.
Carnival believes that such voting and other rights, if any, received by
shareholders are expected to have only nominal value and, therefore, the
receipt of such rights by U.S. Carnival shareholders would only result in a
nominal amount of income. It is possible, however, that the IRS may disagree
with this conclusion.
Holders of Carnival shares should consult their independent professional
advisers in the light of their particular circumstances as to the U.S. federal
income tax consequences of the DLC transaction, as well as to the effect of any
state, local or applicable foreign tax law.
68
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMBINED GROUP
Set forth below is information with respect to the anticipated members of the
board of directors and senior executive management team of each of Carnival and
P&O Princess following completion of the DLC transaction. You are not being
asked to vote on the election of these directors. Not later than July 30, 2002,
we and P&O Princess will hold annual meetings at which the re-election of all
of the directors will be considered as a joint electorate action.
Following completion of the DLC transaction, the directors of Carnival and P&O
Princess and their respective functions will be:
Name Function
---- --------
Micky Arison /(1)/ Chairman and Chief
Executive Officer
Howard S. Frank /(1)/ Vice-Chairman and Chief
Operating Officer
Robert Dickinson /(1)/ Executive Director
Pier Luigi Foschi /(3)/ Executive Director
A. Kirk Lanterman /(1)/ Executive Director
Peter Ratcliffe /(2)/ Executive Director
Ambassador Richard G.
Capen, Jr. /(1)/ Non-Executive Director
Arnold W. Donald /(1)/ Non-Executive Director
Baroness Hogg /(2)/ Non-Executive Director
Modesto A. Maidique /(1)/ Non-Executive Director
Sir John Parker /(2)/ Non-Executive Director
Stuart Subotnick /(1)/ Non-Executive Director
Uzi Zucker /(1)/ Non-Executive Director
--------
Notes:
(1)Existing Carnival director
(2)Existing P&O Princess director
(3)New director
On completion of the DLC transaction, Stuart Subotnick will be designated as
the Senior Non-Executive Director. This is a newly-created position which the
non-executive directors as a body will select, on an annual basis, from one of
their number.
Directors
The directors of each of Carnival and P&O Princess following completion of the
DLC transaction will be:
Micky Arison, age 53, has been Chairman of the Carnival board of directors
since October 1990 and a director since June 1987. He has been Chief Executive
Officer of Carnival since 1979.
Howard S. Frank, age 61, has been Vice Chairman of the Carnival board of
directors since October 1993 and a director since April 1992. He was appointed
Chief Operating Officer of Carnival in January 1998. From July 1989 to January
1998, he was Chief Financial Officer and Chief Accounting Officer of Carnival.
From July 1975 through June 1989, he was a partner with Price Waterhouse.
Ambassador Richard G. Capen, Jr., age 68, has been a director of Carnival since
April 1994. He is currently a corporate director, author and business
consultant. From 1992 to 1993, Ambassador Capen
69
served as United States Ambassador to Spain. From 1989 to 1991, Ambassador
Capen served as Vice Chairman of Knight-Ridder, Inc. Ambassador Capen was the
Chairman and Publisher of the Miami Herald from 1983 to 1989. Ambassador Capen
is a member of the board of directors of the Economy Fund, Smallcap Fund and
Fixed Income Funds of The Capital Group.
Robert H. Dickinson, age 60, has been a director of Carnival since June 1987.
Mr. Dickinson was Senior Vice President--Sales and Marketing of the Carnival
Cruise Lines division of Carnival from 1979 through May 1993. Since May 1993,
Mr. Dickinson has served as President and Chief Operating Officer of Carnival
Cruise Lines ("CCL"), a division of Carnival.
Arnold W. Donald, age 48, has been a director of Carnival since January 2001.
Since March 2000, Mr. Donald has been the Chairman and Chief Executive Officer
of Merisant Company, a manufacturer and marketer of tabletop sweetener
products, including the Equal(R) and Canderel(R) brands. From January 1998 to
March 2000 he was Senior Vice President of Monsanto Company, a company which
develops agricultural products and consumer goods, and President of its
nutrition and consumer sector. Prior to that he was President of Monsanto
Company's agricultural sector. He is a member of the board of directors of
Crown Cork & Seal Company, Inc., Belden, Inc., GenAmerica Insurance Company,
The Scotts Company and Oil-Dri Corporation.
Pier Luigi Foschi, age 56, has been Chief Executive Officer of Costa Cruises,
S.p.A. since October 1997 and Chairman of its board since January 2000. From
1974 to 1997, he held senior positions with OTIS, a world leader in the field
of elevators, which is a subsidiary of United Technologies Corporation, and
from 1990 to 1997 he was Executive Vice President of Otis's Asia-Pacific
operations.
Baroness Hogg, age 56, is a director of P&O Princess, Chairman of 3i Group Plc
and Frontier Economics and a non-executive director of GKN plc. She is also a
Governor of the British Broadcasting Corporation and a member of the House of
Lords Economic Affairs Committee. Baroness Hogg was Head of the Prime
Minister's Policy Unit, with the rank of Second Permanent Secretary, from 1990-
1995 and served as a non-executive director of P&O between 1999 and October
2000. Baroness Hogg has been a non-executive director of P&O Princess since the
demerger in October 2000.
A. Kirk Lanterman, age 71, is a certified public accountant and has been a
director of Carnival since April 1992. He has been Chairman of the Board,
President and Chief Executive Officer of Holland America Line-Westours Inc.
("HALW"), a subsidiary of Carnival, since August 1999. From March 1997 to
August 1999, he was Chairman of the Board and Chief Executive Officer of HALW.
From December 1989 to March 1997, he was President and Chief Executive Officer
of HALW. From 1983 to 1989, he was President and Chief Operating Officer of
HALW. From 1979 to 1983 he was President of Westours, Inc., which merged with
Holland America Line in 1983.
Modesto A. Maidique, age 62, has been a director since April 1994. He has been
President of Florida International University ("FIU") since 1986. Prior to
assuming the presidency of FIU, Dr. Maidique taught at the Massachusetts
Institute of Technology, Harvard University and Stanford University. Dr.
Maidique has also served as Vice President and General Manager of the
Semiconductor Division of Analog Devices, Inc. which he co-founded in 1969, as
President and Chief Executive Officer of Gerome Therapeutics Collaborative
Research, Inc., a genetics engineering firm, and as General Partner of
Hambrecht & Quist, a venture capital firm. Dr. Maidique is a director of
National Semiconductor, Inc.
Sir John Parker, age 60, is a director of P&O Princess and the non-executive
Chairman of National Grid Transco plc, Firth Rixson Plc and RMC Group plc. He
is non-executive director of Brambles Industries plc. He was formerly Chairman
of Babcock International Group plc and a past President of the Royal
Institution of Naval Architects. Sir John Parker has been a member of the
General Committee of Lloyds Register of Shipping since 1983 and Chairman of its
Technical Committee since 1993. He is Vice-President of the Engineering
Employers' Federation. Sir John has been a non-executive director of P&O
Princess since the demerger in October 2000 and was appointed Deputy Chairman
in September 2002.
70
Peter Ratcliffe, age 54, has been Chief Executive Officer and a director of P&O
Princess since the demerger of P&O Princess from P&O in October 2000. He was
previously an executive director of P&O and head of its cruise division, having
served as President of Princess Cruises since 1993 and its Chief Operating
Officer since 1989. His early career was spent with P&O Containers Limited in
London and Sydney. Peter Ratcliffe served as the Chairman of the International
Council of Cruise Lines in 1997 and 1998.
Stuart Subotnick, age 60, has been a director since July 1987. Mr. Subotnick
has been a general partner and the Executive Vice President of Metromedia
Company since July 1986. He was a director of Metromedia Inc., a predecessor
company, from 1982 and its Executive Vice President from 1986. Prior to 1986,
Mr. Subotnick was Senior Vice President--Finance of Metromedia Inc. from
October 1983 and a member of the Office of the President from 1982. He is a
director of Metromedia International Group, Inc., Metromedia Fiber Networks
Inc. and Big City Radio Inc.
Uzi Zucker, age 66, has been a director since July 1987. Mr. Zucker joined
Bear, Stearns & Co. in 1967 and was a Limited Partner until 1982 and has been a
General Partner since. Mr. Zucker has been a Senior Managing Director of Bear,
Stearns & Co. Inc. since 1985. He is a director of Alliance Tire Company Ltd.,
Cathay Investment Fund, Conair Corporation, Jerusalem Economic Corporation Ltd.
And Industrial Buildings Corporation Ltd.
Executive officers
Following completion of the DLC transaction, Micky Arison, the Chairman and
Chief Executive Officer of Carnival, will be the Chairman and Chief Executive
Officer of both Carnival and P&O Princess and Howard S. Frank, the Vice
Chairman and Chief Operating Officer of Carnival, will be the Vice-Chairman and
Chief Operating Officer of both Carnival and P&O Princess. Peter Ratcliffe, P&O
Princess' Chief Executive Officer, will be an executive director of both
Carnival and P&O Princess. In addition, Gerald R. Cahill, the Chief Financial
Officer of Carnival, will be the Chief Financial Officer of both Carnival and
P&O Princess.
71
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE COMBINED GROUP
The following unaudited pro forma financial information gives pro forma effect
to the DLC transaction, after giving effect to the pro forma adjustments
described in the accompanying notes. We have prepared the unaudited pro forma
financial information from, and you should read it in conjunction with, the
historical consolidated financial statements, including the related notes, of
Carnival and P&O Princess that we have incorporated by reference in this proxy
statement/prospectus. For more information on how to obtain copies of
information incorporated by reference, see "Where You Can Find More
Information."
The unaudited pro forma financial information has been prepared in accordance
with U.S. GAAP and in accordance with Carnival's accounting policies under U.S.
GAAP. U.S. GAAP differs in certain respects from UK GAAP, and Carnival's
accounting policies under U.S. GAAP differ in certain respects from P&O
Princess' accounting policies under UK GAAP and U.S. GAAP. The notes to the P&O
Princess audited consolidated financial statements, which are included in its
Annual Report on Form 20-F for the year ended December 31, 2001 and
incorporated by reference in this proxy statement/prospectus, describe the
principal differences between U.S. GAAP and UK GAAP as they relate to P&O
Princess.
We expect that under U.S. GAAP the DLC transaction will be accounted for using
the purchase method of accounting in accordance with Statement of Financial
Accounting Standards No. 141 "Business Combinations." The business combination
adjustments include provisional estimates of the fair value of the identifiable
assets and liabilities acquired. On completion of the DLC transaction,
adjustments will be made to these provisional estimates to reflect their
estimated fair value at that time. In accordance with the purchase method of
accounting, the P&O Princess U.S. GAAP accounting policies will be conformed to
Carnival's accounting policies upon completion of the DLC transaction.
The unaudited pro forma statements of operations for the nine months ended
August 31, 2002 and for the year ended November 30, 2001 have been prepared as
if the DLC transaction had occurred on December 1, 2000. The unaudited pro
forma balance sheet as of August 31, 2002 has been prepared as if the DLC
transaction had occurred on that date. The historical financial information for
P&O Princess used in the unaudited pro forma financial information of the
Combined Group is as at and for the nine months ended September 30, 2002 and
for the year ended December 31, 2001.
The following unaudited pro forma financial information:
.. has been included for illustrative purposes only and, because of its
nature, may not give a true picture of the results and the financial
position of the Combined Group;
.. does not purport to represent what the combined results of operations
actually would have been if the DLC transaction had occurred on December 1,
2000 or what those results will be for any future periods. The pro forma
adjustments are based upon currently available information;
.. does not reflect the results of business operations or trading since August
31, 2002 for Carnival and September 30, 2002 for P&O Princess; and
.. has not been adjusted to reflect any net transaction benefits referred to
in other sections of this proxy/prospectus.
72
Unaudited Pro Forma Statement of Operations
For the Nine Months Ended August 31, 2002
(U.S. dollars in millions, except per share data)
Pro Forma adjustments
------------------------------------- Pro Forma
Carnival Accounting Business Combined
(U.S. P&O Princess policy combination Group
GAAP) (U.S. GAAP)/(1)/ adjustments adjustments (U.S. GAAP)
-------- --------------- ----------- ----------- -----------
Revenues 3,332.6 1,956.2 (3.0) /(a)/ 5,285.8
Costs and expenses
Operating (1,733.9) (1,195.7) 1.0 /(a)(b)/ (2,928.6)
Selling and administrative (442.6) (275.1) 1.5 /(c)/ 26.1 /(i)(k)/ (690.1)
Depreciation and amortization (281.4) (124.8) (406.2)
Impairment charge (20.0) (20.0)
-------- -------- ---- ---- --------
(2,477.9) (1,595.6) 2.5 26.1 (4,044.9)
-------- -------- ---- ---- --------
Operating income 854.7 360.6 (0.5) 26.1 1,240.9
Nonoperating (expense) income
Net interest expense (61.3) (60.6) 0.3 /(f)/ (121.6)
Other (expense) income (5.3) 1.3 (4.0)
Income tax benefit (expense) 36.5 (17.6) 2.1 /(g)/ 21.0
-------- -------- ---- ---- --------
(30.1) (76.9) 2.4 (104.6)
-------- -------- ---- ---- --------
Net income 824.6 283.7 (0.5) 28.5 1,136.3
======== ======== ==== ==== ========
Earnings per share /(m)/
Basic earnings per share 1.41 1.43
Diluted earnings per share 1.40 1.42
--------
(1)P&O Princess information is for the nine months ended September 30, 2002.
See accompanying notes to unaudited pro forma financial information of the
Combined Group in accordance with U.S. GAAP.
73
Unaudited Pro Forma Statement of Operations
For the Year Ended November 30, 2001
(U.S. dollars in millions, except per share data)
Pro forma adjustments
------------------------------------- Pro Forma
Carnival Accounting Business Combined
(U.S. P&O Princess policy combination Group
GAAP) (U.S. GAAP)/(1)/ adjustments adjustments (U.S. GAAP)
-------- --------------- ----------- ----------- -----------
Revenues 4,535.7 2,451.0 (6.2) /(a)/ 6,980.5
Costs and expenses
Operating (2,468.7) (1,584.1) 7.5 /(a)(b)/ (4,045.3)
Selling and administrative (618.7) (381.5) (1.4) /(c)/ 17.0 /(i)(k)/ (984.6)
Depreciation and amortization (372.2) (146.5) 2.4 /(j)/ (516.3)
Impairment charge (140.4) -- (140.4)
-------- -------- ---- ---- --------
(3,600.0) (2,112.1) 6.1 19.4 (5,686.6)
-------- -------- ---- ---- --------
Operating income before loss
from affiliated operations 935.7 338.9 (0.1) 19.4 1,293.9
Loss from affiliated operations, net (44.0) -- (44.0)
-------- -------- ---- ---- --------
Operating income 891.7 338.9 (0.1) 19.4 1,249.9
Nonoperating income (expense)
Net interest expense (86.4) (54.0) 0.4 /(f)/ (140.0)
Other income (expense) 108.6 (1.9) 106.7
Income tax benefit 12.3 151.2 2.8 /(g)/ 166.3
-------- -------- ---- ---- --------
34.5 95.3 3.2 133.0
-------- -------- ---- ---- --------
Income before cumulative effect
of change in accounting
principle 926.2 434.2 (0.1) 22.6 1,382.9
Cumulative effect of change in
accounting principle (9.0) (9.0)
-------- -------- ---- ---- --------
Net income 926.2 425.2 (0.1) 22.6 1,373.9
======== ======== ==== ==== ========
Earnings per share/(m)/
Basic earnings per share before
cumulative effect of change in
accounting principle 1.58 1.74
Diluted earnings per share before
cumulative effect of change in
accounting principle 1.58 1.74
--------
(1)P&O Princess information is for the year ended December 31, 2001.
See accompanying notes to unaudited pro forma financial information of the
Combined Group in accordance with U.S. GAAP.
74
Unaudited Pro Forma Balance Sheet As of August 31, 2002 (U.S. dollars in
millions)
Pro Forma adjustments
---------------------------------
Pro Forma
Carnival Accounting Business Combined
(U.S. P&O Princess policy combination Group
GAAP) (U.S. GAAP)/(1)/ adjustments adjustments (U.S. GAAP)
-------- --------------- ----------- ----------- -----------
Assets
Current assets
Cash and cash equivalents 1,300.4 211.0 1,511.4
Short-term investments 47.0 47.0
Accounts receivable, net 129.3 126.8 2.7 /(a)/ 258.8
Inventories 91.0 80.2 171.2
Prepaid expenses and other 136.9 129.8 6.9 /(b)(c)/ (66.7) /(g)/ 206.9
Fair value of hedged firm
commitments 97.0 111.8 (111.8) /(e)/ 97.0
-------- ------- ---- ------- --------
Total current assets 1,801.6 659.6 9.6 (178.5) 2,292.3
Property and Equipment, Net 9,251.8 5,065.7 14,317.5
Goodwill and Intangible Assets,
Net 678.4 69.1 3,608.7 /(d)(j)/ 4,356.2
Other Assets 284.6 59.0 (44.9) /(d)(f)/ 298.7
Fair Value of Hedged Firm
Commitments 180.3 180.3
-------- ------- ---- ------- --------
12,196.7 5,853.4 9.6 3,385.3 21,445.0
======== ======= ==== ======= ========
Liabilities and Shareholders'
Equity
Current liabilities
Current portion of long-term debt 25.7 75.6 101.3
Accounts payable 317.3 125.4 442.7
Accrued liabilities 261.3 266.8 0.4 /(a)/ 130.8 /(d)(k)/ 659.3
Customer deposits 744.7 406.3 13.6 /(a)/ 1,164.6
Dividends payable 61.6 -- 61.6
Fair value of derivative contracts 97.8 110.6 208.4
-------- ------- ---- ------- --------
Total current liabilities 1,508.4 984.7 14.0 130.8 2,637.9
Long-Term Debt 3,044.5 2,068.4 9.0 /(f)/ 5,121.9
Deferred Income and Other
Long-Term Liabilities 167.9 11.3 60.0 /(h)/ 239.2
Fair Value of Derivative
Contracts 184.2 -- 184.2
Shareholders' Equity 7,291.7 2,789.0 (4.4) 3,185.5 /(l)/ 13,261.8
-------- ------- ---- ------- --------
12,196.7 5,853.4 9.6 3,385.3 21,445.0
======== ======= ==== ======= ========
--------
(1)P&O Princess information is as of September 30, 2002.
See accompanying notes to unaudited pro forma financial information of the
Combined Group in accordance with U.S. GAAP.
75
Notes to the unaudited pro forma financial information of the Combined
Group in accordance with U.S. GAAP
1. Basis of Presentation
The unaudited pro forma financial information has been prepared on the basis
that the DLC transaction will be accounted for using the purchase method of
accounting under U.S. GAAP with Carnival as the acquirer. The pro forma
financial information is based upon the U.S. GAAP accounting policies of
Carnival.
The historical financial information in relation to Carnival as at and for the
nine months ended August 31, 2002 and for the year ended November 30, 2001 has
been derived from the financial information on Carnival that we have
incorporated by reference in this proxy statement/prospectus.
The historical financial information in relation to P&O Princess as at and for
the nine months ended September 30, 2002 and for the year ended December 31,
2001 has been derived from the financial information on P&O Princess that we
have incorporated by reference in this proxy statement/prospectus after making
certain adjustments. The adjustments, which are set out in note 2, relate to
the conversion of financial information on P&O Princess' accounting policies
under UK GAAP to P&O Princess' accounting policies under U.S. GAAP.
2. Conversion of P&O Princess' financial information to U.S. GAAP
This note provides details of adjustments required to convert P&O Princess'
previously reported financial information as at and for the nine month period
ended September 30, 2002 and for the year ended December 31, 2001 that was
prepared in accordance with P&O Princess' accounting policies under UK GAAP to
information in accordance with U.S. GAAP. The results for the year ended
December 31, 2001 have been restated for the adoption of Financial Reporting
Standard 19: Deferred Tax. Further details of the adjustments are set out in
the audited consolidated financial statements of P&O Princess included in its
Annual Report on Form 20-F for the year ended December 31, 2001, which is
incorporated by reference in this proxy statement/prospectus.
(i) Profit and loss accounts
For the nine months ended September 30, 2002
P&O Princess U.S. GAAP P&O Princess
UK GAAP adjustments U.S. GAAP
------------ ----------- ------------
(U.S. dollars in millions)
Revenues 1,956.2 1,956.2
Costs and expenses
Operating (1,195.7) (1,195.7)
Selling and administrative (267.9) (7.2) (275.1)
Depreciation and amortization (128.3) 3.5 (124.8)
-------- ----- --------
(1,591.9) (3.7) (1,595.6)
-------- ----- --------
Operating income 364.3 (3.7) 360.6
Nonoperating (expense) income
Net interest expense (55.5) (5.1) (60.6)
Other income 1.3 1.3
Income tax expense (15.5) (2.1) (17.6)
-------- ----- --------
(69.7) (7.2) (76.9)
-------- ----- --------
Net income 294.6 (10.9) 283.7
======== ===== ========
76
Notes to the unaudited pro forma financial information of the Combined
Group in accordance with U.S. GAAP--(Continued)
For the year ended December 31, 2001
P&O Princess U.S. GAAP P&O Princess
UK GAAP adjustments U.S. GAAP
------------ ----------- ------------
(U.S. dollars in millions)
Revenues 2,451.0 2,451.0
Costs and expenses
Operating (1,584.1) (1,584.1)
Selling and administrative (357.5) (24.0) (381.5)
Depreciation and amortization (148.1) 1.6 (146.5)
-------- ----- --------
(2,089.7) (22.4) (2,112.1)
-------- ----- --------
Operating income 361.3 (22.4) 338.9
Nonoperating (expense) income
Net interest expense (58.0) 4.0 (54.0)
Other expense (1.9) (1.9)
Income tax (expense) benefit 81.7 69.5 151.2
-------- ----- --------
21.8 73.5 95.3
-------- ----- --------
Income before cumulative effect of change in
accounting principle 383.1 51.1 434.2
Cumulative effect of change in accounting principle (9.0) (9.0)
-------- ----- --------
Net income 383.1 42.1 425.2
======== ===== ========
77
Notes to the unaudited pro forma financial information of the Combined
Group in accordance with U.S. GAAP--(Continued)
(ii) Net assets
As of September 30, 2002
P&O Princess U.S. GAAP P&O Princess
UK GAAP adjustments U.S. GAAP
------------ ----------- ------------
(U.S. dollars in millions)
Assets
Current assets
Cash and cash equivalents 211.0 211.0
Accounts receivables, net 126.8 126.8
Inventories 80.2 80.2
Prepaid expenses and other 163.2 (33.4) 129.8
Fair value of hedged firm commitments -- 111.8 111.8
------- ----- -------
Total current assets 581.2 78.4 659.6
Property and Equipment, Net 5,076.7 (11.0) 5,065.7
Goodwill and Intangible Assets, Net 121.2 (52.1) 69.1
Other Assets 16.4 42.6 59.0
------- ----- -------
5,795.5 57.9 5,853.4
======= ===== =======
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt 68.9 6.7 75.6
Accounts payable 125.4 125.4
Accrued liabilities 287.0 (20.2) 266.8
Customer deposits 406.3 406.3
Fair value of hedged firm commitments -- 110.6 110.6
------- ----- -------
Total current liabilities 887.6 97.1 984.7
Long-Term Debt 2,015.9 52.5 2,068.4
Deferred Income and Other Long-Term Liabilities 11.3 11.3
Shareholders' Equity 2,880.7 (91.7) 2,789.0
------- ----- -------
5,795.5 57.9 5,853.4
======= ===== =======
3. Accounting policy adjustments
The pro forma financial information has been prepared in accordance with the
accounting policies of Carnival under U.S. GAAP, which differ in certain
respects from the U.S. GAAP accounting policies of P&O Princess as noted below.
Upon completion of the DLC transaction, Carnival and P&O Princess will perform
a detailed review of their accounting policies and financial statement
classifications. As a result of this detailed review, it may become necessary
to make certain reclassifications to the Combined Group's financial statements
to conform the P&O Princess financial statements to the Carnival accounting
polices and classifications. Although management does not expect that this
detailed review will result in material changes to accounting policies or
classifications other than as noted below, no such assurance can be given at
this time.
(a) Cruise revenues and expenses
P&O Princess' accounting policy is initially to record deposits received on
sales of cruises as deferred income and recognize them, together with
revenues from onboard activities and all associated direct costs of a
voyage, on a pro rata basis at the time of the voyage. Carnival's
accounting policy is to recognize these items generally upon completion of
voyages with durations of ten days or less and on a pro rata basis for
voyages in excess of ten days.
78
Notes to the unaudited pro forma financial information of the Combined
Group in accordance with U.S. GAAP--(Continued)
(b) Dry-docking
P&O Princess' accounting policy is to capitalize dry-docking costs and
amortize them to operating expense using the straight-line method through
the date of the next scheduled dry-dock, which typically is over two to
three years. Carnival's dry-dock accounting policy is the same as P&O
Princess' except that the capitalized dry-dock costs are amortized to
expense generally over one year. For the nine months ended August 31, 2002,
the year ended November 30, 2001 and as of August 31, 2002 adjustments of
$0.3 million, $6.4 million and $(10.5) million, respectively, have been
made to conform P&O Princess' policy to Carnival's policy.
(c) Marketing and promotion costs
P&O Princess' accounting policy under U.S. GAAP is to expense all marketing
and promotion costs as incurred. Carnival expenses all such costs as
incurred except for brochures and media production costs, which are
recorded as prepaid expenses and charged to expense as the brochures are
consumed or upon the first airing of the advertisement, respectively. For
the nine months ended August 31, 2002, the year ended November 30, 2001 and
as of August 31, 2002 adjustments of $1.5 million, $1.4 million and $17.4
million, respectively, have been made to conform P&O Princess' policy to
Carnival's policy.
4. Business combination adjustments
(d) Purchase consideration and related goodwill and intangible assets are as
follows:
(U.S.$m)
Purchase consideration 5,960.1 (i)
Costs of acquisition 53.0 (ii)
--------
Total purchase consideration 6,013.1
Less fair value of net assets acquired (2,335.3) (iii)
--------
Excess of purchase consideration over net assets acquired 3,677.8 (iv)
========
--------
(i)The purchase consideration will be based upon the average of the quoted
closing market price of Carnival's shares beginning two days before and
ending two days after its DLC transaction offer announcement was agreed to
by the P&O Princess board, and the proposed share consolidation of 3.3289
existing P&O Princess shares for one new P&O Princess share, including P&O
Princess stock options and awards which will vest in full on completion of
the DLC transaction. The Carnival share price of $28.05 per share as of
November 30, 2002 is being used for purposes of this pro forma presentation.
For every $1.00 increase or decrease in the Carnival share price, the
purchase consideration will increase or decrease by approximately $210
million.
(ii)Represents Carnival's estimated direct costs of carrying out the proposed
DLC transaction, including costs related to the registration of Carnival
shares pursuant to the Partial Share Offer, of which $27.4 million has been
incurred by Carnival and is included in other assets.
(iii)Based upon preliminary estimates of the fair value of the identifiable
assets acquired and liabilities assumed given current information. On
completion of the DLC transaction, adjustments will be made to these
preliminary estimates to reflect their estimated fair values at that time.
We expect to have independent appraisals performed subsequent to the
completion of the DLC transaction to establish the fair value of P&O
Princess' ships and intangible assets. No assurance can be given that the
preliminary fair value estimates included in this pro forma financial
information will not be materially changed as a result of these
valuations. Fair value adjustments primarily relate to shipbuilding
contracts, debt and pensions.
(iv)The excess of purchase consideration over net assets acquired is primarily
estimated to include the value attributed to P&O Princess's trademarks,
brand names and goodwill. Management believes that these trademarks and
brand names have indefinite lives and, accordingly, based on SFAS No. 142,
"Goodwill and Other Intangible Assets", no adjustment for pro forma
amortization is required. It is possible that upon final valuation certain
amortizable intangibles will be identified.
79
Notes to the unaudited pro forma financial information of the Combined
Group in accordance with U.S. GAAP--(Continued)
(e)The book value, including prepaid dry-dock costs, and fair value of ships in
use and under construction are preliminarily estimated to be the same in all
material respects. An adjustment has been made to write-off $111.8 million
of the fair value of hedged firm commitments. This adjustment relates to
contractural commitments for ships which were ordered, and hedged, at a time
when the euro was stronger, and hence, these contracts could be replaced
today at a euro price that would convert to a lower U.S. dollar cost at
current exchange rates.
(f)An adjustment has been made to the book value of P&O Princess fixed interest
rate long-term debt to reflect current interest rates, without giving effect
to any possible changes in credit ratings. The fair value of this debt is
based upon quoted market prices or the discounted present value of future
amounts payable on the debt. The fair value adjustment is amortized over the
remaining term of the debt as applicable, which results in a pro forma
decrease in interest expense for the respective periods. In addition, an
adjustment has been made to write-off the book value of P&O Princess'
historical deferred financing costs of $17.5 million related to its existing
borrowings.
(g)An adjustment has been made to the book value of deferred and other tax
assets to reflect recoverable value to the Combined Group and to reverse P&O
Princess' related deferred tax expense.
(h)An adjustment has been made to record the fair value of P&O Princess'
pension plan liabilities.
(i)On completion of the DLC transaction all awards and options granted under
the P&O Princess Employee Share Incentive Plans will vest in full. An
adjustment has been made to reverse the P&O Princess employee share
incentive credit of $1.3 million and charge of $5.1 million for the nine
months ended August 31, 2002 and year ended November 30, 2001, respectively.
(j)An adjustment has been made to eliminate $69.1 million of P&O Princess'
historical goodwill related to prior business acquisitions and to reverse
the related goodwill amortization.
(k)Prior to completion of the DLC transaction, which is expected to take place
early in the second quarter of fiscal 2003, P&O Princess is expected to have
incurred and expensed approximately $144.5 million of costs related to its
terminated Royal Caribbean transaction and the completion of the DLC
transaction with Carnival, including costs incurred to register P&O Princess
ordinary shares with the SEC, of which $39.3 million had been incurred as of
September 30, 2002. Accordingly, an adjustment has been made to P&O
Princess' shareholders' equity to reflect these costs as if they were
recorded within P&O Princess' shareholders' equity as of the balance sheet
date. An adjustment has been made to reverse $27.4 million and $11.9 million
for the nine months ended August 31, 2002 and the year ended November 30,
2001, respectively, of P&O Princess nonrecurring transaction expenses
related to the terminated Royal Caribbean transaction. Carnival and P&O
Princess believe that the Royal Caribbean and Carnival costs are
nonrecurring charges directly attributable, in all material respects, to the
DLC transaction.
(l)The shareholders' equity adjustment represents the net equity increase due
to the application of purchase accounting.
(m)The pro forma weighted average number of shares has been calculated as if
the DLC transaction had occurred on December 1, 2000 and after adjusting for
the proposed P&O Princess share reorganization of 3.3289 existing P&O
Princess shares for one new P&O Princess share.
Based upon the weighted average number of shares outstanding of 692.3
million (697.2 million diluted), or 208.0 million (209.4 million diluted)
after the proposed P&O Princess share
80
Notes to the unaudited pro forma financial information of the Combined
Group in accordance with U.S. GAAP--(Continued)
reorganization, for P&O Princess and 586.5 million (588.1 million diluted)
for Carnival for the nine months ended September 30, 2002 and August 31,
2002, respectively, the pro forma weighted average number of shares for the
Combined Group is calculated as 794.5 million (797.5 million diluted).
Based upon the weighted average number of shares outstanding of 691.5
million (694.8 million diluted), or 207.7 million (208.7 million diluted)
after the proposed P&O Princess share reorganization, for P&O Princess and
585.1 million (586.9 million diluted) for Carnival for the years ended
December 31, 2001 and November 30, 2001, respectively, the pro forma
weighted average number of shares for the Combined Group is calculated as
792.8 million (795.6 million diluted).
The pro forma earnings per share amounts have been calculated using the pro
forma weighted average number of shares, calculated as described above, and
the pro forma earnings for the Combined Group.
(n)Certain restructuring and integration expenses may be recorded subsequent to
completion of the DLC transaction. The amount of these charges has not yet
been determined, although they have been preliminarily estimated to be
approximately $30 million, as they will be the subject of a detailed plan of
restructuring and integration to be completed subsequent to the consummation
of the DLC transaction. A portion of these charges may subsequently be
determined to be part of the purchase consideration. These charges are not
reflected in the unaudited pro forma financial information because they are
not expected to have a continuing impact on the combined results.
81
CHANGES IN RIGHTS OF CARNIVAL SHAREHOLDERS
Set forth below is a summary comparison of the rights of Carnival shareholders
before and after the DLC transaction that highlights the proposed changes to
Carnival's articles of incorporation and by-laws. This summary is not complete
and we encourage you to refer to the relevant parts of the proposed Third
Amended and Restated Articles of Incorporation of Carnival, which are attached
to this proxy statement/prospectus as Annex A-4, and the proposed Amended and
Restated By-laws of Carnival, which are attached to this proxy
statement/prospectus as Annex A-5.
General
Carnival's authorized capital stock consists of 1,000,000,000, of which
960,000,000 are shares of common stock and 40,000,000 are shares of preferred
stock. As of January 9, 2003, there were 586,773,138 shares of common stock and
no shares of preferred stock outstanding. Our transfer agent and registrar is
SunTrust Bank. In connection with the DLC transaction, we are increasing our
authorized capital stock to 2,000,000,000 shares, of which 1,959,999,998 are
shares of common stock, and 40,000,000 are shares of preferred stock. We will
also have one share of special voting stock, which we refer to in this proxy
statement/prospectus as a special voting share, and one share of special stock,
which we refer to in this proxy statement/prospectus as the equalization share.
Upon completion of the DLC transaction, you will continue to own your Carnival
shares and will keep your existing certificates, if you have any. Carnival
shares will continue to be listed on the NYSE. In connection with the DLC
transaction, Carnival shareholders will receive trust shares of beneficial
interests in a special voting entity in the form of a trust that we are
creating. Following completion of the DLC transaction, Carnival shares will
trade in units consisting of one Carnival share and one trust share of
beneficial interest in the special voting entity. Separate stock certificates
will not be issued to represent these trust shares of beneficial interest;
instead, certificates representing your Carnival shares will also evidence
these trust shares of beneficial interest.
Voting Rights
Before DLC transaction
Under Panamanian law, unless the articles of incorporation provide otherwise,
each shareholder is entitled to one vote for each share of capital stock held
by the shareholder, and the articles of incorporation may provide that in
elections of directors and other specified circumstances, shareholders are
entitled to cumulative voting. At any meeting of shareholders, all matters,
except as otherwise provided by Panamanian law, will be decided by a majority
of the votes cast by shareholders present in person or by proxy. Carnival's
current articles of incorporation do not alter the voting rights as provided
under Panamanian law or provide for cumulative voting.
After DLC transaction
Following completion of the DLC transaction, all matters, except as otherwise
expressly provided by Panamanian law, the articles or by-laws, will be decided
by a majority of the votes cast by all shareholders entitled to vote
(including, where applicable, the Carnival Special Voting Entity) who are
present in person or by proxy at such meeting; provided that votes recorded as
abstentions will not be counted as having been "cast." In connection with the
DLC transaction, special voting arrangements will be implemented so that the
shareholders of Carnival and P&O Princess will vote together as a single
decision-making body on all actions submitted to a shareholder vote other than
matters designated as class rights actions or resolutions on procedural or
technical matters.
82
These are called joint electorate actions and will include:
.. the appointment, removal or re-election of any director of Carnival or P&O
Princess or both of them;
.. if required by law, the receipt or adoption of the annual accounts of both
companies;
.. the appointment or removal of the auditors of either company;
.. a change of name by P&O Princess or Carnival, or both of them; or
.. the implementation of a mandatory exchange.
The relative voting rights of the P&O Princess shares and Carnival shares will
be determined by the equalization ratio. Based on an equalization ratio of 1:1,
each Carnival share will have the same voting rights as one P&O Princess share
on joint electorate actions.
In the case of class rights actions, the company wishing to carry out the class
rights action would require the prior approval of shareholders of both
companies, each voting separately as a class. If shareholders of either company
do not approve the action, it will fail.
Class rights actions will include:
.. the voluntary liquidation, dissolution or winding up (or equivalent) of
either company for which shareholder approval is required (other than as
part of a voluntary liquidation, dissolution or winding up (or equivalent)
of both companies at or about the same time provided that such liquidation
is not for the purpose of reconstituting all or a substantial part of the
business of the two companies in one or more successor entities);
.. the sale, lease, exchange or other disposition of all or substantially all
of the assets of either company other than a bona fide commercial
transaction for valid business purposes and at fair market value and not as
part of a proposal, the primary purpose of which is to collapse or unify the
DLC structure;
.. an adjustment to the equalization ratio, other than in accordance with the
Equalization and Governance Agreement;
.. any amendment, removal or alteration of any of the provisions of P&O
Princess' articles of association and Carnival's articles of incorporation
and by-laws which entrench specified core provisions of the DLC structure;
.. any amendment or termination of the principal agreements under which the DLC
structure is implemented (except where otherwise specifically provided in
the relevant agreement);
.. any amendment to, removal or alteration of the effect of certain tax-related
provisions of Carnival's articles of incorporation that would be likely to
cause a mandatory exchange; and
.. anything which the boards of both companies agree should be approved as a
class rights action.
When a quorum for the transaction of business is present at any meeting, a
resolution duly approved at a meeting of Carnival's shareholders by the
affirmative vote of a majority of all the votes cast on such resolution by all
shareholders of Carnival entitled to vote on it (including, where applicable,
the Carnival Special Voting Entity as holder of the Carnival special voting
share described below) who are present in person or by proxy at the meeting
will decide such question brought before such meeting, unless the question is
one upon which, by express provision of applicable law or regulation, the
articles of incorporation or the by-laws, a greater vote is required, in which
case such express provision will govern. Every resolution put to a vote at any
meeting of Carnival shareholders is conducted on a poll.
No resolution to approve a class rights action or joint electorate action will
be approved unless a parallel P&O Princess shareholders' meeting is held to
vote on any equivalent resolution.
83
The Carnival board and the P&O Princess board may:
.. decide to seek approval from shareholders for any matter that would not
otherwise require such approval;
.. require any joint electorate action to instead be approved as a class rights
action; or
.. specify a higher majority vote than the majority that would otherwise be
required by applicable laws and regulations.
Special Voting Shares
Before DLC transaction
Carnival's current articles of incorporation and by-laws do not provide for a
special voting share, as the special voting share is merely a mechanism to give
effect to shareholder votes at parallel shareholder meetings on joint
electorate actions and class rights actions as described above under ''Voting
Rights'' and quorum provisions as described below under ''Quorum
Requirements,'' in each case following completion of the DLC transaction.
After DLC transaction
Reflecting votes of P&O Princess shareholders at Carnival meetings
In connection with the DLC transaction, Carnival's articles of incorporation
will be amended to authorize one special voting share. The Carnival special
voting share will have no rights to income or capital and no voting rights
except as described below. Upon completion of the DLC transaction, Carnival
will issue the Carnival special voting share to the Carnival Special Voting
Entity. At all meetings at which a joint electorate action or a class rights
action will be considered, the holder of the Carnival special voting share must
be present.
For joint electorate actions, the Carnival special voting share will represent
the number of votes cast at the parallel meeting of P&O Princess shareholders
(as adjusted by the equalization ratio and rounded up to the nearest whole
number) and will represent "yes" votes, "no" votes and abstention at the
Carnival meeting in accordance with votes cast at the P&O Princess meeting.
For class rights actions, the Carnival Special Voting Entity, as holder of the
Carnival special voting share, will only vote if the proposed action has not
been approved at the parallel P&O Princess meeting. In that event, the Carnival
special voting share will represent that number of votes equal to the largest
whole percentage that is less than the percentage of the number of votes
necessary to defeat the resolution at the Carnival meeting if the total votes
capable of being cast by all outstanding Carnival shares and other Carnival
shares able to vote were cast in favor of the resolution. In most cases, this
will be 49%. Assuming at least 1% of Carnival shareholders vote against such
class rights action, it will fail. If the P&O Princess shareholders approve the
proposed action, the Carnival special voting share will not represent any votes.
The Carnival special voting share will not represent any votes on any
resolution of a procedural or technical nature, which we refer to in this
document as "procedural resolutions." Procedural resolutions are those that do
not adversely affect the shareholders of P&O Princess in any material respect
and are put to the Carnival shareholders at a meeting. The Chairman of the
Carnival board will, in his absolute discretion, determine whether a resolution
is a procedural resolution. To the extent that such matters require the
approval of Carnival shareholders, any of the following will be procedural
resolutions:
.. that certain people be allowed to attend or be excluded from attending the
meeting;
84
.. that discussion be closed and the question put to the vote (provided no
amendments have been raised);
.. that the question under discussion not be put to the vote (where a
shareholder feels the original motion should not be put to the meeting at
all, if such original motion was brought during the course of that meeting);
.. to proceed with matters in an order other than that set out in the notice of
the meeting;
.. to adjourn the debate (for example, to a subsequent meeting); and
.. to adjourn the meeting.
Reflecting votes of Carnival shareholders at P&O Princess meetings
On completion of the DLC transaction, the P&O Princess special voting share
will be transferred to the trustee of the P&O Princess Special Voting Trust.
For joint electorate actions, the P&O Princess special voting share will
represent the number of votes cast at the parallel meeting of Carnival
shareholders (as adjusted by the equalization ratio and rounded to the nearest
whole number) and will represent "yes" votes, "no" votes and abstention at the
P&O Princess meeting in accordance with votes cast at the Carnival meeting.
For class rights actions, the trustee of the P&O Princess Special Voting Trust,
as holder of the P&O Princess special voting share, will only vote if the
proposed action has not been approved at the parallel Carnival meeting. In that
event, the P&O Princess special voting share will represent that number of
votes equal to the largest whole percentage that is less than the percentage of
the number of votes (or, in the case of a special resolution, such percentage
less one vote) necessary to defeat the resolution at the P&O Princess meeting
if the total number of votes capable of being cast by all outstanding P&O
Princess shares (and other P&O Princess shares able to vote) were cast in favor
of the resolution. In most cases, this will be 49%. Assuming at least 1% of P&O
Princess shareholders vote against such class rights action, it will fail. If
the Carnival shareholders approve the proposed action, the P&O Princess special
voting share will not represent any votes.
The P&O Princess special voting share will not represent any votes on any
procedural resolutions.
Trust shares of beneficial interest in the P&O Princess Special Voting Trust
will be transferred to Carnival. Immediately following this transfer, Carnival
will distribute the trust shares of beneficial interest in the P&O Princess
Special Voting Trust by way of dividend to Carnival shareholders of record at
the close of business on . 2003. Separate certificates will not be issued to
represent these trust shares of beneficial interest in the P&O Princess Special
Voting Trust; instead, the trust shares of beneficial interest will be paired
with, and evidenced by, certificates representing Carnival shares.
Following completion of the DLC transaction, Carnival shares will trade in
units consisting of one Carnival share and one trust share of beneficial
interest in the P&O Princess Special Voting Trust. The provisions of the
pairing agreement described under ''Special Voting Entities; Special Voting
Shares -- Pairing Agreement'' will also be included in the Carnival articles.
The trust shares of beneficial interest in the P&O Princess Special Voting
Trust will entitle Carnival shareholders to receive any distributions made by
the P&O Princess Special Voting Trust. As the sole purpose of the P&O Princess
Special Voting Trust relates to the holding of the P&O Princess special voting
share, it is not expected to make any distributions.
Equalization Share
Before DLC transaction
Carnival's current articles of incorporation and by-laws do not provide for an
equalization share, as the equalization share is merely a mechanism to give
effect to equalized dividend payments to the shareholders of Carnival and P&O
Princess.
85
After DLC transaction
In connection with the DLC transaction, Carnival's articles will be amended to
authorize one equalization share, par value $0.01 per share. The equalization
share will:
.. have rights to dividends in accordance with the Equalization and Governance
Agreement as declared and paid by the board of directors;
.. have no rights to receive notice of, attend or vote at any shareholder
meeting; and
.. in the event of a voluntary or involuntary liquidation of Carnival, rank
after all other holders of shares.
Quorum Requirements
Before DLC transaction
Under Carnival's current by-laws, the holders of a majority of the shares of
stock entitled to vote at any meeting of shareholders, present in person or
represented by proxy, constitutes a quorum for the transaction of any business
at such meeting.
After DLC transaction
Following completion of the DLC transaction, the presence in person or by proxy
at any meeting of Carnival shareholders holding at least one-third of the total
votes entitled to be cast will constitute a quorum for the transaction of
business at such meeting, except as otherwise required by applicable law or
regulation, the articles of incorporation or the by-laws.
For purposes of determining whether a quorum exists at any meeting of
shareholders where a joint electorate action or a class rights action is to be
considered:
.. if the meeting of Carnival shareholders convenes before the parallel
shareholder meeting of P&O Princess, the Carnival special voting share will,
at the commencement of the meeting, have no votes and therefore will not be
counted for purposes of determining the total number of shares entitled to
vote at such meeting or whether a quorum exists at such meeting, although
the Carnival special voting share itself must be present, either in person
(through a representative of the Carnival Special Voting Entity) or by proxy;
.. if the meeting of the Carnival shareholders convenes at substantially the
same time as or after the parallel shareholder meeting of P&O Princess with
respect to one or more joint electorate actions, the Carnival special voting
share will have the maximum number of votes attached to it as were cast on
such joint electorate actions, either for, against or abstained, at the
parallel shareholder meeting of P&O Princess, and such maximum number of
votes (including abstentions) will constitute shares entitled to vote and
present for purposes of determining whether a quorum exists at such meeting;
and
.. if the meeting of shareholders convenes at substantially the same time as or
after the parallel shareholder meeting of P&O Princess with respect to a
class rights action, the Carnival special voting share will, at the
commencement of the meeting, have no votes and therefore will not be counted
for purposes of determining the total number of shares entitled to vote at
such meeting or whether a quorum exists at such meeting, although the
Carnival special voting share itself must be present, either in person
(through a representative of the Carnival Special Voting Entity) or by proxy.
In addition, in order for a quorum to be validly constituted with respect to
meetings of shareholders convened to consider a joint electorate action or
class rights action, the Carnival Special Voting Entity must be present at such
meeting.
86
Shareholder Action By Written Consent
Before DLC transaction
Although Panamanian law provides that shareholders may act by written consent
and Carnival's current by-laws allow action to be taken by written consent,
NYSE rules do not permit shareholder action by written consent.
After DLC transaction
Following completion of the DLC transaction, Carnival's articles of
incorporation and by-laws will not provide Carnival shareholders with the
ability to act by written consent.
Shareholder Proposals
Before DLC transaction
Panamanian law does not specifically address the issue of shareholders'
proposals and Carnival's by-laws do not expressly permit shareholder proposals
to be considered at the annual meeting of shareholders. Panamanian law requires
that prior notice of a meeting must set out the purpose or purposes for which
the meeting is convened. Any proposal to be discussed at a meeting should be
included in the notice of the meeting, unless the notice reserves time for any
other matters which the shareholders may which to discuss.
Under the rules of the Exchange Act, shareholders may submit proposals,
including director nominations, for consideration at shareholder meetings. Such
proposals will need to comply with SEC regulations regarding the inclusion of
shareholder proposals in company-sponsored proxy materials. In order for
shareholder proposals to be considered for inclusion in Carnival's proxy
statement/prospectus for an annual meeting, the written proposals must be
received by Carnival not less than 120 calendar days before the first
anniversary of the date of mailing of the proxy statement from the previous
year's annual meeting.
Carnival's by-laws provide that at any special meeting of shareholders only
such business may be transacted as is related to the purpose or purposes of
such meeting set forth in the notice of the special meeting. Carnival's by-laws
provide that special meetings of shareholders may only be called by the
Carnival board or the president or secretary of Carnival.
After DLC transaction
No change is proposed to be made to Carnival's articles of incorporation or
by-laws regarding shareholder proposals.
Standard of Conduct for Directors
Before DLC transaction
Panamanian law imposes a general fiduciary duty on directors to act prudently
and in the best interests of the company. Among other things, directors are
responsible for the authenticity of the payments which appear to have been made
on behalf of the company, for the validity of dividends to be paid, general
book-keeping and for effecting the operation of the company in accordance with
applicable laws, its articles of incorporation, its by-laws, and resolutions of
the General Assembly of shareholders.
After DLC transaction
No change is proposed to be made to Carnival's articles of incorporation or
by-laws regarding the standard of conduct for directors, except that following
completion of the DLC transaction, the Carnival
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board of directors will be authorized to operate and carry into effect the
Equalization and Governance Agreement, the SVE Special Voting Deed and the
Carnival Deed of Guarantee and, subject to applicable laws and regulations,
nothing done by any director in good faith pursuant to such authority and
obligations will constitute a breach of the fiduciary duties of such director
to Carnival or its shareholders. In particular, the directors will, in addition
to their duties to Carnival, be entitled to consider the interests of the
Carnival shareholders and the P&O Princess shareholders as if Carnival and P&O
Princess were a single entity. Following completion of the DLC transaction, the
boards of directors of Carnival and P&O Princess will be identical.
Meetings of the Board of Directors
Before DLC transaction
Under Panamanian law, the business of every corporation is to be managed and
directed by a board of directors whom, subject to the provisions of Panamanian
law and the articles of incorporation, will have absolute control and full
direction over the corporation's affairs. Carnival's current articles of
incorporation provide that meetings of the board of directors may be held in
the Republic of Panama or in any other country and any director can be
represented and vote by proxy. The board of directors may act by written
consent of a majority of the directors or their proxies in lieu of a meeting. A
majority of the total number of directors constitutes a quorum for the
transaction of business at any meeting of Carnival's board, and the vote of a
majority of the directors present at the time of the vote, if a quorum is
present, will be the act of the board.
After DLC transaction
Following completion of the DLC transaction, at all meetings of each board of
directors, the presence in person or by proxy, of at least one-third of the
total number of directors will constitute a quorum for the transaction of
business except as may be otherwise specifically provided by applicable law,
the articles of incorporation or by-laws. The act of a simple majority of the
directors present in person or by proxy at any meeting at which there is a
quorum will constitute a valid act of the board of directors, except as may be
otherwise specifically provided by applicable law or regulation, the articles
of incorporation or by-laws. The board of directors will continue to be allowed
to act by written consent.
General Meetings of Shareholders
Before DLC transaction
The current by-laws of Carnival provide that the annual meeting of shareholders
be held on a date and at a time in March or April of each year fixed by the
Carnival board. Under Panamanian law, the President, Vice President, Secretary,
or Assistant-Secretary may also determine the place of such meeting which may
be within or without of the Republic of Panama.
After DLC transaction
Following completion of the DLC transaction, written notice of all meetings of
shareholders will have to state the purpose of the meeting, including whether a
joint electorate or class rights action will be considered. The requirement
that the annual meeting be held in March or April of each year will be removed.
In addition, if Carnival proposes to undertake a joint electorate action or
class rights action, Carnival must immediately give notice to P&O Princess of
the nature of the joint electorate action or the class rights action it
proposes to take. Unless such action is proposed to be taken at the annual
meeting of shareholders, the board of directors must convene a special meeting
for the purpose of considering a
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resolution to approve the joint electorate action or class rights action. Such
meeting will be held as close in time as practicable with the parallel
shareholder meeting convened by P&O Princess for purposes of considering such
joint electorate action or class rights action. If Carnival receives notice
from P&O Princess that P&O Princess proposes to undertake a joint electorate
action or a class rights action, the Carnival board of directors must convene a
meeting of Carnival shareholders as close in time as practicable to the P&O
Princess meeting and must propose an equivalent resolution as that proposed at
the P&O Princess meeting. Carnival must cooperate fully with P&O Princess in
preparing resolutions, explanatory memoranda or any other information or
material required in connection with the proposed joint electorate action or
class rights action.
Special Meetings of Shareholders
Before DLC transaction
Panamanian law provides that special meetings of shareholders may be called by:
(1) the President, Vice President, Secretary, or Assistant-Secretary; or (2)
any person or persons authorized by the corporation's articles of incorporation
or by-laws. The by-laws of Carnival provide that special meetings of
shareholders may be called at any time by the board of directors, the President
or the Secretary. Shareholders may not call special meetings. Carnival's
by-laws provide that written notice of each meeting of the shareholders,
stating the date, hour, place and purpose or purposes thereof, will be given,
personally or by mail, to each shareholder entitled to notice of or to vote at
the meeting not less than ten nor more than sixty days before the date of the
meeting. If mailed, such notice will be deposited in the U.S. mail, postage
prepaid, directed to the shareholder at his/her address as it appears on the
records of Carnival.
After DLC transaction
No change is proposed to be made to Carnival's articles of incorporation and
by-laws regarding special meetings, except that following completion of the DLC
transaction, written notice of all meetings of shareholders will state the
purpose of the meeting, including whether a joint electorate action or class
rights action will be considered. In addition, if Carnival proposes to
undertake a joint electorate action or class rights action, Carnival must
immediately give notice to P&O Princess of the nature of the joint electorate
action or the class rights action it proposes to take. Unless such action is
proposed to be taken at the annual meeting of shareholders, the board of
directors is to convene a special meeting for the purpose of considering a
resolution to approve the joint electorate action or class rights action. Such
meeting will be held as close in time as practicable with the parallel
shareholder meeting convened by P&O Princess for purposes of considering such
joint electorate action or class rights action. If Carnival receives notice
from P&O Princess that P&O Princess proposes to undertake a joint electorate
action or a class rights action the Carnival board of directors must convene a
meeting of Carnival shareholders as close in time as practicable to the P&O
Princess meeting and must propose an equivalent resolution as that proposed at
the P&O Princess meeting. Carnival must cooperate fully with P&O Princess in
preparing resolutions, explanatory memoranda or any other information or
material required in connection with the proposed joint electorate action or
class rights action.
Sources and Payment of Dividends
Before DLC transaction
Under Panamanian law, a corporation may pay dividends to the extent of a
corporation's net earnings or capital surplus.
After DLC transaction
Following completion of the DLC transaction, Carnival expects to continue to
pay quarterly dividends and there will be no change in the entitlement of
quarterly dividends for shareholders of either
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company. Carnival shareholders and P&O Princess shareholders will have rights
to income and capital distributions from the combined group based on the
equalization ratio. In order for the companies to pay a dividend or make a
distribution, the ratio of dividends and distributions paid per share of
Carnival common stock to dividends and distributions paid per P&O Princess
ordinary share must equal the equalization ratio, taking account the applicable
currency exchange rate.
Dividends will be equalized according to the equalization ratio (and any
balancing transactions between the companies will be determined and made)
before deduction of any amounts in respect of the tax required to be deducted
or withheld and excluding the amounts of any tax credits or other tax benefits.
If one company has insufficient profits or is otherwise unable to pay a
dividend, Carnival and P&O Princess will, as far as practicable, enter into
such balancing transactions as are necessary to enable both companies to pay
dividends in accordance with the equalization ratio. This may take the form of
a payment from one company to the other or a dividend payment on an
equalization share. Following completion of the DLC transaction Carnival and
P&O Princess expect that dividends received by P&O Princess shareholders will
be made to be consistent with Carnival's regular quarterly dividend.
Rights of Purchase and Redemption
Before DLC transaction
Under Panamanian law, except as otherwise provided in the articles of
incorporation, any corporation may purchase, redeem and dispose of its own
shares. If the acquisition of shares is made with funds or property other than
the excess of assets over the liabilities or the net earnings of the
corporation, the acquired shares of stock will be canceled by the reduction of
the issued stock, but such shares may be sold again if the authorized capital
stock is not decreased by the cancellation of such shares. Shares of its own
stock acquired by any corporation, from funds derived from the excess of its
assets over its liabilities or net earnings, may be retained by the corporation
as treasury stock and sold by it or may be canceled or reissued by resolution
passed by the board of directors.
Carnival's current articles of incorporation do not prohibit the corporation
from purchasing, redeeming and disposing of its own shares. The NYSE requires
that prompt publicity be given and prompt notice be sent to the NYSE of action
which will result in, or which looks toward, either the partial or full call
for redemption of a listed security. NYSE rules provide that when a listed
security is fully redeemed, trading is suspended as soon as the redemption
funds become available to the holders of the security. When only a part of the
listed securities are redeemed, the amount authorized to be listed is reduced
by the amount redeemed as soon as the redemption funds become available to
holders of the redeemed securities.
After DLC transaction
No change is proposed to be made to Carnival's articles of incorporation or
by-laws regarding rights of purchase and redemption of Carnival shares.
Appraisal Rights
Before DLC transaction
Under Panamanian law, shareholders of a corporation do not have appraisal
rights.
After DLC transaction
No change is proposed to be made to Carnival's articles of incorporation or
by-laws regarding appraisal rights.
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Pre-emptive Rights
Before DLC transaction
Under Panamanian law, a shareholder is entitled to pre-emptive rights to
subscribe for additional issuances of common stock or any security convertible
into stock in proportion to the shares that are owned unless there is a
provision to the contrary in the articles of incorporation. Carnival's articles
of incorporation provide that Carnival shareholders are not entitled to
pre-emptive rights.
After DLC transaction
No change is proposed to be made to Carnival's articles of incorporation
regarding pre-emptive rights, except that pursuant to the Equalization and
Governance Agreement, neither Carnival nor P&O Princess may issue any shares
carrying voting rights to the other or its subsidiaries (except on a
pre-emptive basis) during the first two years following the date of the
Equalization and Governance Agreement. After expiration of the initial two-year
period, for each of the subsequent three years neither Carnival nor P&O
Princess may issue shares carrying voting rights to the other company, or any
of that company's subsidiaries, except on a pre-emptive basis to all
shareholders, in excess of 5% per year of the issued or outstanding shares
(calculated as at the first day in such annual period). Thereafter, there will
be no restriction on the issuance of shares carrying voting rights to the other
company or any of that company's subsidiaries. These restrictions may be varied
by a class rights action.
Amendment of Governing Instruments
Before DLC transaction
Under Panamanian law, unless the articles of incorporation require a greater
vote, an amendment to the articles of incorporation may be made:
.. by the holders or their proxies of all the issued and outstanding stock of
the corporation entitled to vote;
.. by means of a resolution passed by holders or their proxies of the majority
of the outstanding stock of the corporation entitled to vote; and
.. in case the amendment to the articles consists in any change in the
preference of shares of any class, by means of a resolution passed by
holders or their proxies of majority of the outstanding stock of the
corporation entitled to vote of each class.
Carnival's articles do not specifically address amendments.
Under Panamanian law, the board of directors of a corporation has the power to
adopt, amend or repeal the by-laws of the corporation, unless specifically
provided to the contrary by the articles of incorporation or in the by-laws
approved by the shareholders. The by-laws of Carnival provide that the by-laws
may be altered, amended, supplemented or repealed or new by-laws may be
adopted, by the board of directors or by vote of the holders of the shares
entitled to vote in the election of directors. Any by-laws adopted, altered or
supplemented by the board of directors may be altered, amended, supplemented or
repealed by the shareholders entitled to vote thereon.
After DLC transaction
Following completion of the DLC transaction, any amendment to the provisions of
Carnival's amended articles of incorporation which entrench the DLC structure
will require approval as a class rights action. The entrenched provisions of
the amended articles of incorporation include matters relating to:
.. the special voting share;
.. anti-takeover provisions;
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.. dividends and distributions;
.. amendments to Carnival's articles and by-laws; and
.. liquidation.
All other provisions of Carnival's articles (except as provided below) may be
amended by the shareholders of Carnival and P&O Princess voting together in a
joint electorate action. Amendments to the Carnival articles require approval,
whether in a class rights action or joint electorate action, of a majority of
all votes entitled to be cast with respect thereto (including votes entitled to
be cast by the Carnival special voting share) at a meeting of Carnival
shareholders.
Notwithstanding the foregoing, any amendment of the articles of incorporation
(1) to specify or change the location of the office or registered agent of
Carnival, or (2) to make, revoke or change the designation of a registered
agent, or to specify or change the registered agent, may be approved and
effected by the board of directors without the approval of the shareholders of
Carnival or the shareholders of P&O Princess.
Following completion of the DLC transaction, any amendment to or repeal of the
provisions of Carnival's by-laws which entrench the DLC structure will also
require approval as a class rights action. Any amendment to or repeal of any
by-law of Carnival other than any of the Carnival entrenched by- laws may be
approved and effected by the board of directors without the approval of the
shareholders of Carnival or the shareholders of P&O Princess. The entrenched
provisions of the amended by-laws include matters relating to:
.. the transferability of the special voting share;
.. the scope of, and voting rights and procedures in relation to, joint
electorate actions, class rights actions and procedural resolutions; and
.. election, qualification and disqualification of directors.
Any amendment to or repeal of any by-law of Carnival other than any of the
Carnival entrenched by-laws may be approved and effected by the Carnival board
without the approval of Carnival Shareholders or P&O Princess shareholders.
If a mandatory exchange is triggered, the articles of incorporation and the
by-laws will be automatically amended upon completion of the mandatory
exchange, without any further action of Carnival or the shareholders of
Carnival to conform to the articles of incorporation and by-laws of Carnival
prior to the implementation of the DLC structure. See "Proposal No. 1--The
Offer and Implementation Agreement--Mandatory Exchange".
Stock Class Rights
Before DLC transaction
Under Panamanian law, any change to the rights of holders of Carnival common
stock or any series of preferred stock requires an amendment to the Carnival
articles of incorporation. Panamanian law provides that the holders of shares
of a class or series will be entitled to vote as a class upon a proposed
amendment if the amendment consists in any change in the preference of the
outstanding shares of any class, or would authorize the issuance of shares with
preferences which are in any respect superior to those of outstanding shares of
any class.
Under its current articles of incorporation, Carnival has the right to issue
shares of common stock and shares of preferred stock for such consideration and
for such corporate purposes as the board of directors may from time to time
determine. The shares of authorized common stock shall be identical in all
respects and have equal rights and privileges. The shares of preferred stock
may be issued from
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time to time in one or more series of any number of shares, provided that the
aggregate number of shares issued and not canceled of any and all such series
shall not exceed the total number of shares of preferred stock authorized, and
with distinctive serial designations, all as shall be stated and expressed in
the resolution or resolutions providing for the issue of such shares of
preferred stock. Each series of shares of preferred stock:
.. may have such voting powers, full or limited, or may be without voting
powers;
.. may be subject to redemption at such time or times and at such prices;
.. may be entitled to receive dividends (which may be cumulative or
non-cumulative) at such rate or rates, in such consideration (including,
without limitation, shares of capital stock), on such conditions and at such
times, and payable in preference to, or in such relation to, the dividends
payable on any other class or classes or series of stock;
.. may have such rights upon the dissolution of, or upon any distribution of
the assets of Carnival;
.. may be made convertible into or exchangeable for, shares of any other class
or classes or of any other series of the same or any other class or classes
of shares of Carnival or any other person at such price or prices or at such
rates of exchange and with such adjustments;
.. may be entitled to the benefit of a sinking fund to be applied to the
purchase or redemption of shares of such series in such amount or amounts;
.. may be entitled to the benefit of conditions and restrictions upon the
creation of indebtedness of Carnival or any subsidiary, upon the issue of
any additional shares (including additional shares of such series or of any
other series) and upon the payment of dividends or the making of other
distributions on, and the purchase, redemption or other acquisition by
Carnival or any subsidiary of, any outstanding shares of Carnival; and
.. may have such other relative, participating, optional or other special
rights, qualifications, limitations or restrictions, all as shall be stated
in the resolution or resolutions providing for the issue of such shares of
preferred stock.
After DLC transaction
No change is proposed to be made to Carnival's articles of incorporation
regarding stock class rights, except that the proposed articles of
incorporation provide that the holders of shares of Carnival common stock be
entitled, in accordance with the Equalization and Governance Agreement and to
the exclusion of the holders of shares of preferred stock, to receive such
dividends as from time to time may be declared by the board of directors,
except as otherwise provided by the resolution or resolutions providing for the
issue of any series of shares of preferred stock.
Rights of Inspection
Before DLC transaction
Panamanian law does not regulate the right to inspect the corporate books and
records. Any shareholder may inspect the corporation's stock ledger, a list of
its shareholders and its other books and records and make copies or extracts of
those materials during normal business hours, subject to applicable provisions,
if any, in the articles of incorporation or by-laws. The current by-laws of
Carnival provide that the board of directors will determine from time to time
whether, and if allowed, when and under what conditions and regulations the
accounts, books, minutes and other records of Carnival or any of them will be
open to the inspection of the shareholders. However, a shareholder holding at
least 5% of the issued and outstanding capital stock of the corporation may
request the General Assembly of Shareholders to appoint auditors for
examination of the balance sheet, or the incorporation records of the
corporation, or the management thereof, but if such proposal is rejected, a
Judge may without further proceeding appoint such auditors.
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After DLC transaction
Following completion of the DLC transaction, every Carnival shareholder will,
upon written demand stating the purpose thereof, have a right to inspect, in
person or by agent or attorney, during the usual hours of business, for a
purpose reasonably related to his interests as a shareholder, the share
register, books of account, and minutes of all proceedings, and make copies or
extracts therefrom.
Classification of the Board of Directors
Before DLC transaction
Panamanian law permits the articles of incorporation or the by-laws to provide
that directors be divided into one, two or three classes, with the term of
office of one class of directors to expire each year. Carnival's current
articles of incorporation do not provide for classification of its board of
directors and each member of the Carnival board is elected annually to serve
until the next annual meeting of shareholders.
After DLC transaction
No change is proposed to be made to Carnival's articles of incorporation
regarding classification of its board of directors.
Election of Directors
Before DLC transaction
Panamanian law provides that the directors of a corporation will be elected in
such manner, at such place and in such time as the articles of incorporation or
the by-laws determine, and that vacancies existing in the board of directors
will be filled in the manner prescribed by the articles of incorporation or the
by-laws. If the directors are not elected on the day designated for that
purpose, the directors in office will continue to serve as such until their
respective successors are elected. Carnival's current by-laws provide that all
elections of directors be by written ballot and that directors be elected by a
plurality of the votes cast at a meeting of shareholders of shares entitled to
vote in the election of directors. Subject to the provisions of the articles of
incorporation, the number of directors is fixed by the by-laws of the
corporation. Carnival's current articles of incorporation provide that the
number of directors be no less than three and no more than 17. Within said
minimum and maximum, the total number of directors may be fixed from time to
time by action of the shareholders or by action of the board. A change in the
minimum and maximum number of directors will require an amendment to the
articles.
After DLC transaction
Following completion of the DLC transaction, resolutions relating to the
appointment, removal and re-election of directors will be considered as a joint
electorate action and voted upon by the shareholders of each company
effectively voting together as a single decision-making body. The number of
directors will be a minimum of three and a maximum of 25. No person may be
elected or appointed to serve on the Carnival board unless that person is also
elected to be a member of the P&O Princess board. Any director of Carnival who
resigns from the Carnival board must also resign from the P&O Princess board
and vice versa.
Removal of Directors
Before DLC transaction
Panamanian law provides that a director may be removed with or without cause by
the holders of a majority in voting power of the shares entitled to vote at an
election of directors. The by-laws of
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Carnival provide that any director may be removed at any time, with or without
cause, only by the affirmative vote of holders of a majority of the shares of
the class of common stock which elected them.
After DLC transaction
Following completion of the DLC transaction, subject to the provisions of
Panamanian law, directors may be removed with or without cause only by a
majority vote of a quorum of the shareholders.
Vacancies on the Board of Directors
Before DLC transaction
Under Panamanian law, vacancies existing in the board of directors will be
filled in the manner prescribed by the company's articles of incorporation or
the by-laws. Subject to the foregoing, the following vacancies may be filled by
a vote of a majority of the directors then in office: (1) vacancies on a board
of directors; and (2) newly created directorships resulting from an increase in
the authorized number of directors. However, if the holders of any specific
class of stock are entitled to elect directors, vacancies and newly created
directorships of the class may only be filled by a majority of the directors
elected by the class. If the board increases the number of directors, any
vacancy so created may be filled by the board.
After DLC transaction
Following completion of the DLC transaction, vacancies on the board of
directors will be filled by a majority of the directors then in office, even
though less than a quorum, provided that any such person is appointed to both
the Carnival board and the P&O Princess board at the same time. If only one
director remains in office, the director will have the power to fill all
vacancies. If there are no directors, the Secretary of Carnival may call a
meeting at the request of any two shareholders for the purpose of appointing
one or more directors.
Indemnification of Directors and Officers
Before DLC transaction
Panamanian law does not specifically address the issue of indemnification of
directors and officers. Carnival may indemnify any officer or director who is
made a party to any suit or proceeding on account of being a director, officer
or employee of the corporation against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement reasonably incurred by him/her
in connection with the action, through, among other things, a majority vote of
a quorum consisting of directors who were not parties to the suit or proceeding
if the officer or director acted in good faith and in a manner he/she
reasonably believed to be in the best interests of the corporation. In a
criminal proceeding, the standard is that the director or officer had no
reasonable cause to believe his/her conduct was unlawful.
Carnival's articles of incorporation and by-laws provide that Carnival will
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was a director or an officer of Carnival against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
to the fullest extent and in the manner set forth in and permitted by the
General Corporation Law of Panama, and any other applicable law, as from time
to time in effect. This right of indemnification is not exclusive of any other
rights to which a director or officer may be entitled. Any repeal or
modification of the applicable provisions of the General Corporation Law of
Panama will
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not affect any rights or obligations then existing with respect to any state of
facts then or theretofore existing or any action, suit or proceeding
theretofore or thereafter brought or threatened based in whole or in part upon
any such state of facts.
In addition, Carnival's current articles of incorporation provide that Carnival
may indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was an employee or agent of Carnival, or is or was serving at the
request of Carnival as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding to the extent and in the manner set forth in and
permitted by the General Corporation Law of the Republic of Panama, and any
other applicable law, as from time to time in effect. Such right of
indemnification is not exclusive of any other rights to which any such person
may be entitled. Carnival is authorized to purchase and maintain insurance in
respect of its indemnification obligations.
After DLC transaction
Following completion of the DLC transaction, a director of Carnival will not be
liable to Carnival, P&O Princess or their respective shareholders for monetary
damages for breach of fiduciary duty as a director.
Each person who was or is a party to or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, by reason of the
fact that such person is or was a director or an officer of Carnival or P&O
Princess or is or was serving at the request of Carnival or P&O Princess as a
director or officer of another corporation, partnership, joint venture, trust
or other enterprise, shall be indemnified and held harmless by Carnival against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding to the fullest extent and in the manner set forth in
and permitted by Panamanian law, and any other applicable law, as from time to
time in effect. Carnival will continue to have the power to purchase and
maintain insurance in respect of its indemnification obligations.
A member of the board of directors, or a member of any committee designated by
the board of directors, will, in the performance of his duties, be fully
protected in relying in good faith upon the records of Carnival or P&O Princess
and upon such information, opinions, reports or statements presented to
Carnival by any of Carnival's or P&O Princess' officers or employees, or
committees of the board of directors, or by any other person as to matters the
member reasonably believes are within such other person's professional or
expert competence and who has been selected with reasonable care by or on
behalf of Carnival. In discharging their duties, directors and officers, when
acting in good faith, may rely upon financial statements of Carnival or P&O
Princess represented to them to be correct by the chief financial officer or
the controller or other officer of Carnival or P&O Princess having charge of
its books or accounts, or stated in a written report by an independent public
or certified public account or firm of such accountants fairly to reflect the
financial condition of Carnival or P&O Princess.
Takeover Restrictions
Before DLC transaction
Under Panamanian law, directors are responsible for the good management and in
general for the execution or faulty fulfillment of their obligations to
administer the corporation's affairs. There is limited legislative or judicial
guidance on takeover issues in Panama and it is difficult to anticipate how a
Panamanian court will react or resolve a matter concerning application of a
policy of judicial deference to board of directors decisions to adopt
anti-takeover measures in the face of a potential takeover
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where the directors are able to show that (1) they had reasonable grounds for
believing that there was a danger to corporate policy and effectiveness from an
acquisition proposal and (2) the board action taken was reasonable in relation
to the threat posed. Before the DLC transaction, Carnival was not subject to
the UK Takeover Code.
In order to qualify as a publicly-traded company under Section 883 of the
Internal Revenue Code, Carnival's articles also contain restrictions that
prevent any person(s) (other than the Arison family and its permitted
transferees) from acquiring beneficial ownership of more than 4.9% of Carnival
shares.
After DLC transaction
Following completion of the DLC transaction, the articles of incorporation of
Carnival will contain provisions which would apply to any person, or group of
persons acting in concert, that acquires shares in the Combined Group which
would trigger a mandatory offer obligation as if the UK Takeover Code applied
to the Combined Group on a combined basis. Where:
.. a person or group of persons acquired, or acquires voting rights over 30%
or more of the combined votes which would be cast on a joint electorate
action; or
.. any person or group of persons that already holds not less than 30% but not
more than 50% of the combined votes which would be cast on a joint
electorate action, acquired, or acquires voting rights over, any shares
which increase the percentage of votes which such person(s) could cast on a
joint electorate action,
such shares acquired would be disenfranchized (that is, the owner of those
shares could cease to have any economic or voting rights on those shares)
unless an offer for all the shares in the Combined Group at a price equivalent
to that applicable to the acquisition has been made by the person or group.
These takeover restrictions would not apply to:
.. acquisitions of shares of the other company by either P&O Princess or
Carnival;
.. if the restrictions are prohibited by applicable law and regulations;
.. any acquisition by the Arison family and certain trusts for their benefit
within the thresholds described below; and
.. any acquisition pursuant to a mandatory exchange.
There are certain exceptions to these provisions in the case of the Arison
family and trusts for their benefit which together will hold approximately 35%
of the equity of the Combined Group immediately following implementation of the
DLC structure. The Arison family and certain trusts for their benefit can
acquire shares in the Combined Group without triggering these provisions
provided that, as a result, their aggregate holdings do not increase by more
than 1% of the voting power of the Combined Group in any period of 12
consecutive months, subject to their combined holdings not exceeding 40% of the
voting power of the Combined Group. However, these parties may acquire
additional shares or voting power without being subject to these restrictions
if they comply with the offer requirement described above. These restrictions
do not apply to acquisitions of shares by either P&O Princess or Carnival.
The 4.9% ownership threshold will remain in place following the DLC
transaction. While both the mandatory offer protection and 4.9% protection
remain in place, no third party other than the Arison family and certain trusts
for their benefit will be able to acquire control of the Combined Group.
Liquidation
Before DLC transaction
Under Panamanian law, if the board of directors deems it advisable that the
corporation be dissolved, it is to propose by a majority of the votes of the
members thereof an Agreement of Dissolution and within
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10 days shall call or cause to be called, in accordance with law, a meeting of
stockholders, to vote on the resolution passed by the board of directors
proposing the dissolution. At the stockholders' meeting, the holders of a
majority of shares with voting rights on the matter can adopt the resolution
for the dissolution of the company. The dissolution of the company may also be
adopted by written consent in lieu of meeting of the holders of all shares
having voting power. Carnival's current articles of incorporation and by-laws
do not address liquidation.
After DLC transaction
Following completion of the DLC transaction, in the event of a voluntary or
involuntary liquidation of Carnival, to the extent assets are available for
distribution, Carnival is to ensure that the holders of Carnival common stock
and P&O Princess ordinary shares will be entitled to a liquidation distribution
which is equivalent on a per share basis in accordance with the equalization
ratio then in effect and disregarding any tax consequences.
In giving effect to the principles regarding a liquidation of Carnival,
Carnival may:
.. make a payment to P&O Princess in accordance with the provisions of the
Equalization and Governance Agreement;
.. issue shares to P&O Princess or to holders of P&O Princess ordinary shares
and make a distribution or return on such shares; or
.. take any other action that the boards of directors of each of Carnival and
P&O Princess consider appropriate to give effect to such principles.
Any action other than a payment of cash by one company to the other company
will require the prior approval of the board of directors of each company.
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PROPOSAL NO. 1
APPROVAL OF THE OFFER AND IMPLEMENTATION AGREEMENT
You are being asked to approve the Offer and Implementation Agreement and
related transactions required to effect the DLC transaction. The affirmative
vote of the holders of a majority of all outstanding Carnival shares entitled
to vote at the special meeting is required to approve the Offer and
Implementation Agreement.
We have attached the Offer and Implementation Agreement as Annex A to this
proxy statement/prospectus. We encourage you to read this agreement carefully
because it is the legal document that governs the terms and conditions on which
we and P&O Princess will effect the DLC transaction.
The Offer and Implementation Agreement
Introduction
On January 8, 2003, P&O Princess and Carnival entered into the Offer and
Implementation Agreement under which, subject to certain conditions, they
agreed to implement the DLC structure. Upon entering into the Offer and
Implementation Agreement and the board of P&O Princess recommending the DLC
proposal, all of the pre-conditions to Carnival's DLC proposal were satisfied.
The following is a simplified illustration of the Combined Group after
implementation of the DLC structure.
[FLOW CHART]
(1)Votes at Carnival shareholders meetings based on the outcome of votes at
parallel meetings of P&O Princess shareholders, and is held by the trustee
of the P&O Princess Special Voting Trust.
(2)Votes at P&O Princess shareholders meetings based on the outcome of votes at
parallel meetings of Carnival shareholders and is held by the Carnival
Special Voting Entity.
(3)Trust shares of beneficial interest in the P&O Princess Special Voting Trust
will be distributed by way of a dividend to Carnival shareholders.
(4)Trust shares of beneficial interest in the P&O Princess Special Voting Trust
will be paired with Carnival shares pursuant to the pairing agreement.
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Generally
The Offer and Implementation Agreement sets out the terms and conditions under
which Carnival and P&O Princess have agreed to implement the DLC structure. The
Offer and Implementation Agreement was entered into by Carnival and P&O
Princess on January 8, 2003. Under the Offer and Implementation Agreement,
Carnival and P&O Princess have agreed, among other things:
.. to use their respective reasonable best efforts to take all steps necessary
or desirable to implement the DLC structure;
.. on satisfaction or waiver of the conditions precedent to closing of the DLC
transaction:
-- to enter into the Equalization and Governance Agreement, the SVE Special
Voting Deed, the Deeds of Guarantee;
-- to effect the amendments to their respective governing documents
necessary to implement the DLC structure;
-- to issue their respective special voting shares;
-- to appoint, and procure the resignations of, such persons as are
necessary to ensure that the board of directors of each company is
identical;
.. subject to certain exceptions, not to approach or entertain, solicit or
facilitate an approach from a third party with respect to an acquisition
proposal for all or a significant portion of the assets or voting power of
its company; and
.. to pay a break fee of $49.4 million, representing 1% of P&O Princess' market
capitalization at the close of business on January 7, 2003, to the other
company if the Offer and Implementation Agreement is terminated in certain
circumstances.
Conditions to the Offer and Implementation Agreement
Completion of the DLC transaction is subject to certain conditions set forth in
the Offer and Implementation Agreement being satisfied or waived on or before
September 30, 2003. If the conditions are not satisfied or waived by the
relevant party on or before September 30, 2003, either Carnival or P&O Princess
may (so long as the terminating party is not in breach of the Offer and
Implementation Agreement and subject to the approval of the UK Takeover Panel)
terminate the Offer and Implementation Agreement. Closing of the DLC
transaction is scheduled to take place not later than the third business day
after the date all conditions are satisfied or waived or such other date as the
parties agree. If the Offer and Implementation Agreement is terminated, the DLC
transaction will not proceed. The most important of these conditions include:
.. approval of at least three-quarters of the P&O Princess shareholders and a
majority of Carnival shareholders;
.. the absence of action, or threatened action, by any governmental authority
that restrains, enjoins or otherwise prohibits the completion or performance
of, or materially adversely affects, the DLC transaction and the other
transactions contemplated by the Offer and Implementation Agreement;
.. effectiveness of the revised governing documents of each of P&O Princess and
Carnival;
.. clearance of the DLC transaction under the European Commission merger
regulation and all other relevant regulatory consents or approvals having
been obtained;
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.. the Partial Share Offer becoming unconditional (other than the condition
regarding completion of the DLC transaction); and
.. approval by the NYSE of the listing of either the trust shares of beneficial
interest or the P&O Princess special voting share, subject in either case
only to official notice of issuance.
Our obligation to complete the DLC transaction is subject to the satisfaction
or waiver of the following additional conditions:
.. the representations and warranties of P&O Princess set forth in the Offer
and Implementation Agreement, as qualified by applicable materiality
thresholds, being true and correct as of the date of the Offer and
Implementation Agreement and as of the closing date;
.. P&O Princess having performed in all material respects its obligations under
the Offer and Implementation Agreement;
.. P&O Princess having obtained all third party consents or approvals necessary
to complete the DLC transaction, other than those that would not have a
material adverse effect;
.. P&O Princess having issued the P&O Princess special voting share and the P&O
Princess special voting share having been deposited in the P&O Princess
Special Voting Trust;
.. each of the documents required to implement the DLC structure having been
executed and delivered in the form agreed; and
.. the Joint Venture Agreement between P&O Princess and Royal Caribbean Cruises
having been terminated.
The obligation of P&O Princess to complete the DLC transaction is subject to
the satisfaction or waiver of the following additional conditions:
.. our representations and warranties in the Offer and Implementation
Agreement, as qualified by applicable materiality thresholds, being true and
correct as of the date of the Offer and Implementation Agreement and as of
the date of completion;
.. our performance in all material respects of our obligations under the Offer
and Implementation Agreement;
.. our having obtained all third party consents or approvals necessary to
complete the DLC transaction, other than those that would not have a
material adverse effect;
.. our having issued the Carnival special voting share to the Carnival Special
Voting Entity; and
.. each of the documents required to implement the DLC structure having been
executed and delivered in the form agreed.
Other Key Provisions of the Offer and Implementation Agreement
Conduct of business
Each of P&O Princess and Carnival have undertaken customary covenants that
place restrictions on it and its subsidiaries until the completion of the DLC
transaction. In general, the P&O Princess group and the Carnival group are
required to conduct their respective businesses in the usual, regular and
ordinary course and to use their reasonable best efforts to preserve materially
intact their business organizations and present lines of business, to maintain
commercially reasonable insurance, to maintain their material rights and
franchises and preserve their existing material relationships with third
parties. P&O Princess and Carnival may, nevertheless, undertake the following
actions: internal reorganizations that are not reasonably likely to have a
material adverse effect on the company undertaking such reorganization; the
purchase, sale or charter of any vessels or amendment to or termination of
existing shipbuild contracts; making other acquisitions or investments for
consideration,
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when offset against any divestments, not to exceed $500 million in the
aggregate; and making any divestments the net proceeds of which do not exceed
$500 million.
P&O Princess and Carnival have also agreed to various specific restrictions
that are substantially reciprocal relating to the conduct of their respective
businesses. These restrictions relate to, among other things, amendments to
governing documents, issuances of shares, changes in capitalization, payment of
dividends, incurrence of indebtedness and the entering into of non-competition
agreements.
The parties have also agreed to adjust the equalization ratio in the manner
provided in the Equalization and Governance Agreement for all actions occurring
prior to the effective time of the DLC transaction that would require an
automatic adjustment if such agreement were in force during such period, except
that there will be no adjustments for regular dividends declared prior to the
effective time.
Information and cooperation
The Offer and Implementation Agreement contains mutual covenants relating to
cooperation and consultation with respect to necessary filings with
governmental entities, access to information of the other party and public
announcements with respect to the transactions contemplated by the Offer and
Implementation Agreement.
Shareholder meetings
The Offer and Implementation Agreement contains mutual covenants relating to
the preparation of this proxy statement/prospectus and the other prospectus and
circular relating to the DLC transaction and the holding of the P&O Princess
extraordinary general meeting and the Carnival special meeting as soon as
possible to obtain shareholder approval of the transactions contemplated by the
Offer and Implementation Agreement.
Corporate governance
Following the DLC transaction, the board of directors of each of P&O Princess
and Carnival will consist of 13 directors. The proposed directors of Carnival
and P&O Princess following implementation of the DLC structure are listed under
"Directors and Executive Officers of the Combined Group".
Declaration and payment of dividends
P&O Princess and Carnival have agreed that, until the DLC transaction is
completed, each company will only pay regular quarterly dividends. The parties
have agreed to coordinate declaration of dividends so that neither company's
shareholders will receive two dividends, or fail to receive one dividend, in
respect of the quarter in which the DLC transaction is completed.
Representations and warranties
The Offer and Implementation Agreement contains substantially reciprocal
representations and warranties of P&O Princess and Carnival relating to their
respective businesses that are customary in business combination transactions.
Certain representations and warranties are qualified by a material adverse
effect standard, which for purposes of the Offer and Implementation Agreement,
means a material adverse effect on:
.. the financial condition, results of operations, assets or business of the
relevant party and its subsidiaries;
.. the ability of the relevant party to perform its obligations under the
Offer and Implementation Agreement; or
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.. the completion of the DLC transaction or implementation of the transactions
contemplated by the Offer and Implementation Agreement.
With the exception of the representation regarding corporate authority and
approval of the transactions contemplated by the Offer and Implementation
Agreement, the representations in the Offer and Implementation Agreement do not
survive termination of the Offer and Implementation Agreement or the completion
of the DLC transaction.
Directors' indemnification
P&O Princess has agreed to indemnify the directors of Carnival in relation to
any personal liability arising from information provided (or which should have
been provided) by P&O Princess in connection with certain public documents to
be published by Carnival relating to the DLC proposal. Similarly, Carnival has
agreed to indemnify P&O Princess directors on a similar basis in connection
with certain public documents to be published by P&O Princess relating to the
DLC proposal.
Partial Share Offer
The Offer and Implementation Agreement contains certain provisions agreed by
the parties relating to the making, terms and conduct of the Partial Share
Offer.
Termination of the Offer and Implementation Agreement
The Offer and Implementation Agreement may be terminated, and the DLC
transaction abandoned, before the DLC transaction is scheduled to be completed
if the P&O Princess board and Carnival board mutually agree to do so. In
addition, the Offer and Implementation Agreement may be terminated, and the DLC
transaction abandoned by action of either the P&O Princess board and Carnival
board, as applicable, if:
.. the DLC transaction is not completed by September 30, 2003;
.. any governmental authority of competent jurisdiction shall have issued a
final, non-appealable order permanently restraining, enjoining or otherwise
prohibiting the completion of the DLC transaction or materially adversely
affecting the DLC transaction;
.. the shareholders of either party fail to approve the DLC transaction at the
relevant shareholders' meeting called for the purpose of considering and
voting upon the DLC transaction and other transactions necessary to complete
the DLC transaction;
.. the board of directors of the other party, at any time prior to the
shareholders' meetings, withdraws or adversely modifies its approval or
recommendation of the DLC transaction or shall have resolved to take such
action, or shall have failed to reconfirm such approval or recommendation at
the request of the other party;
.. the board of directors of the other party has recommended a superior
acquisition proposal to its shareholders; or
.. the other party materially breaches any representation, warranty, covenant
or agreement contained in the Offer and Implementation Agreement that causes
the failure of certain conditions to closing and such breach cannot be or
has not been cured prior to termination.
Neither party may terminate the Offer and Implementation Agreement, if that
party has breached in any material respect its obligations under the Offer and
Implementation Agreement and such breach contributed to the failure of the DLC
transaction to be completed.
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If the Offer and Implementation Agreement is terminated, it will become void
and there will be no liability on the part of P&O Princess or Carnival, except
that:
.. termination will not relieve a breaching party from liability for any breach
of the Offer and Implementation Agreement; and
.. termination will not relieve a terminating party from its obligation to pay,
if applicable, the break fee to the other party as described below.
P&O Princess will be obligated to pay Carnival a break fee of $49.4 million,
representing 1% of P&O Princess' market capitalization at the close of business
on January 7, 2003, if the Offer and Implementation Agreement is terminated:
.. by either P&O Princess or Carnival as a result of P&O Princess failing to
obtain shareholder approval of the DLC transaction and, at the time of such
failure, an acquisition proposal existed with respect to P&O Princess; or
.. by Carnival due to:
-- the P&O Princess board withdrawing or adversely modifying, or resolving
to withdraw or adversely modify, its approval or recommendation of the
DLC transaction or failing to reconfirm such approval or recommendation;
-- the P&O Princess board recommending a superior acquisition proposal to
its shareholders; or
-- P&O Princess having breached the no solicitation provisions described
below,
and, a third party acquisition proposal with respect to P&O Princess is
completed within 18 months of the date of the Offer and Implementation
Agreement.
Carnival will be obligated to pay P&O Princess a break fee of $49.4 million,
representing 1% of P&O Princess' market capitalization at the close of business
on January 7, 2003 if the Offer and Implementation Agreement is terminated:
.. by either Carnival or P&O Princess as a result of Carnival failing to obtain
shareholder approval of the DLC transaction and at the time of such failure,
an acquisition proposal existed with respect to Carnival; or
.. by P&O Princess due to:
-- the Carnival board withdrawing or adversely modifying, or resolving to
withdraw or adversely modify, its approval or recommendation of the
Offer and Implementation Agreement and the DLC transaction, or failing
to reconfirm such approval or recommendation;
-- the Carnival board recommending a superior acquisition proposal to its
shareholders; or
-- Carnival having breached the no solicitation covenants described below,
and a third-party acquisition proposal with respect to Carnival is completed
within 18 months of the date of the Offer and Implementation Agreement
No Solicitation
P&O Princess and Carnival have also agreed that they and their respective
subsidiaries will not, and they will use their reasonable best efforts to cause
their respective representatives and subsidiaries' representatives not to,
directly or indirectly, initiate, solicit, encourage or otherwise facilitate
any inquiries or any proposal or offer relating to a merger, acquisition or
other business combination transaction involving the acquisition of 15% or more
of the assets or equity securities of P&O Princess or Carnival. P&O Princess
and Carnival have also agreed not to have any discussions with or provide any
confidential information to any person relating to an acquisition proposal or
otherwise facilitate any
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effort or attempt to make an acquisition proposal, except as described below.
If a bona fide unsolicited written acquisition proposal is made to P&O Princess
or Carnival, that party can negotiate and furnish information in connection
with such proposal and recommend such proposal to its shareholders if (i) its
board of directors determines in good faith after consultation with outside
legal counsel that such action is required by its fiduciary duties, and (ii)
the proposal is on terms which the board of directors determines, after
consultation with its financial advisers and after giving the other party 10
business days to respond to such proposal, is more favorable from a financial
point of view to its shareholders than the DLC transaction, is reasonably
likely to be completed, and which relates to at least a majority of the assets
or voting power of the applicable company. P&O Princess and Carnival have
agreed that they will immediately advise each other following the receipt of
any acquisition proposal.
Mandatory Exchange
In certain limited circumstances following implementation of the DLC structure,
P&O Princess shares may be subject to a mandatory exchange for Carnival shares
at the then prevailing equalization ratio. Upon a mandatory exchange, P&O
Princess shareholders would no longer hold their investment in the Combined
Group in the form of P&O Princess shares listed on the LSE, but would instead
hold their investment in the form of Carnival shares listed on the NYSE. A
mandatory exchange would occur if there is a change in applicable tax laws,
rules or regulations or their application or interpretation, and, based on a
legal opinion and after using commercially reasonable efforts to explore
available alternatives, and the P&O Princess board shall have reasonably
determined that:
.. the change is reasonably likely to have a material adverse effect on the
Combined Group being considered as a single enterprise;
.. it is reasonably likely that the material adverse effect would be eliminated
or substantially reduced by a mandatory exchange; and
.. the material adverse effect could not be substantially eliminated by any
commercially reasonable alternative to a mandatory exchange,
and the mandatory exchange is approved by two-thirds of the shareholders of P&O
Princess and Carnival voting on a joint electorate action.
A mandatory exchange would also occur if:
.. there is a change in the applicable non-tax laws, rules or regulations or
their application or interpretation, as a result of which the P&O Princess
board has reasonably determined and having received a legal opinion, that it
is reasonably likely that all or a substantial portion of the documents
required to implement the DLC structure are unlawful, illegal or
unenforceable; or
.. a court or other governmental entity has issued a ruling, judgement, decree
or order, which has been appealed to the extent the P&O Princess board deems
reasonably appropriate, holding that all or a substantial portion of the DLC
documents are unlawful, illegal or unenforceable,
and the P&O Princess board, based on a legal opinion and after using
commercially reasonable efforts to explore the available alternatives to the
mandatory exchange, has reasonably determined that:
.. the legal basis for the illegality or unenforceability would be eliminated
by a mandatory exchange;
.. the illegality or unenforceability could not be eliminated by amendments to
the documents required to implement the DLC structure that would not
materially and adversely affect the rights of the shareholders of P&O
Princess and Carnival, taken together or in relation to each other;
.. the change in law or the ruling, judgment, decree or order is reasonably
likely to be enforced in a way that will have a material adverse effect on
the Combined Group; and
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.. the P&O Princess board decides to effect a mandatory exchange.
Carnival will execute the Carnival Corporation Deed for the benefit of P&O
Princess shareholders in respect of its obligations to effect a mandatory
exchange under the P&O Princess articles on the basis described above. The
Carnival Corporation Deed will automatically terminate in the following
circumstances:
.. termination of the Equalization and Governance Agreement;
.. completion of a mandatory exchange;
.. a resolution is passed for the liquidation of the whole or substantially the
whole of P&O Princess; or
.. the mandatory exchange provisions in the P&O Princess articles are properly
deleted.
Governing Law of the Offer and Implementation Agreement
The Offer and Implementation Agreement will be governed by New York law.
The Equalization and Governance Agreement
General Principles
The Equalization and Governance Agreement, which will be the contractual
relationship between Carnival and P&O Princess that governs the treatment of
the two companies as if they were a single economic enterprise following
implementation of the DLC structure, embodies the following DLC principles:
.. Carnival and P&O Princess will operate as if they were a single economic
enterprise, through identical boards of directors and a single senior
executive management;
.. the economic interests of Carnival and P&O Princess will be aligned and they
will pursue common interests;
.. the directors of Carnival and P&O Princess will be entitled to have regard
to the interests of both groups of shareholders and both companies of the
Combined Group;
.. the capital of the Combined Group will be deployed and managed in the most
effective way for the benefit of the shareholders of the Combined Group;
.. voting on matters to be considered by the Combined Group's shareholders will
be undertaken in accordance with the P&O Princess articles, the Carnival
articles and by-laws and the SVE Special Voting Deed; and
.. no person will be permitted to obtain control over Carnival or P&O Princess
without making a comparable takeover offer for the other company. Subject to
compliance with these provisions, a person, together with any concert party,
may (a) acquire, or acquire voting rights over, 30% or more of the combined
votes which could be cast on a joint electorate action; or (b) if such
person already holds not less than 30%, but not more than 50%, of the
combined votes which could be cast as a joint electorate action, acquire
voting rights over any shares which increase the percentage of votes which
such person(s) could cast on a joint electorate action.
The Equalization and Governance Agreement will be entered into by Carnival and
P&O Princess at closing of the DLC transaction and will be the primary
agreement governing the ongoing relationship of Carnival and P&O Princess as
dual listed companies operating as if they were a single economic enterprise in
the Combined Group.
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Restrictions on Buy-Backs and Share Issuances
During the first two years after the date of the Equalization and Governance
Agreement neither company will be able to:
.. purchase any P&O Princess shares (except those P&O Princess shares acquired
by Carnival pursuant to the Partial Share Offer); nor
.. issue any shares (or other shares carrying voting rights or securities
convertible into shares carrying voting rights) to any member of the P&O
Princess group and/or the Carnival group (other than as part of pre-emptive
issue to all shareholders of either Carnival or P&O Princess or the issue of
an equalization share).
The restrictions referred to above will apply from the second anniversary until
the fifth anniversary of the date of the Equalization and Governance Agreement
except that Carnival will be permitted to purchase up to 5% of the issued P&O
Princess shares (and other shares carrying voting rights) during each 12 month
period commencing after the second anniversary of the date of the Equalization
and Governance Agreement and each company shall be entitled to issue shares, up
to an aggregate of 5% of its outstanding or issued share capital (or other
shares carrying voting rights or securities convertible into shares carrying
voting rights) to any member of the P&O Princess group and/or the Carnival
group during each 12 month period commencing after the second anniversary of
the date of the Equalization and Governance Agreement. All such restrictions
lapse on the fifth anniversary of the date of the Equalization and Governance
Agreement.
Disenfranchisement
All P&O Princess shares acquired by any member of the Carnival group, whether
as a result of the Partial Share Offer or otherwise, will automatically lose
the right to attend or vote at any general meeting or class meeting of P&O
Princess, unless the Carnival group beneficially owns 90% or more of P&O
Princess shares, or to receive liquidation distributions.
Liquidation
Under the Equalization and Governance Agreement, the Carnival articles and the
P&O Princess articles, the provisions described below will apply on the
insolvency of either or both companies. These provisions are intended to ensure
that, as far as practicable, the shareholders of the Combined Group are treated
equitably in the event of insolvency of either or both companies and in
accordance with the equalization ratio.
One or both companies insolvent
If either or both of Carnival and/or P&O Princess goes into liquidation,
Carnival and P&O Princess will make and receive such payments or take such
other actions required to ensure that the holders of shares of each company
would, had each entity gone into liquidation on the same date, be entitled to
receive a distribution which is equivalent on a per share basis in accordance
with the equalization ratio then in effect, based on the prevailing U.S.
dollar/pound sterling exchange rate (or such other exchange rate agreed by the
P&O Princess board and Carnival board (or the liquidators of the relevant
companies)) and ignoring any tax on, or tax benefit of, any shareholder. To
establish the amount payable, each company will determine the amount of assets
(if any) it will have available for distribution on the date of liquidation (or
notional date of liquidation) to shareholders after payment of all its debts
and other financial obligations including any tax costs associated with such
payment and any payments due on any preference shares. To the extent one
company has greater net assets so that any liquidation distribution to its
shareholders would not be equivalent on a per share basis (in accordance with
the equalization ratio then in effect based on the applicable exchange rate,
but ignoring any tax on, or tax benefit of, a shareholder) to the amount that
could be paid by the other
107
company, the first company will pay or make a balancing payment (or take other
balancing action described below) in such amount as will ensure that, after
payment of any tax liability in respect of the balancing payment or other
action by the companies, both companies make equivalent liquidation payments;
provided always that neither company need make a balancing payment if it would
result in no holders of Carnival shares or P&O Princess shares being entitled
to receive any distribution of property or cash whatsoever.
Balancing action
In giving effect to the principle regarding a liquidation of Carnival and/or
P&O Princess described above, Carnival and P&O Princess will take such action
as may be required to give effect to that principle, which may include:
.. making a payment (of cash or in specie) to the other company;
.. issuing shares (which may include the equalization share) to the other
company or to holders of shares of the other company and making any
distribution or return on such shares; or
.. taking any other action that Carnival and P&O Princess consider appropriate
to give effect to that principle.
Any action other than a payment of cash by one company to the other shall
require the prior approval of the boards of both companies.
Combination
In any combination of Carnival and P&O Princess into a single, non-DLC
structure, the consideration to be received by the shareholders of the two
companies will be calculated by reference to the equalization ratio then in
effect.
Termination of the Equalization and Governance Agreement
The Equalization and Governance Agreement may be terminated:
.. if either Carnival or P&O Princess has become a wholly owned subsidiary of
the other (including as a result of a mandatory exchange);
.. by mutual agreement of Carnival and P&O Princess and approved as a class
rights action; or
.. after all liquidation obligations have been satisfied.
In any other circumstances of termination of the DLC structure, the Carnival
board and P&O Princess board will use their reasonable endeavours to agree to a
termination proposal to be put to their shareholders which those boards
consider to be equitable to both the holders of Carnival shares and the holders
of P&O Princess shares, at the equalization ratio then in effect and using a
currency exchange rate agreed by the parties (or, failing which, an exchange
rate determined by an independent accounting firm). If the Carnival board and
P&O Princess board cannot agree on the proposal to be put to their respective
shareholders then each board will appoint an independent accounting firm to
establish the value of its company as of the proposed date of termination. The
two accounting firms will use the same principles of valuation. If the
accounting firms fail to agree on each other's valuation for the other company,
then a third independent accounting firm shall be appointed to finally
determine the values of both companies. If the agreed/determined respective
values of each company on a per share basis (using the applicable exchange
rate) are not in a proportion that reflects the equalization ratio at the
proposed date of termination, then a balancing payment, or other equivalent
action agreed by the companies, will be made by one company to the other as
appropriate as will ensure that, after payment of any tax liability by either
company in respect of such balancing payment (or other action), such values are
in a proportion that reflects the equalization ratio.
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In the event of any conflict between the Equalization and Governance Agreement,
on the one hand, and either the P&O Princess memorandum and articles or the
Carnival articles of incorporation and by-laws, on the other hand, the parties
will use their best endeavours to ensure that any required amendment to the P&O
Princess memorandum and articles or the Carnival articles of incorporation and
by-laws, as is appropriate, is proposed at shareholder meetings of P&O Princess
and/or Carnival in order to conform the relevant governing document with the
provisions of the Equalization and Governance Agreement.
Governing Law of Equalization and Governance Agreement
The Equalization and Governance Agreement will be governed by the laws of the
Isle of Man.
Equalization Ratio
In order to effect the relative rights of Carnival shares and P&O Princess
shares, the Combined Group will be operated under the following DLC
equalization principles:
.. the equalization ratio will effectively govern the proportion in which
distributions of income and capital are made to the holders of Carnival
shares relative to the holders of P&O Princess shares (and vice versa) and
the relative voting rights of the holders of Carnival shares and the holders
of P&O Princess shares on joint electorate actions. Immediately after
completion of the DLC transaction and the P&O Princess share reorganization,
a holder of one Carnival share will effectively have the same right to
distributions of income and capital and rights as to voting in relation to
joint electorate actions as the holder of one P&O Princess share;
.. issuances of or transactions affecting the share capital of Carnival or P&O
Princess will be implemented in a way which will not give rise to a
materially different financial effect as between the interests of the
holders of Carnival shares and the interests of the holders of P&O Princess
shares. If any such issue or transaction involves any of the following:
-- a rights issue of shares at less than market value;
-- an offer of any securities, or a grant of any options, warrants or other
rights to subscribe for, purchase or sell any securities, to
shareholders by way of rights;
-- non-cash distributions to shareholders and share repurchases involving
an offer made to all or substantially all of the shareholders of a
company to repurchase their shares at a premium to market value;
-- a consolidation or subdivision of shares; or
-- an issue of shares to shareholders for no consideration or solely by way
of capitalization of profits or reserves,
then an automatic adjustment to the equalization ratio will occur as prescribed
in the Equalization and Governance Agreement, unless the Carnival board of
directors and P&O Princess board of directors, in their sole discretion,
undertake:
.. an offer or action which having regard to the then existing equalization
ratio; the timing of the offer or action; and any other relevant
circumstances, is in the reasonable opinion of the boards of Carnival and
P&O Princess financially equivalent (but not necessarily identical) in
respect of, on the one hand holders of Carnival shares, and on the other
hand holders of P&O Princess shares, and does not materially disadvantage
either company's shareholders, which we refer to as a "matching action"; or
.. an alternative to such automatic adjustment that has been approved as such
by a class rights action.
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The Carnival board and P&O Princess board will be under no obligation to
undertake any such matching action or to seek approval of an alternative as a
class rights action if any issue or transaction referred to above is not
covered by an automatic adjustment to the equalization ratio, then no automatic
adjustment to the equalization ratio will occur, but the Carnival board and P&O
Princess board shall have the right (in their sole discretion), but not the
obligation, to undertake a matching action, or to seek approval of an
adjustment to the equalization ratio as a class rights action.
No adjustment to the equalization ratio will be required in respect of:
.. scrip dividends or dividend reinvestments at market price;
.. issuances of P&O Princess shares or Carnival shares or securities
convertible into, or exercizable or exchangeable for, such shares pursuant
to employee share plans;
.. issuances of Carnival shares under Carnival's $600,000,000 2% Convertible
Senior Debentures due 2021 and the $1,051,175,000 Liquid Yield Option
Notes(TM) due 2021;
.. issuances of shares or securities convertible into, or exercisable or
exchangeable for, such shares other than to all or substantially all
shareholders of either company (including for acquisitions);
.. a buy-back or repurchase of any shares:
-- in the market by means of an offer not open to all or substantially all
shareholders of either company or in compliance with Rule 10b-18 under
the Exchange Act;
-- at or below market value;
-- by either company pursuant to the provisions in such company's governing
documents; or
-- pro rata to the shareholders of the Combined Group at the same effective
premium to the market price (taking into account the equalization ratio);
.. matching actions;
.. the issue of an equalization share by either company to the other; and
.. any purchase, cancellation or reduction of disenfranchized shares.
SVE Special Voting Deed
General Provisions
The SVE Special Voting Deed will be signed by Carnival, P&O Princess, the
Carnival Special Voting Entity (as holder of the Carnival special voting
share), the trustee of the P&O Princess Special Voting Trust (as holder of the
P&O Princess special voting share) and the legal and beneficial owner of the
Carnival Special Voting Entity. Among other things, the SVE Special Voting Deed
sets out the following:
Notification obligations. The obligations of Carnival and P&O Princess
respectively to notify the Carnival Special Voting Entity and the trustee of
the P&O Princess Special Voting Trust of the votes cast by holders of Carnival
shares and P&O Princess shares at shareholder meetings (in the case of joint
electorate actions) and whether or not any resolution in relation to a class
rights action was passed by the required majority of holders of Carnival shares
or P&O Princess shares;
Voting obligations. The obligations of the Carnival Special Voting Entity and
the trustee of the P&O Princess Special Voting Trust to attend meetings and to
vote its special voting share in accordance with the Carnival articles and
by-laws or the P&O Princess articles (as the case may be) and the SVE Special
Voting Deed;
Restrictions on transfer of special voting share. Restrictions on the ability
of the Carnival Special Voting Entity and the trustee of the P&O Princess
Special Voting Trust to transfer or encumber in any way (other than the
creation and distribution of the trust shares of beneficial interest in the P&O
Princess Special Voting Trust) the special voting shares or interests in or
rights attaching to such shares unless approved by Carnival and P&O Princess;
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Provision of information. The obligations of Carnival and P&O Princess to
provide the Carnival Special Voting Entity and the trustee of the P&O Princess
Special Voting Trust with such information as it reasonably requires (other
than information which is of a price-sensitive nature and not generally
available) for the purpose of exercising the powers and discretion vested in
it, and discharging its duties, under the SVE Special Voting Deed;
Confidentiality. The obligation of the Carnival Special Voting Entity and the
trustee of the P&O Princess Special Voting Trust to maintain the
confidentiality of information provided to it;
Remuneration of special voting entities. The remuneration, which shall be
agreed between the parties from time to time, and expenses payable to the
Carnival Special Voting Entity and the trustee of the P&O Princess Special
Voting Trust;
Exclusion of responsibilities. The Carnival Special Voting Entity and the
trustee of the P&O Princess Special Voting Trust will not be responsible:
.. in respect of actions taken by them on the opinion or advice of or on
information obtained from any lawyer, valuer, banker, accountant, registrars
or transfer agent of Carnival or P&O Princess or other expert;
.. in circumstances where they have acted upon or have implemented or given
effect to any resolution purporting to have been passed as a resolution of
shareholders; and
.. in respect of them having accepted or acted or relied upon notices given to
them by Carnival or P&O Princess;
Indemnity. Subject to certain exceptions, such as fraud, negligence or willful
default, the Carnival Special Voting Entity and the trustee of the P&O Princess
Special Voting Trust (and their directors, officers, employees, and other
agents) will be indemnified against all liabilities or expenses incurred by
them in the execution of their respective obligations under the SVE Special
Voting Deed;
Restriction on activities. Prohibitions on the Carnival Special Voting Entity
and the trustee of the P&O Princess Special Voting Trust carrying out any
activities other than those necessary or expedient to perform their respective
obligations under the SVE Special Voting Deed or the Carnival articles and
by-laws and/or P&O Princess memorandum and articles; and
Directors. The requirement that the directors of the Carnival Special Voting
Entity be appointed by the owner of the Carnival Special Voting Entity but that
such directors cannot be employees or directors of the P&O Princess group or
the Carnival group.
Amendments to SVE Special Voting Deed
The SVE Special Voting Deed may be amended by all the parties to it agreeing in
writing. The Carnival Special Voting Entity, the trustee of the P&O Princess
Special Voting Trust and the owner of the Carnival Special Voting Entity are
generally required to concur with Carnival and P&O Princess in amending the SVE
Special Voting Deed in relation to:
.. formal or technical amendments which Carnival and P&O Princess certify do
not materially prejudice the interests of shareholders;
.. amendments necessary to correct manifest errors or inconsistencies between
the SVE Special Voting Deed and the Equalization and Governance Agreement;
and
.. amendments approved by both groups of shareholders as a class rights action.
Termination of SVE Special Voting Deed
The SVE Special Voting Deed will terminate if the Equalization and Governance
Agreement is terminated or if a resolution to terminate the SVE Special Voting
Deed is approved by the shareholders of the Combined Group as a class rights
action. Upon termination of the SVE Special Voting Deed or if Carnival so
decides, the Carnival Special Voting Entity will transfer its special voting
share to a person notified to it in writing by the board. In addition, Carnival
can require the Carnival Special Voting Entity
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to transfer the special voting share to a new person (nominated by the Carnival
board) if it wants to replace the trustee company owning the shares in the
Carnival Special Voting Entity.
Governing Law of SVE Special Voting Deed
The SVE Special Voting Deed will be governed by the laws of the Isle of Man.
Deeds of Guarantee
At closing of the DLC transaction, Carnival and P&O Princess will each enter
into a Deed of Guarantee. The Deeds of Guarantee will be governed by the laws
of the Isle of Man.
Carnival Deed of Guarantee
Under the Offer and Implementation Agreement, we have agreed with P&O Princess
to execute the Carnival Deed of Guarantee at the completion of the DLC
transaction in respect of:
.. any contractual monetary obligations owed to creditors of P&O Princess
incurred on or after completion;
.. any contractual monetary obligations of other persons, referred to as
principal debtors, which are guaranteed by P&O Princess and are incurred on
or after completion; and
.. any other obligation of any kind which may be agreed between the Carnival
board and the P&O Princess board.
Pursuant to the Carnival Deed of Guarantee, we will guarantee the payment by
P&O Princess of such obligations and will undertake to pay on demand any
amounts due and in respect of such obligations if for any reason P&O Princess
does not make payment in respect of such obligations on their due date.
The obligations to be covered by the Carnival Deed of Guarantee exclude the
following obligations incurred by P&O Princess or by any principal debtor:
.. any non-monetary obligations;
.. obligations to the extent covered by the terms of any policy of insurance of
which P&O Princess (or the principal debtor) has the benefit and which is in
full force and effect;
.. any obligation explicitly guaranteed in writing by Carnival otherwise than
under the Carnival Deed of Guarantee;
.. any obligation incurred under an arrangement which explicitly provides that
the obligation is not to be guaranteed by Carnival;
.. obligations owed to Carnival or to any of its subsidiaries or subsidiary
undertakings or to any subsidiary or subsidiary undertaking of P&O Princess;
.. obligations of P&O Princess under or in connection with any guarantee by P&O
Princess of any obligation of Carnival or any subsidiary of Carnival;
.. obligations excluded from the scope of the Carnival Deed of Guarantee (see
below); and
.. obligations of P&O Princess under a guarantee, or of any principal debtor
guaranteed by that guarantee, to the extent that the guaranteed obligation
is not a contractual monetary obligation or is of a type excluded as
referred to above.
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Beneficiaries of the Carnival Deed of Guarantee may make demand upon Carnival
provided that any such beneficiary has first served a written demand on P&O
Princess and (to the extent, if any, that the terms of the relevant obligation
require such recourse) recourse first being had to any other person or security.
The Carnival Deed of Guarantee will automatically terminate if the Equalization
and Governance Agreement terminates or ceases to have effect or if the P&O
Princess Deed of Guarantee has terminated or ceased to have effect. We may also
terminate the Carnival Deed of Guarantee with the consent of P&O Princess (or
without their consent where P&O Princess is in liquidation) upon three months
notice. No termination of the Carnival Deed of Guarantee will be effective with
respect to any existing obligation subject to the guarantee (that is, an
obligation incurred before, or arising out of any credit or similar facility
available for use at, the time at which the termination becomes effective).
We may, with the agreement of P&O Princess, at any time exclude obligations of
a particular type, or a particular obligation or obligations, incurred after a
specified future time from the scope of the Carnival Deed of Guarantee. The
future time must, in the case of obligations of a particular type, be at least
three months after the date on which notice of the relevant exclusion is given
or, in the case of a particular obligation, at least five business days after
the date on which notice is given.
We may also amend the Carnival Deed of Guarantee, at any time and in any way,
with effect from such future time as it determines. That future time must be at
least three months after the date on which notice of such amendment is given
under the terms of the Carnival Deed of Guarantee. Any such amendment shall
require the prior agreement of P&O Princess, except where P&O Princess is in
liquidation. No amendment will be effective in respect of existing obligations,
as referred to above.
Any notice to be given to creditors generally will be given by way of an
advertisement in one United Kingdom and one U.S. newspaper (usually the
Financial Times and The Wall Street Journal).
P&O Princess Deed of Guarantee
P&O Princess has agreed to execute a reciprocal guarantee for the benefit of
certain creditors of Carnival on parallel terms to those described above at
closing of the DLC transaction.
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PROPOSAL NO. 2
APPROVAL OF AMENDMENTS TO CARNIVAL'S ARTICLES OF INCORPORATION AND BY-LAWS
Amendments to certain provisions of our existing articles of incorporation and
by-laws are necessary in order to harmonize the governing documents of Carnival
and P&O Princess. Upon completion of the DLC transaction, equivalent changes
will be made to the governing documents of P&O Princess. These proposed
amendments depart from our existing articles of incorporation and by-laws in
areas such as the election and removal of directors, calling of shareholders'
meetings, quorum and the vote required to approve certain matters.
Set forth below is a summary of the proposed changes to Carnival's articles of
incorporation and by-laws. This summary is not complete and we encourage you to
refer to the relevant portions of the proposed Third Amended and Restated
Articles of Incorporation of Carnival, which are attached to this proxy
statement/prospectus as Annex B, and the proposed Amended and Restated By-laws
of Carnival, which are attached to this proxy statement/prospectus as Annex C,
as well as the section of this proxy statement/prospectus called "The DLC
Transaction--Changes in Rights of Carnival Shareholders".
Capitalization
In connection with the DLC transaction, we are increasing our authorized
capital stock from 1,000,000,000 shares, including 960,000,000 shares of common
stock, to 2,000,000,000 shares, including 1,959,999,998 shares of common stock.
Our new articles of incorporation will also authorize one special voting share
and one equalization share.
Voting Rights
In connection with the DLC transaction, special voting arrangements will be
implemented so that the shareholders of Carnival and P&O Princess will vote
together as a single decision-making body on all actions submitted to a
shareholder vote other than matters designated as class rights actions or
resolutions on procedural or technical matters. The relative voting rights of
the P&O Princess shares and Carnival shares will be determined by the
equalization ratio. Based on an equalization ratio of 1:1, each Carnival share
will have the same voting rights as one P&O Princess share on joint electorate
actions.
In the case of class rights actions, the company wishing to carry out the class
rights action would require the prior approval of shareholders of both
companies, each voting separately as a class. If shareholders of either company
do not approve the action, it will fail. No resolution to approve a class
rights action or joint electorate action shall be approved unless a parallel
P&O Princess shareholders' meeting is held to vote on any equivalent
resolution. See "The DLC Transaction--Changes in Rights of Carnival
Shareholders--Voting Rights".
Disenfranchisement
All of our shares acquired by any member of the P&O Princess group will
automatically lose the right to attend or vote at any general meeting or class
meeting of Carnival, unless the P&O Princess group beneficially owns 90% or
more of our shares, or to receive liquidation distributions.
Special Voting Share
In connection with the DLC transaction, Carnival's articles of incorporation
will be amended to authorize one special voting share. Upon completion of the
DLC transaction, Carnival will issue a
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special voting share to the Carnival Special Voting Entity. At all meetings at
which a joint electorate action or a class rights action will be considered,
the holder of the Carnival special voting share must be present. See "The DLC
Transaction--Changes in Rights of Carnival Shareholders--Special Voting Shares".
Quorum Requirements
Following the DLC transaction, the presence in person or by proxy at any
meeting of Carnival shareholders holding at least one-third of the total votes
entitled to be cast will constitute a quorum for the transaction of business at
such meeting, except as otherwise required by applicable law or regulation, the
articles of incorporation or the by-laws. The quorum requirements for any
meeting where a joint electorate action or a class rights action is to be
considered are discussed in the section of this proxy statement/prospectus
called "The DLC Transaction--Changes in Rights of Carnival Shareholders--Quorum
Requirements".
Shareholder Action By Written Consent
Following completion of the DLC transaction, Carnival's articles of
incorporation will not provide Carnival shareholders with the ability to act by
written consent.
Standard of Conduct for Directors
No change is proposed to be made to Carnival's articles of incorporation or
by-laws regarding the standard of conduct for directors, except that following
completion of the DLC transaction, the board of directors will be authorized to
operate and carry into effect the Equalization and Governance Agreement, the
SVE Special Voting Deed and the Carnival Deed of Guarantee and, subject to
applicable laws and regulations, nothing done by any director in good faith
pursuant to such authority and obligations will constitute a breach of the
fiduciary duties of such director to Carnival or its shareholders. In
particular, the directors will, in addition to their duties to Carnival, be
entitled to consider the interests of the Carnival shareholders and the P&O
Princess shareholders as if Carnival and P&O Princess were a single entity.
Following completion of the DLC transaction, the boards of directors of
Carnival and P&O Princess will be identical.
Meetings of the Board of Directors
Following completion of the DLC transaction, the board of directors of each of
Carnival and P&O Princess will be identical. At all meetings of each board of
directors, the presence in person or by proxy, of at least one-third of the
total number of directors will constitute a quorum for the transaction of
business except as may be otherwise specifically provided by applicable law,
the articles of incorporation or by-laws. The act of a simple majority of the
directors present in person or by proxy at any meeting at which there is a
quorum will constitute a valid act of the board of directors, except as may be
otherwise specifically provided by applicable law or regulation, the articles
of incorporation or by-laws.
General Meetings of Shareholders
No change is proposed to be made to Carnival's by-laws regarding annual
meetings, except that following completion of the DLC transaction, written
notice of all meetings of shareholders must state the purpose of the meeting,
including whether a joint electorate or class rights action will be considered.
In addition, if Carnival proposes to undertake a joint electorate action or
class rights action, Carnival must immediately give notice to P&O Princess of
the nature of the joint electorate action or the class
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rights action it proposes to take. Unless such action is proposed to be taken
at the annual meeting, the board of directors must convene a special meeting
for the purpose of considering a resolution to approve the joint electorate
action or class rights action. If Carnival receives notice from P&O Princess
that P&O Princess proposes to undertake a joint electorate action or a class
rights action, the Carnival board of directors must convene a meeting of
Carnival shareholders as close in time as practicable to the P&O Princess
meeting and must propose an equivalent resolution as that proposed at the P&O
Princess meeting. Such meeting will be held as close in time as practicable
with the parallel shareholder meeting convened by P&O Princess for purposes of
considering such joint electorate action or class rights action. Carnival must
cooperate fully with P&O Princess in preparing resolutions, explanatory
memoranda or any other information or material required in connection with the
proposed joint electorate action or class rights action. See "The DLC
Transaction--Changes in Rights of Carnival Shareholders--General Meetings of
Shareholders".
Special Meetings of Shareholders
No change is proposed to be made to Carnival's articles of incorporation and
by-laws regarding special meetings, except to provide for the mechanics
relating to joint electorate and class rights actions. See "The DLC
Transaction--Changes in Rights of Carnival Shareholders--Special Meetings of
Shareholders".
Sources and Payment of Dividends
Following completion of the DLC transaction, Carnival expects to continue to
pay quarterly dividends and there will be no change in the entitlement of
quarterly dividends for shareholders of either company. Carnival shareholders
and P&O Princess Shareholders will have rights to income and capital
distributions from the combined group based on the equalization ratio. In order
for the companies to pay a dividend or make a distribution, the ratio of
dividends and distributions paid per share of Carnival common stock to
dividends and distributions paid per P&O Princess ordinary share must equal the
equalization ratio, taking account the applicable currency exchange rate. See
"The DLC Transaction--Changes in Rights of Carnival Shareholders--Sources and
Payments of Dividends".
Pre-emptive Rights
No change is proposed to be made to Carnival's articles of incorporation
regarding pre-emptive rights, except that pursuant to the Equalization and
Governance agreement, neither Carnival nor P&O Princess may issue any shares
carrying voting rights to the other or its subsidiaries (except on a
pre-emptive basis) during the first two years following the date of the
Equalization and Governance Agreement. Thereafter, until the fifth anniversary
of the date of the Equalization and Governance Agreement, neither Carnival nor
P&O Princess may issue more than 5% of its shares to the other or its
subsidiaries (unless such issuance is made on a pre-emptive basis) in any 12
month period.
Amendment of Governing Instruments
Following completion of the DLC transaction, any amendment to the provisions of
Carnival's amended articles of incorporation which entrench the DLC structure
will require approval as a class rights action. See "The DLC
Transaction--Changes in Rights of Carnival Shareholders--Amendment of Governing
Instruments".
Notwithstanding the foregoing, any amendment of the articles of incorporation
(1) to specify or change the location of the office or registered agent of
Carnival, or (2) to make, revoke or change the designation of a registered
agent, or to specify or change the registered agent, may be approved and
effected by the board of directors without the approval of the shareholders of
Carnival or the shareholders of P&O Princess.
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Following completion of the DLC transaction, any amendment to or repeal of the
provisions of Carnival's by-laws which entrench the DLC structure will also
require approval as a class rights action. Any amendment to or repeal of any
by-law of Carnival other than any of the Carnival entrenched by-laws may be
approved and effected by the board of directors without the approval of the
shareholders of Carnival or the shareholders of P&O Princess. See "The DLC
Transaction--Changes in Rights of Carnival Shareholders--Amendment of Governing
Instruments".
Upon completion of a mandatory exchange, the articles of incorporation and the
by-laws will be automatically amended without any further action of Carnival or
the shareholders of Carnival to conform to the articles of incorporation and
by-laws of Carnival prior to the implementation of the DLC structure. See "The
DLC Transaction--Changes in Rights of Carnival Shareholders--Amendment of
Governing Instruments".
Stock Class Rights
No change is proposed to be made to Carnival's articles of incorporation
regarding stock class rights, except that the proposed articles of
incorporation provide that the holders of shares of Carnival common stock be
entitled, in accordance with the Equalization and Governance Agreement and to
the exclusion of the holders of shares of preferred stock, to receive such
dividends as from time to time may be declared by the board of directors,
except as otherwise provided by the resolution or resolutions providing for the
issue of any series of shares of preferred stock.
Rights of Inspection
Following completion of the DLC transaction, every Carnival shareholder will,
upon written demand stating the purpose thereof, have a right to inspect, in
person or by agent or attorney, during the usual hours of business, for a
purpose reasonably related to his interests as a shareholder, the share
register, books of account, and minutes of all proceedings, and make copies or
extracts therefrom.
Election of Directors
Following completion of the DLC transaction, resolutions relating to the
appointment, removal and re-election of directors will be considered as a joint
electorate action and voted upon by the shareholders of each company
effectively voting together as a single decision-making body. The number of
directors will be a minimum of three and a maximum of 25. No person may be
elected or appointed to serve on the Carnival board unless that person is also
elected to be a member of the P&O Princess board. Any director of Carnival who
resigns from the Carnival board must also resign from the P&O Princess board.
Removal of Directors
Following completion of the DLC transaction, subject to the provisions of
Panamanian law, directors may be removed with or without cause only by a
majority vote of a quorum of the shareholders.
Vacancies on the Board of Directors
Following completion of the DLC transaction, vacancies on the board of
directors will be filled by a majority of the directors then in office, even
though less than a quorum, provided that any such person is appointed to both
the Carnival board and the P&O Princess board at the same time. If only one
director remains in office, the director will have the power to fill all
vacancies. If there are no directors, the Secretary of Carnival may call a
meeting at the request of any two shareholders for the purpose of appointing
one or more directors.
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Indemnification of Directors and Officers
Following completion of the DLC transaction, a director of Carnival will not be
liable to Carnival, P&O Princess or their respective shareholders for monetary
damages for breach of fiduciary duty as a director.
Each person who was or is a party to or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, by reason of the
fact that such person is or was a director or an officer of Carnival or P&O
Princess or is or was serving at the request of Carnival or P&O Princess as a
director or officer of another corporation, partnership, joint venture, trust
or other enterprise, shall be indemnified and held harmless by Carnival against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding to the fullest extent and in the manner set forth in
and permitted by Panamanian law, and any other applicable law, as from time to
time in effect. Carnival will continue to have the power to purchase and
maintain insurance in respect of its indemnification obligations.
A member of the board of directors, or a member of any committee designated by
the board of directors, will, in the performance of his duties, be fully
protected in relying in good faith upon the records of Carnival or P&O Princess
and upon such information, opinions, reports or statements presented to
Carnival by any of Carnival's or P&O Princess' officers or employees, or
committees of the board of directors, or by any other person as to matters the
member reasonably believes are within such other person's professional or
expert competence and who has been selected with reasonable care by or on
behalf of Carnival. In discharging their duties, directors and officers, when
acting in good faith, may rely upon financial statements of Carnival or P&O
Princess represented to them to be correct by the chief financial officer or
the controller or other officer of Carnival or P&O Princess having charge of
its books or accounts, or stated in a written report by an independent public
or certified public account or firm of such accountants fairly to reflect the
financial condition of Carnival or P&O Princess.
Takeover Restrictions
Following completion of the DLC transaction, the articles of incorporation of
Carnival will contain provisions which would apply to any person, or group of
persons acting in concert, that acquires shares in the Combined Group which
would trigger a mandatory offer obligation as if the UK Takeover Code applied
to the Combined Group on a combined basis. See "The DLC Transaction--Changes in
Rights of Carnival Shareholders--Takeover Restrictions".
Carnival's articles also contain restrictions that prevent any person(s) (other
than the Arison family and its permitted transferees) from acquiring more than
4.9% of the beneficial ownership of Carnival shares. While both the mandatory
offer protection and 4.9% ownership threshold remain in place, no third party
other than the Arison family and trusts for their benefit will be able to
acquire control of the Combined Group.
Liquidation
Following completion of the DLC transaction, in the event of a voluntary or
involuntary liquidation of Carnival, to the extent assets are available for
distribution, Carnival is to ensure that the holders of Carnival common stock
and P&O Princess ordinary shares will be entitled to a liquidation distribution
which is equivalent on a per share basis in accordance with the equalization
ratio then in effect and disregarding any tax consequences. See "The DLC
Transaction--Changes in Rights of Carnival Shareholders--Liquidation".
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COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is information concerning the share ownership of (1) all
persons known by us to be the beneficial owners of 5% or more of the
586,773,138 shares of common stock outstanding as of January 9, 2003, (2) each
executive officer of the Company, (3) each other director of Carnival and (4)
all directors and executive officers as a group.
Micky Arison, the Chairman of the Board and Chief Executive Officer of Carnival
other members of the Arison family and trusts for their benefit (collectively,
the "Principal Shareholders"), beneficially own shares representing
approximately 47% of the voting power of the common stock and have entered into
undertakings under which they will be required to vote such shares in favor of
the proposals at the special meeting. These undertakings are irrevocable except
in circumstances where the DLC transaction is withdrawn or lapses. The table
begins with ownership of the Principal Shareholders. See footnote (2) below for
a description of the group comprised of members of the Arison family and other
persons and entities affiliated with them.
The number of shares beneficially owned by each entity, person, director or
executive officer is determined under rules of the SEC, and the information is
not necessarily indicative of beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares as to which the individual
has the sole or shares voting power or investment power and also any shares
which the individual has the right to acquire as of . , 2003 (60 days after
the record date of . , 2003) through the exercise of any stock option or
other right.
Beneficial Ownership Table
Name and Address of Beneficial Owners Amount and Nature of Percent of
or Identity of Group/(1)/ Stock Beneficial Ownership Common
------------------------------------- -------------------- ----------
Micky Arison......................................... 227,663,671/(2)(3)/ 38.9%
Marilyn B. Arison.................................... 1,032,440/(2)/ *
c/o AFO, LLC
P.O. Box 11-1605
Miami, Florida 33111-1605
Shari Arison......................................... 6,251,200/(2)(4)/ *
c/o Israel Arison Foundation
Marcaz Golda Center
23 Shaul Hamelech Blvd.
Tel Aviv, Israel 64367
James M. Dubin....................................... 141,112,083/(2)(16)/ 24.9%
c/o Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
MA 1994 B Shares, L.P................................ 106,114,284/(2)(5)/ 18.1%
MA 1994 B Shares, Inc................................ 106,114,284/(2)(5)/ 18.1%
JMD Delaware, Inc.................................... 106,114,284/(2)(5)/ 18.1%
as Trustee for the Micky Arison 1994 "B" Trust
MA 1997 Holdings, L.P................................ 6,042,187/(2)(6)/ *
MA 1997 Holdings, Inc................................ 6,042,187/(2)(6)/ *
JMD Delaware, Inc.................................... 6,042,187/(2)(6)/ *
as Trustee for the Micky Arison 1997 Holdings Trust
119
Name and Address of Beneficial Owners Amount and Nature of Percent of
or Identity of Group/(1)/ Stock Beneficial Ownership Common
------------------------------------- -------------------- ----------
The Royal Bank of Scotland Trust Company (Jersey) Limited.......... 46,145,830/(2)(7)/ 7.9%
as Trustee of the Ted Arison 1992 Irrevocable Trust for Lin No. 2
P.O. Box 298, St. Helier
Jersey, Channel Islands
Balluta Limited.................................................... 5,102,708/(2)/ *
as Trustee for the Shari Arison Irrevocable Guernsey Trust
c/o Baring Brothers (Guernsey) Limited
Arnold House, St. Julian's Avenue
St. Peter Port
Guernsey, Channel Islands GYI-3DA
Cititrust (Jersey) Limited......................................... 76,787,525/(2)(7)/ 13.1%
as Trustee for the Ted Arison 1994 Irrevocable Trust For
Shari No. 1
P.O. Box 728, 38 Esplanade, St. Helier
Jersey, Channel Islands JE4-8ZT
JMD Protector...................................................... 122,933,355/(2)(7)/ 21.0%
c/o Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, New York 10019
JMD Delaware, Inc.................................................. 2,124,560/(2)/ *
as Trustee for the Continued Trust for Micky Arison
JMD Delaware, Inc.................................................. 3,759,010/(2)/ *
as Trustee for the Continued Trust for Shari Arison Dorsman
JMD Delaware, Inc.................................................. 4,759,010/(2)/ *
as Trustee for the Continued Trust for Michael Arison
JMD Delaware, Inc.................................................. 1,432,440/(2)(8)/ *
as Trustee for the Marilyn B. Arison Irrevocable Delaware Trust
JMD Delaware, Inc.................................................. 1,000,000/(2)/ *
as Trustee for the Michael Arison 1999 Irrevocable Delaware Trust
MBA I, L.L.C....................................................... 1,432,440/(2)(8)/ *
TAMMS Investment Company........................................... 3,653,168/(2)/ *
Limited Partnership
TAMMS Management Corporation....................................... 3,653,168/(2)/ *
The Ted Arison Family Foundation USA, Inc.......................... 2,250,000/(2)/ *
3655 N.W. 87 Avenue
Miami, Florida 33178
Robert H. Dickinson................................................ 525,104/(9)/ *
Pier Luigi Foschi.................................................. 50,000/(10)/ *
Howard S. Frank.................................................... 1,073,606/(11)/ *
A. Kirk Lanterman.................................................. 170,595/(12)/ *
c/o Holland America Line
300 Elliott Avenue West
Seattle, Washington 98119
Maks L. Birnbach................................................... 33,600/(13)/ *
c/o Fullcut Manufacturers, Inc.
555 Fifth Avenue, 19th Floor,
New York, New York 10128
120
Name and Address of Beneficial Owners Amount and Nature of Percent of
or Identity of Group/(1)/ Stock Beneficial Ownership Common
------------------------------------- -------------------- ----------
Ambassador Richard G. Capen, Jr............................. 40,202/(14)/ *
6077 San Elijo
Rancho Santa Fe, California 92067
Arnold W. Donald............................................ 4,200/(15)/ *
c/o Merisant Company
1 North Brentwood Blvd., Ste. 510
Clayton, MO 63105
Modesto A. Maidique......................................... 22,400/(17)/ *
Florida International University
Office of the President
University Park Campus
107th Avenue and S.W. 8th Street
Miami, Florida 33199
Stuart Subotnick............................................ 62,400/(18)/ *
c/o Metromedia Company
810 7th Avenue, 29th Floor
New York, New York 10019
Sherwood M. Weiser.......................................... 14,400/(19)/ *
c/o Continental Hospitality Holdings, LLC
3250 Mary Street
Coconut Grove, Florida 33133
Meshulam Zonis.............................................. 631,463/(20)/ *
1 Island Place, 3801 NE 207th Street
Tower 1, Apartment 2802
North Miami Beach, Florida 32180
Uzi Zucker.................................................. 62,400/(21)/ *
c/o Bear, Stearns & Co. Inc.
383 Madison Avenue
New York, New York 10179
All directors and executive officers as a group (22 persons) 234,376,872/(22)/ 39.9%
--------
* Less than one percent.
(1)The address of each natural person named, unless otherwise noted, is 3655
N.W. 87 Avenue, Miami, Florida 33178-2428. The address of all other
entities, unless otherwise noted, is 1201 North Market Street, Wilmington,
Delaware 19899.
(2)Micky Arison, Shari Arison and the other Arison family entities named that
own shares of common stock have filed a joint statement on Schedule 13D with
respect to the shares of common stock held by such persons. TAMMS Investment
Company Limited Partnership ("TAMMS") owns 3,653,168 shares of common stock.
TAMMS' general partner is TAMMS Management Corporation ("TAMMS Corp."),
which is wholly-owned by MBA I, L.L.C. ("MBA I") and Marilyn B. Arison.
TAMMS' limited partners are various trusts established for the benefit of
certain members of Micky Arison's family, including Shari Arison and Marilyn
Arison (the "Family Trusts"). By virtue of the limited partnership agreement
of TAMMS, TAMMS Corp. may also be deemed to beneficially own such 3,653,168
shares of common stock. By virtue of their interests in TAMMS, JMD Delaware,
Inc. and Balluta Limited, as trustees of certain of the Family Trusts, may
be deemed to beneficially own the portion of the 3,653,168 shares of common
stock held by TAMMS which corresponds to their respective partnership
interest in TAMMS. Such amounts are included in the number of shares set
forth next to their names in the table above. Because Marilyn Arison
beneficially owns all of the capital stock of TAMMS Corp., she may be deemed
to beneficially own all of the 3,653,168 shares of common stock owned by
TAMMS; however, she disclaims beneficial ownership of 2,620,728 of such
shares of common stock (those owned by partners of TAMMS other than TAMMS
Corp. and MBA I. Accordingly, Marilyn B. Arison has only reported beneficial
ownership of 1,032,440 shares held by TAMMS L.P. Because of his position as
President of TAMMS Corp., Micky Arison may be deemed to beneficially own the
3,653,168 shares of common stock owned by TAMMS; however, Micky Arison
disclaims beneficial ownership of all such shares which are beneficially
owned by TAMMS. Accordingly, Micky Arison has not reported beneficial
ownership of any of the shares owned by TAMMS.
(3)Includes (i) 288,000 shares of common stock issuable to Micky Arison upon
his exercise of stock options granted to him in May 1995 and January 1998,
1999, 2000, 2001 and October 2001, (ii) 6,042,187 shares of common stock
held by the MA 1997 Holdings, L.P., (iii) 106,114,284 shares of common stock
held by the MA 1994 B Shares, L.P., (iv) 93,847,639 shares
121
of common stock held by the Ted Arison 1992 Irrevocable Trust for Lin No. 2,
Ted Arison 1994 Irrevocable Trust For Shari No. 1 and the Michael Arison
1999 Irrevocable Delaware Trust by virtue of the authority granted to Micky
Arison under the last will of Ted Arison, and (v) 17,538,393 shares of
common stock held by The 1997 Irrevocable Trust for Micky Arison, all of
which may be deemed to be beneficially owned by Micky Arison. However, Micky
Arison disclaims beneficial ownership of all such shares owned by TAMMS.
(4)Under the terms governing the Shari Arison Irrevocable Guernsey Trust, Shari
Arison has the sole right to vote and direct the sale of the 4,000,000
shares of common stock held directly by such trust. Includes 2,250,000
shares owned by The Ted Arison Family Foundation USA, Inc. (the
"Foundation"). Because Shari Arison is Chairman and President of the
Foundation, she may be deemed to beneficially own the common stock held by
the Foundation. Also includes 1,200 shares of common stock owned by Shari
Arison's children. Shari Arison disclaims beneficial ownership of the shares
owned by the Foundation and her children.
(5)MA 1994 B Shares, L.P. ("MA 1994, L.P.") owns 106,114,284 shares of common
stock. The general partner of MA 1994, L.P. is MA 1994 B Shares, Inc. ("MA
1994, Inc."), which is wholly-owned by the Micky Arison 1994 "B" Trust, a
trust established for the benefit of Micky Arison and his heirs (the "B
Trust"). The sole limited partner of MA 1994, L.P. is the B Trust. By virtue
of the limited partnership agreement of MA 1994, L.P., MA 1994, Inc. may be
deemed to beneficially own all such 106,114,284 shares of common stock. By
virtue of the B Trust's interest in MA 1994, L.P., the B Trust may be deemed
to beneficially own all such 106,114,284 shares of common stock. Under the
terms of the instrument governing the B Trust, Micky Arison has the sole
right to vote and direct the sale of the common stock indirectly held by the
B Trust. The trustee of the B Trust is JMD Delaware, Inc., a corporation
wholly-owned by James M. Dubin.
(6)MA 1997 Holdings, L.P. ("MA 1997, L.P.") owns 6,042,187 shares of common
stock. The general partner of MA 1997, L.P. is MA 1997 Holdings, Inc. ("MA
1997, Inc."), which is wholly-owned by the Micky Arison 1997 Holdings Trust,
a trust established for the benefit of Micky Arison and his heirs (the "MA
1997 Trust"). The sole limited partner of MA 1997, L.P. is the MA 1997
Trust. By virtue of the limited partnership agreement of MA 1997, L.P., MA
1997, Inc. may be deemed to beneficially own all of such 6,042,187 shares of
common stock. By virtue of the MA 1997 Trust's interest in MA 1997, L.P.,
the MA 1997 Trust may be deemed to beneficially own all such 6,042,187
shares of common stock. Under the terms of the instrument governing the MA
1997 Trust, Micky Arison has the sole right to vote the common stock
indirectly held by the MA 1997 Trust. The trustee of the MA 1997 Trust is
JMD Delaware, Inc., a corporation wholly-owned by James M. Dubin.
(7)JMD Protector, Inc., a Delaware corporation, is the protector of the Ted
Arison 1994 Irrevocable Trust for Shari No. 1 and the Ted Arison 1992
Irrevocable Trust for Lin No. 2 has certain voting and dispositive rights
with respect to the common stock held by such trusts.
(8)MBA I LLC owns 400,000 shares of common stock and a limited partnership
interest in TAMMS (See Note 2 above). MBA I may be deemed to own 1,032,440
shares of common stock held by TAMMS which corresponds to its respective
partnership interest in TAMMS and TAMMS Corp. The Marilyn B. Arison
Irrevocable Delaware Trust (the "Irrevocable Trust") owns a controlling
interest in MBA I; therefore, the Irrevocable Trust may be deemed to
beneficially own all such 1,432,440 shares of common stock.
(9)Includes 278,400 shares of common stock issuable to Mr. Dickinson upon
exercise of stock options granted to him in August 1997, 1998, 1999, 2000
and 2001 and January and October 2001. Also includes 244,551 shares of
common stock owned by Dickinson Enterprises Limited Partnership (the
"Dickinson Partnership"). The general partner of the Dickinson Partnership
is Dickinson Enterprises, Inc., which is wholly owned by a revocable trust
established for the benefit of Mr. Dickinson and his heirs (the "Dickinson
Trust"). Under the terms of the instrument governing the Dickinson Trust,
Mr. Dickinson has the sole right to vote and direct the sale of the common
stock indirectly held by the Dickinson Trust.
(10)Includes 30,000 shares of common stock issuable to Mr. Foschi upon his
exercise of stock options granted to him in January and October 2001.
(11)Includes (i) 740,000 shares of common stock issuable to Mr. Frank upon his
exercise of stock options granted to him in May 1995, January 1998, 1999,
2000 and 2001 and October 2001, (ii) 9,600 shares of common stock owned by
Mr. Frank's wife as to which he disclaims beneficial ownership, and (iii)
4,002 shares of common stock owned by the Jackson S. Woolworth Irrevocable
Trust and the Cassidy B. Woolworth Trust (Mr. Frank is trustee), as to
which Mr. Frank disclaims beneficial ownership.
(12)Includes 8,000 shares of common stock held by the Helen K. Lanterman Trust
(Mr. Lanterman is trustee).
(13)Includes 8,500 shares of common stock owned by Trust Under Will of Norman
Salit (Mr. Birnbach is trustee), and 1,000 shares of common stock owned by
Fullcut Manufacturers, Inc. Employee Pension Fund (Mr. Birnbach is the
trustee of such fund), as to which he disclaims beneficial ownership. Also
includes 2,400 shares of common stock issuable to Mr. Birnbach upon his
exercise of stock options granted to him in April and October 2001.
(14)Includes 22,400 shares of common stock issuable to Ambassador Capen upon
his exercise of stock options granted to him in April 1999 and April and
October 2001. Also includes 17,000 shares owned by the Capen Trust, of
which Mr. Capen is co-trustee. Also includes 802 shares of common stock
owned by Ambassador Capen's wife as to which he disclaims beneficial
ownership.
(15)Includes 2,400 shares of common stock issuable to Mr. Donald upon his
exercise of stock options granted to him in April and October 2001. Also
includes 1,800 shares owned by The Arnold and Hazel Donald Charitable Trust
(Mr. Donald is trustee).
122
(16)By virtue of being the sole shareholder of JMD Delaware, Inc., JMD
Protector, Inc. and Balluta Limited, Mr. Dubin may be deemed to own the
aggregate of 141,111,083 shares of common stock beneficially owned by such
entities, as to which he disclaims beneficial ownership.
(17)Includes 22,400 shares of common stock issuable to Dr. Maidique upon his
exercise of stock options granted to him in April 1999 and 2001 and October
2001.
(18)Includes 2,400 shares of common stock issuable to Mr. Subotnick upon his
exercise of stock options granted to him in April and October 2001.
(19)Includes 2,400 shares of common stock issuable to Mr. Weiser upon his
exercise of stock options granted to him in April and October 2001. Also
includes 4,000 shares of common stock owned by Mr. Weiser's wife as to
which he disclaims beneficial ownership.
(20)Includes 98,400 shares of common stock issuable to Mr. Zonis upon his
exercise of stock options granted to him in January 1998, 1999 and 2000 and
April and October 2001.
(21)Includes 2,400 shares of common stock issuable to Mr. Zucker upon his
exercise of stock options granted to him in April and October 2001.
(22)Includes an aggregate of 1,516,027 shares of common stock issuable to
directors and executive officers upon their exercise of previously granted
stock options.
INTERESTS OF CERTAIN PERSONS IN THE PROPOSALS
As of January 9, 2003, Carnival had no interest in P&O Princess shares. As of
January 9, 2003, A. Kirk Lanterman, a director and executive officer of
Carnival, beneficially owned 16 P&O Princess shares.
OTHER BUSINESS
Our board of directors is not aware of any other matters to be presented at the
meeting. If any other matters should properly come before the meeting, the
persons named in the enclosed proxy will vote the proxies in accordance with
their best judgment.
LEGAL MATTERS
The validity of the Carnival shares will be passed upon for Carnival by Tapia
Linares y Alfaro. The validity of the P&O Princess special voting share will be
passed upon by Freshfields Bruckhaus Deringer.
EXPERTS
The consolidated financial statements of Carnival incorporated in this
proxy/prospectus by reference to Carnival's Annual Report on Form 10-K for the
year ended November 30, 2001 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent certified public accountants,
given on the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of P&O Princess as of 31 December 2001
and 2000 and for each of the years in the three year period ended 31 December
2001 have been incorporated by reference herein in reliance upon the report of
KPMG Audit Plc, independent auditors incorporated by reference herein and upon
the authority of said firm as experts in auditing and accounting.
123
WHERE YOU CAN FIND MORE INFORMATION
We and P&O Princess file annual, quarterly and current reports, proxy
statement/prospectus and other information with the SEC. You can read and copy
any materials we file with the SEC at the SEC's public reference room at 450
Fifth Street, N.W., Washington, D.C. 20549. You can obtain information about
the operation of the SEC's public reference room by calling the SEC at 1-800-
SEC-0330. The SEC also maintains a web site that contains information we and
P&O Princess file electronically with the SEC, which you can access over the
Internet at www.sec.gov. Our electronic SEC filings are also available through
its website at www.carnivalcorp.com and P&O Princess' electronic SEC filings
are also available through its website at www.poprincess.com. Information
contained on the Carnival or P&O Princess website is not incorporated into this
proxy statement/prospectus and does not constitute a part of this proxy
statement/prospectus. You can also obtain information about us at the offices
of the NYSE, 20 Broad Street, New York, New York 10005.
Statements contained in this proxy statement/prospectus, or in any document
incorporated by reference in this proxy statement/prospectus, regarding the
contents of any contract or other document are not necessarily complete and
each such statement is qualified in its entirety by reference to such contract
or other document filed as an exhibit with the SEC.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we and P&O
Princess file with it, which means we can disclose important information to you
by referring you to those documents. The information we incorporate by
reference is an important part of this proxy statement/prospectus, and later
information we and P&O Princess file with the SEC will automatically update and
supersede the information in this proxy statement/prospectus. We incorporate by
reference into this proxy statement/prospectus the documents listed below, and
any future filings we make with the SEC (file number 1-9610) and any filings we
make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this proxy statement/prospectus and before the date of the
special meeting. The documents we incorporate by reference are:
.. our annual report on Form 10-K for the year ended November 30, 2001;
.. our quarterly reports on Form 10-Q for the quarters ended February 28,
2002, May 31, 2002 and August 31, 2002; and
.. our current reports on Form 8-K dated December 17, 2001, December 20, 2001,
February 13, 2002, March 21, 2002, April 22, 2002, May 2, 2002, June 20,
2002, August 7, 2002, September 20, 2002, October 25, 2002, December 2,
2002, December 19, 2002 and January 8, 2003.
We also incorporate by reference into this proxy statement/prospectus the
documents filed with the SEC by P&O Princess that are listed below, any future
filings P&O Princess makes with the SEC (file number 1-15136) and any filings
P&O Princess makes with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this proxy
statement/prospectus and before the special meeting. The documents filed by P&O
Princess that we incorporate by reference are:
.. P&O Princess' annual report on Form 20-F for the year ended December 31,
2001; and
.. P&O Princess' report of foreign issuer on Form 6-K dated January 9, 2003.
We will provide without charge to each person, including any beneficial owner,
to whom a copy of this proxy statement/prospectus has been delivered, upon
written or oral request, a copy of any or all the documents we incorporate by
reference in this proxy statement/prospectus, other than any exhibit to
124
any of those documents, unless we have specifically incorporated that exhibit
by reference into the information this proxy statement/prospectus incorporates.
You may request copies by writing or telephoning us or P&O Princess at the
following addresses:
Carnival Corporation
Carnival Place
3655 N.W. 87th Avenue
Miami, Florida 33178-2428
Attention: The Corporate Secretary
Telephone: (305) 599-2600, Ext. 18018
P&O Princess Cruises plc
11-12 Charles II Street
London SW1Y 4QU, England.
Attention: Company Secretary
Telephone: +44 20 7805-1200.
You will not be charged for any of these documents that your request. In order
to ensure timely delivery of the documents, any request should be made by .
2003.
In connection with the P&O Princess extraordinary general meeting to approve
the DLC transaction, P&O Princess is disseminating to its shareholders a
shareholder circular, which it has furnished to the SEC under cover of Form
6-K. The circular does not form a part of, and is not incorporated by reference
in, this proxy statement/prospectus.
This proxy statement/prospectus does not constitute the solicitation of a proxy
in any jurisdiction to or from any person to whom or from whom it is unlawful
to make such proxy solicitation in such jurisdiction. You should rely only on
the information we have provided or incorporated by reference in this proxy
statement/prospectus to vote your shares at the special meeting. We have not
authorized any person to provide information other than that provided in this
proxy statement/prospectus. We have not authorized anyone to provide you with
different information. This proxy statement/prospectus is dated ., 2003. You
should not assume that the information in this proxy statement/prospectus is
accurate as of any date other than that date or that any information contained
in any document we have has incorporated by reference is accurate as of any
date other than the date of the document incorporated by reference, and the
mailing of this proxy statement/prospectus to shareholders does not create any
implication to the contrary. Accordingly, we urge you to review each document
we and P&O Princess subsequently file with the SEC and we incorporate by
reference as we describe above for updated information.
125
Annex A-1
EXECUTION COPY
OFFER AND IMPLEMENTATION AGREEMENT
Between
Carnival Corporation
and
P&O Princess Cruises plc
Dated as of January 8, 2003
TABLE OF CONTENTS
Page
----
ARTICLE I Definitions ................................................................... 2
ARTICLE II Closing; Equalization Ratio ................................................... 9
2.1 Closing. ........................................................................... 9
2.2 Transactions to be Effected and Documents to be Exchanged .......................... 10
2.2.1 Equalization and Governance Agreement ..................................... 10
2.2.2 SVE Special Voting Deed ................................................... 10
2.2.3 Carnival Amendments ....................................................... 10
2.2.4 P&O Princess Amendments ................................................... 10
2.2.5 P&O Princess Special Share ................................................ 10
2.2.6 Issuance and Dividend of SVT Shares ....................................... 10
2.2.7 Carnival Special Share .................................................... 11
2.2.8 Mutual Directors .......................................................... 11
2.2.9 Officers .................................................................. 11
2.2.10 Deeds of Guarantee ........................................................ 11
2.2.11 Carnival Deed ............................................................. 11
2.2.12 Pairing Agreement ......................................................... 11
2.2.13 Other Documents ........................................................... 11
2.3 Equalization Ratio ................................................................. 11
ARTICLE III Representations and Warranties ................................................ 12
3.1 Representations and Warranties of Carnival and P&O Princess ........................ 12
3.1.1 Organization, Good Standing and Qualification ............................. 12
3.1.2 Capital Structure. ........................................................ 12
3.1.3 Corporate Authority; Approval and Fairness. ............................... 14
3.1.4 Governmental Filings; No Violations. ...................................... 14
3.1.5 Reports; Financial Statements. ............................................ 16
3.1.6 Absence of Certain Changes ................................................ 18
3.1.7 Litigation and Liabilities. ............................................... 18
3.1.8 Brokers and Finders ....................................................... 19
3.1.9 Ownership of Other Party's Common Stock. .................................. 19
3.1.10 Taxes ..................................................................... 20
3.1.11 Carnival Common Stock to be Issued in the Offer ........................... 20
ARTICLE IV Covenants ..................................................................... 20
4.1 Interim Operations ................................................................. 20
4.1.1 Ordinary Course ........................................................... 21
4.1.2 Governing Documents; Share Capital; Dividends ............................. 21
4.1.3 Issuance of Securities; Indebtedness; Acquisitions and Dispositions ....... 21
4.1.4 Employee Benefits ......................................................... 22
4.1.5 Representations and Warranties ............................................ 22
4.1.6 Non-Competition Agreements ................................................ 22
Page
----
4.1.7 Satisfaction of Closing Conditions .................................. 22
4.1.8 No Related Actions .................................................. 23
4.2 Acquisition Proposals. ....................................................... 23
4.2.1 No Shop ............................................................. 23
4.2.2 Notifications ....................................................... 24
4.2.3 Compliance with Exchange Act, Exchange Regulations and City Code .... 24
4.3 Information Supplied. ........................................................ 25
4.3.1 Shareholder Documents ............................................... 25
4.4 Shareholders Meetings ........................................................ 25
4.5 Filings; Other Actions; Notification. ........................................ 26
4.5.1 Filings ............................................................. 26
4.5.2 Mailing of Documents ................................................ 26
4.5.3 Cooperation ......................................................... 26
4.5.4 Furnishing Information .............................................. 27
4.5.5 Status .............................................................. 27
4.5.6 Consultation; Participation ......................................... 28
4.5.7 Cooperation in Defense of Claim ..................................... 28
4.6 Access ....................................................................... 28
4.7 Publicity .................................................................... 29
4.8 Benefits and Other Matters. .................................................. 29
4.8.1 Director and Officer Liability. ..................................... 29
4.8.2 Directors of Carnival and P&O Princess .............................. 30
4.8.3 Executive Officers .................................................. 30
4.9 Expenses ..................................................................... 30
4.10 Other Actions by Carnival and P&O Princess. .................................. 30
4.10.1 Dividends ........................................................... 30
4.10.2 Integration Planning ................................................ 31
4.11 Carnival Offer to Exchange ................................................... 31
4.11.1 Offer to Exchange ................................................... 31
4.11.2 Modification of the Offer, Fractional Shares ........................ 31
4.11.3 Expiration and Extension of the Offer Acceptance Period ............. 32
4.11.4 Acceptances by Carnival ............................................. 32
4.11.5 Schedule TO ......................................................... 32
4.11.6 P&O Princess Shareholder Information ................................ 32
4.11.7 Schedule 14D-9 ...................................................... 33
4.11.8 Termination of the Offer ............................................ 33
4.11.9 Adjustment of the Offer Exchange Ratio .............................. 33
ARTICLE V Conditions to the Closing ............................................... 33
5.1 Conditions to Each Party's Obligation to Effect the Closing .................. 33
5.1.1 Shareholder Approvals ............................................... 33
5.1.2 Regulatory Consents ................................................. 33
5.1.3 Laws and Orders ..................................................... 34
5.1.4 Carnival Amendments and P&O Princess Amendments ..................... 34
5.1.5 Approval of P&O Princess EGM Circular ............................... 34
5.1.6 Offer ............................................................... 34
-ii-
Page
----
5.1.7 Registration Statements ............................................. 34
5.1.8 European Commission. ................................................ 34
5.1.9 NYSE Listing ........................................................ 35
5.2 Conditions to Obligations of P&O Princess to Effect the Closing .............. 35
5.2.1 Representations and Warranties of Carnival .......................... 35
5.2.2 Performance of Obligations of Carnival .............................. 35
5.2.3 Consents Under Agreements ........................................... 35
5.2.4 Carnival Special Share .............................................. 36
5.2.5 Other DLC Documents ................................................. 36
5.3 Conditions to Obligations of Carnival ........................................ 36
5.3.1 Representations and Warranties of P&O Princess ...................... 36
5.3.2 Performance of Obligations of P&O Princess .......................... 36
5.3.3 Consents Under Agreements ........................................... 36
5.3.4 P&O Princess Special Share .......................................... 37
5.3.5 Other DLC Documents ................................................. 37
5.3.6 Termination of Joint Venture Agreement .............................. 37
ARTICLE VI Termination ............................................................. 37
6.1 Termination by Mutual Consent ................................................ 37
6.2 Termination by Either P&O Princess or Carnival ............................... 37
6.3 Termination by Carnival ...................................................... 38
6.4 Termination by P&O Princess .................................................. 38
6.5 Effect of Termination and Abandonment. ....................................... 38
6.5.1 Effect of Termination ............................................... 38
6.5.2 Carnival Break Fee .................................................. 39
6.5.3 P&O Princess Break Fee .............................................. 39
ARTICLE VII Miscellaneous and General ............................................... 40
7.1 Survival ..................................................................... 40
7.2 Modification or Amendment .................................................... 40
7.3 Waiver of Conditions ......................................................... 40
7.4 Failure or Indulgence Not Waiver; Remedies Cumulative ........................ 40
7.5 Counterparts ................................................................. 41
7.6 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. ............................... 41
7.6.1 Governing Law And Venue ............................................. 41
7.6.2 WAIVER OF JURY TRIAL ................................................ 41
7.7 Notices ...................................................................... 42
7.8 Entire Agreement ............................................................. 43
7.9 Severability ................................................................. 44
7.10 Interpretation ............................................................... 44
7.11 Assignment ................................................................... 45
7.12 No Partnership ............................................................... 45
EXHIBIT A Agreed form of Equalization and Governance Agreement
EXHIBIT B Agreed form of SVE Special Voting Deed
EXHIBIT C Agreed form of Carnival Amended Articles
EXHIBIT D Agreed form of Carnival Amended By-Laws
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Page
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EXHIBIT E Agreed form of P&O Princess Amended Memorandum
EXHIBIT F Agreed form of P&O Princess Amended Articles
EXHIBIT G Agreed form of Carnival Deed of Guarantee
EXHIBIT H Agreed form of P&O Princess Deed of Guarantee
EXHIBIT I Agreed form of Carnival Deed
EXHIBIT J Directors of Carnival and P&O Princess
Annex 1 Offer Conditions
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OFFER AND IMPLEMENTATION AGREEMENT (hereinafter called this
"Agreement"), dated as of January 8, 2003, between Carnival Corporation, a
corporation organized under the laws of the Republic of Panama, having its
principal place of business at 3655 N.W. 87th Avenue, Miami, FL 33178-2428
("Carnival"), and P&O Princess Cruises plc, a public limited company
incorporated in England and Wales (Registered No. 4039524) having its registered
office at 77 New Oxford Street, London WC1A 1PP ("P&O Princess").
RECITALS
WHEREAS, on the terms and subject to the conditions provided herein
Carnival and P&O Princess (each, a "Party" and, together, the "Parties") intend
to establish a dual listed company structure for the purposes of conducting
their businesses together, treating their shareholders as if they owned an
interest in a combined enterprise and creating certain rights for the Carnival
Shareholders and the P&O Princess Shareholders in respect of their indirect
interests in the combined enterprise;
WHEREAS, on the terms and subject to the conditions herein, Carnival
also wishes to offer to P&O Princess shareholders the opportunity to exchange
their P&O Princess Ordinary Shares for shares of Carnival Common Stock, pursuant
to the Offer;
WHEREAS, the board of directors of each Party has determined that it
is in the best interest of their respective companies and shareholders to enter
into transactions (collectively, the "Transactions") contemplated by this
Agreement, including the Offer;
WHEREAS, in furtherance of such determination, the board of directors
of each Party has approved this Agreement and the Transactions, including,
(i) the execution and delivery by each of Carnival and P&O Princess
of an Equalization and Governance Agreement (the "Equalization and Governance
Agreement") in the Agreed Form,
(ii) (a) the issue by Carnival of one share of special voting stock
(the "Carnival Special Share") to a newly organized special purpose entity
wholly owned by an entity designated by P&O Princess and reasonably acceptable
to Carnival that is not an Affiliate of P&O Princess or Carnival (such special
purpose entity, the "Carnival SVC") and (b) the issue by P&O Princess of one
special voting share (the "P&O Princess Special Share"), to Carnival, which
shall immediately thereafter deposit (the "Deposit") the P&O Princess Special
Share with a trust company to be designated by Carnival and reasonably
acceptable to P&O Princess (the "P&O Princess Trustee"), in its capacity as
trustee of the P&O Princess Special Voting Trust (the "P&O Princess SVT"), a
trust to be formed under the P&O Princess Special Voting Trust Agreement, and in
each case (a) and (b), subject to the terms of a voting agreement (the "SVE
Special Voting Deed") in the Agreed Form,
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(iii) (a) the issue to Carnival by the P&O Princess Trustee, in
respect of the Deposit, of one share of beneficial interest in the P&O Princess
SVT (each, a "SVT Share") for each share of Carnival Common Stock outstanding on
the Closing Date, (b) the execution and delivery of the Pairing Agreement (the
"Pairing Agreement") between Carnival and the P&O Princess Trustee in the Agreed
Form and (c) the distribution by Carnival as a dividend to the holders of the
Carnival Common Stock of one SVT Share for each share of Carnival Common Stock;
(iv) the appointment or election of the same individuals as members
of the board of directors of Carnival and P&O Princess, and
(v) the implementation of the corporate governance arrangements
contained in the Agreed Form of the Carnival Amendments and the P&O Princess
Amendments;
WHEREAS, it is intended that this Agreement and the DLC Transactions
will not for any legal, tax or other purpose (i) alter the status of P&O
Princess and Carnival as separate independent entities, (ii) result in any of
Carnival, P&O Princess, their respective Subsidiaries, or their respective
shareholders being treated as creating an entity or otherwise entering into any
partnership, joint venture, association or agency relationship, or (iii) give
either Party (or its respective Subsidiaries or shareholders) any legal or
beneficial ownership interest in the assets or income of the other Party, and
shall not be construed as having such effect;
WHEREAS, as an inducement to P&O Princess' willingness to enter into
this Agreement and the Transactions, the Carnival Major Stockholders each
entered into a separate deed poll (respectively the "Arison Deed Poll", the "JMD
Delaware, Inc. Deed Poll" and the "JMD Protector, Inc. Deed Poll") covering the
shares of Carnival Common Stock listed in Exhibit A to each deed poll
(collectively the "Stockholders Deed Polls"); and
WHEREAS, Carnival and P&O Princess desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
Parties agree as follows:
ARTICLE I
Definitions
"Affiliate" of any specified Person shall have the meaning assigned to
such term in Rule 12b-2 promulgated under the Exchange Act.
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"Agreed Form" means, with respect to any DLC Document, the form of
such DLC Document agreed by the Parties on or prior to the Closing; provided,
however, that the Agreed Form of the Equalization and Governance Agreement, the
Deeds of Guarantee, the SVE Special Voting Deed, the Carnival Amended Articles,
the Carnival Amended By-Laws, the P&O Princess Amended Memorandum, the P&O
Princess Amended Articles and the Carnival Deed shall be the forms attached to
this Agreement, together with such changes thereto as the Parties may agree
prior to the Closing.
"Business Day" means any day other than a Saturday, Sunday or day on
which banking institutions in The City of New York or London are authorized or
obligated by law or executive order to close in the United States or England (or
on which such banking institutions are open solely for trading in euros).
"Carnival Announcement" means Carnival's press release with respect to
a "Pre-conditional Carnival DLC proposal with Partial Share Offer for P&O
Princess" dated 24 October 2002.
"Carnival Common Stock" means the common stock, par value $0.01 per
share, of Carnival, excluding the Carnival Special Share.
"Carnival Circular" means the proxy statement/prospectus to be sent to
Carnival shareholders in connection with the DLC Transaction and the Carnival
Shareholders Meeting, as amended or supplemented, containing (i) a notice
convening the Carnival Shareholders Meeting, (ii) information relating to the
approval by Carnival shareholders of the Carnival Amendments, (iii) the
prospectus from the Second Joint Registration Statement, (iv) such other
information (if any) as may be required by the City Code, the Takeover Panel,
the SEC or the NYSE and (v) such other information as P&O Princess and Carnival
shall agree to include therein, and any supplements thereto and any other
circulars or documents issued to shareholders or employees of Carnival.
"Carnival Deed" means the deed between Carnival and P&O Princess in
the form attached to this Agreement as Exhibit I.
"Carnival Deed of Guarantee" means the guarantee whereby Carnival
agrees to guarantee certain obligations of P&O Princess for the benefit of
certain future creditors of P&O Princess, in the Agreed Form.
"Carnival Group" means Carnival, its subsidiaries and its subsidiary
undertakings.
"Carnival Major Stockholders" means Micky Arison, JMD Delaware, Inc.
and JMD Protector, Inc.
"Carnival SVC Owner" means the legal and beneficial owner of all of
the shares in Carnival SVC, as mutually agreed by Carnival and P&O Princess.
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"City Code" means the United Kingdom City Code on Takeovers and
Mergers.
"Companies Act" means the Companies Act 1985 of the United Kingdom, as
amended.
"Compensation and Benefit Plans" means, with respect to Carnival or
P&O Princess, any bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment, termination, severance,
compensation, medical, health or other plan, agreement, policy or arrangement
that covers employees, directors, former employees or former directors of it and
its Subsidiaries.
"Deeds of Guarantee" means each of the P&O Princess Deed of Guarantee
and the Carnival Deed of Guarantee.
"DLC Documents" means the Equalization and Governance Agreement, the
SVE Special Voting Deed, the Carnival Amended Articles, the Carnival Amended
By-Laws, the P&O Princess Amended Memorandum, the P&O Princess Amended Articles,
the Carnival SVC constituent documents, the P&O Princess SVT constituent
documents, the Deeds of Guarantee, the Carnival Deed, the Pairing Agreement and
any other document or instrument the parties agree is a DLC Document.
"DLC Transactions" means the Transactions other than those relating to
the Offer and other transactions incidental to the Offer.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended;
"Governmental Entity" means a court of competent jurisdiction or any
government or any governmental, regulatory, self-regulatory or administrative
authority, agency, commission, body or any other governmental entity and shall
include any relevant competition authorities, the Takeover Panel, the European
Commission, the London Stock Exchange, the UKLA, the U.S. Securities and
Exchange Commission and the NYSE.
"IRC" means the United States Internal Revenue Code of 1986, as
amended.
"Joint Registration Statement" means the joint registration statement
on Form S-4 and Form F-4 under the Securities Act relating to the Offer and the
deemed exchange of P&O Princess Ordinary Shares in connection with the DLC
Transaction, as amended or supplemented.
"Joint Venture Agreement" means the Joint Venture Agreement among P&O
Princess, Royal Caribbean Cruises Ltd. and JOEX Limited, dated as of November
19, 2001.
-4-
"Law" means any law, statute, ordinance, rule, regulation, judgment,
order, injunction, decree, arbitration award, agency requirement, franchise,
license or permit of any Governmental Entity, including the City Code.
"Lien" shall mean any mortgage, pledge, lien, deed of trust,
hypothecation, claim, security interest, title defect, encumbrance, burden, tax
lien (as used in Section 6321 of the IRC or similarly by any state, local, or
foreign tax authority), charge, or other similar restriction, title retention
agreement, option, easement, covenant, encroachment or other adverse claim.
"London Listing Rules" means the listing rules of the UKLA.
"London Stock Exchange" means the London Stock Exchange plc.
"Material Adverse Change" means, with respect to any Party, any
change, effect, event or occurrence which has had or could reasonably be
expected to have a Material Adverse Effect with respect to such Party other than
any changes, effects, events or occurrences attributable to any one or more of
the following: (i) any changes after the date of this Agreement in generally
accepted accounting principles or interpretations thereof that applies to such
Party, (ii) the announcement and performance of this Agreement and compliance
with the covenants and obligations set forth herein, and (iii) the economy or
financial markets relevant to such Party in general or in general to the
industries in which such Party operates and not having a materially
disproportionate effect relative to the other Party on, such Party.
"Material Adverse Effect" means, with respect to any Party, a material
adverse effect on (i) the financial condition, results of operations, assets or
business of such Party and its Subsidiaries, taken as a whole, (ii) the ability
of such Party to perform without delay or restrictions its obligations under
this Agreement or the transactions contemplated on its part hereby or (iii) the
consummation or implementation of the Transactions.
"NYSE" means the New York Stock Exchange, Inc.
"Offer" means a partial offer to exchange up to 20% of the outstanding
P&O Princess Ordinary Shares (whether or not held in the form of P&O Princess
ADSs) as of the Effective Time for validly issued, fully paid and non-assessable
shares of Carnival Common Stock at the Offer Exchange Ratio as such offer may be
amended from time to time as permitted under this Agreement and by applicable
Law upon the terms and subject to the conditions set forth in this Agreement.
"Offer Documents" means the Schedule TO, the prospectus contained in
the Joint Registration Statement, the transmittal and acceptance documents, and
any other documents or information as may be required by the City Code, the
Takeover Panel, the UKLA, the NYSE, the SEC or London Stock Exchange in
connection with the Offer.
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"Offer Exchange Ratio" means 0.3004 shares of Carnival Common Stock
for each P&O Princess Ordinary Share.
"Person" means a natural person, a corporation, a limited liability
company, a general or limited partnership, a trust, an estate, a joint venture,
any Governmental Entity, or any other entity or organization.
"P&O Princess ADSs" means the American Depositary Shares of P&O
Princess, each of which represents four P&O Princess Ordinary Shares, which are
listed on the NYSE.
"P&O Princess Deed of Guarantee" means the guarantee whereby P&O
Princess agrees to guarantee certain obligations of Carnival for the benefit of
certain future creditors of Carnival, in the Agreed Form.
"P&O Princess EGM Circular" means the circular to be sent to P&O
Princess shareholders in connection with the P&O Princess Shareholders Meeting
to approve the DLC Transactions containing (i) a notice convening the P&O
Princess Shareholders Meeting, (ii) such other information (if any) as may be
required by the City Code, the Takeover Panel, the UKLA, the SEC, the NYSE or
the London Stock Exchange, (iii) all information required by applicable Law
relating to the DLC Transactions and (iv) such other information as P&O Princess
and Carnival shall agree to include therein, and any supplements thereto and any
other circulars or documents issued to shareholders or employees of P&O
Princess.
"P&O Princess Group" means P&O Princess, its subsidiaries and its
subsidiary undertakings.
"P&O Princess Ordinary Shares" means the ordinary shares (including
the Ordinary Shares underlying P&O Princess' American Depositary Shares) of P&O
Princess, excluding the P&O Princess Special Share.
"PGCL" means Law 32 of the Corporation Law of 1927 of the Republic of
Panama, as amended.
"Registration Statements" means the Joint Registration Statement and
the Second Joint Registration Statement.
"Schedule TO" means a Tender Offer Statement on Schedule TO
promulgated under the Exchange Act with respect to the Offer, as amended or
supplemented, which shall contain or incorporate by reference all or part of the
Joint Registration Statement.
"Second Joint Registration Statement" means the joint registration
statement on Form S-4 and Form F-4 under the Securities Act relating to the
deemed exchange of shares of Carnival Common Stock in connection with the DLC
Transaction
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and the registration of the P&O Princess Special Voting Share, as amended or
supplemented.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Shareholder Documents" means the P&O Princess EGM Circular, the Joint
Registration Statement and the Second Joint Registration Statement, including
the prospectuses constituting part of the Joint Registration Statement and the
Second Joint Registration Statement.
"Significant Subsidiary" of any specified Person shall have the
meaning assigned to such term in Rule 1-02(w) of the Regulation S-X promulgated
under the Exchange Act.
"Subsidiary" means, with respect to a Party, any entity, whether
incorporated or unincorporated, in which such Party owns, directly or
indirectly, a majority of the securities or other ownership interests having by
their terms ordinary voting power to elect a majority of the directors or other
persons performing similar functions, or the management and policies of which
such Party otherwise has the power to direct.
"Takeover Panel" means the UK Panel on Takeovers and Mergers.
"US GAAP" means United States generally accepted accounting
principles.
"UK GAAP" means United Kingdom generally accepted accounting
principles.
"UKLA" means the Financial Services Authority in its capacity as
competent authority for the purposes of Part VI of the UK Financial Services and
Markets Act 2000.
"Wider Carnival Group" means Carnival and any of its subsidiary
undertakings or any associated undertaking or company of which 20 per cent. or
more of the voting capital is held by the Carnival Group or any partnership,
joint venture, firm or company in which any member of the Carnival Group may be
interested.
"Wider P&O Princess Group" means P&O Princess and any of its
subsidiary undertakings or any associated undertaking or company of which 20 per
cent. or more of the voting capital is held by the P&O Princess Group or any
partnership, joint venture, firm or company in which any member of the P&O
Princess Group may be interested.
Each of the following terms is defined in the Section set forth
opposite such term:
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SCHEDULE OF DEFINED TERMS
Defined Term Section
------------ -------
Acquisition Proposal ............................................. 4.2.1
Agreement ........................................................ Recitals
Arison Deed Poll ................................................. Recitals
Audit Date ....................................................... 3.1.5.2
Bankruptcy and Equity Exception .................................. 3.1.3.1
Carnival ......................................................... Recitals
Carnival Amended Articles ........................................ 2.2.3
Carnival Amended By-Laws ......................................... 2.2.3
Carnival Amendments .............................................. 2.2.3
Carnival Audit Date .............................................. 3.1.5.1
Carnival Disclosure Letter ....................................... 3.1
Carnival Officers ................................................ 3.1.7.1
Carnival Preferred Stock ......................................... 3.1.2.1
Carnival Reports ................................................. 3.1.5.1
Carnival Required Consents ....................................... 3.1.4.1
Carnival Requisite Vote .......................................... 3.1.3.1
Carnival Shareholders Meeting .................................... 4.4
Carnival Special Share ........................................... Recitals
Carnival SVC ..................................................... Recitals
Carnival Stock Plans ............................................. 3.1.2.1
Carnival Termination Amount ...................................... 6.5.2
Closing .......................................................... 2.1
Closing Date ..................................................... 2.1
Confidentiality Agreement ........................................ 4.6
Contracts ........................................................ 3.1.4.2
Deposit .......................................................... Recitals
Disclosure Letter ................................................ 3.1
Effective Time ................................................... 2.1
Equalization and Governance Agreement ............................ Recitals
Equalization Ratio ............................................... 2.3
Governmental Consents ............................................ 5.1.2
HSR Act .......................................................... 3.1.4.1
Indemnitees ...................................................... 4.8.1.2
Integration Committee ............................................ 4.10.2
JMD Delaware, Inc. Deed Poll ..................................... Recitals
JMD Protector, Inc. Deed Poll .................................... Recitals
Mutual Directors ................................................. 4.8.2
Offer Conditions ................................................. 4.11.1
Order ............................................................ 5.1.3
Pairing Agreement ................................................ Recitals
Parties .......................................................... Recitals
Party ............................................................ Recitals
Permits .......................................................... 3.1.7.2
-8-
SCHEDULE OF DEFINED TERMS
Defined Term Section
------------ -------
P&O Princess ..................................................... Recitals
P&O Princess Amended Articles .................................... 2.2.4
P&O Princess Amended Memorandum .................................. 2.2.4
P&O Princess Amendments .......................................... 2.2.4
P&O Princess Audit Date .......................................... 3.1.5.2
P&O Princess Disclosure Letter ................................... 3.1
P&O Princess Officers ............................................ 3.1.7.1
P&O Princess Option Plans ........................................ 3.1.2.2
P&O Princess Reports ............................................. 3.1.5.2
P&O Princess Required Consents ................................... 3.1.4.1
P&O Princess Requisite Vote ...................................... 3.1.3.2
P&O Princess Shareholders Meeting ................................ 4.4
P&O Princess Special Share ....................................... Recitals
P&O Princess SVT ................................................. Recitals
P&O Princess Termination Amount .................................. 6.5.3
P&O Princess Trustee ............................................. Recitals
P&O Princess UK Reports .......................................... 3.1.5.2
P&O Princess US Reports .......................................... 3.1.5.2
Qualifying Acquisition Proposal .................................. 4.2.1
Reports .......................................................... 3.1.5.2
Representatives .................................................. 4.2.1
Schedule 14D-9 ................................................... 4.11.7
SEC .............................................................. 3.1.5.1
Stockholders Deed Polls .......................................... Recitals
Superior Proposal ................................................ 4.2.1
SVE Special Voting Deed .......................................... Recitals
SVT Share ........................................................ Recitals
Tax .............................................................. 3.1.10
Tax Return ....................................................... 3.1.10
Termination Date ................................................. 6.2
Transactions ..................................................... Recitals
ARTICLE II
Closing; Equalization Ratio
2.1 Closing.
The closing and completion (the "Closing") of the DLC
Transactions shall take place simultaneously (i) at the offices of Paul, Weiss,
Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York, New
York, 10019 and at the offices of Herbert Smith, Exchange Square, Primrose
Street, London, EC2A 2HS, not later than the third Business Day after the first
day on which all of the conditions set forth in Article V
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are satisfied or waived by the Party or Parties entitled thereto in accordance
with this Agreement (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of such
conditions) or (ii) at such other places and time and/or on such other date as
Carnival and P&O Princess may agree in writing (the "Closing Date"). All
transactions to be effected at the Closing shall be effected simultaneously, and
no transaction shall be complete or effective until such time as all such
transactions are complete and effective (the "Effective Time").
2.2 Transactions to be Effected and Documents to be Exchanged. At or
prior to the Closing:
2.2.1 Equalization and Governance Agreement. Each of P&O Princess
and Carnival shall execute and deliver to the other the Equalization and
Governance Agreement in the Agreed Form;
2.2.2 SVE Special Voting Deed. Carnival, P&O Princess, Carnival
SVC, the P&O Princess Trustee and the Carnival SVC Owner shall execute and
deliver the SVE Special Voting Deed in the Agreed Form;
2.2.3 Carnival Amendments. The second amended and restated
articles of incorporation of Carnival shall be amended and restated in the
Agreed Form (the "Carnival Amended Articles") and shall be filed with the
Companies Registry of the Republic of Panama in accordance with the provisions
of the PGCL, and the amended and restated By-Laws of Carnival shall be amended
and restated in the Agreed Form (the "Carnival Amended By-Laws" and,
collectively with the Carnival Amended Articles, the "Carnival Amendments"), and
shall become effective;
2.2.4 P&O Princess Amendments. An amendment to each of the
memorandum and articles of association of P&O Princess, in the Agreed Form (such
memorandum as so amended, the "P&O Princess Amended Memorandum", such articles,
as so amended, the "P&O Princess Amended Articles" and, collectively with the
P&O Princess Amended Memorandum, the "P&O Princess Amendments") shall become
effective;
2.2.5 P&O Princess Special Share. P&O Princess shall issue and
allot the P&O Princess Special Share to Carnival, which shall make the Deposit.
P&O Princess shall register the P&O Princess Trustee as the holder of the P&O
Princess Special Share and issue a share certificate or holding statement for
the P&O Princess Special Share to the P&O Princess Trustee;
2.2.6 Issuance and Dividend of SVT Shares. The P&O Princess
Trustee shall issue to Carnival, in respect of the Deposit, one SVT Share for
each share of Carnival Common Stock outstanding as of the Closing Date, and
Carnival shall distribute, as a dividend to holders of Carnival Common Stock,
one SVT Share for each share of Carnival Common Stock;
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2.2.7 Carnival Special Share. Carnival shall issue the Carnival
Special Share to Carnival SVC, register Carnival SVC as the holder of the
Carnival Special Share and issue a share certificate or a book statement for the
Carnival Special Share to Carnival SVC;
2.2.8 Mutual Directors. To the extent that they are not already
effective, (i) the appointment or election of the Mutual Directors designated
pursuant to Section 4.8.2 as directors of each of Carnival and P&O Princess,
comprising the entire board of directors of each of Carnival and P&O Princess,
shall become effective, and (ii) the resignation of each director of Carnival or
P&O Princess who is not designated as a Mutual Director shall become effective;
2.2.9 Officers. The appointment or election of the individuals
identified as officers pursuant to Section 4.8.3 as officers of each of Carnival
and P&O Princess shall become effective;
2.2.10 Deeds of Guarantee. Each Party shall execute and deliver
to the other the Deeds of Guarantee;
2.2.11 Carnival Deed. Carnival shall execute and deliver the
Carnival Deed;
2.2.12 Pairing Agreement. Carnival and the P&O Princess Trustee
shall execute and deliver the Pairing Agreement; and
2.2.13 Other Documents. Each Party shall deliver to the other
such other documents, instruments and certificates as the other Party may
reasonably request in connection with the Transactions and the Closing.
2.3 Equalization Ratio. Subject to adjustment as set forth below in
this Section 2.3, the Equalization Ratio to be set forth in the Equalization and
Governance Agreement shall, as of the Effective Time, be one P&O Princess
Ordinary Share to 0.3004 of a share of Carnival Common Stock, such that the
voting rights and the rights to distributions (of income and capital) of one P&O
Princess Ordinary Share shall be equivalent to the voting rights and the rights
to distributions of 0.3004 of a share of Carnival Common Stock.
If the Parties agree that the Equalization Ratio shall instead be 1:1, then they
shall make such subdivisions and/or combinations of Carnival Common Stock and/or
P&O Princess Ordinary Shares, or other such actions, as they mutually agree are
necessary to achieve that result. In either case, the Equalization Ratio (i)
shall be adjusted, in the manner provided in the Equalization and Governance
Agreement, for all actions occurring on or after the date hereof and at or
before the Effective Time that would require an automatic adjustment to the
Equalization Ratio pursuant to the terms of the Equalization and Governance
Agreement as if such agreement were effective during such period, and (ii)
subject to any such adjustment, shall be the Equalization Ratio as of the
Effective Time; provided, however, that the Equalization Ratio shall not be
adjusted for regular
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dividends declared prior to the Effective Time and permitted pursuant to Section
4.1.2. Such Equalization Ratio, as so adjusted from time to time, is referred to
herein as the "Equalization Ratio".
ARTICLE III
Representations and Warranties
3.1 Representations and Warranties of Carnival and P&O Princess.
Except as set forth in the corresponding sections or subsections of the
disclosure letter, dated the date hereof and signed by an authorized officer,
delivered by Carnival to P&O Princess or by P&O Princess to Carnival (each a
"Disclosure Letter" and the "Carnival Disclosure Letter" and the "P&O Princess
Disclosure Letter", respectively), as the case may be, Carnival (except for
subparagraphs 3.1.2.2, 3.1.3.2, 3.1.5.2, 3.1.8(ii), and 3.1.9.2 below and
references in Section 3.1.1 below to documents made available by P&O Princess to
Carnival) hereby represents and warrants to P&O Princess, and P&O Princess
(except for subparagraphs 3.1.2.1, 3.1.3.1, 3.1.5.1, 3.1.8(i), and 3.1.9.1 below
and references in Section 3.1.1 below to documents made available by Carnival to
P&O Princess), hereby represents and warrants to Carnival, that:
3.1.1 Organization, Good Standing and Qualification. Each of it
and its Significant Subsidiaries is a corporation or other organization duly
organized, validly existing and in good standing (with respect to jurisdictions
that recognize the concept of good standing) under the laws of its respective
jurisdiction of incorporation or organization and has all requisite corporate or
similar power and authority, and has been duly authorized by all necessary
approvals and orders, to own, operate and lease its properties and assets and to
carry on its business as presently conducted and is duly qualified to do
business and is in good standing in each jurisdiction where the ownership,
operation or leasing of its assets or properties or conduct of its business
requires such qualification, except for any such failures to be so organized,
qualified or in good standing, or to have such power or authority, which,
individually or in the aggregate, have not had and are not reasonably likely to
have a Material Adverse Effect with respect to it. Carnival has made available
to P&O Princess complete and correct copies of its articles of incorporation and
by-laws, and P&O Princess has made available to Carnival complete and correct
copies of its memorandum and articles of association, in all cases as amended to
date. Such articles of incorporation and by-laws or memorandum and articles of
association, as the case may be, as so made available are in full force and
effect.
3.1.2 Capital Structure.
3.1.2.1 The authorized capital stock of Carnival consists
of 960,000,000 shares of Carnival Common Stock, of which 586,837,283 shares were
issued and outstanding as of the close of business on January 3, 2003, and
40,000,000 shares of Preferred Stock, par value $0.01 per share ("Carnival
Preferred Stock") none of which is outstanding as of the date hereof. All of the
outstanding shares of Carnival Common Stock have been duly authorized and
validly issued and are paid and non-assessable.
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Carnival has no shares of Carnival Common Stock or Carnival Preferred Stock
reserved for or otherwise subject to issuance, except that as of the close of
business on January 3, 2003, there were no more than 56,570,829 shares of
Carnival Common Stock subject to issuance pursuant to the plans of Carnival
identified in paragraph 3.1.2.1 of the Carnival Disclosure Letter as being the
only Compensation and Benefit Plans or agreements pursuant to which Carnival
Common Stock may be issued (the "Carnival Stock Plans"). Each of the outstanding
shares of capital stock or other ownership interests of each of Carnival's
Significant Subsidiaries is duly authorized, validly issued, fully paid and
non-assessable and owned by Carnival or a direct or indirect wholly owned
Subsidiary of Carnival, in each case free and clear of any Lien. Except as set
forth above or as contemplated by this Agreement, there are no preemptive or
other outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind which obligate Carnival
or any of its Subsidiaries to issue or sell any shares of capital stock or other
securities of Carnival or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any
Person a right to subscribe for or acquire from Carnival or any of its
Subsidiaries, any securities of Carnival or any of its Subsidiaries, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding. Except as described in the Carnival Disclosure Letter, Carnival
does not have outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the shareholders of
Carnival on any matter.
3.1.2.2 The authorized share capital of P&O Princess is
$375 million divided into 750,000,000 P&O Princess Ordinary Shares. As of the
close of business on January 7, 2003, the allotted and issued share capital of
P&O Princess consisted of 693,596,865 P&O Princess Ordinary Shares. All of those
P&O Princess Ordinary Shares have been duly authorized and validly issued and
are fully paid or credited as fully paid. P&O Princess has no P&O Princess
Ordinary Shares reserved for or otherwise subject to issuance, except that, as
of the close of business on January 7, 2003, there were no more than 10,000,000
P&O Princess Ordinary Shares and no more than 2,000,000 P&O Princess ADSs
subject to issuance pursuant to the plans of P&O Princess identified in
subparagraph 3.1.2.2 of the P&O Princess Disclosure Letter as being the only
Compensation and Benefit Plans or agreements pursuant to which P&O Princess
Ordinary Shares may be issued (the "P&O Princess Option Plans"). Each of the
outstanding shares of capital stock or other ownership interests of each of P&O
Princess' Significant Subsidiaries is duly authorized, validly issued, fully
paid and non-assessable and owned by P&O Princess or a direct or indirect wholly
owned Subsidiary of P&O Princess, in each case free and clear of any Lien.
Except as set forth above or as contemplated by this Agreement, there are no
preemptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind which obligate P&O
Princess or any of its Subsidiaries to issue or to sell any shares of capital
stock or other securities of P&O Princess or any of its Subsidiaries or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire from P&O Princess or
any of its Subsidiaries,
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any securities of P&O Princess or any of its Subsidiaries, and no securities or
obligations evidencing such rights are authorized, issued or outstanding. P&O
Princess does not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the shareholders of P&O Princess on any matter.
3.1.3 Corporate Authority; Approval and Fairness.
3.1.3.1 Carnival has all requisite corporate power and
authority and has taken all corporate action necessary in order to authorize,
execute, deliver and perform its obligations under this Agreement and to
consummate the Transactions, subject only to the approval of the Transactions
(including the Carnival Amendments by the vote of the holders of not less than
50% of the outstanding shares of Carnival Common Stock entitled to vote thereon
(the "Carnival Requisite Vote"). Assuming the due authorization, execution and
delivery of this Agreement by each party thereto other than Carnival or any of
its Subsidiaries, this Agreement constitutes, and at the Effective Time each DLC
Document to which Carnival will be or is a party will constitute, a valid and
binding agreement of Carnival enforceable against Carnival in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles (the "Bankruptcy
and Equity Exception"). The Board of Directors of Carnival has approved this
Agreement (including the Exhibits hereto) and the Transactions.
3.1.3.2 P&O Princess has all requisite corporate power
and authority and has taken all corporate action necessary in order to
authorize, execute, deliver and perform its obligations under this Agreement and
to consummate the Transactions, subject only to the approval of the Transactions
(including the P&O Princess Amendments) by, on a show of hands, not less than
75% of the holders of the outstanding P&O Princess Ordinary Shares present in
person or, on a poll, by the holders of not less than 75% of the votes attaching
to the P&O Princess Ordinary Shares who vote in person or by proxy at the P&O
Princess Shareholders Meeting at which a quorum is present and acting throughout
(the "P&O Princess Requisite Vote"). Assuming the due authorization, execution
and delivery of this Agreement by each party thereto other than P&O Princess or
any of its Subsidiaries, this Agreement constitutes, and at the Effective Time
each DLC Document to which P&O Princess will be or is a party will constitute, a
valid and binding agreement of P&O Princess, enforceable against P&O Princess in
accordance with its terms, subject to the Bankruptcy and Equity Exception. The
Board of Directors of P&O Princess (A) has approved this Agreement (including
the Exhibits hereto), and the Transactions and (B) has received the advice of
its financial advisor, Schroder Salomon Smith Barney, to the effect that, as of
the date of this Agreement, the terms of the DLC Transactions are fair and
reasonable.
3.1.4 Governmental Filings; No Violations.
3.1.4.1 Other than the filings, consents, notices,
approvals, confirmations, declarations and/or decisions listed in Section
3.1.4.1 of each Party's
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Disclosure Letter (all such filings, consents, notices, approvals,
confirmations, declarations and/or decisions to be made, given or obtained by
Carnival being the "Carnival Required Consents", and by P&O Princess being the
"P&O Princess Required Consents") no filings, notices, approvals, confirmations,
and/or declarations are required to be made by it or any of its Subsidiaries
with, nor are any approvals, consents or other confirmations required to be
obtained by it or any of its Subsidiaries from, any Governmental Entity, in
connection with the execution and delivery by it of this Agreement and the
consummation by it of the Transactions, except those the failure of which to
make, give or obtain, individually or in the aggregate, is not reasonably likely
to have a Material Adverse Effect with respect to it.
3.1.4.2 The execution, delivery and performance of this
Agreement by it does not, and the consummation by it of the Transactions will
not, constitute or result in (A) a breach or violation of, or a default under,
its articles of incorporation or by-laws, in the case of Carnival, or memorandum
or articles of association, in the case of P&O Princess, or the comparable
governing instruments of any of the Significant Subsidiaries of Carnival and P&O
Princess, (B) subject to making, giving or obtaining all Carnival Required
Consents or P&O Princess Required Consents, as applicable, and all other
necessary third-party consents as set forth in Section 3.1.4.2 of its Disclosure
Letter, a breach or violation of, or a default under, or the termination,
amendment, cancellation or acceleration of any obligations or penalties or the
creation of a Lien, charge, "put" or "call" right, right of purchase or other
encumbrance on the assets of it or any of its Subsidiaries (with or without
notice, lapse of time or both) pursuant to any agreement, lease, license,
insurance contract, contract, note, mortgage, loan, indenture, arrangement
(including, without limitation, any financing arrangement) or other obligation
("Contracts") binding upon it or any of its Subsidiaries or any Law or
governmental or non-governmental permit or license to which it or any of its
Subsidiaries is or any of its or their assets is subject or bound, (C) any
change in the rights or obligations of either Party under any of its Contracts,
or (D) any employee of it or its Subsidiaries being entitled to severance pay
under, acceleration of the time of payment or vesting or triggering of any
payment of compensation or benefits under, increasing the amount payable or
triggering of any other obligation pursuant to, any of the Compensation and
Benefit Plans involving in any such case an amount or value greater than $2.5
million for any individual or $10 million in the aggregate or any breach or
violation of, or a default under, any of the Compensation and Benefit Plans,
except, in the case of clause (B) or (C) above, for any breach, violation,
default, termination, amendment, cancellation, acceleration, creation or change
that, individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect with respect to it. Neither Party nor any of its
Subsidiaries is in violation of, or default under, or with the lapse of time or
giving of notice or both would be in violation of, or default under, any
provision of any agreement, instrument or arrangement pursuant to which it has
borrowed money or otherwise incurred indebtedness where the resulting
acceleration of all the borrowed money or indebtedness under all such
agreements, instruments and arrangements would be greater than $100 million.
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3.1.5 Reports; Financial Statements.
3.1.5.1 Carnival has made available to P&O Princess
copies of (A) each registration statement, report, or other document prepared by
it or its Subsidiaries and filed with the United States Securities and Exchange
Commission (the "SEC") since November 30, 2001 (the "Carnival Audit Date"),
including Carnival's Annual Report on Form 10-K for the year ended November 30,
2001 and Quarterly Reports on Form 10-Q for the quarters ended February 28,
2002, May 31, 2002 and August 31, 2002, each in the form (including exhibits,
annexes and any amendments thereto) filed with the SEC (collectively, including
any such registration statement, report, or other document filed with the SEC
subsequent to the date hereof, the "Carnival Reports") and (B) all circulars,
reports and other documents distributed by Carnival to its shareholders since
the Carnival Audit Date (it being understood that all documents filed with the
SEC shall be deemed to have been made available for purposes of this Section
3.1.5.1). As of their respective dates, the Carnival Reports did not, and any
Carnival Reports filed with the SEC subsequent to the date hereof will not,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
Each of the consolidated balance sheets included in or incorporated by reference
into the Carnival Reports (including the related notes and schedules) fairly
presents, or in the case of those filed with the SEC after the date hereof will
fairly present, in all material respects, the consolidated financial position of
Carnival and its Subsidiaries as of its date and each of the related
consolidated statements of operations, shareholders' equity and cash flows
included in or incorporated by reference into the Carnival Reports (including
any related notes and schedules) fairly presents, or in the case of those filed
with the SEC after the date hereof will fairly present, in all material
respects, the consolidated results of operations, retained earnings and changes
in cash flows, as the case may be, of Carnival and its consolidated Subsidiaries
for the periods set forth therein (subject, in the case of unaudited statements,
to notes and normal year-end audit adjustments that are not expected to be
material in amount or effect), in each case in accordance with US GAAP
consistently applied during the periods involved except as may be noted therein.
All of the Carnival Reports, as of their respective dates (and as of the date of
any amendment to the respective Carnival Report), complied, or in the case of
those filed with the SEC after the date hereof will comply, as to form in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act. Except as disclosed in the Carnival Reports filed prior to the
date hereof, Carnival and its consolidated Subsidiaries have not incurred any
liabilities that are of a nature that would be required to be disclosed on a
balance sheet of Carnival and its consolidated Subsidiaries or the footnotes
thereto prepared in conformity with US GAAP, other than (A) liabilities incurred
in the ordinary course of business consistent with past practice, (B)
liabilities incurred in accordance with Section 4.1, (C) liabilities for Taxes
in respect of income, profits or gains earned in the ordinary course of business
or (D) liabilities that, individually or in the aggregate, have not had and are
not reasonably likely to have a Material Adverse Effect with respect to
Carnival.
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3.1.5.2 P&O Princess has made available to Carnival
copies of (A) each registration statement, report or other document prepared by
it or its Subsidiaries and filed with, or furnished to, the SEC since December
31, 2001 (the "P&O Princess Audit Date", with the P&O Princess Audit Date and
the Carnival Audit Date each being referred to herein as the relevant Party's
"Audit Date"), including P&O Princess' Annual Report on Form 20-F for the year
ended December 31, 2001 and interim financial Reports on Form 6-K for the
quarters ended March 31, 2002, June 30, 2002 and September 30, 2002, each in the
form (including exhibits, annexes and any amendments thereto) filed with, or
furnished to, the SEC (collectively, including any such registration statement,
report or other document filed with, or furnished to, the SEC subsequent to the
date hereof, the "P&O Princess US Reports"); and (B) all circulars, reports and
other documents distributed by P&O Princess to its shareholders since the P&O
Princess Audit Date (it being understood that all documents filed with the SEC
shall be deemed to have been made available for purposes of this Section
3.1.5.2). As of their respective dates, the P&O Princess US Reports did not, and
any P&O Princess US Report filed with, or furnished to, the SEC subsequent to
the date hereof will not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. All of the P&O Princess US Reports, as of their
respective dates (and as of the date of any amendment to the respective P&O
Princess US Reports), complied, or in the case of those filed with, or furnished
to, the SEC after the date hereof will comply, as to form in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act. All documents notified by P&O Princess to, or filed by P&O Princess with,
the UKLA since the P&O Princess Audit Date, including any documents notified by
P&O Princess to, or filed by P&O Princess with, the UKLA subsequent to the date
hereof (the "P&O Princess UK Reports", collectively with the P&O Princess US
Reports, the "P&O Princess Reports", with the Carnival Reports and the P&O
Princess Reports each being referred to as the relevant Party's "Reports")
complied, or in the case of those notified or filed by P&O Princess subsequent
to the date hereof will comply, as to form, in all material respects with the
applicable provisions, of the London Listing Rules and the Companies Act. As of
their respective dates, the P&O Princess UK Reports did not, and any P&O
Princess UK Report notified by P&O Princess to, or filed by P&O Princess with,
the UKLA subsequent to the date hereof will not, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading in any material
respect. Each of the consolidated balance sheets included in or incorporated by
reference into the P&O Princess Reports (including the related notes and
schedules) fairly presents, or will fairly present, in all material respects,
the consolidated financial position of P&O Princess and its Subsidiaries as of
its date, and each of the related consolidated statements of profit and loss
accounts, changes in shareholders' funds, total recognized gains and losses and
cash flows included in or incorporated by reference into the P&O Princess
Reports (including any related notes and schedules) fairly presents, or, in the
case of those filed with or furnished to, the SEC after the date hereof, will
fairly present, in all material respects, the consolidated results of
operations, retained earnings and cash flows of P&O Princess and its
consolidated
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Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that are
not expected to be material in amount or effect), in each case in accordance
with UK GAAP consistently applied during the periods involved except as may be
noted therein. The related notes to the P&O Princess US Reports filed with the
SEC reconciling such consolidated balance sheet, consolidated statement of
income, statement of changes in shareholders' interest, and statement of cash
flows comply in all material respects with the requirements of the SEC
applicable to such reconciliation to US GAAP. Except as disclosed in the P&O
Princess Reports filed prior to the date hereof, P&O Princess and its
consolidated Subsidiaries have not incurred any liabilities that are of a nature
that would be required to be disclosed on a balance sheet of P&O Princess and
its consolidated Subsidiaries or the footnotes thereto prepared in conformity
with UK GAAP, other than (A) liabilities incurred in the ordinary course of
business consistent with past practice, (B) liabilities incurred in accordance
with Section 4.1, (C) liabilities for Taxes in respect of income, profits or
gains earned in the ordinary course of business or (D) liabilities that,
individually or in the aggregate, have not had and are not reasonably likely to
have a Material Adverse Effect with respect to P&O Princess.
3.1.6 Absence of Certain Changes. Except as disclosed in its
Reports filed or furnished prior to the date hereof, or as expressly
contemplated by this Agreement, since its Audit Date it and its Significant
Subsidiaries have conducted their respective businesses only in, and have not
engaged in any material transaction ("material" being construed in the context
of the Party and its Subsidiaries taken as a whole) other than according to, the
ordinary and usual course of such businesses, and there has not been (i) any
Material Adverse Change with respect to it; (ii) declaration, setting aside or
payment of any dividend or other distribution in cash, stock or property in
respect of its capital stock, except for dividends or other distributions on its
capital stock publicly announced prior to the date hereof and except as
expressly permitted hereby; (iii) any split in its capital stock, combination,
subdivision or reclassification of any of its capital stock or issuance or
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, except as expressly
contemplated hereby or (iv) any change by it in accounting principles, practices
or methods except as required by changes in US GAAP or UK GAAP, as the case may
be. Since its Audit Date, except as provided for herein or as disclosed in its
Reports filed or furnished prior to the date hereof, there has not been any
increase in the compensation payable or that could become payable by it or any
of its Subsidiaries to officers or key employees, or any amendment of, or
acceleration of the time of payment or vesting under, any of its Compensation
and Benefit Plans or agreements, other than increases or amendments in the
ordinary course of business consistent with past practice that are not,
individually or aggregate, material ("material" being construed in the context
of the Party and its Subsidiaries taken as a whole) or that are contemplated by
this Agreement.
3.1.7 Litigation and Liabilities.
3.1.7.1 Except as disclosed in its Reports filed or
furnished prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
existing, pending or, to the knowledge of,
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in the case of Carnival, its Chief Executive Officer, Chief Financial Officer or
General Counsel (the "Carnival Officers") and, in the case of P&O Princess, its
Chief Executive Officer, Chief Financial Officer or General Counsel (the "P&O
Princess Officers") threatened, against it or any of its Subsidiaries or (ii)
obligations or liabilities, whether or not accrued, contingent or otherwise and
whether or not required to be disclosed, or any other facts or circumstances of
which, in the case of Carnival, the Carnival Officers, and, in the case of P&O
Princess, the P&O Princess Officers, have knowledge that would reasonably be
expected to result in any claims against, or obligations or liabilities of, it
or any of its Subsidiaries, except, in each case, for those that, individually
or in the aggregate, have not had and are not reasonably likely to have a
Material Adverse Effect with respect to it.
3.1.7.2 Except as disclosed in its Reports filed or
furnished prior to the date hereof it and its Subsidiaries hold all permits,
licenses, franchises, variances, exemptions, orders and approvals of
Governmental Entities which are necessary for the operation of the businesses as
now being conducted by it and its Subsidiaries, taken as a whole (as to each
Party, its "Permits"), no suspension or cancellation of any of its Permits is
pending or, to the knowledge of the Carnival Officers in the case of Carnival or
the P&O Princess Officers in the case of P&O Princess, threatened and it and its
Subsidiaries are in compliance with the terms of its Permits, except for any
such failures to hold, suspensions or cancellations of, or failures to comply
with, such Permits that, individually or in the aggregate, have not had and are
not reasonably likely to have a Material Adverse Effect with respect to it.
Neither it nor its Subsidiaries is in violation with respect to any Laws of any
Governmental Entity, except for any such violations which, individually or in
the aggregate, have not had and are not reasonably likely to have a Material
Adverse Effect with respect to it.
3.1.8 Brokers and Finders. Neither it nor any of its
Subsidiaries, officers, directors or employees has employed any broker or finder
or incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the execution and delivery of this Agreement or the
Transactions, except that (i) Carnival has retained Merrill Lynch International
and UBS Warburg Ltd. as its financial advisors and disclosed its arrangements
with such financial advisors to P&O Princess prior to the date hereof and (ii)
P&O Princess has retained Schroder Salomon Smith Barney as its financial
advisors and disclosed its arrangements with such financial advisor to Carnival
prior to the date hereof.
3.1.9 Ownership of Other Party's Common Stock.
3.1.9.1 Carnival and its Subsidiaries do not
"beneficially own" (as such term is defined in Rule 13d-3 under the Exchange
Act) any P&O Princess Ordinary Shares or P&O Princess American Depositary
Shares.
3.1.9.2 P&O Princess and its Subsidiaries do not
"beneficially own" (as such term is defined in Rule 13d-3 under the Exchange
Act) any shares of Carnival Common Stock or any debt of Carnival that is
convertible into such shares.
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3.1.10 Taxes. Except for any such matters that, individually
or in the aggregate, have not had and are not reasonably likely to have a
Material Adverse Effect with respect to it, it and each of its Subsidiaries (i)
have prepared in good faith and duly and timely filed (taking into account any
extension of time within which to file) all Tax Returns required to be filed by
any of them and all such filed Tax Returns are complete and accurate in all
material respects; (ii) have paid all Taxes that are required to have been paid
including any Taxes which it or any of its Subsidiaries are obligated to
withhold from amounts owing to any employee, creditor or third party, except
with respect to matters contested in good faith; (iii) have not waived any
statute of limitations with respect to Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency and (iv) have no liability with
respect to Taxes that accrued on or before November 30, 2001 (in the case of
Carnival) or December 31, 2001 (in the case of P&O Princess) in excess of the
amounts accrued with respect thereto that are reflected in the financial
statements included in the Reports filed or furnished on or prior to the date
hereof. Except for any such matters that, individually or in the aggregate, have
not had and are not reasonably likely to have a Material Adverse Effect with
respect to it, there are no pending or, to the knowledge of the P&O Princess
Officers or the Carnival Officers (as appropriate) threatened in writing, any
audits, examinations, investigations or other proceedings in respect of Taxes
and Tax matters or any unresolved questions or claims concerning its or any of
its Subsidiaries' Tax liability.
As used in this Agreement, (i) the term "Tax" (including, with correlative
meaning, the terms "Taxes", and "Taxable") includes all national, federal,
state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, capital gains, severance, stamp,
payroll, sales, employment, unemployment, disability, use, property,
withholding, excise, production, value added, occupancy and other taxes, duties
or assessments of any nature whatsoever whether levied in the United Kingdom,
Panama, the United States or any other country, together with all interest,
penalties and additions imposed with respect to such amounts and any interest in
respect of such penalties and additions, and (ii) the term "Tax Return" includes
all returns and reports (including elections, declarations, disclosures,
schedules, estimates and information returns) required to be supplied to a Tax
authority relating to Taxes.
3.1.11 Carnival Common Stock to be Issued in the Offer. All
of the shares of Carnival Common Stock to be issued in the Offer in accordance
with this Agreement will be, when so issued, duly authorized, validly issued,
fully paid and non-assessable and free of preemptive rights.
ARTICLE IV
Covenants
4.1 Interim Operations. Each of Carnival and P&O Princess
covenants and agrees as to itself and its Subsidiaries that, after the date
hereof and until the Effective Time, except (i) as the other Party shall
otherwise approve in writing, (ii) as set forth in the corresponding section of
the applicable Disclosure Letter, (iii) as otherwise
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expressly contemplated by or provided in this Agreement, or (iv) as required by
applicable Law:
4.1.1 Ordinary Course. The businesses of it and its Subsidiaries
(taken as a whole) shall be conducted in the usual, regular and ordinary course
consistent with past practice and, to the extent consistent therewith, it and
each of its Significant Subsidiaries shall use its reasonable best efforts to
preserve its business organization and present lines of business materially
intact and maintain its commercially reasonable insurance (taking into account
industry practice and market conditions) and material rights and franchises and
preserve its existing material relations with third parties. Notwithstanding
anything in this Agreement to the contrary, none of the following actions by any
Party and/or its Subsidiaries after the date of this Agreement shall be
prohibited by this Agreement: (i) any internal reorganizations and related
actions pursuant thereto involving such Party and/or its Subsidiaries that do
not have and are not reasonably likely to have a Material Adverse Effect on such
Party, (ii) any purchase, sale or charters of any vessels or any amendment to,
or termination of, new-building contracts, (iii) any other acquisitions or
investments for consideration not exceeding in the aggregate $500 million plus
the net proceeds of any divestments referred to in the next clause, and (iv) any
divestments the net proceeds of which do not exceed $500 million in the
aggregate;
4.1.2 Governing Documents; Share Capital; Dividends. It shall not
(i) amend its articles of incorporation or by-laws, in the case of Carnival, or
its memorandum and articles of association, in the case of P&O Princess (except
for any amendments made solely to preserve its tax position to the extent
necessary or desirable); (ii) split, combine, subdivide or reclassify its
outstanding shares of capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock; (iii) declare, set aside or pay any dividend
or distribution payable in cash, stock or property in respect of any capital
stock other than (A) in the case of Carnival, regular quarterly cash dividends
consistent with past practice and (B) in the case of P&O Princess, regular
quarterly cash dividends consistent with past practice (it being understood that
P&O Princess may accelerate payment of its dividend for the fourth quarter of
the 2002 financial year to March 2003); or (iv) reduce, cancel, repurchase,
redeem or otherwise acquire or permit any of its Subsidiaries to reduce, cancel,
purchase or otherwise acquire (except for repurchases, redemptions or
acquisitions required by (A) the terms of its capital stock or securities
outstanding on the date hereof or (B) the respective terms as of the date hereof
of, or in connection with, any Carnival Stock Plans, in the case of Carnival, or
P&O Princess Option Plans, in the case of P&O Princess, or any dividend
reinvestment plans as in effect on the date hereof in the ordinary course of the
operation of such plans), any shares of the capital stock of P&O Princess or
Carnival, as the case may be, or any securities convertible into or exchangeable
or exercisable for any shares of its capital stock;
4.1.3 Issuance of Securities; Indebtedness; Acquisitions and
Dispositions. Neither it nor any of its Subsidiaries shall (i) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable
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for, or rights, options, warrants, conversion rights, stock appreciation rights,
redemption rights, repurchase rights, agreements, arrangements, calls,
commitments or rights of any kind to acquire, the capital stock of P&O Princess
or Carnival, as the case may be, of any class other than (x) in the case of
Carnival, shares of Carnival Common Stock issuable pursuant to options
outstanding on the date hereof under the Carnival Stock Plans, additional
options or rights to acquire shares of Carnival Common Stock granted under the
terms of any Carnival Stock Plan as in effect on the date hereof in the ordinary
course of the operation of such Carnival Stock Plan or pursuant to Carnival's
convertible debt securities outstanding as of the date hereof, (y) in the case
of P&O Princess, P&O Princess Ordinary Shares issuable or transferable pursuant
to options outstanding on the date hereof under the P&O Princess Option Plans
and additional options or rights to acquire P&O Princess Ordinary Shares granted
under the terms of any P&O Princess Option Plans as in effect on the date hereof
in the ordinary course of the operation of such P&O Princess Option Plan and (z)
issuances of securities in connection with grants or awards of stock-based
compensation made in accordance with paragraph 4.1.4 hereof), or (ii) incur or
modify any significant indebtedness or other liability except in the ordinary
and usual course of business consistent with past practice or pursuant to the
financial plans communicated to the other Party in writing prior to the date
hereof. Neither it nor any of its Significant Subsidiaries will merge or
consolidate with any Person;
4.1.4 Employee Benefits. Neither it nor any of its Subsidiaries
shall terminate, establish, adopt, enter into, make any new grants or awards of
stock-based compensation or other benefits under, accelerate the time of payment
or vesting under, amend or otherwise modify any Compensation and Benefit Plan or
agreement or increase the salary, wage, bonus or other compensation of any
directors, officers or employees except for grants or awards to directors,
officers and employees of it or its Subsidiaries under existing Compensation and
Benefit Plans, agreements or otherwise in each case in the normal and usual
course of business consistent with past practice (which shall include normal
periodic performance reviews and related compensation and benefit increases);
4.1.5 Representations and Warranties. Neither it nor any of its
Subsidiaries shall take any action or omit to take any action that would cause
any of its representations and warranties not to satisfy the condition set forth
in Section 5.2.1 or 5.3.1, as applicable, as of the Closing Date;
4.1.6 Non-Competition Agreements. Neither Party shall enter into
or renew any non-compete, exclusivity or similar agreement that would restrict
or limit, in any material respect as of the Effective Time (material being
construed in the context of the Party and its Subsidiaries taken as a whole),
its operations;
4.1.7 Satisfaction of Closing Conditions. Neither Party shall
take any action or omit to take any action for the purpose of preventing,
delaying or impeding the consummation of the Transactions; and
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4.1.8 No Related Actions. Neither it nor any of its Subsidiaries
shall authorize or enter into an agreement to do any of the foregoing.
4.2 Acquisition Proposals.
4.2.1 No Shop. Each of Carnival and P&O Princess agrees that,
subject to Section 4.2.3 and except as expressly contemplated by this Agreement,
neither it nor any of its Subsidiaries nor any of the officers or directors of
it or its Subsidiaries shall, and that it shall direct and use its reasonable
best efforts to cause its and its Subsidiaries' officers, directors, employees,
investment bankers, attorneys, accountants, financial advisors, agents or other
representatives (collectively, with respect to each of Carnival and P&O
Princess, such Person's "Representatives") not to, directly or indirectly,
initiate, solicit, encourage or otherwise facilitate any inquiries or the making
of any proposal or offer by a third party with respect to a merger, takeover,
reorganization, share exchange, scheme of arrangement, dual-holding company
transaction, consolidation or similar transaction involving Carnival or P&O
Princess, or any purchase of or joint venture (or similar arrangement)
involving, or offer to purchase or enter into a joint venture (or similar
arrangement) involving, all or 15% or more of the equity securities of Carnival
or P&O Princess, as the case may be, or of its and its Subsidiaries' assets
taken as a whole (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal"). Each of Carnival and P&O Princess further agrees that
neither it nor any of its Subsidiaries nor any of its or its Subsidiaries'
officers or directors shall, and that it shall direct and use its reasonable
best efforts to cause its Representatives not to, directly or indirectly, have
any discussions with or provide any confidential information or data to any
Person relating to an Acquisition Proposal or engage in any negotiations
concerning an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent either Carnival or P&O
Princess or its board of directors from (i) negotiating with or furnishing
information to any Person who has made a bona fide unsolicited written
Acquisition Proposal which did not result from a breach of this Section 4.2.1
(or any action that would have constituted such a breach if the Representatives
of such Party were bound by this Section to the same extent as such Party) or
Section 6 of, or any comparable no-shop provision in, the Stockholders Deed
Polls (or any action that would have constituted a breach if the Representatives
(as defined in the Stockholders Deed Polls) were bound by such Section to the
same extent as the Carnival Major Stockholders) (each, a "Qualifying Acquisition
Proposal") or (ii) recommending a Qualifying Acquisition Proposal to its
shareholders, if and only to the extent that, in each case, the board of
directors of such Party determines in good faith after consultation with outside
legal counsel that the failure to take such action would result in a breach of
the fiduciary duties of the Board of Directors and such Qualifying Acquisition
Proposal is a Superior Proposal. For purposes of this Agreement, a "Superior
Proposal" means in respect of Carnival or P&O Princess, as applicable, any
Qualifying Acquisition Proposal by a third party (x) on terms which the board of
directors of such Party determines in its good faith judgment to be more
favorable from a financial point of view to its shareholders than the
Transactions after consultation with its financial advisors (which advice shall
be communicated to the other Party) and after giving the
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other Party at least ten Business Days to respond to such third party Qualifying
Acquisition Proposal, (y) which the board of directors of such Party determines
in its good faith judgment to constitute a transaction that is reasonably likely
to be consummated on the terms set forth, taking into account all legal,
financial, regulatory and other aspects of such proposal and (z) which relates
to at least a majority of the consolidated assets by value or the securities by
voting power of such Party. Each of Carnival and P&O Princess agrees that it
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Person conducted heretofore with respect to
any Acquisition Proposal. Each of Carnival and P&O Princess also agrees that if
it has not already done so, it will promptly request each Person, if any, that
has heretofore executed a confidentiality agreement within the 12 months prior
to the date hereof in connection with its consideration of any Acquisition
Proposal to return or destroy all confidential information heretofore furnished
to such Person by or on behalf of it or any of its Subsidiaries.
4.2.2 Notifications. Each of Carnival and P&O Princess agrees
that it will take the necessary steps promptly to inform its Subsidiaries and
its and its Subsidiaries' Representatives of the obligations undertaken in this
Section 4.2. Each of Carnival and P&O Princess agrees that it will notify the
other promptly if any inquiries, proposals or offers relating to or constituting
an Acquisition Proposal are received by, any information is requested from, or
any such discussions or negotiations are sought to be initiated or continued
with, it, any of its Subsidiaries or any of its or its Subsidiaries'
Representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers and
thereafter shall keep the other informed, on a current basis, of the status and
material terms of any such proposals or offers, including providing the other
Party with copies of any information provided to such other Person.
4.2.3 Compliance with Exchange Act, Exchange Regulations and City
Code. Nothing contained in this Agreement shall prohibit a Party from taking and
disclosing to its shareholders a position contemplated by Rule 14e-2(a) under
the Exchange Act with respect to an Acquisition Proposal by means of a tender or
exchange offer or taking such action and making such recommendations as its
board of directors shall determine, in good faith after consultation with
outside legal counsel, is required in order to comply with any obligations
imposed on it by the SEC, the NYSE, the City Code, the Takeover Panel, the
London Stock Exchange or the UKLA in relation to any Acquisition Proposal
(provided that it is hereby acknowledged, for the avoidance of doubt, that no
provision of the City Code requires P&O Princess or its directors to solicit or
initiate any Acquisition Proposal). If the SEC, the NYSE, the Takeover Panel,
UKLA or London Stock Exchange, as applicable, requests or directs a Party to
take any course of action in connection with, or which would have any effect on,
the Transactions, then such Party agrees, solely to the extent practicable
(having regard to the time available and the nature and urgency of such request
or direction), to (i) notify the other Party of this fact and (ii) consult with
the other Party prior to taking any action with respect to such request or
direction.
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4.3 Information Supplied.
4.3.1 Shareholder Documents. Each of Carnival and P&O Princess
each agrees, as to itself and its Subsidiaries that:
4.3.1.1 It shall provide such information for inclusion in
each of the Shareholder Documents, such that each Shareholder Document shall
contain all particulars relating to Carnival and P&O Princess required to comply
in all material respects with all applicable Laws, including the PGCL, the
Companies Act, the City Code and the Financial Services and Markets Act 2000
(and the rules and regulations thereunder), the requirements of the London Stock
Exchange, the listing rules of the UKLA, the Securities Act, the Exchange Act
and the rules and regulations of the SEC and the NYSE;
4.3.1.2 The information provided by such Party for
inclusion or incorporation by reference in any of the Shareholder Documents
shall not, at the date of mailing to shareholders and at the time or times of
the Carnival Shareholders Meeting or the P&O Princess Shareholders Meeting, as
applicable, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading in any material respect; and
4.3.1.3 If at any time prior to the Carnival Shareholders
Meeting or the P&O Princess Shareholders Meeting, as applicable, any information
relating to Carnival or P&O Princess, or any of their respective Affiliates,
officers or directors, should be discovered by Carnival or P&O Princess which
should be set forth in a supplement to any of the Shareholder Documents, so that
such document would not include any misstatement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading in any material respect, the Party which discovers such
information shall promptly notify the other Party and, to the extent required by
Law, an appropriate amendment or supplement describing such information shall be
promptly disseminated to the Carnival shareholders or the P&O Princess
shareholders, as applicable.
4.4 Shareholders Meetings. Carnival and P&O Princess will each
respectively take all action necessary to convene a meeting of the holders of
Carnival Common Stock to obtain the Carnival Requisite Vote (the "Carnival
Shareholders Meeting") and the holders of P&O Princess Ordinary Shares to obtain
the P&O Princess Requisite Vote (the "P&O Princess Shareholders Meeting") to
approve the Transactions, as soon as possible after the date hereof, and the
Parties shall liaise to ensure that the Carnival Shareholders Meeting will be
held two days prior to the P&O Princess Shareholders Meeting; provided that if
either Party elects to hold its meeting on an earlier date, it may do so;
provided, however, the P&O Princess Shareholders Meeting may not be convened
prior to the 20th Business Day after commencement of the Offer. Subject to
fiduciary obligations and the requirements of applicable Law, the board of
directors of each of Carnival and P&O Princess shall recommend to its respective
shareholders the
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approval of, in the case of Carnival, the Carnival Amendments and, in the case
of P&O Princess, the P&O Princess Amendments, and in each case, this Agreement
and the DLC Transactions, which recommendation shall be set forth in the
Carnival Circular and the P&O Princess EGM Circular, respectively, and shall
take all lawful action to solicit such approval. The Carnival Shareholders
Meeting and the P&O Princess Shareholders Meeting will be held regardless of any
failure to make such recommendation or any change in such recommendation.
4.5 Filings; Other Actions; Notification.
4.5.1 Filings. As promptly as practicable after the execution of
this Agreement, Carnival and P&O Princess shall prepare and make all necessary
filings and notifications to any Governmental Entity required to implement the
DLC Transactions, including the filing of the Shareholder Documents with the SEC
and UKLA, as appropriate. Carnival and P&O Princess shall cooperate to conform
the content of the Shareholder Documents, to the extent reasonably practicable
and appropriate. Carnival and P&O Princess each shall use its reasonable best
efforts to have the Registration Statements declared effective by the SEC as
promptly as practicable after filing. P&O Princess and Carnival each shall use
its reasonable best efforts to have the P&O Princess EGM Circular approved by
the UKLA as promptly as practicable after filing. Carnival and P&O Princess
shall each provide the other and its counsel with copies of any comments
Carnival or P&O Princess or its counsel may receive from the SEC or its Staff or
the UKLA, as applicable, with respect to the Shareholders Documents promptly
after the receipt of such comments, and Carnival and P&O Princess shall
cooperate (and shall cause their respective counsel to cooperate) reasonably in
responding promptly and appropriately to such comments. Carnival shall promptly
prepare and file a supplemental listing application with the NYSE with respect
to the shares of Carnival Common Stock to be issued in the Offer and shall use
its reasonable best efforts to have such shares of Carnival Common Stock
approved for listing by the NYSE, subject only to official notice of issuance,
and shall promptly prepare and file a listing application with the NYSE with
respect to the SVT Shares and shall use its reasonable best efforts to have such
SVT Shares approved for listing by the NYSE, subject only to official notice of
issuance.
4.5.2 Mailing of Documents. Carnival shall use its reasonable best
efforts to cause the Carnival Circular to be mailed to its shareholders as
promptly as practicable after the SEC has declared the Second Joint Registration
Statement effective. P&O Princess shall use its reasonable best efforts to cause
the P&O Princess EGM Circular to its shareholders, and Carnival shall use its
reasonable best efforts to cause the Offer Documents to be mailed to the P&O
Princess shareholders as promptly as practicable after the SEC has declared the
Joint Registration Statement effective and UKLA has approved the P&O Princess
EGM Circular.
4.5.3 Cooperation. Carnival and P&O Princess shall each cooperate
with the other and (i) use (and shall cause their respective Subsidiaries to
use) all their respective reasonable best efforts promptly to take or cause to
be taken all
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actions, and do or cause to be done all things, necessary, proper or advisable
under this Agreement and applicable Laws to consummate and make effective the
Transactions as soon as practicable, including preparing and filing as promptly
as practicable all documentation to effect all necessary filings, notices,
petitions, statements, registrations, submissions of information, applications
and other documents, (ii) use (and shall cause their respective Subsidiaries to
use) all their respective reasonable best efforts to obtain as promptly as
practicable all approvals, consents, registrations, permits, authorizations and
other confirmations required to be obtained from any third party (other than
Carnival Required Consents and P&O Princess Required Consents) necessary, proper
or advisable to consummate the Transactions, and (iii) use (and shall cause
their respective Subsidiaries to use) their respective reasonable best efforts
to take or cause to be taken all actions, and do or cause to be done all things,
necessary, proper or advisable to obtain the Carnival Required Consents or P&O
Princess Required Consents, as the case may be; provided that neither Party
shall be required by this Section 4.5.3(ii) or (iii) to accept or agree to any
conditions, terms or restrictions in connection with any such Carnival Required
Consent or P&O Princess Required Consent, as the case may be, which,
individually or in the aggregate, would be reasonably likely to have a Material
Adverse Effect on P&O Princess and/or Carnival after the Effective Time (it
being understood that, for this purpose, materiality shall be considered with
reference to the total equity market value of P&O Princess and Carnival as a
unified commercial enterprise). Subject to applicable Laws relating to the
exchange of information, Carnival and P&O Princess shall have the right to
review in advance, and to the extent practicable each will consult the other on,
all the information relating to Carnival and its Subsidiaries or P&O Princess
and its Subsidiaries, as the case may be, that appears in any filing made with,
or written materials submitted to, any third party and/or any Governmental
Entity in connection with the Transactions. In exercising the foregoing right,
each of Carnival and P&O Princess shall act reasonably and as promptly as
practicable.
4.5.4 Furnishing Information. Carnival and P&O Princess each shall,
upon request by the other, furnish the other with all information concerning
itself, its Subsidiaries, directors, officers and shareholders and such other
matters as may be reasonably necessary or advisable in connection with the
Shareholder Documents or any other necessary or appropriate filing, notice,
statement, registration, submission of information or application made by or on
behalf of Carnival or P&O Princess or any of their respective Subsidiaries to
any third party and/or any Governmental Entity in connection with the
Transactions.
4.5.5 Status. Carnival and P&O Princess each shall keep the other
apprised of the status of matters relating to completion of the Transactions,
including promptly furnishing the other with copies of notices or other
communications received by Carnival or P&O Princess, as the case may be, or any
of its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Transactions. Carnival and P&O Princess each shall give prompt
notice to the other of any change that is reasonably likely to result in a
Material Adverse Effect on it or of any failure of any condition set forth in
Article V to the other Party's obligations to effect the Transactions.
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4.5.6 Consultation; Participation. Prior to making any filing,
notice, petition, statement, registration, submission of information or
application to or with any third party and/or Governmental Entity (including any
securities exchange) in connection with the consummation of the Transactions and
except as may be required by Law or by obligations pursuant to any listing
agreement with or rules of any securities exchange, each Party shall make all
reasonable efforts to consult with the other Party with respect to the content
of such filing, notice, petition, statement, registration, submission of
information or application and to provide the other Party with copies of the
proposed filing, notice, petition, statement, registration, statement of
information or application. Carnival and P&O Princess each shall not agree to
participate in any meeting with any Governmental Entity in respect of any
filings, investigation or other inquiry relating to the Transactions unless it
consults with the other Party in advance and, to the extent practicable and
permitted by such Governmental Entity, gives the other Party the opportunity to
attend and participate thereat. The foregoing requirements of Section 4.5.6
shall not apply to P&O Princess' discussions and meetings with the UK Inland
Revenue with respect to tonnage taxes and amendments to existing tonnage tax
elections; provided that P&O Princess shall notify Carnival of any such
discussions and meetings, and to the extent practicable, consult with Carnival
with respect thereto.
4.5.7 Cooperation in Defense of Claim. In the event any claim,
action, suit investigation or other proceeding by any Governmental Entity or
other Person or other legal or administrative proceeding is commenced that
questions the validity or legality of this Agreement or any of the Transactions
or claims damages in connection therewith, the Parties agree to cooperate and
use their reasonable best efforts, subject to the limitations set forth in
Section 4.5.3, to defend against and respond thereto.
4.6 Access. In order to facilitate consummation of the Transactions,
the Parties hereby agree that upon reasonable request to an executive officer of
P&O Princess or Carnival, as the case may be, designated for the purpose, and
except as may otherwise be required by applicable Law, each Party shall (and
shall cause its Subsidiaries to) afford the other Party's Representatives
access, during normal business hours throughout the period prior to the
Effective Time, to its properties, books, contracts and records and, during such
period, each shall (and shall cause its Subsidiaries to) furnish promptly to the
other all information concerning its business, properties and personnel as may
be requested by the other Party which it reasonably requires in order to
investigate and confirm the accuracy of such Party's representations and
warranties and the satisfaction of the conditions to Closing relating thereto;
provided that no receipt of information pursuant to this Section shall affect or
be deemed to modify any representation or warranty made by Carnival or P&O
Princess hereunder; and provided, further that the foregoing shall not require
Carnival or P&O Princess to permit any inquiry, or to disclose any information,
that in the reasonable judgment of Carnival or P&O Princess, as the case may be,
would (i) violate any antitrust or competition Law or (ii) result in the
disclosure of any trade secrets of third parties or violate any of its
obligations with respect to confidentiality to third parties if Carnival or P&O
Princess, as the case may be, shall have used reasonable efforts to obtain the
consent of such third party to such inspection or disclosure. All such
information shall be governed by the
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terms of the Confidentiality Agreement, dated October 11, 2002, between the
Parties (the "Confidentiality Agreement"), including without limitation all such
information disclosed in the Disclosure Letters.
4.7 Publicity. Carnival and P&O Princess shall to the extent practicable
(i) consult with each other and, except as may be required by Law or by
obligations pursuant to any listing agreement with or rules of any national
securities exchange or as required by the Takeover Panel, mutually agree on the
content prior to issuing any press releases or otherwise making public
announcements with respect to the Transactions and (ii) consult with each other
prior to issuing any press releases or otherwise making public announcements
which could materially affect the Transactions.
4.8 Benefits and Other Matters.
4.8.1 Director and Officer Liability.
4.8.1.1 P&O Princess and Carnival each agree that all
rights to indemnification and all limitations on liability existing in favor of
any Indemnitee (as defined below) in respect of acts or omissions of such
Indemnitee on or prior to the Effective Time as provided in the articles of
incorporation and by-laws, in the case of Carnival, or memorandum and articles
of association, in the case of P&O Princess, or an agreement between an
Indemnitee and it or its Subsidiaries in effect as of the date hereof shall
continue in full force and effect in accordance with the terms thereof.
4.8.1.2 For six years after the Effective Time, P&O
Princess or Carnival, as the case may be, shall indemnify and hold harmless the
individuals who on or prior to the Effective Time were officers or directors of
either Party or either Party's Subsidiaries (the "Indemnitees") to the same
extent as set forth in Section 4.8.1.1 above. In the event any claim in respect
of which indemnification is available pursuant to the foregoing provisions is
asserted or made within such six-year period, all rights to indemnification
shall continue until such claim is disposed of or all judgments, orders, decrees
or other rulings in connection with such claim are duly satisfied.
4.8.1.3 For six years after the Effective Time, P&O
Princess and Carnival shall provide officers' and directors' liability insurance
in respect of acts or omissions occurring prior to the Effective Time covering
each such Person currently covered by its officers' and directors' liability
insurance policy on terms with respect to coverage and in amounts no less
favorable than those of such policy in effect on the date hereof; provided,
however, that during such period, Carnival and P&O Princess shall be required to
maintain or procure as much coverage as can be obtained for the remainder of
such period for an annual premium not in excess of 200% of the current annual
premium paid by P&O Princess or Carnival, as the case may be, for its existing
coverage.
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4.8.1.4 The obligations of P&O Princess and Carnival under
this Section 4.8.1 shall not be terminated or modified in such a manner as to
adversely affect any Indemnitee to whom this Section 4.8.1 applies without the
consent of such affected Indemnitee (it being expressly agreed that the
Indemnitees to whom this Section 4.8.1 applies shall be third party
beneficiaries of this Section 4.8.1).
4.8.1.5 Each Party (the "Providing Party") shall indemnify
and hold harmless, to the fullest extent permissible under applicable Law, the
officers and directors of the other party in respect of all losses, claims,
damages, costs, expenses and liabilities arising from or in connection with the
information provided by such Providing Party for use in the Shareholder
Documents pursuant to Section 4.3 which contains any untrue statement of a
material fact or an omission to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
4.8.2 Directors of Carnival and P&O Princess. At the Effective
Time, the board of directors of each of Carnival and P&O Princess shall consist
of the individuals listed on Exhibit J (the "Mutual Directors"). Such Mutual
Directors shall be the directors of each of Carnival and P&O Princess from and
after the Effective Time until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with P&O Princess' memorandum and articles and Carnival's restated
articles of incorporation and by-laws, in each case as then in effect. Carnival
and P&O Princess agree to procure such resignations of their respective
directors as may be necessary so that at the Effective Time the Mutual Directors
are the only directors of Carnival and P&O Princess.
4.8.3 Executive Officers. At the Effective Time, Micky Arison
shall be elected or appointed as Chairman and Chief Executive Officer of
Carnival and P&O Princess, and Howard S. Frank shall be elected or appointed as
Chief Operating Officer of Carnival and P&O Princess, to serve in such
capacities until their respective successors are elected or appointed and shall
have qualified in accordance with the P&O Princess' memorandum and articles and
Carnival's restated articles of incorporation and by-laws, in each case as then
in effect. If at or immediately prior to the Effective Time, either of such
individuals shall be unwilling or unable to serve, a person to fill such
position shall be designated by the chief executive officer of Carnival at such
time.
4.9 Expenses. Except as otherwise provided in Section 6.5, whether or
not the Transactions are consummated, all costs and expenses incurred in
connection with this Agreement and the Transactions shall be paid by the Party
incurring such expense, except that the Parties each shall pay one-half of
filing fees and printer costs and expenses in connection with the preparation
and filing of the Shareholder Documents.
4.10 Other Actions by Carnival and P&O Princess.
4.10.1 Dividends. Except with respect to the distribution of the 0
SVT Shares by Carnival contemplated by this Agreement, Carnival and P&O Princess
shall coordinate the declaration, setting of record dates and payment dates of
dividends on Carnival Common Stock and P&O Princess Ordinary Shares so that the
respective
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holders of Carnival Common Stock and P&O Princess Ordinary Shares do not receive
two dividends in respect of the calendar quarter in which the Effective Time
occurs or fail to receive a dividend in respect of the calendar quarter in which
the Effective Time occurs.
4.10.2 Integration Planning. To the extent permitted by applicable
Law, promptly following the date of this Agreement, the Parties will establish
an integration planning committee (the "Integration Committee") to address and
agree upon integration issues. The Chief Executive Officer of each of Carnival
and P&O Princess shall determine which of their respective officers shall serve
on the Integration Committee and such Committee shall be comprised of an equal
number of persons from Carnival and P&O Princess.
4.11 Carnival Offer to Exchange. Section 4.11 is subject to applicable
Law.
4.11.1 Offer to Exchange. Provided that this Agreement shall not
have been terminated, and subject to the provisions of this Agreement, Carnival
shall commence, within the meaning of Rule 14d-2 under the Exchange Act, the
Offer, not later than ten business days after the effective date of the Joint
Registration Statement or earlier if required by the City Code. The Offer shall
be subject only to the conditions (the "Offer Conditions") set forth in Annex 1
hereto (including, without limitation, the occurrence of the Closing), of which
conditions 4 and 5 may be waived in whole or in part by Carnival in its sole
discretion. The P&O Princess EGM Circular shall state that P&O Princess
shareholders may (i) vote to approve the DLC Transactions; and/or (ii) accept
the Offer, subject to the terms and conditions set forth therein and in the
Offer Documents. Subject to the terms and conditions of the Offer and this
Agreement (including, without limitation, Section 4.11.4), Carnival shall
acquire all P&O Princess Ordinary Shares validly tendered and not withdrawn
pursuant to the Offer in compliance with the obligations respecting prompt
payment pursuant to Rule 14e-1(c) under the Exchange Act and Rule 31.8 of the
City Code.
4.11.2 Modification of the Offer, Fractional Shares. Subject to
the City Code, Carnival expressly reserves the right to modify the terms of the
Offer, except that, without the prior written consent of P&O Princess, Carnival
shall not (i) decrease the Offer Exchange Ratio, (ii) impose any conditions to
the Offer in addition to the Offer Conditions or modify the Offer Conditions
(other than to waive any Offer Conditions to the extent permitted by this
Agreement), (iii) except as provided in Section 4.11.3, extend the Offer, (iv)
change the form of consideration payable in the Offer or (v) make any other
change or modification in any of the terms of the Offer in any manner that is
adverse to the holders of P&O Princess Ordinary Shares. Notwithstanding anything
to the contrary set forth herein, no certificates representing fractional shares
of Carnival Common Stock shall be issued in connection with the exchange of
Carnival Common Stock for P&O Princess Ordinary Shares upon consummation of the
Offer, and in lieu thereof each tendering shareholder who would otherwise be
entitled to a fractional share of Carnival Common Stock in the Offer will be
paid an amount in cash equal to either: (i)
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the product obtained by multiplying (A) the fractional share interest to which
such holder would otherwise be entitled by (B) the closing price of the Carnival
Common Stock on the NYSE (as reported in The Wall Street Journal or, if not
reported therein, any other authoritative source) on the date the Offer becomes
unconditional; or (ii) the pro rata entitlement of such member to the net
proceeds of the sale of the aggregate fractional entitlements to Carnival Common
Stock which shall be sold in the market at the best price reasonably obtainable
by Carnival; provided always that Carnival shall be able to choose whether to
apply the procedure referred to in (i) or (ii) above, shall not be obliged to
give any reasons for such choice and such choice shall be conclusive and binding
on all persons concerned and shall not be open to challenge on any grounds
whatsoever.
4.11.3 Expiration and Extension of the Offer Acceptance Period.
The period for acceptance of the Offer shall initially expire at 5:00 p.m.,
London time, on the date of the P&O Princess Shareholders Meeting unless it is
extended by Carnival with the consent of the Takeover Panel.
4.11.4 Acceptances by Carnival. The terms of the Offer shall
provide that if the number of P&O Princess Ordinary Shares as to which the Offer
is accepted represents more than 20% of the outstanding P&O Princess Ordinary
Shares, only that number of P&O Princess Ordinary Shares representing 20% of the
outstanding P&O Princess Ordinary Shares shall be acquired by Carnival, and
acceptances shall be scaled back in the manner prescribed by Rule 36.7 of the
City Code.
4.11.5 Schedule TO. As promptly as practicable after the date
hereof, Carnival shall file with the SEC a Schedule TO.
4.11.6 P&O Princess Shareholder Information. In connection with
the Offer, P&O Princess shall cause its registrar to furnish Carnival promptly
with mailing labels containing the names and addresses of the record holders of
P&O Princess Ordinary Shares as of a recent date and of those persons becoming
record holders subsequent to such date, together with copies of all lists of
shareholders, security position listings and computer files and all other
information in P&O Princess's possession or control regarding the beneficial
owners of P&O Princess Ordinary Shares and any securities convertible into P&O
Princess Ordinary Shares, and shall furnish to Carnival such information and
assistance (including updated lists of shareholders, security position listings
and computer files) as Carnival may reasonably request in communicating the
Offer to P&O Princess's shareholders. P&O Princess shall cooperate with Carnival
to communicate the Offer to the holders of the P&O Princess ADSs. Subject to the
requirements of applicable Law, and except for such steps as are necessary to
disseminate the Offer Documents, Carnival and its affiliates, associates and
agents shall hold in confidence the information contained in any such labels,
listings and files, will use such information only in connection with the Offer
and, if this Agreement shall be terminated, will promptly, upon request,
deliver, and will use reasonable efforts to cause its affiliates, associates and
agents to deliver, to P&O Princess all copies of such information then in their
possession or control.
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4.11.7 Schedule 14D-9. In accordance with the Exchange Act, P&O
Princess shall file with the SEC a Statement on Schedule 14D-9 with respect to
the Offer (such document, as amended from time to time, the "Schedule 14D-9").
4.11.8 Termination of the Offer. The Offer may be terminated by
Carnival if, at the expiration date of the Offer, any of the Offer Conditions
has not been met.
4.11.9 Adjustment of the Offer Exchange Ratio. Subject to the
City Code, in the event that, other than pursuant to the Transactions, Carnival
changes or establishes a record date for changing the number of shares of
Carnival Common Stock issued and outstanding as a result of a stock split, stock
dividend, recapitalization, subdivision, reclassification, combination or
similar transaction with respect to the outstanding shares of Carnival Common
Stock and the record date therefor shall be prior to the Effective Time, the
Offer Exchange Ratio, and any other calculations based on or relating to the
shares of Carnival Common Stock shall be appropriately adjusted to reflect such
stock split, stock dividend, recapitalization, subdivision, reclassification,
combination or similar transaction. In the event that other than pursuant to the
Transactions, P&O Princess changes or establishes a record date for changing the
number of P&O Princess Ordinary Shares issued and outstanding as a result of a
stock split, stock dividend, recapitalization, subdivision, reclassification,
combination or similar transaction with respect to the outstanding P&O Princess
Ordinary Shares and the record date therefor shall be prior to the completion of
the Offer, the Offer Exchange Ratio, and any other calculations based on or
relating to the P&O Princess Ordinary Shares shall be appropriately adjusted to
reflect such stock split, stock dividend, recapitalization, subdivision,
reclassification, combination or similar transaction.
ARTICLE V
Conditions to the Closing
5.1 Conditions to Each Party's Obligation to Effect the Closing. The
respective obligations of P&O Princess and Carnival to effect the Closing and
the DLC Transactions are subject to the satisfaction or waiver of each of the
following conditions:
5.1.1 Shareholder Approvals. This Agreement and the DLC
Transactions (including the Carnival Amendments) shall have been duly approved
by holders of Carnival Common Stock constituting the Carnival Requisite Vote and
this Agreement, and the DLC Transactions (including the P&O Princess Amendments)
shall have been duly approved by the shareholders of P&O Princess constituting
the P&O Princess Requisite Vote.
5.1.2 Regulatory Consents. All Carnival Required Consents and
P&O Princess Required Consents from or with any Governmental Entity
(collectively, "Governmental Consents") in connection with the consummation of
the DLC Transactions, other than those Governmental Consents described in
Section 5.1.8 below,
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which are subject to satisfaction or waiver in accordance with such section,
shall have been made or obtained, and such Governmental Consents shall not
contain any terms or impose any condition or restriction relating or applying
to, or requiring changes in or limitations on, (i) the operation of any asset or
businesses of Carnival, P&O Princess or any of their respective Subsidiaries
which term, condition or restriction, individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect on P&O Princess or Carnival
after the Effective Time (it being understood that, for this purpose,
materiality shall be considered with reference to the total equity market value
of P&O Princess and Carnival as a unified commercial enterprise), or (ii) the
P&O Princess Amended Memorandum, the P&O Princess Amended Articles, the Carnival
Amended Articles, the Carnival Amended By-Laws, the Equalization and Governance
Agreement, the ability to vote the P&O Princess Special Share or P&O Princess
Ordinary Shares or the ability to vote the Carnival Special Share or Carnival
Common Stock (other than, in each case, terms, conditions or restrictions that
would not materially frustrate the express intent and purposes of this Agreement
or the Equalization and Governance Agreement).
5.1.3 Laws and Orders. No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Law (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits the consummation or performance of, or
materially adversely affects, the DLC Transactions (collectively, an "Order"),
and no Governmental Entity shall have instituted or threatened any proceeding
challenging the DLC Transactions or seeking any such Order or taken any action
or decision to revoke or materially amend any consent, clearance or approval of
the combination of P&O Princess and Carnival.
5.1.4 Carnival Amendments and P&O Princess Amendments. The
Carnival Amended Articles shall have been filed with the Companies Registry of
the Republic of Panama and the Carnival Amended Articles and Carnival Amended
By-laws shall have become effective and the P&O Princess Amended Memorandum and
the P&O Princess Amended Articles shall have become effective.
5.1.5 Approval of P&O Princess EGM Circular. The UKLA shall have
approved the P&O Princess EGM Circular.
5.1.6 Offer. The Offer shall have become unconditional (except
for the condition regarding the completion of the DLC Transactions).
5.1.7 Registration Statements. The Registration Statements shall
have been declared effective by the SEC and shall be effective and not the
subject of a stop order or other proceeding by the SEC to suspend their
effectiveness.
5.1.8 European Commission.
5.1.8.1 Insofar as the DLC Transactions constitute a
concentration which is required to be notified to the European Commission
pursuant to Article 4(1) of Council Regulation (EEC) No. 4064/89 (as amended)
(the "Merger Regulation"), and subject to Clause 5.1.8.2, either, (i) the
European Commission having
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adopted in relation to the DLC Transactions a decision under either Article
6(1)(a), Article 6(1)(b) or Article 8(2) of the Merger Regulation, or (ii) the
DLC Transactions shall have been deemed compatible with the common market in
accordance with Article 10(6) of the Merger Regulation.
5.1.8.2 In the event that a decision (or decisions) has
been taken under Article 9(3) of the Merger Regulation (or is deemed to have
been taken pursuant to Article 9(5) of the Merger Regulation) or Article 6(1) of
Protocol 24 to the Agreement to establish the European Economic Area (the "EEA
Agreement") to refer the whole or part of the DLC Transactions to the competent
authorities of one or more European Union or relevant EFTA state, decisions
having been taken by all such competent authorities to permit the DLC
Transactions; provided that if any such competent authority should have failed
to publish its report or the announcement of the findings of its examination, or
to complete its review, of the DLC Transactions within four months of the last
date on which the European Commission could have issued a decision in relation
to the DLC Transactions pursuant to Article 6 of the Merger Regulation, this
Condition to Closing shall be deemed to have been satisfied in respect of that
competent authority.
5.1.9 NYSE Listing. The NYSE shall have approved the listing on
the NYSE of either the SVT Shares or the P&O Princess Special Share, subject in
either case only to official notice of issuance.
5.2 Conditions to Obligations of P&O Princess to Effect the Closing.
The obligation of P&O Princess to effect the Closing and the DLC Transactions is
also subject to the satisfaction or waiver by P&O Princess prior to the
Effective Time of the following conditions:
5.2.1 Representations and Warranties of Carnival. The
representations and warranties of Carnival set forth in this Agreement (i) to
the extent qualified by Material Adverse Effect or any other materiality
qualification shall be true and correct and (ii) to the extent not qualified by
Material Adverse Effect or any other materiality qualification shall be true and
correct (provided that this clause (ii) shall be deemed satisfied so long as any
failures of such representations and warranties to be true and correct, taken
together, do not have a Material Adverse Effect on Carnival) as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date (except to the extent any such representation or warranty expressly
speaks as of an earlier date), and P&O Princess shall have received a
certificate signed on behalf of Carnival by a Carnival Officer to such effect.
5.2.2 Performance of Obligations of Carnival. Carnival shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and P&O Princess shall
have received a certificate signed on behalf of Carnival by a Carnival Officer
to such effect.
5.2.3 Consents Under Agreements. Carnival shall have obtained the
consent or approval of each Person whose consent or approval shall be required
in
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order to consummate the DLC Transactions under any Contract to which Carnival or
any of its Subsidiaries is a party or by which any of its or their assets are
bound, except those the failure of which to obtain such consent or approval,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect on Carnival or prevent the consummation of, or materially
adversely affect, the DLC Transactions by Carnival.
5.2.4 Carnival Special Share. Carnival shall have issued the
Carnival Special Share to Carnival SVC.
5.2.5 Other DLC Documents. Each DLC Document that is required to
be executed and delivered by the parties thereto shall have been so executed and
delivered in the Agreed Form by all such parties other than P&O Princess and its
Subsidiaries.
5.3 Conditions to Obligations of Carnival. The obligation of Carnival
to effect the Closing and the DLC Transactions contemplated by this Agreement is
also subject to the satisfaction or waiver by Carnival prior to the Effective
Time of the following conditions:
5.3.1 Representations and Warranties of P&O Princess. The
representations and warranties of P&O Princess set forth in this Agreement (i)
to the extent qualified by Material Adverse Effect or any other materiality
qualification shall be true and correct; and (ii) to the extent not qualified by
Material Adverse Effect or any other materiality qualification shall be true and
correct (provided that this clause (ii) shall be deemed satisfied so long as any
failures of such representations and warranties to be true and correct, taken
together, do not have a Material Adverse Effect on P&O Princess) as of the date
hereof and as of the Closing Date as though made on and as of the Closing Date
(except to the extent any such representation and warranty expressly speaks as
of an earlier date), and Carnival shall have received a certificate signed on
behalf of P&O Princess by a P&O Princess Officer to such effect.
5.3.2 Performance of Obligations of P&O Princess. P&O Princess
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Carnival shall have received a certificate signed on behalf of P&O Princess by a
P&O Princess Officer to such effect.
5.3.3 Consents Under Agreements. P&O Princess shall have obtained
the consent or approval of each Person whose consent or approval shall be
required in order to consummate the DLC Transactions under any Contract to which
P&O Princess or any of its Subsidiaries is a party or by which any of its or
their assets are bound, except those the failure of which to obtain such consent
or approval, individually or in the aggregate, is not reasonably likely to have
a Material Adverse Effect on P&O Princess or prevent the consummation of, or
materially adversely affect, the DLC Transactions by P&O Princess.
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5.3.4 P&O Princess Special Share. P&O Princess shall have issued
the P&O Princess Special Share to Carnival.
5.3.5 Other DLC Documents. Each DLC Document that is required to
be executed and delivered by the parties thereto shall have been so executed and
delivered in the Agreed Form by all such parties other than Carnival and its
Subsidiaries.
5.3.6 Termination of Joint Venture Agreement. P&O Princess shall
have given a termination notice under Section 9.01(c) of the Joint Venture
Agreement or the Joint Venture Agreement shall have been terminated without any
cost to P&O Princess (excluding any existing termination amount set forth in the
Implementation Agreement between P&O Princess and Royal Caribbean Cruises Ltd.,
dated as of November 19, 2001) under Section 9.01(a) thereof.
ARTICLE VI
Termination
6.1 Termination by Mutual Consent. This Agreement may be terminated
and the Transactions may be abandoned at any time prior to the Effective Time,
whether before or after the approvals by shareholders of Carnival and P&O
Princess referred to in paragraph 5.1.1, by mutual written consent of Carnival
and P&O Princess by action of their respective boards of directors.
6.2 Termination by Either P&O Princess or Carnival. This Agreement
may be terminated and the Transactions may be abandoned at any time prior to the
Effective Time by action of the board of directors of either P&O Princess or
Carnival if (i) the Closing and the Transactions shall not have been consummated
by September 30, 2003, whether such date is before or after the date of approval
by the shareholders of Carnival or P&O Princess (the "Termination Date"), (ii)
any Order (which the terminating Party shall have used its reasonable best
efforts to resist, resolve or lift, as applicable, in accordance with Section
4.5) permanently restraining, enjoining or otherwise prohibiting the
consummation of, or materially adversely affecting, the Transactions shall have
become final and non-appealable, whether before or after the approval by the
shareholders of Carnival or P&O Princess, (iii) the Carnival Requisite Vote
shall not have been obtained at the duly held Carnival Shareholders Meeting,
including any adjournments or postponements thereof or, in any event by the date
that is five Business Days prior to the Termination Date, or (iv) the P&O
Princess Requisite Vote shall not have been obtained at the duly held P&O
Princess Shareholders Meeting, including any adjournments or postponements
thereof or, in any event by the date that is five Business Days prior to the
Termination Date; provided that the right to terminate this Agreement shall not
be available to a Party that has breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to the failure of the Transactions to be consummated.
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6.3 Termination by Carnival. This Agreement may be terminated and the
Transactions may be abandoned at any time prior to the Effective Time, whether
before or after the approval by shareholders of Carnival referred to in
paragraph 5.1.1, by action of the board of directors of Carnival, if (i) the
board of directors of P&O Princess shall have withdrawn or adversely modified
its approval or recommendation to shareholders of this Agreement and the
Transactions or shall have resolved to take any such action or failed to
reconfirm such approval or recommendation within five Business Days after a
written request by Carnival to do so; or (ii) P&O Princess or its board of
directors shall take any of the actions described in clause (ii) of the proviso
to Section 4.2.1; or (iii) there shall be a breach by P&O Princess of any
representation, warranty, covenant or agreement contained in this Agreement, or
any event or circumstance shall occur as a result of which any such
representation and warranty shall not be true as of, and as if made on, any date
after the date hereof, which, in each case, would result in a failure of a
condition set forth in paragraph 5.3.1 or 5.3.2 and cannot be or is not cured
prior to the Termination Date; or (iv) a third party announces a firm intention
(whether or not subject to a pre-condition) to make an offer or Acquisition
Proposal for P&O Princess (including an offer to form a dual-listed company)
which offer is (x) either subject to the City Code or is otherwise legally
binding and (y) in Carnival's reasonable opinion, acting in good faith and after
consultation with its financial advisers, the nature of such advice to be
communicated to P&O Princess, is likely to be more attractive to P&O Princess
Shareholders than the DLC Transactions.
6.4 Termination by P&O Princess. This Agreement may be terminated and
the Transactions may be abandoned at any time prior to the Effective Time,
whether before or after the approval by the shareholders of P&O Princess
referred to in paragraph 5.1.1, by action of the board of directors of P&O
Princess, if (i) the board of directors of Carnival shall have withdrawn or
adversely modified its approval or recommendation to shareholders of this
Agreement and the Transactions, or shall have resolved to take any such action
or failed to reconfirm such approval or recommendation within five Business Days
after a written request by P&O Princess to do so; or (ii) Carnival or its board
of directors shall take any of the actions described in clause (ii) of the
proviso to Section 4.2.1; or (iii) there shall be a breach by Carnival of any
representation, warranty, covenant or agreement contained in this Agreement, or
any event or circumstance shall occur as a result of which any such
representation and warranty shall not be true as of, and as if made on, any date
after the date hereof, which, in each case, would result in a failure of a
condition set forth in paragraph 5.2.1 or 5.2.2 and cannot be or is not cured
prior to the Termination Date.
6.5 Effect of Termination and Abandonment.
6.5.1 Effect of Termination. In the event of termination of this
Agreement and the abandonment of the Transactions pursuant to this Article VI,
this Agreement (other than as set forth in Section 7.1) shall become void and of
no effect with no liability on the part of either Party (or of any of its
Representatives); provided, however, that, subject to Section 7.1, no such
termination shall relieve either Party of any liability for damages resulting
from any breach of this Agreement or from any obligation
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to pay, if applicable, the Carnival Termination Amount (as defined below) or the
P&O Princess Termination Amount (as defined below), as the case may be, pursuant
to Section 6.5.2 or 6.5.3.
6.5.2 Carnival Break Fee. In the event that (i) this Agreement is
terminated by either Carnival or P&O Princess pursuant to Section 6.2(iii) and
at the time of the Carnival Shareholders Meeting an Acquisition Proposal exists
with respect to Carnival; or (ii) this Agreement is terminated by P&O Princess
pursuant to Section 6.4(i), 6.4(ii) or 6.4(iii) (solely with respect to a breach
of Section 4.2), then if any Acquisition Proposal involving Carnival is
implemented or completed on or before the day which is 18 months after the date
of this Agreement, Carnival shall promptly, but in no event later than two days
after the date of such implementation or completion, pay to P&O Princess a
termination payment equal to the Carnival Termination Amount, which amount shall
be exclusive of any expenses to be paid pursuant to Section 4.9, payable by wire
transfer of same day funds. The term "Carnival Termination Amount" shall mean
$49.4 million (representing 1 per cent of the market capitalisation of P&O
Princess on January 7, 2003). Carnival acknowledges that the agreements
contained in this Section 6.5.2 are an integral part of the Transactions, and
that, without these agreements, P&O Princess would not enter into this
Agreement; accordingly, if Carnival fails promptly to pay any amount due
pursuant to this Section 6.5.2, and, in order to obtain such payment, P&O
Princess commences a suit which results in a judgment against Carnival for the
payment set forth in this Section 6.5.2, Carnival shall pay to P&O Princess its
costs and expenses (including attorneys' fees) in connection with such suit,
together with interest on the Carnival Termination Amount from each date for
payment until the date of such payment at the prime rate of Citibank N.A. in
effect on the date such payment was required to be made plus 2 percent.
6.5.3 P&O Princess Break Fee. In the event that (i) this
Agreement is terminated by either Carnival or P&O Princess pursuant to Section
6.2(iv) and at the time of the P&O Princess Shareholders Meeting an Acquisition
Proposal exists with respect to P&O Princess; or (ii) this Agreement is
terminated by Carnival pursuant to Section 6.3(i), 6.3(ii) or 6.3(iii) (solely
with respect to a breach of Section 4.2 then if any Acquisition Proposal
involving P&O Princess is implemented or completed on or before the day which is
18 months after the date of this Agreement, P&O Princess shall promptly, but in
no event later than two days after the date of such implementation or
completion, pay to Carnival a termination payment equal to the P&O Princess
Termination Amount, which amount shall be exclusive of any expenses to be paid
pursuant to Section 4.9, payable by wire transfer of same day funds. The term
"P&O Princess Termination Amount" shall mean $49.4 million (representing 1 per
cent. of the market capitalisation of P&O Princess on January 7, 2003). P&O
Princess acknowledges that the agreements contained in this Section 6.5.3 are an
integral part of the Transactions, and that, without these agreements, Carnival
would not enter into this Agreement; accordingly, if P&O Princess fails promptly
to pay any amount due pursuant to this Section 6.5.3, and, in order to obtain
such payment, Carnival commences a suit which results in a judgment against P&O
Princess for the payment set forth in this Section 6.5.3, P&O Princess shall pay
to Carnival its costs and expenses (including
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attorneys' fees) in connection with such suit, together with interest on the P&O
Princess Termination Amount from each date for payment until the date of such
payment at the prime rate of Citibank N.A. in effect on the date such payment
was required to be made plus 2 percent.
ARTICLE VII
Miscellaneous and General
7.1 Survival. This Article VII and the agreements of Carnival and P&O
Princess contained in Sections 4.8 (Benefits and Other Matters) and 4.9
(Expenses) shall survive the Effective Time. This Article VII (other than
Section 7.2 (Modification or Amendment), Section 7.3 (Waiver of Conditions) and
Section 7.11 (Assignment)), the representations and warranties contained in
Section 3.1.3 (Corporate Authority; Approval and Fairness), the agreements of
Carnival and P&O Princess contained in Section 4.9 (Expenses), Section 6.5
(Effect of Termination and Abandonment) and the last sentence of Section 4.6
(Access) and Section 4.11.7 and 4.11.8 shall survive the termination of this
Agreement. All other representations, warranties, agreements and covenants in
this Agreement shall not survive the Effective Time or the termination of this
Agreement. Notwithstanding the foregoing, no termination of this Agreement shall
relieve any Party from liability for any breach by it of its covenants and
agreements in this Agreement prior to such termination; provided that the sole
remedy of any Party for any breach by the other Party of any representation or
warranty in this Agreement other than those in Section 3.1.3 (Corporate
Authority; Approval; and Fairness) shall be the right (if any) to terminate this
Agreement pursuant to clause (iii) of Section 6.3 or Section 6.4, as applicable.
7.2 Modification or Amendment. This Agreement may be modified or
amended by agreement of the Parties, by action taken or authorized by their
respective boards of directors, at any time prior to the Effective Time;
provided, however, that, after approval by shareholders of the matters presented
at the Carnival Shareholders Meeting or the P&O Princess Shareholders Meeting,
no modification or amendment shall be made which under applicable Law requires
further approval by such shareholders without such further approval. This
Agreement may not be modified or amended except by an instrument in writing
executed and delivered by duly authorized officers of each of the Parties.
7.3 Waiver of Conditions. Any provision of this Agreement may be
waived prior to the Effective Time if, and only if, such waiver is in writing
and signed by the Party against whom the waiver is to be effective. For the
purposes of Article V, P&O Princess may waive any condition contained in Section
5.2 and Carnival may waive any condition contained in Section 5.3.
7.4 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay by any Party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any
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other or further exercise thereof or the exercise of any other right, power or
privilege. Except as otherwise herein provided, the rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by Law.
7.5 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
7.6 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
7.6.1 Governing Law And Venue. THIS AGREEMENT SHALL BE DEEMED TO
BE MADE IN, AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY
AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
TO BE PERFORMED WHOLLY IN SUCH STATE. The Parties hereby irrevocably submit to
the jurisdiction of the Federal courts of the United States of America located
in the Borough of Manhattan, New York State solely (or, if such jurisdiction is
refused by such Federal courts, the Supreme Court of the State of New York,
located in the Borough of Manhattan) in respect of the interpretation and
enforcement of the provisions of this Agreement and in respect of the
Transactions and thereby waive, and agree not to assert, as a defense in any
action, suit or proceeding for the interpretation or enforcement hereof, that it
is not subject thereto or that such action, suit or proceeding may not be
brought or is not maintainable in said courts or that the venue thereof may not
be appropriate or that this Agreement may not be enforced in or by such courts,
and the Parties irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such a Federal court. The Parties
hereby consent to and grant any such court jurisdiction over the person of such
Parties and over the subject matter of such dispute and agree that mailing of
process or other papers in connection with any such action or proceeding in the
manner provided in Section 7.7 (Notices), or in such other manner as may be
permitted by Law, shall be valid and sufficient service thereof.
7.6.2 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE "TRANSACTIONS." EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY
UNDERSTANDS AND HAS
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CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 7.6.
7.7 Notices. Notices, requests, instructions or other documents
to be given under this Agreement shall be in writing and shall be deemed given,
(i) when sent if sent by facsimile, provided that the facsimile is promptly
confirmed by telephone confirmation thereof or (ii) when delivered, if delivered
personally to the intended recipient or sent by overnight delivery via a
national courier service, and in each case, addressed to a Party at the
following address for such Party:
if to Carnival:
Carnival Corporation
3655 N.W. 87th Avenue
Miami, Florida 33l78-2428
Attention: Chairman and Chief Executive Officer
Facsimile: (305) 477-1740
with copies to
Carnival Corporation
3655 N.W. 87th Avenue
Miami, Florida 33178-2428
Attention: General Counsel
Facsimile: (305) 477-1740
and
James M. Dubin, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, New York 10019-6064
Facsimile: (212) 757-3990
and
Anthony Macaulay
Herbert Smith
Exchange Square
Primrose Street
London EC2A 2HS
Facsimile: (44) 20-7374 0888
-42-
if to P&O Princess:
P&O Princess Cruises plc
77 New Oxford Street
London WC1A 1PP
Attention: Chief Executive Officer
Facsimile: (44) 20-7805-1240
with copies to
P&O Princess Cruises plc
77 New Oxford Street
London WC1A 1PP
Attention: General Counsel
Facsimile: (44) 20-7805-1240
Duncan C. McCurrach, Esq.
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Facsimile: (212) 558-3588
and
Mark Rawlinson
Freshfields Bruckhaus Deringer
65 Fleet Street
London EC4Y 1HS
Facsimile: (44) 20-7832-7001
or to such other Persons or addresses as may be designated in writing by the
Party to receive such notice as provided above.
7.8 Entire Agreement. This Agreement (including the exhibits,
annexes and schedules hereto), the Carnival Disclosure Letter, the P&O Princess
Disclosure Letter, the Stockholder Voting Agreement and the Confidentiality
Agreement constitute the entire agreement, and supersede all other prior
agreements, understandings, representations and warranties both written and
oral, between the Parties with respect to the subject matter hereof. References
herein to this Agreement shall for all purposes be deemed to include references
to the Carnival Disclosure Letter and the P&O Princess Disclosure Letter. Except
as set forth in Section 4.8.1, this Agreement is not intended to confer upon any
Person other than the Parties any rights or remedies hereunder except the
individuals who were directors of either Party on or prior to the Effective Time
shall be deemed third party beneficiaries with respect to Section 4.8, as
applicable. No employee or former employee of Carnival or P&O Princess who is
not a director of Carnival or P&O Princess shall be deemed a third party
beneficiary with respect to any provision of this Agreement. EACH PARTY HERETO
AGREES THAT, EXCEPT FOR THE
-43-
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT OR ANY OTHER
AGREEMENT CONTEMPLATED HEREBY, NEITHER CARNIVAL NOR P&O PRINCESS MAKES ANY OTHER
REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES WITH
RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT, OR THE "TRANSACTIONS",
NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER'S
REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY
ONE OR MORE OF THE FOREGOING.
7.9 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision unless the substitution of such provision would materially frustrate
the express intent and purposes of this Agreement or the Equalization and
Governance Agreement and (b) the remainder of this Agreement and the application
of such provision to other Persons or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
7.10 Interpretation. The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." As used herein with respect to any Party, a matter shall be deemed
to be "material" only if it is material to the Party and its Subsidiaries taken
as a whole. A reference to any agreement or document is to that agreement or
document as amended, novated, supplemented, varied or replaced from time to
time, except to the extent prohibited by this Agreement. A reference to any
legislation (including any listing rules of a stock exchange or voluntary codes)
or to any provision of any legislation includes any modification or re-enactment
of it, any legislative provision substituted for it and all rules and
regulations and statutory instruments promulgated and issued under it. Nothing
in this Agreement or the DLC Documents will mean or be taken to imply that P&O
Princess or Carnival have agreed to dispose of or to acquire any interest in the
assets or undertakings of either of them. The parties hereto acknowledge that
this Agreement (including the Exhibits and Schedules hereto) has been drafted
jointly by the parties hereto and agree that this Agreement will
-44-
not be construed against any party as a result of any role such party may have
had in the drafting process.
7.11 Assignment. This Agreement shall not be assignable by operation
of law or otherwise, and any purported assignment in violation of this provision
shall be void.
7.12 No Partnership. Neither this Agreement nor the DLC Transactions
are intended for any legal, tax or other purpose to (i) alter the status of P&O
Princess and Carnival as separate, independent entities (taxed respectively and
exclusively as a United Kingdom and a Panamanian non-resident corporation), (ii)
result in any of Carnival, P&O Princess, their respective Subsidiaries, or their
respective shareholders being treated as creating an entity or otherwise
entering into any partnership, joint venture, association or agency
relationship, or (iii) give either Party (or its respective Subsidiaries or
shareholders) any legal or beneficial ownership interest in the assets or income
of the other Party, and shall not be construed as having such effect.
7.13 Special Shares. The parties agree for all United States federal
income tax purposes to treat both the Carnival Special Share and the P&O
Princess Special Share as not constituting stock or any other equity interest in
Carnival or P&O Princess or any other entity.
-45-
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of Carnival and P&O Princess as of the
date hereof.
CARNIVAL CORPORATION
By: /s/ Micky Arison
----------------------------------------------
Name: Micky Arison
Title: Chairman & Chief Executive
Officer
P&O PRINCESS CRUISES PLC
By: /s/ Peter G. Ratcliffe
----------------------------------------------
Name: Peter G. Ratcliffe
Title: Chief Executive Officer
-46-
Annex A-2
AGREED FORM
DATED 2003
--------------------------------------------
CARNIVAL CORPORATION
and
P&O PRINCESS CRUISES PLC
--------------------------------------------
EQUALIZATION AND GOVERNANCE AGREEMENT
--------------------------------------------
1
CONTENTS
Page
1. Definitions and Interpretation ........................................ 1
2. Boards of P&O Princess and Carnival ................................... 9
3. Equalization of Distributions ......................................... 10
4. Capital Actions ....................................................... 11
5. Joint Electorate Actions .............................................. 16
6. Separate Approvals of Class Rights Actions ............................ 17
7. Meetings and Voting ................................................... 18
8. Change of Control of either P&O Princess or Carnival .................. 20
9. Stock Exchanges ....................................................... 20
10. Liquidation ........................................................... 20
11. Termination ........................................................... 21
12. Consequences of Termination ........................................... 22
13. Personal Rights Only .................................................. 22
14. Issue of Equalization Shares .......................................... 23
15. Relationship with other Documents ..................................... 23
16. Miscellaneous ......................................................... 23
17. Notices ............................................................... 24
18. Counterparts .......................................................... 24
19. Governing Law ......................................................... 24
20. Arbitration ........................................................... 25
EQUALIZATION AND GOVERNANCE AGREEMENT
THIS AGREEMENT is made on [.] 2003 between:
(1) CARNIVAL CORPORATION, a Panamanian corporation having its principal place
of business at Carnival Place, 3655 N.W. 87th Avenue, Miami, Florida, 33178
- 2428 ("Carnival"); and
(2) P&O PRINCESS CRUISES PLC, a public limited company incorporated in England
and Wales (Registered No. 4039524) having its registered office at 77 New
Oxford Street, London WC1A 1PP ("P&O Princess").
WHEREAS:
(A) P&O Princess and Carnival entered into the Implementation Agreement,
pursuant to which P&O Princess and Carnival have agreed to do certain acts
and things to implement the DLC Combination and create certain rights for
the Carnival Shareholders and the P&O Princess Shareholders in respect of
their interests in the combined enterprise.
(B) P&O Princess and Carnival wish to agree upon the terms of the ongoing
relationship between them following the DLC Combination, the basic
principles being that:
(i) the two companies shall operate as if they were a single unified
economic entity; and
(ii) the Equalization Ratio shall govern the proportion in which
distributions of income and capital are made to, and the relative
voting rights of, the holders of Carnival Common Stock relative to the
holders of P&O Princess Ordinary Shares.
1. Definitions and Interpretation
1.1 Definitions
In this Agreement, unless the context otherwise requires:
"Action" means, in relation to Carnival or P&O Princess, any action
affecting the amount or nature of issued share capital of such company,
including any non-cash Distribution, offer by way of rights, bonus issue,
sub-division or consolidation, or buy-back;
"Applicable Exchange Rate" means, in relation to any proposed Distributions
by P&O Princess and Carnival in relation to which a foreign exchange rate
is required, the average of the closing mid-point spot US dollar-sterling
exchange rate on the five Business Days ending on the Business Day before
the Distribution Determination Date relating to such Distributions (as
shown in the London Edition of the Financial Times, or such other point of
reference as the parties shall agree), or such other spot US
dollar-sterling exchange rate or average US dollar-sterling exchange rate
as at such other date (or over such other period) before a Distribution
Determination Date as the Boards of P&O Princess and Carnival shall agree,
in each case rounded to five decimal places;
1
"Applicable Regulations" means:
(a) any law, statute, ordinance, regulation, judgement, order, decree,
licence, permit, directive or requirement of any Governmental Agency
having jurisdiction over P&O Princess and/or Carnival; and
(b) the rules, regulations, and guidelines of:
(i) any stock exchange or other trading market on which any shares or
other securities or depositary receipts representing such shares
or securities of either P&O Princess or Carnival are listed,
traded or quoted; and
(ii) any other body with which entities with securities listed or
quoted on such exchanges customarily comply,
(but, if not having the force of law, only if compliance with such
directives, requirements, rules, regulations or guidelines is in accordance
with the general practice of persons to whom they are intended to apply) in
each case for the time being in force and taking account all exemptions,
waivers or variations from time to time applicable (in particular
situations or generally) to P&O Princess or, as the case may be, Carnival;
"Associated Tax Credit" means, in relation to any Distribution proposed to
be made by either P&O Princess or Carnival, the amount of any imputed or
associated Tax credit or rebate or exemption (or the value of any other
similar associated Tax benefit) which would be available to a shareholder
receiving or entitled to receive the Distribution, together with the amount
of any credit or benefit in respect of any tax required to be deducted or
withheld from the Distribution by or on behalf of the paying company;
"Board" means the Board of P&O Princess or the Board of Carnival as the
context may require;
"Board of Carnival" means the board of directors of Carnival (or a duly
appointed committee of that board) from time to time;
"Board of P&O Princess" means the board of directors of P&O Princess (or a
duly appointed committee of that board) from time to time;
"Business Day" means any day other than a Saturday, Sunday or day on which
banking institutions in the City of New York or London are authorised or
obligated by law or executive order to close in the United States or
England (or on which such banking institutions are open solely for trading
in euros);
"Carnival Articles" means the Amended Articles of Incorporation of Carnival
which will be in effect immediately following Completion, as amended from
time to time;
"Carnival Articles and By-laws" means the Carnival Articles and the By-laws
of Carnival which will be in effect immediately following Completion, as
amended from time to time;
"Carnival Common Stock" means the issued and outstanding common stock, par
value US$0.01 per share, of Carnival from time to time, as the same may be
subdivided or consolidated from time to time and any capital stock into
which such common stock may be reclassified, converted or otherwise
changed;
2
"Carnival Convertible Instruments" means the $600,000,000 2% Convertible
Senior Debentures due 2021; and the $1,051,175,000 Liquid Yield Option
Notes due 2021 (Zero Coupon-Senior);
"Carnival Entrenched Provision" has the meaning given to it in the Carnival
Articles and By-laws;
"Carnival Equalization Share" means any share designated as an equalization
share in Carnival from time to time by the Board of Carnival;
"Carnival Equivalent Number" means the number of shares of Carnival Common
Stock that have the same rights to distributions of income and capital and
voting rights as one P&O Princess Ordinary Share. Initially, the Carnival
Equivalent Number shall be 0.30040 but shall be adjusted as provided in
Clause 4 and the Schedule. In all cases, the Carnival Equivalent Number
shall be rounded to five decimal places;
"Carnival Group" means Carnival and its Subsidiaries from time to time and
a member of the Carnival Group means any one of them;
"Carnival Guarantee" means the deed of guarantee of even date herewith
between Carnival and P&O Princess whereby Carnival agrees to guarantee
certain obligations of P&O Princess for the benefit of certain future
creditors of P&O Princess, as amended from time to time;
"Carnival SVC" means Carnival SVC Limited, a company incorporated in
England and Wales with registered number [.] or such other company as
replaces Carnival SVC Limited pursuant to the terms of the SVE Special
Voting Deed;
"Carnival Special Voting Share" means the special voting share of US$0.01
in Carnival;
"Carnival SVC Owner" means [.] or such other entity as shall be agreed
between P&O Princess and Carnival;
"Class Rights Action" means any of the actions listed in Clause 6.1;
"Combined Group" means the P&O Princess Group and the Carnival Group;
"Combined Shareholders" means the holders of Carnival Common Stock and the
holders of P&O Princess Ordinary Shares;
"Completion" means the time at which the steps set out in Section 2.2
(Transaction to be Effected and Documents to be Exchanged) of the
Implementation Agreement have been completed;
"Current Market Price" has the meaning given to it in Paragraph 3 of the
Schedule;
"Dealing Day" has the meaning given to it in Paragraph 3 of the Schedule;
"Disenfranchised Carnival Common Stock" has the meaning given to that term
in the Carnival Articles;
"Disenfranchised P&O Ordinary Shares" has the meaning given to that term in
the P&O Princess Articles of Association;
3
"Disenfranchised Shares" means the Disenfranchised P&O Ordinary Shares and
the Disenfranchised Carnival Common Stock;
"Dispute" has the meaning given to it in Clause 20(A);
"Distributable Reserves" means, with respect to any Distribution by
Carnival or P&O Princess, the total funds available to such company which
it is permitted to use to pay or make such Distribution under the
Applicable Regulations relating to Carnival or P&O Princess, as the case
may be;
"Distribution" means, in relation to Carnival or P&O Princess, any dividend
or other distribution, whether of income or capital, and in whatever form,
made by such company or any of its Subsidiaries to the holders of such
company's Shares, including for the purposes of this definition
Disenfranchised Shares, by way of pro rata entitlement, excluding any
Liquidation Distribution or buy-back or repurchase or cancellation of
Shares;
"Distribution Determination Date" means, with respect to any parallel
Distributions to be made by Carnival and P&O Princess, the date on which
the Board of P&O Princess and the Board of Carnival resolve to pay or make
such parallel Distributions (or, if they resolve on different dates to pay
or make such parallel Distributions, the later of those dates);
"DLC Combination" means the combination of Carnival and P&O Princess by
means of a dual listed company structure effected pursuant to this
Agreement and the transactions contemplated hereby, including the SVE
Special Voting Deed, the Carnival Articles and By-laws, the P&O Princess
Memorandum and Articles, the Carnival Guarantee and the P&O Princess
Guarantee;
"DLC Structure" means the structure created by the DLC Combination;
"DLC Transactions" has the meaning given to that term in the Implementation
Agreement;
"Equalization Distribution Amount" means, in relation to either P&O
Princess or Carnival, the amount of any Distribution proposed to be paid or
made by such company at any particular time on its Shares, before deduction
of any amount in respect of Tax required to be deducted or withheld from
such Distribution by or on behalf of such company and excluding the amount
of any Associated Tax Credit, all such amounts being expressed in the
currency of declaration and on a per share basis;
"Equalization Fraction" means, as of any time, the Equalization Ratio as of
such time expressed as a fraction, where the numerator is one and the
denominator is the Carnival Equivalent Number at such time;
"Equalization Ratio" means, at any time, the ratio of (i) one P&O Princess
Ordinary Share to (ii) the Carnival Equivalent Number at such time;
"Equalization Share" means, in relation to P&O Princess, the P&O Princess
Equalization Share and, in relation to Carnival, the Carnival Equalization
Share;
"equity equivalents" has the meaning given in Clause 4.4(A);
"Equivalent Distribution" has the meaning given in Clause 3.1;
4
"Equivalent Resolution" means a resolution of either P&O Princess or
Carnival that is equivalent in nature and effect to a resolution of the
other company;
"Fair Market Value" has the meaning given to it in Paragraph 3 of the
Schedule;
"Final Award" has the meaning given to it in Clause 20(D);
"Financial Period" means a financial year of either P&O Princess or
Carnival or any other period for which both of their accounts may by mutual
agreement be made up;
"Governmental Agency" means a court of competent jurisdiction or any
government or any governmental, regulatory, self-regulatory or
administrative authority, agency, commission, body or other governmental
entity and shall include any relevant competition authorities, the UK Panel
on Takeovers and Mergers, the European Commission, the London Stock
Exchange, the UK Listing Authority, the U.S. Securities and Exchange
Commission and the NYSE;
"Group" means, in relation to P&O Princess, the P&O Princess Group and, in
relation to Carnival, the Carnival Group as the context requires;
"Guarantee" means each of the P&O Princess Guarantee and the Carnival
Guarantee;
"Implementation Agreement" means the agreement headed "Offer and
Implementation Agreement" entered into between P&O Princess and Carnival
dated as of 8 January 2003;
"Joint Electorate Action" has the meaning given in Clause 5.1;
"Joint Electorate Procedure" means the procedures referred to in Clause
5.2;
"Liquidation" means, with respect to either Carnival or P&O Princess, any
liquidation, winding up, receivership, dissolution, insolvency or
equivalent or analogous proceedings pursuant to which the assets of such
company will be liquidated and distributed to creditors and other holders
of provable claims against such company;
"Liquidation Distribution" means, in relation to Carnival or P&O Princess,
any dividend or other distribution per Share, whether of income or capital,
and in whatever form, made or to be made by such company or any of its
Subsidiaries to the holders of such company's Shares by way of pro rata
entitlement in connection with the Liquidation of such company;
"Liquidation Exchange Rate" means, as at any date, the average of the
closing mid-point spot US dollar-sterling exchange rate on the five
Business Days ending on the Business Day before such date (as shown in the
London Edition of the Financial Times), or such other US dollar-sterling
exchange rate as the Boards of P&O Princess and Carnival or the Board of
P&O Princess and liquidators of Carnival or the Board of Carnival and the
liquidators of P&O Princess or the liquidators of both P&O Princess and
Carnival, as the case may be, may determine, in each case rounded to five
decimal places;
"London Stock Exchange" means the London Stock Exchange plc;
"Majority Resolution" means, with respect to Carnival or P&O Princess, a
resolution duly approved at a meeting of the shareholders of such company
by the affirmative vote of a majority of all the votes Voted on such
resolution by all shareholders of such
5
company entitled to vote thereon (including, where appropriate, the holder
of the Special Voting Share of such company) who are present in person or
by proxy at such meeting;
"Matching Action" has the meaning given in Clause 4.5;
"Net Assets" has the meaning given in Clause 10.2;
"NYSE" means the New York Stock Exchange, Inc.;
"P&O Princess Articles of Association" means the Articles of Association of
P&O Princess which will be in effect immediately following Completion, as
amended from time to time;
"P&O Princess Entrenched Provision" has the meaning given to it in the P&O
Princess Memorandum and Articles;
"P&O Princess Equalization Share" means the equalization share
of(pound)50,000 in the capital of P&O Princess;
"P&O Princess ADS" means an American Depositary Share of P&O Princess, each
of which currently represents four P&O Princess Ordinary Shares, which is
listed on NYSE;
"P&O Princess Guarantee" means the deed of guarantee of even date herewith
between P&O Princess and Carnival whereby P&O Princess agrees to guarantee
certain obligations of Carnival for the benefit of certain future creditors
of Carnival, as amended from time to time;
"P&O Princess Group" means P&O Princess and its Subsidiaries from time to
time and a member of the P&O Princess Group means any one of them;
"P&O Princess Memorandum and Articles" means the Memorandum and Articles of
Association of P&O Princess which will be in effect immediately following
Completion, as amended from time to time;
"P&O Princess Ordinary Shares" means the issued ordinary shares of US$0.50
each in P&O Princess from time to time (including the underlying ordinary
shares to each P&O Princess ADS), as the same may be subdivided or
consolidated from time to time and any ordinary shares into which such
class of shares may be reclassified, converted or otherwise changed;
"P&O Princess SVT" means P&O Princess Special Voting Trust, a trust
organized under the laws of __________ or such other entity as replaces it
pursuant to the terms of the SVE Special Voting Deed;
"P&O Princess Special Voting Share" means the special voting share of
(pound)1 in P&O Princess;
"P&O Princess Trustee" means [.], as trustee of P&O Princess SVT pursuant
to the P&O Princess SVT Agreement (or any successor trustee appointed
pursuant to Section 7.08 thereof);
"P&O Princess SVT Agreement" means the Voting Trust Agreement establishing
P&O Princess SVT between P&O Princess Trustee and Carnival, of even date
herewith as amended from time to time;
6
"Parallel Shareholder Meeting" means, in relation to Carnival or P&O
Princess, any meeting of the shareholders of that company which is:
(a) nearest in time to, or is actually contemporaneous with, the meeting
of the shareholders of the other company and at which some or all of
the same resolutions or some or all the Equivalent Resolutions are to
be considered;
(b) designated by the Board of Carnival or the Board of P&O Princess, as
the case may be, as the parallel meeting of a particular meeting of
shareholders of the other company;
"Primary Action" has the meaning given in Clause 4.5;
"Relevant Company" has the meaning given in Paragraph 1.1 of the Schedule;
"Repurchase" means:
(a) a repurchase of shares in the capital of P&O Princess having voting
rights by any member of the P&O Princess Group or a reduction by P&O
Princess of its issued Ordinary share capital;
(b) a repurchase of Carnival Common Stock by any member of the Carnival
Group; or
(c) a purchase of shares in the capital of P&O Princess having voting
rights by any member of the Carnival Group; or
(d) a purchase of Carnival Common Stock by any member of the P&O Princess
Group;
provided that the purchase of P&O Princess Ordinary Shares in the Offer (as
defined in the Implementation Agreement) shall not be deemed to be a
Repurchase.
"Required Majority" has the meaning given in Clause 6.2;
"Shares" means, in relation to P&O Princess, the P&O Princess Ordinary
Shares which, for the avoidance of doubt shall not include Disenfranchised
P&O Ordinary Shares (except where stated to the contrary) and, in relation
to Carnival, the Carnival Common Stock which, for the avoidance of doubt
shall not include Disenfranchised Carnival Common Stock (except where
stated to the contrary);
"Special Voting Share" means, in relation to Carnival, the Carnival Special
Voting Share and, in relation to P&O Princess, the P&O Princess Special
Voting Share;
"sterling" means the lawful currency from time to time of the United
Kingdom;
"Subsidiary" means with respect to Carnival or P&O Princess, any entity,
whether incorporated or unincorporated, in which such company owns,
directly or indirectly, a majority of the securities or other ownership
interests having by their terms ordinary voting power to elect a majority
of the directors or other persons performing similar functions, or the
management and policies of which such party otherwise has the power to
direct;
7
"Supermajority Resolution" means, with respect to Carnival or P&O Princess,
a resolution required by Applicable Regulations and/or the Carnival
Articles and By-laws or the P&O Princess Memorandum and Articles, as
relevant, to be approved by a higher percentage of votes Voted than
required under a Majority Resolution, or where the percentage of votes
Voted in favour and against the resolution is required to be calculated by
a different mechanism to that required by a Majority Resolution;
"SVE Special Voting Deed" means the agreement of even date herewith entered
into among Carnival SVC, the Carnival SVC Owner, the P&O Princess Trustee,
P&O Princess and Carnival relating, inter alia, to how each Special Voting
Share is to be voted, as amended from time to time;
"Tax" means any taxes, levies, imposts, deductions, charges, withholdings
or duties levied by any authority (including stamp and transaction duties)
(together with any related interest, penalties, fines and expenses in
connection with them);
"Tax Benefit" means any credit, rebate, exemption or benefit in respect of
Tax available to any person;
"Tribunal" has the meaning given to it in Clause 20(B);
"UK Listing Authority" means the Financial Services Authority in its
capacity as competent authority for the purposes of Part VI of the UK
Financial Services and Markets Act 2000;
"US Securities Exchange Act" means the U.S. Securities Exchange Act of
1934; and
"Voted" means the number of votes recorded in favour of and against a
particular resolution at a shareholders' meeting of either P&O Princess or
Carnival by holders of Shares, holders of any other class of shares
entitled to vote and the holder of the relevant Special Voting Share
PROVIDED THAT votes recorded as abstentions by holders of Carnival Common
Stock or P&O Princess Ordinary Shares (or any other class of shares
entitled to vote) shall not be counted as having been Voted for these
purposes.
1.2 Interpretation
Headings are for convenience only and do not affect interpretation. The
following rules of interpretation apply unless the context requires
otherwise.
(A) The singular includes the plural and conversely.
(B) One gender includes all genders.
(C) Where a word or phrase is defined, its other grammatical forms have a
corresponding meaning.
(D) A reference to a person includes a body corporate, an unincorporated
body or other entity and conversely.
(E) A reference to a Clause or a Schedule is to a Clause of or a Schedule
to this Agreement, and the Schedule forms part of this Agreement.
8
(F) A reference to any agreement or document is to that agreement or
document as amended, novated, supplemented, varied or replaced from
time to time, except to the extent prohibited by this Agreement.
(G) A reference to any legislation (including any listing rules of a stock
exchange or voluntary codes) or to any provision of any legislation
includes any modification or re-enactment of it, any legislative
provision substituted for it and all regulations and statutory
instruments issued under it.
(H) A reference to "writing" includes a facsimile transmission and any
means of reproducing words in a tangible and permanently visible form.
(I) Mentioning anything after "include", "includes", or "including" does
not limit what else might be included. Where particular words are
following by general words, the general words are not limited by the
particular.
(J) Reference to a body, other than a party to this Agreement (including
any Governmental Agency) , whether statutory or not:
(i) which ceases to exist; or
(ii) whose powers or functions are transferred to another body,
is a reference to the body which replaces it or which substantially
succeeds to its powers or functions.
(K) All references to "time" are to the local time in the place where the
relevant obligation is to be performed (or right exercised).
(L) References in this Agreement to "US$" and "cents" are to United States
dollars and cents and to "(pound)" and "p" are to pounds sterling and
to pence sterling.
(M) References to an offer by way of rights by Carnival or P&O Princess
are to any type of offer (whether renounceable or non-renounceable)
made by such company to the holders of its Shares in proportion to
their holdings at the relevant time, subject to such exclusions or
other arrangements as the relevant Board may deem necessary or
expedient in relation to fractional entitlements or legal or practical
difficulties with making the offer under any Applicable Regulations of
or in any jurisdiction.
(N) References to "party" or "parties" in this Agreement are to the
parties to this Agreement.
2. Boards of P&O Princess and Carnival
2.1 Board Principles
P&O Princess and Carnival agree that the following principles are essential
to the implementation, management and operation of the DLC Structure:
(A) P&O Princess and Carnival must operate as if they were a single
unified economic entity, through boards of directors which comprise
exactly the same individuals and a unified senior executive
management, and the Combined
9
Shareholders shall be treated as if they were shareholders of a
combined enterprise; and
(B) the directors of P&O Princess and Carnival shall, in addition to their
duties to the company concerned, have regard to the interests of the
other company and both the holders of P&O Princess Ordinary Shares and
the holders of Carnival Common Stock as if the two companies were a
single unified legal entity.
2.2 Board Composition
Each of Carnival and P&O Princess will therefore do (and will, to the
extent it is able, procure that each member of its Group will do) all acts
and things necessary and within their respective powers to ensure that at
all times the Board of P&O Princess and the Board of Carnival comprise
exactly the same individuals.
2.3 Indemnification of Directors
Each of Carnival and P&O Princess will take all actions necessary or
desirable to ensure that the directors of each company shall be indemnified
by such company and the other company for any acts or omissions by such
directors in their capacity as a director of such company, to the maximum
permitted by Applicable Regulations PROVIDED THAT nothing in this paragraph
shall affect the obligations provided for in Section 4.8.1 (Director and
Officer Liability) of the Implementation Agreement.
3. Equalization of Distributions
3.1 Equalization Principle
3.1.1 Subject to the other provisions of this Agreement, neither Carnival
nor P&O Princess shall pay or make any Distribution in cash unless
the other company also pays or makes a Distribution in cash at or
about the same time and the ratio of the Equalization Distribution
Amount so paid or made by Carnival to the Equalization Distribution
Amount so paid or made by P&O Princess (converted, if applicable, at
the Applicable Exchange Rate for such Distributions and rounded to
five decimal places) equals the Equalization Ratio in effect on the
Distribution Determination Date for such Distributions (each, an
"Equivalent Distribution")
3.1.2 Subject to Clause 3.1.3, neither Carnival nor P&O Princess shall
declare or otherwise become obligated to pay or make a Distribution
in cash unless (i) on the date on which such declaration is made or
such obligation is created, the other company has sufficient
Distributable Reserves to make an Equivalent Distribution with
respect to such Distribution; or (ii) such company agrees to pay, and
does pay, to the other company (before such other company pays or
makes such Distribution) the minimum amount required by the other
company so that it will have sufficient Distributable Reserves to pay
or make such an Equivalent Distribution. Notwithstanding compliance
with the preceding sentence, if either of Carnival or P&O Princess
shall have declared or otherwise become obligated to pay or make an
Equivalent Distribution and does not have sufficient Distributable
Reserves to pay or make such Equivalent Distribution when due, then
the other company shall pay to such company the minimum amount
required by such company so that it will have sufficient
Distributable Reserves to pay or make such Equivalent Distribution;
PROVIDED HOWEVER that if the other company does not have sufficient
Distributable Reserves to pay or make in full
10
both the Equivalent Distribution that it declared or became obligated
to make and the payment required by this sentence, then (1) such
other company shall only pay or make the portion of that Equivalent
Distribution (and any related payment that would have been required
by this sentence in respect of such portion if it were the entire
Equivalent Distribution that it had declared or became obligated to
make) that it can make out of its Distributable Reserves; and (2) the
first company shall only pay or make the portion of its Equivalent
Distribution that it can make out of its Distributable Reserves
following receipt of such payment.
3.1.3 For the purposes of Clause 3.1.2, the amount a company is required to
pay the other company shall be determined after taking into account
all Taxes payable by, and all Tax Benefits of, the parties with
respect to the payment or receipt of such payment and any such
payment may be made on the Equalization Share issued by the paying
party if both Boards deem it appropriate.
3.2 Timing of Equalized Distributions
The parties agree that, insofar as is practical, the Boards of P&O Princess
and Carnival shall:
(A) in relation to any proposed cash Distribution, agree the amount of
the Equivalent Distribution to be made by each company;
(B) determine to pay or recommend to pay Equivalent Distributions at
Board meetings convened as close in time to each other as is
practicable;
(C) announce and pay their Equivalent Distributions simultaneously or as
close in time as is practicable;
(D) ensure that the record dates for receipt of the Equivalent
Distributions are on the same date; and
(E) generally co-ordinate the timing of all other aspects of the payment
or making of Equivalent Distributions.
4. Capital Actions
4.1 Equalization Principle
The capital of the DLC Structure is to be deployed and managed in the most
effective way for the benefit of the Combined Shareholders. Solely for
purposes of construing the provisions of this Clause 4 and the Schedule,
and without providing an independent basis for requiring any adjustment to
the Carnival Equivalent Number or the Equalization Ratio or other action
hereunder, Carnival and P&O Princess further intend to undertake Actions in
such a way as will not give rise to a materially different financial effect
as between the interests of the holders of Carnival Common Stock and the
interests of the holders of P&O Princess Ordinary Shares, unless approved
as a Class Rights Action.
4.2 Automatic Adjustment
If any Action by Carnival or P&O Princess is covered by the Schedule, then
an automatic adjustment to the Carnival Equivalent Number (and therefore
the Equalization Ratio) will occur pursuant to such Schedule unless the
Board of the other company, in its sole discretion, undertakes:
11
(A) a Matching Action; or
(B) an alternative to such automatic adjustment, that has been approved as
such by a Class Rights Action,
it being understood that the Board of the other company is under no
obligation to undertake any such Matching Action or to seek approval as a
Class Rights Action of any such alternative.
4.3 Other Actions
If any Action by Carnival or P&O Princess is not covered by the Schedule,
then no automatic adjustment to the Carnival Equivalent Number or the
Equalization Ratio will occur but the Board of the other company shall have
the right (in its sole discretion), but not the obligation (i) to undertake
a Matching Action; or (ii) to seek approval of an adjustment to the
Carnival Equivalent Number (and therefore the Equalization Ratio) as a
Class Rights Action in order to ensure that the proposed Action does not
give rise to materially different financial effects as between the
interests of the holders of Carnival Common Stock and the interests of
holders of P&O Princess Ordinary Shares. In all cases, the Boards of P&O
Princess and Carnival will co-operate in deciding what (if any) Actions or
Matching Actions to undertake.
4.4 No Adjustment Required
Notwithstanding any other provision of this Clause 4 or the Schedule, no
adjustment to the Carnival Equivalent Number or the Equalization Ratio will
be required on the following Actions:
(A) grants or issuances by Carnival or P&O Princess of their equity
securities, or securities convertible into, or exchangeable or
exercisable for, their equity securities ("equity equivalents"), under
scrip dividend or dividend reinvestment schemes where the market value
of the equity securities or equity equivalents granted or issued
(determined in the manner customary for such schemes or plans in the
jurisdictions in which they operate) is equal to, or less than, the
cash amount of the dividend waived or reinvested;
(B) issuances of equity securities or equity equivalents by either P&O
Princess or Carnival pursuant to a share or stock option or purchase
or other benefit plan to or on behalf of any one or more of the
directors, officers, employees or consultants (in their capacity as
such) of such company or any of its Subsidiaries, which plans are
either:
(i) in existence prior to the date of this Agreement; or
(ii) approved by the relevant Board and as otherwise required by
Applicable Regulations;
(C) any issuance of Carnival Common Stock under the Carnival Convertible
Instruments;
(D) other issuances by Carnival or P&O Princess of its equity securities
or equity equivalents to any person, including for acquisitions, other
than by way of rights to the holders of its Shares as a class;
12
(E) repurchases or buy-backs by Carnival or P&O Princess of its Shares as
follows:
(i) in the market in an offer (1) not made by way of rights to the
holders of its Shares; or (2) in compliance with Rule 10b-18
(under the US Securities Exchange Act);
(ii) (other than under the preceding sub-clause (i)) at or below
market price of such Shares (1) in the case of a repurchase or
buy-back at a fixed price, on the Dealing Day immediately
preceding the date on which such repurchase or buy-back is
announced; or (2) otherwise, on the Dealing Day immediately
preceding the date on which such repurchase or buy-back is
made;
(iii) any purchase by Carnival of Excess Shares (as defined in the
Carnival Articles and By-laws) under Article XIII of the
Carnival Articles (or any equivalent amended articles of
Carnival's Articles);
(iv) any purchase pursuant to the provisions of the Carnival
Articles and By-laws or the P&O Princess Memorandum and
Articles referred to in Clause 8; and
(v) pro rata by way of rights to the Combined Shareholders at the
same amount of premium to the market value of the relevant
Shares (as adjusted by the Equalization Ratio);
(F) Matching Actions;
(G) the issue of an Equalization Share in accordance with Clause 14 by
either party;
(H) any purchase, cancellation or reduction of Disenfranchised P&O
Ordinary Shares;
(I) any purchase, cancellation or reduction of Disenfranchised Carnival
Common Stock; and
(J) any distribution of shares of beneficial interest in the P&O Princess
SVT by Carnival in accordance with the Pairing Agreement among P&O
Princess Trustee, Carnival and the transfer agent thereunder, of even
date herewith.
4.5 Matching Action
For the purposes of this Agreement, a "Matching Action" means, in relation
to an Action in respect of the holders of Shares of Carnival or P&O
Princess (the "Primary Action"), an Action in respect of the holders of
Shares in the other company which the Board of such other company
determines (i) has a financial effect on the holders of the Shares of such
other company equivalent (but not necessarily identical) to the financial
effect of the Primary Action on the holders of Shares of the company
undertaking the Primary Action; and (ii) does not materially disadvantage
the holders of the Shares of either company. In making the determination
referred to in the preceding sentence:
(A) the Board of such other company shall consider the then existing
Equalization Ratio, the timing of the Primary Action and any proposed
Matching Action, and any other relevant circumstances;
13
(B) in relation to any Action, when calculating any economic return to the
holders of P&O Princess Ordinary Shares or Carnival Common Stock, any
Tax or Tax Benefit shall be disregarded; and
(C) the Boards of Carnival and P&O Princess shall have no obligation to
take into account any fluctuations in exchange rates or in the market
value of any securities or any other changes in circumstances arising
after the date on which the Boards of Carnival and P&O Princess, as
the case may be, decide to undertake a particular Matching Action.
4.6 Boards' Decisions Final
The decision as to whether an Action is a Matching Action shall be a
decision solely for the Boards of P&O Princess and Carnival, which may
obtain appropriate professional advice in connection with such
determination if they, in their sole discretion, consider it to be
appropriate. Any such decision made by the Boards of P&O Princess and
Carnival in accordance with this Clause 4 shall be final and binding.
4.7 Repurchase of Shares
4.7.1 From the date of this Agreement until the second anniversary of the
date of this Agreement:
(A) no P&O Princess Ordinary Shares (other than P&O Princess
Ordinary Shares which, immediately prior to such Repurchase,
were Disenfranchised P&O Ordinary Shares) or other shares in
the capital of P&O Princess carrying voting rights shall be
Repurchased; and
(B) Carnival Common Stock may be Repurchased without restriction.
4.7.2 From the second anniversary of the date of this Agreement until the
fifth anniversary of the date of this Agreement:
(A) Carnival Common Stock may be Repurchased without restriction;
and
(B) during each twelve month period commencing on an anniversary of
this Agreement, P&O Princess Ordinary Shares representing not
more than 5% of the total aggregate number of issued P&O
Princess Ordinary Shares and other shares in the capital of P&O
Princess carrying voting rights (including for the purpose of
this provision any Disenfranchised P&O Ordinary Shares) as of
the beginning of such twelve month period may be Repurchased.
4.7.3 From the fifth anniversary of the date of this Agreement:
(A) there shall be no restriction on the Repurchase of Carnival
Common Stock; and
(B) there shall be no restriction on the Repurchase of P&O Princess
Ordinary Shares.
4.7.4 All Repurchases shall be made in accordance with Applicable
Regulations.
4.8 Issuance of Shares
14
4.8.1 From the date of this Agreement until the second anniversary of the
date of this Agreement:
(A) no shares in the capital of P&O Princess carrying voting rights
or securities convertible into or exercisable for such shares
(other than an Equalization Share and the P&O Princess Special
Voting Share) shall be issued to any member of the Carnival
Group except where such shares or securities are issued on a
pre-emptive basis to all shareholders of P&O Princess; and
(B) no shares in the capital of Carnival carrying voting rights or
securities convertible into or exercisable for such shares
(other than an Equalization Share) shall be issued to any
member of the P&O Princess Group except where such shares or
securities are issued on a pre-emptive basis to all
shareholders of Carnival.
4.8.2 From the second anniversary of the date of this Agreement until the
fifth anniversary of the date of this Agreement:
(A) during each twelve month period commencing on an anniversary of
this Agreement, shares in the capital of P&O Princess carrying
voting rights or securities convertible into or exercisable for
such shares representing (in the aggregate, on an as-converted
basis) not more than 5% of the total aggregate voting power of
the outstanding shares in the capital of P&O Princess carrying
voting rights and the shares issuable upon conversion or
exercise of such securities (including any Disenfranchised P&O
Ordinary Shares) as of the beginning of such twelve month
period may be issued to a member of the Carnival Group; and
(B) during each twelve month period commencing on an anniversary of
this Agreement, shares in the capital of Carnival carrying
voting rights or securities convertible or exercisable for into
such shares representing (in the aggregate, on an as-converted
basis) not more than 5% of the total aggregate voting power of
the outstanding shares in the capital of Carnival carrying
voting rights and the shares issuable upon conversion or
exercise of such securities (including for the purpose of this
provision any Disenfranchised Carnival Common Stock) as of the
beginning of such twelve month period may be issued to a member
of the P&O Princess Group.
4.8.3 From the fifth anniversary of the date of this Agreement:
(A) there shall be no restriction on the issue of Carnival Common
Stock to a member of the P&O Princess Group; and
(B) there shall be no restriction on the issue of P&O Princess
Ordinary Shares to a member of the Carnival Group.
4.8.4 All issuances of shares by Carnival and P&O Princess shall be made
in accordance with Applicable Regulations.
15
5. Joint Electorate Actions
5.1 Joint Electorate Actions
5.1.1 All actions put to shareholders of either P&O Princess or Carnival,
except for Class Rights Actions (see Clause 6 below) or resolutions
of a procedural or administrative nature (see Clause 7.5 below),
will be Joint Electorate Actions.
5.1.2 For the avoidance of doubt, the following actions, if put to the
holders of P&O Princess Ordinary Shares or the holders of Carnival
Common Stock, will be put to the Combined Shareholders as Joint
Electorate Actions:
(A) the appointment, removal or re-election of any director of
Carnival or P&O Princess, or both of them;
(B) to the extent such receipt or adoption is required by
Applicable Regulations, the receipt or adoption of the
financial statements of P&O Princess or Carnival, or both of
them, or accounts prepared on a combined basis, other than any
accounts in respect of the period(s) ended prior to the date of
Completion;
(C) a change of name by P&O Princess or Carnival, or both of them;
or
(D) the appointment or removal of the auditors of P&O Princess or
Carnival, or both of them.
5.2 Joint Electorate Procedure
A Joint Electorate Action shall be approved under the Joint Electorate
Procedure if, and only if, such action shall have been approved by:
(A) a Majority Resolution of P&O Princess (or, if the P&O Princess
Memorandum and Articles or Applicable Regulations require the action
to be approved by Supermajority Resolution of the holders of the P&O
Princess Ordinary Shares, by a Supermajority Resolution); and
(B) a Majority Resolution of Carnival (or, if the Carnival Articles and
By-laws or Applicable Regulations require the action to be approved
by Supermajority Resolution of the holders of the Carnival Common
Stock, by a Supermajority Resolution).
5.3 Disenfranchised P&O Ordinary Shares
If at any relevant time the rights attached to the Disenfranchised P&O
Ordinary Shares enable the holders of such shares to vote at any general
meeting or class meeting of the Company then all references in Clauses 5.1
and 5.2 to:
(A) shareholders of P&O Princess;
(B) holders of P&O Princess Ordinary Shares; and
(C) Combined Shareholders,
shall include the holders of the Disenfranchised P&O Ordinary Shares and
such persons shall have the right to vote such shares on Joint Electorate
Actions, Class Rights Actions
16
of P&O Princess and procedural resolutions in the same manner as the
holders of P&O Princess Ordinary Shares for the purposes of Clauses 5, 6
and 7.
5.4 Disenfranchised Carnival Common Stock
If at any relevant time the rights attached to the Disenfranchised Carnival
Common Stock enable the holders of such shares to vote at any general
meeting or class meeting of the Company then all references in Clauses 5.1
and 5.2 to:
(A) shareholders of Carnival;
(B) holders of Carnival Common Stock; and
(C) Combined Shareholders,
shall include the holders of the Disenfranchised Carnival Common Stock and
such persons shall have the right to vote such shares on Joint Electorate
Actions, Class Rights Actions of Carnival and procedural resolutions in the
same manner as holders of Carnival Common Stock for the purposes of Clauses
5, 6 and 7.
6. Separate Approvals of Class Rights Actions
6.1 Class Rights Action
Notwithstanding anything to the contrary contained in this Agreement, if
either P&O Princess or Carnival proposes to take any of the following
actions:
(A) the voluntary Liquidation of such company for which the approval of
shareholders is required by Applicable Regulations or otherwise sought
other than a voluntary Liquidation of both companies at or about the
same time with the purpose or effect of no longer continuing the
operation of the businesses of the companies as a combined going
concern and not as part of a scheme, plan, transaction, or series of
related transactions the primary purpose or effect of which is to
reconstitute all or a substantial part of such businesses in one or
more successor entities;
(B) the sale, lease exchange or other disposition of all or substantially
all of the assets of such company, other than in a bona fide
commercial transaction undertaken for a valid business purpose in
which such company receives consideration with a fair market value
reasonably equivalent to the assets disposed of and not as a part of a
scheme, plan, transaction or series of related transactions the
primary purpose or effect of which is to collapse or unify the DLC
Structure;
(C) any adjustment to the Carnival Equivalent Number or the Equalization
Ratio otherwise than in accordance with the provisions of this
Agreement;
(D) except where specifically provided for in the relevant agreements, any
amendment to the terms of, or termination of, this Agreement, the SVE
Special Voting Deed, the P&O Princess Guarantee or the Carnival
Guarantee (including, for the avoidance of doubt, the voluntary
termination of either Guarantee);
(E) any amendment to, removal or alteration of the effect of (which shall
include the ratification of any breach of) any P&O Princess Entrenched
Provision or any Carnival Entrenched Provision;
17
(F) any amendment to, removal or alteration of the effect of (which shall
include the ratification of any breach of) Article XII or XIII of the
Carnival Articles that would cause, or at the time of implementation
would be reasonably likely to cause, an Exchange Event described in
clause (a) of the definition of such term in the P&O Princess Articles
to occur; and
(G) the doing of anything which the Boards of Carnival and P&O Princess
agree (either in a particular case or generally), in their absolute
discretion, should be approved as a Class Rights Action,
each of them agrees with the other that it shall only take such action
after it has been approved as a Class Rights Action in accordance with this
Clause 6.
6.2 Approvals of Class Rights Action
A Class Rights Action shall require approval by a Majority Resolution of
each company, unless Applicable Regulations and/or the Carnival Articles
and By-laws and the P&O Princess Memorandum and Articles (as relevant)
require such Class Rights Action to be approved as a Supermajority
Resolution by either or both companies, in which case it shall be approved
as a Supermajority Resolution by the relevant company or companies to which
such requirement applies (the "Required Majority").
6.3 Class Rights Procedure
A Class Rights Action must be approved separately by the Required Majority
of (i) the holders of the Carnival Common Stock and the holders of any
other class of shares of Carnival that are entitled to vote pursuant to
Applicable Regulations and/or the Carnival Articles and By-laws; and (ii)
the holders of the P&O Princess Ordinary Shares and the holders of any
other class of shares of P&O Princess that are entitled to vote pursuant to
Applicable Regulations and/or the P&O Princess Memorandum and Articles.
Each of Carnival and P&O Princess will convene a shareholders meeting at
which the holders of its Shares and the holder of its Special Voting Share
(and the holders of any other relevant class of shares) may vote upon the
Class Rights Action together as a single class on a poll; PROVIDED THAT the
holder of the relevant Special Voting Share shall not vote on such
resolution unless the Class Rights Action is not approved by the Required
Majority of the holders of Shares (and any other relevant class of shares)
of the other company, in which case the holder of the Special Voting Share
shall cast all votes to which the Special Voting Share is entitled against
such resolution in accordance with the Carnival Articles and By-laws (in
the case of the Carnival Special Voting Share) or in accordance with the
P&O Princess Articles of Association (in the case of the P&O Princess
Special Voting Share).
7. Meetings and Voting
7.1 Obligations to convene meetings
In relation to both Joint Electorate Actions and Class Rights Actions:
(A) each party shall, as soon as practicable, convene a meeting of its
shareholders for the purpose of considering a resolution to approve
the Joint Electorate Action or Class Rights Action;
18
(B) each party shall endeavour to ensure such meetings are held on dates
as close together as is practicable; and
(C) the parties shall co-operate fully with each other in preparing
resolutions, explanatory memoranda or any other information or
material required in connection with the proposed Joint Electorate
Action or Class Rights Action.
7.2 Poll
Each of P&O Princess and Carnival agrees with the other that any resolution
proposed at a meeting of its shareholders in relation to which the holder
of the P&O Princess Special Voting Share, or the holder of the Carnival
Special Voting Share, is or may be entitled to vote shall be decided on by
a poll (i.e. by tabulation of individual votes) and not, for the avoidance
of doubt, on a show of hands.
7.3 Timing of Poll
7.3.1 P&O Princess agrees with Carnival that any poll in which the holder
of the P&O Princess Special Voting Share is or may be entitled to
vote shall (as regards the P&O Princess Special Voting Share) be kept
open for such time as to allow the corresponding general meeting of
Carnival to be held and for the votes attaching to the P&O Princess
Special Voting Share to be calculated and cast on such poll, although
such poll may be closed earlier in respect of shares of other
classes.
7.3.2 Carnival agrees with P&O Princess that any poll on which the holder
of the Carnival Special Voting Share is or may be entitled to vote
shall (as regards the Carnival Special Voting Share) be kept open for
such time as to allow the corresponding general meeting of P&O
Princess to be held and for the votes attaching to the Carnival
Special Voting Share to be calculated and cast on such poll, although
such poll may be closed earlier in respect of shares of other
classes.
7.4 Discretionary Matters
The Boards of P&O Princess and Carnival may by agreement (subject to
Applicable Regulations):
(A) decide to seek the approval of the shareholders (or any class of
shareholders) of either or both of P&O Princess and Carnival for any
matter that would not otherwise require such approval;
(B) require any Joint Electorate Action to be approved instead as a Class
Rights Action; or
(C) specify a higher majority vote than the majority that would otherwise
be required for any shareholder vote provided for in this Clause 7.
7.5 Procedural Resolutions
Notwithstanding anything to the contrary contained in this Agreement,
resolutions of Carnival or P&O Princess of a procedural or technical nature
(and which do not adversely affect the other company or its shareholders in
any material respect) shall not constitute Joint Electorate Actions or
Class Rights Actions and will be voted on by the relevant company's
shareholders voting separately, and neither Special Voting Share will
19
have any vote on those resolutions. Resolutions which will constitute
resolutions of a procedural or technical nature may include any resolution:
(A) that certain people be allowed to attend or excluded from attending
the meeting;
(B) that discussion be closed and the question put to the vote (provided
no amendments have been raised);
(C) that the question under discussion not be put to the vote;
(D) to proceed with matters in an order other than that set out in the
notice of the meeting;
(E) to adjourn the debate (for example, to a subsequent meeting); and
(F) to adjourn the meeting.
8. Change of Control of Either P&O Princess or Carnival
Carnival and P&O Princess shall co-operate with each other in the prompt
enforcement of the provisions of Articles XIV and XV of the Carnival
Articles and Articles 277 to 286 of the P&O Princess Articles of
Association to the full extent possible under law.
9. Stock Exchanges
Each of P&O Princess and Carnival will, and so far as it is able will
ensure that each of its Subsidiaries will, ensure that it is in a position
to comply with obligations imposed on it by all stock exchanges on which
either or both of the parties' shares (or other securities or depository
receipts representing such shares or securities) are from time to time
listed, quoted or traded.
10. Liquidation
10.1 Liquidation Principle
If either or both of Carnival and/or P&O Princess goes into any voluntary
or involuntary Liquidation, Carnival and P&O Princess will, subject to
Clause 10.2 below, make and receive such payments or take such other
actions required to ensure that the holders of Shares (which, for the
avoidance of doubt in this Clause 10 do not include the holders of
Disenfranchised Shares) of each entity would, had each entity gone into
Liquidation on the same date, be entitled to receive a Liquidation
Distribution which is equivalent on a per Share basis in accordance with
the then existing Equalization Ratio, having regard to the Liquidation
Exchange Rate but ignoring any shareholder Tax or Tax Benefit.
10.2 Liquidation Procedure
10.2.1 To establish the amount payable under Clause 10.1, each of Carnival
and P&O Princess will determine the amount of assets (if any) it
will have available for distribution in a Liquidation on the date of
Liquidation (or notional date of Liquidation) to holders of its
Shares after payment of all its debts and other financial
obligations, including any tax costs associated with the realisation
of any assets on a Liquidation and any payments due on any
preference shares (its "Net Assets"). To the extent that the Net
Assets of one company would enable it to make a Liquidation
Distribution to the holders of its Shares that is greater than
20
the Liquidation Distribution that the other company could pay from
its Net Assets to the holders of its Shares, adjusting such
comparative Liquidation Distribution in accordance with the then
existing Equalization Ratio and having regard to the Liquidation
Exchange Rate, but ignoring any shareholder Tax (including any
withholding Tax required to be deducted by the company concerned) or
Tax Benefit, then, subject to Clause 10.2.2, such company will make
a balancing payment (or take any other balancing action described in
Clause 10.3 below) in such amount as will ensure that both companies
may make equivalent Liquidation Distributions to the holders of
their Shares in accordance with the then existing Equalization Ratio
and having regard to the Liquidation Exchange Rate, but ignoring any
shareholder Tax (including any withholding Tax required to be
deducted by the company concerned) or Tax Benefit, PROVIDED ALWAYS
THAT no company need make a balancing payment (or take any other
action) as described in this Clause 10.2 if it would result in
neither the holders of Carnival Common Stock nor the holders of P&O
Princess Ordinary Shares being entitled to receive any Liquidation
Distribution at all.
10.2.2 For purposes of Clause 10.2.1, the amount a company is required to
pay the other company shall be determined after taking into account
all Taxes payable by, and all Tax credits, losses or deductions of,
the parties with respect to the payment or receipt of such payment
and any such payment may be made on the Equalization Share issued by
the paying party if both Boards deem it appropriate.
10.3 Liquidation Actions
In giving effect to the principle regarding a Liquidation of Carnival
and/or P&O Princess described above, Carnival and P&O Princess shall take
such action as may be required to give effect to that principle, which may
include:
(A) making a payment (of cash or in specie) to the other company;
(B) issuing shares (which may include the Equalization Share) to the
other party or to holders of Shares of the other party and making a
distribution or return on such Shares; or
(C) taking any other action that the Boards of Carnival and P&O Princess
shall both consider appropriate to give effect to that principle.
Any action other than a payment of cash by one company to the other shall
require the prior approval of the Boards of both companies.
11. Termination
Either Carnival or P&O Princess may terminate this Agreement:
(A) on the mutual agreement of both parties (upon approval as a Class
Rights Action);
(B) if either party becomes a wholly-owned Subsidiary of the other; or
(C) after all Liquidation obligations under Clause 10 have been
satisfied.
21
12. Consequences of Termination
12.1 Non Dual-Listed Group
In any combination of Carnival and P&O Princess into a single non
dual-listed group, the consideration to be received by the holders of
Shares in the two companies will be calculated by reference to the
applicable Equalization Ratio.
12.2 Other Circumstances
12.2.1 In any other circumstances of termination of the DLC Structure, the
Boards of Carnival and P&O Princess will use their reasonable
endeavours to agree a termination proposal to be put to their
shareholders which the Boards consider to be equitable to both the
holders of Carnival Common Stock and the holders of P&O Princess
Ordinary Shares, at the applicable Equalization Ratio and using an
exchange rate agreed by the parties (failing which, such exchange
rate to be determined by an independent accounting firm). If the
Boards cannot agree on the proposal to be put to their respective
holders of Shares, each Board will appoint an independent accounting
firm to establish the value of its company as at the proposed date
of termination. The two accounting firms will use the same
principles of valuation. If the accounting firms fail to agree on
each other's valuation of any company, then a third independent
accounting firm shall be appointed to finally determine the value of
such company or companies. If, subject to Clause 12.2.2, the
agreed/determined respective values of each company on a per Share
basis (using the agreed or determined exchange rate) are not
equivalent in accordance with the Equalization Ratio at the proposed
date of termination then a balancing payment, or other balancing
action agreed by the companies, will be made by one company to the
other as appropriate in such amount as will ensure that such values
are equivalent in accordance with such Equalization Ratio.
12.2.2 For purposes of Clause 12.2.1, the amount a company is required to
pay the other company shall be determined after taking into account
all Taxes payable by, and all Tax credits, losses or deductions of,
the parties with respect to the payment or receipt of such payment
and any such payment may be made on the Equalization Share issued by
the paying party if both Boards deem it appropriate.
13. Personal rights only
13.1 Contracts (Rights of Third Parties) Act 2001
The parties to this Agreement do not intend that any term of this Agreement
should be enforceable, by virtue of the Contracts (Rights of Third Parties)
Act 2001, by any person who is not a party to this Agreement.
13.2 Personal rights
For the avoidance of doubt, the provisions of this Agreement are personal
rights only. They do not, and are not intended to, create any proprietary
right (including any proprietary right in any member, shareholder or
creditor of P&O Princess or Carnival). These undertakings are not
assignable, and cannot be subject to a mortgage, charge, pledge,
encumbrance or other security interest. These undertakings do not survive
any termination of this Agreement. It is fundamental to the agreement of
each of P&O
22
Princess and Carnival to give these undertakings that they should be relied
on solely by the other, and it is fundamental to the agreement of each of
P&O Princess and Carnival to accept these undertakings that they should be
performed solely by the other.
14. Issue of Equalization Shares
The parties agree that the Board of P&O Princess and the Board of Carnival
may agree to the issue of the P&O Princess Equalization Share to a member
of the Carnival Group (against the nominal value of that share) and of the
Carnival Equalization Share to a member of the P&O Princess Group (against
the nominal value of that share), but that neither Carnival or P&O Princess
shall issue its Equalization Share unless the Board of Carnival and the
Board of P&O Princess shall have agreed to such issue.
15. Relationship with other documents
In the event of any conflict between this Agreement on the one hand and on
the other hand either of the P&O Princess Memorandum and Articles or the
Carnival Articles and By-laws, the terms of this Agreement shall prevail
and the parties shall use their best endeavours to ensure that any required
amendment to the P&O Princess Memorandum and Articles or the Carnival
Articles and By-laws, as is appropriate, is proposed at meetings of P&O
Princess and/or as the case may be Carnival in order to conform it or them
with the provisions of this Agreement.
16. Miscellaneous
16.1 Regulatory
The parties will co-operate with each other from time to time to ensure
that all information necessary or desirable for the making of (or
responding to any requests for further information consequent upon) any
notifications or filings made in respect of this Agreement, or the
transactions contemplated hereunder, is supplied to the party dealing with
such notification and filings and that they are properly, accurately and
promptly made.
16.2 No assignment
Neither of the parties may assign any of its rights or obligations under
this Agreement in whole or in part without the approval of the other party.
16.3 No waiver
No waiver by a party of a failure or failures by the other party to perform
any provision of this Agreement shall operate or be construed as a waiver
in respect of any other or further failure whether of a like or different
character.
16.4 No partnership
Neither this Agreement nor the DLC Transactions are intended for any legal,
tax or other purpose to (i) alter the status of P&O Princess and Carnival
as separate, independent entities (taxed respectively and exclusively as a
United Kingdom and a Panamanian non-resident corporation), (ii) result in
any of Carnival, P&O Princess, their respective Subsidiaries, or their
respective shareholders being treated as creating an entity or otherwise
entering into any partnership, joint venture, association or agency
relationship, or (iii) give either party (or its respective Subsidiaries or
shareholders) any legal or
23
beneficial ownership interest in the assets or income of the other party,
and shall not be construed as having such effect.
16.5 Applicable Regulations
Each of the obligations of the parties hereto shall be subject to any
Applicable Regulations as in force from time to time. To the extent not
prohibited by law, the parties will do all things necessary to remedy any
situation where Applicable Regulations prevent any party from performing
its obligations hereunder.
16.6 Severance
If any of the provisions of this Agreement is or becomes invalid, illegal
or unenforceable under any relevant law, the validity, legality or
enforceability of the remaining provisions shall not in any way be affected
or impaired. Notwithstanding the foregoing, the parties shall thereupon
negotiate in good faith in order to agree the terms of a mutually
satisfactory provision, achieving as nearly as possible the same commercial
effect, to be substituted for the provision found to be invalid, illegal or
unenforceable.
16.7 Amendment
Any amendment to or termination of this Agreement shall be made in writing
signed by duly authorised representatives of P&O Princess and Carnival. Any
amendments to this Agreement which are formal or technical in nature and
which are not materially prejudicial to the interests of the shareholders
of either party or are necessary to correct any inconsistency or manifest
error may be agreed between the Board of P&O Princess and the Board of
Carnival. Any other amendment to this Agreement shall, for the avoidance of
doubt, require approval by a Class Rights Action.
17. Notices
Notices, requests, instructions or other documents to be given under this
Agreement shall be in writing and shall be deemed given (i) when sent if
sent by facsimile is promptly confirmed by telephone confirmation thereof;
or (ii) when delivered, if delivered personally to the intended recipient
or sent by overnight delivery via a national courier service, and in each
case, addressed to such person or persons at such address or addresses as
each party shall notify in writing to the other party at the address given
at the head of this Agreement or thereafter at the relevant address for
notification from time to time.
18. Counterparts
This Agreement may be entered into in any number of counterparts, all of
which taken together, shall constitute one and the same instrument. Either
party may enter into this Agreement by signing any such counterpart.
19. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the Isle of Man.
24
20. Arbitration
(A) Any and all disputes, controversies or claims arising out of or in
connection with this Agreement, any provision hereof, or any alleged
breach hereof, and any and all disputes, controversies or claims
relating to the validity of this Agreement (all of which are referred
to herein as "Disputes"), even though some or all of such Disputes are
alleged to be extra-contractual in nature, whether such Disputes sound
in contract, tort or otherwise, at law or in equity, whether for
damages, specific performance or other relief, shall be finally and
exclusively determined by final and binding arbitration in accordance
with this Clause 20.
(B) The arbitral tribunal (the "Tribunal") shall be composed of three
arbitrators, which shall be appointed as follows: each party shall
have the right to appoint one arbitrator; the two arbitrators so
appointed shall then appoint a third arbitrator who shall serve as the
Chairman of the Tribunal. A person or persons, entitled to appoint an
arbitrator, shall appoint such arbitrator within ten (10) days of
receiving notice from a party of the commencement of an arbitration,
failing which such arbitrator shall, at the written request of either
party, be appointed by the International Chamber of Commerce. At the
initiation of a proceeding and upon the convening of the Tribunal, the
arbitrators shall take an oath of neutrality and shall decide the
matters presented to them based upon the evidence submitted in the
proceeding and without regard to the origin or circumstances of their
appointment or selection for service on the Tribunal.
(C) The construction and interpretation of this Clause 20, and all rules
of conduct of any arbitration conducted pursuant to this Clause 20
(including procedural and evidentiary matters), shall be determined by
the Tribunal. Unless otherwise unanimously agreed by the arbitrators,
the venue of the arbitration shall be Miami, Florida, USA.
(D) The Tribunal shall conduct a hearing as soon as reasonably practicable
after a matter has been submitted for arbitration by a party and the
members of the Tribunal have been selected. As the Tribunal may direct
and without the necessity of subpoenas or other court orders, the
parties shall make their agents, employees and witnesses available
upon reasonable notice at reasonable times for deposition or for
testimony at the hearing and shall respond to requests for documents.
An award completely disposing of all Disputes (a "Final Award") shall
be rendered by the Tribunal as soon as reasonably practicable after
the hearing. The Tribunal shall not be required to submit a detailed
statement of its reasons, but shall set forth concisely in the Final
Award the amounts, actions, contractual responsibilities or other
remedial conclusions that the Tribunal determines to be appropriate.
(E) Each party acknowledges and agrees that in the event either party
breaches any of its obligations under this Agreement, the other party
would be irreparably harmed and could not be made whole by monetary
damages alone. Both parties accordingly agree that the Tribunal shall
have the authority to grant any party all appropriate non-monetary
relief, including ordering a breaching party to comply fully with its
obligations under the Agreement, ordering specific performance or
granting temporary or permanent injunctive relief; PROVIDED, HOWEVER,
that nothing in this Clause 20 shall be construed to limit the
Tribunal in awarding
25
monetary damages, whether as a sole remedy or together with remedies
for specific performance and/or injunctive relief.
(F) Any award made by the Tribunal shall be final and binding upon each
party, each of which expressly waives all right to appeal or recourse
to any court. The Final Award may be confirmed, and a judgement
entered or enforced, in any court of competent jurisdiction in the
United States or the United Kingdom.
(G) The fees and expenses of the arbitrators shall be borne equally by the
parties, but the Final Award may include such allocations and awards
of the arbitrators' fees and expenses as the Tribunal determines is
appropriate.
IN WITNESS whereof this Agreement has been executed on the date first written
above.
26
Schedule
Automatic Adjustments to the Carnival Equivalent Number
1. Automatic Adjustments
1.1 Rights issue of Shares
If either Carnival or P&O Princess (the "Relevant Company") shall offer its
Shares to the holders of its Shares as a class by way of rights at less
than the Current Market Price of such Shares, the Carnival Equivalent
Number shall be adjusted by:
(i) dividing the Carnival Equivalent Number by the following
fraction where Carnival is the Relevant Company; and
(ii) multiplying the Carnival Equivalent Number by the following
fraction where P&O Princess is the Relevant Company:
K + L Q
----- where L = - M
K + M P
where:
K is the number of Shares of the Relevant Company which rank for the
relevant offer;
M is the aggregate number of Shares being offered to the holders of Shares
of the Relevant Company;
P is the Current Market Price of one Share of the Relevant Company; and
Q is the price per Share being offered to the holders of Shares of the
Relevant Company.
The adjustment to the Carnival Equivalent Number shall become effective
from the later of the time at which the Shares of the Relevant Company are
first traded ex-rights and the time at which the issue of the Shares
becomes wholly unconditional.
1.2 Rights issue of other securities
If the Relevant Company shall offer any securities (other than a rights
issue of Shares described in paragraph 1.1 of this Schedule) to holders of
its Shares as a class by way of rights, or grant to such shareholders as a
class by way of rights, any options, warrants or other rights to subscribe
for, purchase or sell any securities, Carnival Equivalent Number shall be
adjusted by:
(i) dividing the Carnival Equivalent Number by the following
fraction where Carnival is the Relevant Company; and
(ii) multiplying the Carnival Equivalent Number by the following
fraction where P&O Princess is the Relevant Company:
R - S
-----
R
27
where:
R is the Current Market Price of one Share; and
S is the estimated Fair Market Value (calculated in the same currency as
the Shares described in R above) of the portion of the rights attributable
to one Share of the Relevant Company over any five consecutive Dealing Days
determined by the Board of the Relevant Company during the twenty Dealing
Days preceding the date on which the Shares are first traded ex-rights.
The adjustment to the Carnival Equivalent Number shall become effective
from the later of the time at which the Shares of the Relevant Company are
first traded ex-rights and the time at which the issue of the Shares
becomes wholly unconditional.
1.3 Non cash distributions and share repurchases
If the Relevant Company shall implement (i) any distribution of any
non-cash assets; or (ii) any repurchase of its Shares involving an offer
made to all or substantially all of its holders of Shares to repurchase
their Shares at a premium to the Current Market Price of such shares, the
Carnival Equivalent Number shall be adjusted by:
(i) dividing the Carnival Equivalent Number by the following
fraction where Carnival is the Relevant Company; and
(ii) multiplying the Carnival Equivalent Number by the following
fraction where P&O Princess is the Relevant Company:
V
T - -
U
-----
T
where:
T is the Current Market Price of one Share of the Relevant Company;
U is equal to the number of Shares of the Relevant Company prior to the non
cash distribution or repurchase; and
V is (i) in the case of a non cash distribution, the aggregate Fair Market
Value of the assets distributed to shareholders of the Relevant Company;
and (ii) in the case of a repurchase, the aggregate premium paid to holders
of Shares; in either case denominated in the same currency as the Current
Market Price referred to in T and disregarding the effect of any
shareholder Taxes or Tax Benefits and/or any fees incurred in connection
with the non-cash Distribution or repurchase.
The adjustment to the Carnival Equivalent Number shall become effective
immediately following implementation of the non-cash Distribution or
repurchase.
1.4 Consolidation or subdivision of shares
If there shall be a change to the number of Shares of the Relevant Company
as a result of a consolidation or subdivision of shares, the Carnival
Equivalent Number shall be adjusted by:
28
(i) dividing the Carnival Equivalent Number by the following
fraction where Carnival is the Relevant Company; and
(ii) multiplying the Carnival Equivalent Number by the following
fraction where P&O Princess is the Relevant Company:
X
-
Y
where:
X is the number of Shares of the Relevant Company outstanding or in issue
immediately before such alteration; and
Y is the number of Shares of the Relevant Company outstanding or in issue
immediately after such alteration.
The adjustment to the Carnival Equivalent Number shall become effective
immediately after the alteration takes effect.
1.5 Bonus issue or stock dividend
If the Relevant Company issues any Shares to holders of Shares for no
consideration or solely by way of capitalisation of profits or reserves,
the Carnival Equivalent Number shall be adjusted by:
(i) dividing the Carnival Equivalent Number following fraction where
Carnival is the Relevant Company; and
(ii) multiplying the Carnival Equivalent Number by the following
fraction where P&O Princess is the Relevant Company:
X
-
Y
where:
X is the number of Shares of the Relevant Company outstanding immediately
before the issue; and
Y is the number of Shares of the Relevant Company outstanding immediately
after such issue.
The adjustment to the Carnival Equivalent Number shall become effective
from the time the issue of such Shares becomes wholly unconditional.
2. Certification
The auditors for the time being of P&O Princess and Carnival shall jointly
certify the arithmetical adjustment to be made to the Carnival Equivalent
Number in the circumstances set out in this Schedule where an adjustment is
made to such Carnival Equivalent Number and any adjustments so certified
shall, in the absence of manifest error, be final and binding on the
parties and on all others affected thereby. P&O Princess and Carnival agree
with each other to make and co-ordinate such public announcements
29
as are appropriate in relation to any such adjustments, subject to the
requirements of Applicable Regulations.
3. Definitions
In this Schedule:
"Current Market Price" means the average market price of one Share of the
Relevant Company (on its primary or main stock exchange) calculated over
any five consecutive Dealing Days determined by the Board of the Relevant
Company during the twenty Dealing Days preceding:
(i) in the case of P in paragraph 1.1 and R in paragraph 1.2, the
date on which such Shares are first traded ex-rights; and
(ii) in the case of T in paragraph 1.3, the date on which the
non-cash distribution or repurchase is implemented;
"Dealing Day" means, with respect to any relevant market for the Shares, a
day on which trading is conducted in such market; and
"Fair Market Value" means the fair market value determined by an investment
bank of international repute appointed by agreement between the Boards of
Carnival and P&O Princess, acting as expert and not as arbitrator and whose
determination (in the absence of manifest error) shall be final and binding
on the parties and on all others affected by such determination.
30
Annex A-3
AGREED FORM
DATED 2003
--------------------------------------------------------------------------
CARNIVAL CORPORATION
[CARNIVAL SVC] LIMITED
P&O PRINCESS CRUISES PLC
P&O PRINCESS TRUSTEE
[CARNIVAL SVC OWNER]
-------------------------------------------
SVE SPECIAL VOTING DEED
-------------------------------------------
CONTENTS
CLAUSE PAGE
1. DEFINITIONS AND INTERPRETATION ......................................................... 1
2. NOTIFICATION OF VOTES CAST ON JOINT ELECTORATE ACTIONS AT A PARALLEL SHAREHOLDER MEETING
AND CALCULATION OF SPECIFIED NUMBER .................................................... 6
3. NOTIFICATION OF OUTCOME ON VOTE ON CLASS RIGHTS ACTIONS ................................ 7
4. ATTENDANCE AT MEETINGS AND VOTING ...................................................... 8
5. DEALINGS ............................................................................... 11
6. OBLIGATIONS SUBJECT TO APPLICABLE REGULATIONS .......................................... 12
7. DEFAULT BY CARNIVAL OR P&O PRINCESS .................................................... 12
8. SUPPLY OF INFORMATION; CONFIDENTIALITY ................................................. 12
9. REMUNERATION AND EXPENSES OF SVES ...................................................... 13
10. POWER OF SVES .......................................................................... 14
11. INDEMNITIES ............................................................................ 15
12. ACTIVITIES ............................................................................. 16
13. MANAGEMENT OF SVES ..................................................................... 16
14. AMENDMENTS TO THIS DEED ................................................................ 17
15. DAMAGES NOT ADEQUATE REMEDY ............................................................ 17
16. TERMINATION ............................................................................ 17
17. GENERAL ................................................................................ 18
THIS SVE SPECIAL VOTING DEED is dated 2003
BETWEEN
(1) CARNIVAL CORPORATION, a Panamanian corporation, having its principal
place of business at Carnival Place, 3655 N.W. 87th Avenue, Miami,
Florida, 33178-2428 ("Carnival");
(2) CARNIVAL SVC LIMITED, a company incorporated in England and Wales
(Registered No. [.]), having its registered office at [.] ("Carnival
SVC");
(3) P&O PRINCESS CRUISES PLC, a company incorporated in England and Wales
(Registered No 4039524) and having its registered office at 77 New Oxford
Street, London, WC1A 1PP ("P&O Princess");
(4) [.], a __________ corporation, having its principal place of business at
[.], in its capacity as the trustee (the "P&O Princess Trustee") of P&O
Princess Special Voting Trust ("P&O Princess SVT"), a trust formed under
the laws of __________ pursuant to the Voting Trust Agreement between
Carnival and the P&O Princess Trustee of even date herewith (the "P&O
Princess SVT Constitution"); and
(5) [.], a company incorporated in England and Wales (Registered No [.]),
having its registered office at [.] (the "Carnival SVC Owner").
Recitals
(A) Carnival and P&O Princess entered into the Implementation Agreement
pursuant to which Carnival and P&O Princess have agreed to do certain
acts and things to implement the DLC Structure and create certain rights
for the Carnival shareholders and the P&O Princess shareholders in
respect of their indirect interests in the combined enterprise.
(B) Carnival SVC and the P&O Princess Trustee have agreed to carry out
certain functions in accordance with the provisions of this Deed in
connection with their ownership of the Carnival Special Voting Share and
the P&O Princess Special Voting Share, respectively.
(C) The Carnival SVC Owner is the legal and beneficial owner of all the
shares in Carnival SVC.
(D) The P&O Princess Trustee is the trustee of P&O Princess SVT.
IT IS AGREED on and from Completion as follows.
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
The following definitions apply unless otherwise specified in this Deed:
"Applicable Regulations" has the same meaning as in the Equalization
Agreement;
1
"Board of Carnival" means the board of directors of Carnival (or a duly
appointed committee of that board) from time to time;
"Boards of Carnival and P&O Princess" means the Board of Carnival and the
Board of P&O Princess;
"Board of P&O Princess" means the board of directors of P&O Princess (or
a duly appointed committee of that board) from time to time;
"Business Day" has the same meaning as in the Equalization Agreement;
"Carnival Common Stock" has the meaning given to it in the Carnival
Constitution;
"Carnival Constitution" means the Articles of Incorporation and the
By-Laws of Carnival which will be in effect immediately following
Completion, as amended from time to time;
"Carnival Equivalent Number" has the same meaning as in the Equilization
Agreement.
"Carnival Group" has the same meaning as in the Equalization Agreement;
"Carnival Special Voting Share" means the special voting share of US$0.01
in Carnival;
"Carnival Specified Numbers" means, in relation to a resolution to
consider a Joint Electorate Action at a meeting of P&O Princess
shareholders, (i) the number of votes Cast in favour of the Equivalent
Resolution of Carnival at the Parallel Shareholder Meeting of Carnival
shareholders divided by the Carnival Equivalent Number in effect at the
time such meeting of P&O Princess shareholders is held rounded up to the
nearest whole number; (ii) the number of votes Cast against the Carnival
Equivalent Number of Carnival at the Parallel Shareholder Meeting of
Carnival shareholders divided by the Carnival Equivalent Number in effect
at the time such meeting of P&O Princess shareholders is held, rounded up
to the nearest whole number; and (iii) the number of votes Cast as formal
abstentions in relation to the Equivalent Resolution of Carnival at the
Parallel Shareholder Meeting of Carnival shareholders divided by the
Carnival Equivalent Number in effect at the time such meeting of P&O
Princess shareholders is held, rounded up to the nearest whole number;
"Carnival SVC Constitution" means the Memorandum and Articles of
Association of Carnival SVC;
"Cast" means, separately, the number of votes recorded (i) in favour;
(ii) against; and (iii) formally abstained in accordance with the terms
of the P&O Princess Articles or the Carnival Constitution (as applicable)
by holders of Carnival Common Stock (and of any other stock in Carnival
(other than the Carnival Special Voting Share) that from time to time are
entitled to vote on the relevant resolution) or P&O Princess Ordinary
Shares (and of any other shares in P&O Princess (other than the P&O
Princess Special Voting Share) that from time to time are entitled to
vote on the relevant resolution), as the context requires
"Class Rights Action" has the same meaning as in the Equalization
Agreement;
2
"Companies Act" means the UK Companies Act 1985 as amended;
"Completion" means the time at which the steps set out in Section 2.2 of
the Implementation Agreement have been completed;
"Deal" in relation to a share or an interest in a share or the rights
attaching to a share, means transfer, assign (by operation of law or
otherwise), convey, create an Encumbrance over or otherwise deal (or
agree to do any of those things) with such share or interest or rights in
any way whatsoever and "Dealing" shall be construed accordingly;
"DLC Structure" means the combination of Carnival and P&O Princess by
means of a dual listed company structure whereby, amongst other things,
Carnival and P&O Princess have a unified management structure and the
businesses of both the Carnival Group and the P&O Princess Group are
managed on a unified basis in accordance with the provisions of the
Equalization Agreement;
"Encumbrance" means an interest or power:
(a) reserved in or over any interest in any asset (including shares)
including any retention of title; or
(b) created or otherwise arising in or over any interest in any asset
(including shares) under a bill of sale, mortgage, charge, lien,
pledge, trust or power, by way of security for the payment of debt
or any other monetary obligation or the performance of any other
obligation and whether existing or agreed to be granted or created;
"Equalization Agreement" means the Equalization and Governance Agreement
entered into between Carnival and P&O Princess on the same date as this
Deed;
"Equivalent Resolution" means a resolution of either Carnival or P&O
Princess, as applicable, certified in accordance with this Deed by a duly
authorised officer of Carnival or a duly authorised officer of P&O
Princess (as applicable) as equivalent in nature and effect to a
resolution of the other company. (For example, a resolution to appoint an
individual as a director of Carnival or to appoint the auditors of
Carnival would, if a resolution considering such matters in relation to
P&O Princess were put to a meeting of P&O Princess' shareholders, be the
equivalent resolution (provided that a duly authorised officer of
Carnival and a duly authorised officer of P&O give the certification
described above) to a resolution to appoint the same individual as a
director of P&O Princess or to appoint the auditors of P&O Princess, and
vice versa. In addition, if a resolution was proposed by one of the
companies (the "Proposing Company") that did not need to be proposed by
the other company (the "Other Company"), (e.g. a resolution for the
approval of the disapplication of pre-emption rights if under Applicable
Regulations this needs to be approved by P&O Princess' shareholders, but
not by Carnival's shareholders), then the Proposing Company would put
that resolution to a meeting of its shareholders and the same or
substantially the same resolution (provided that a duly authorised
officer of Carnival and a duly authorised officer of P&O Princess give
the certification described above) would also be put to a meeting of the
Other Company's shareholders, to enable both sets of shareholders to vote
on that resolution);
"Governmental Agency" has the same meaning as in the Equalization
Agreement;
3
"Implementation Agreement" means the Offer and Implementation Agreement,
dated as of 8 January 2003, between Carnival and P&O Princess;
"Joint Electorate Action" has the same meaning as in the Equalization
Agreement;
"London Stock Exchange" means London Stock Exchange plc;
"Majority Resolution" means, with respect to Carnival or P&O Princess, a
resolution duly approved at a meeting of the shareholders of such company
by the affirmative vote of a majority of all the votes Voted on such
resolution by all shareholders of such company entitled to vote thereon
(including, where appropriate, the holder of the Special Voting Share of
such company) who are present in person or by proxy at such meeting;
"NYSE" means the New York Stock Exchange, Inc.;
"Parallel Shareholder Meeting" means, in relation to Carnival or P&O
Princess, any meeting of the shareholders of that company which is:
(a) nearest in time to, or is actually contemporaneous with, the
meeting of the shareholders of the other company and at which some
or some or all of the same resolutions or some or all of the
Equivalent Resolutions are to be considered; or
(b) designated by the Board of Carnival or the Board of P&O Princess,
as the case may be, as the parallel meeting of shareholders of a
particular meeting of shareholders of the other company.
"P&O Princess Articles" means the Articles of Association of P&O Princess
which will be in effect as immediately following Completion as amended
from time to time;
"P&O Princess Group" has the same meaning as in the Equalization
Agreement;
"P&O Princess ADS" means an American Depositary Share of P&O Princess,
each of which currently represents four P&O Princess Ordinary Shares,
which is listed on the NYSE;
"P&O Princess Ordinary Shares" has the meaning given to it in the P&O
Princess Articles;
"P&O Princess Special Voting Share" means the special voting share of
(pound)1 in P&O Princess;
"P&O Princess Specified Numbers" means, in relation to a resolution to
consider a Joint Electorate Action at a meeting of Carnival shareholders
(i) the number of votes Cast in favour of the Equivalent Resolution of
P&O Princess at the Parallel Shareholder Meeting of P&O Princess
shareholders multiplied by the Carnival Equivalent Number in effect at
the time such meeting of Carnival shareholders is held, rounded up to the
nearest whole number; (ii) the number of votes Cast against the
Equivalent Resolution of P&O Princess at the Parallel Shareholder Meeting
of P&O Princess shareholders multiplied by the Carnival Equivalent Number
in effect at the time such meeting of Carnival shareholders is held,
rounded up to the nearest whole number; and (iii) the number of votes
Cast as formal abstentions in relation to the Equivalent Resolution of
P&O Princess at the Parallel Shareholder Meeting of
4
P&O Princess shareholders multiplied by the Carnival Equivalent Number in
effect at the time such meeting of Carnival shareholders is held, rounded
up to the nearest whole number;
"SEC" means the United States Securities and Exchange Commission;
"Shares" means, in relation to P&O Princess, the P&O Princess Ordinary
Shares and, in relation to Carnival, the Carnival Common Stock;
"Special Voting Share" means, in relation to P&O Princess, the P&O
Princess Special Voting Share and, in relation to Carnival, the Carnival
Special Voting Share;
"Subsidiary" means with respect to P&O Princess or Carnival, any entity,
whether incorporated or unincorporated, in which P&O Princess or Carnival
owns, directly or indirectly, a majority of the securities or other
ownership interests having by their terms ordinary voting power to elect
a majority of the directors or other persons performing similar
functions, or the management and policies of which P&O Princess or
Carnival otherwise has the power to direct;
"Supermajority Resolution" means, with respect to Carnival or P&O
Princess, a resolution required by Applicable Regulations and/or the
Carnival Constitution or the P&O Princess Articles, as relevant, to be
approved by a higher percentage of votes Voted than required under a
Majority Resolution, or where the percentage of votes Voted in favour and
against the resolution is required to be calculated by a different
mechanism to that required by a Majority Resolution;
"UKLA" means the Financial Services Authority in its capacity as
competent authority for the purposes of Part VI of the UK Financial
Services and Markets Act 2000; and
"Voted" means the number of votes recorded in favour of and against a
particular resolution at a shareholders' meeting of either P&O Princess
or Carnival by holders of Shares, holders of any other class of shares
entitled to vote and the holder of the relevant Special Voting Share
PROVIDED THAT votes recorded as abstentions by holders of Carnival Common
Stock or P&O Princess Ordinary Shares (or any other class of shares
entitled to vote) shall not be counted as having been Voted for these
purposes.
1.2 Interpretation
The headings herein are for convenience of reference only and do not
constitute part of this Deed and shall not be deemed to limit or
otherwise affect any of the provisions hereof. The following rules of
interpretation apply unless the context requires otherwise.
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) Where a word or phrase is defined, its other grammatical forms have
a corresponding meaning.
(d) A reference to a person includes a body corporate, an
unincorporated body or other entity.
5
(e) A reference to a clause is to a clause of this Deed unless
otherwise indicated.
(f) A reference to any party to this Deed or any other agreement or
document includes the party's successors and permitted assigns.
(g) A reference to any agreement or document is to that agreement or
document as amended, novated, supplemented, varied or replaced from
time to time, except to the extent prohibited by this Deed.
(h) A reference to any legislation (including any listing rules of a
stock exchange or voluntary codes) or to any provision of any
legislation includes any modification or re-enactment of it, any
legislative provision substituted for it and all rules and
regulations and statutory instruments issued thereunder.
(i) A reference to $ is to US dollars and a reference to(Pound)is to
pounds sterling.
(j) A reference to conduct includes any omission and any statement or
undertaking, whether or not in writing.
(k) A reference to writing includes a facsimile transmission and any
other means of reproducing words in a tangible and permanently
visible form.
(l) Whenever the words include, includes or including are used in this
Deed, they shall be deemed to be followed by the words without
limitation;
(m) A reference to a body, other than a party to this Deed (including,
an institute, association, authority or Governmental Agency),
whether statutory or not:
(i) which ceases to exist; or
(ii) whose powers or functions are transferred to another body,
is a reference to the body which replaces it or which substantially
succeeds to its powers or functions.
(n) All references to time are to local time in the place where the
relevant obligation is to be performed (or right exercised).
1.3 Business Day
Where the day on or by which any thing is to be done is not a Business
Day, that thing must be done on or by the Business Day following such
day.
2. NOTIFICATION OF VOTES CAST ON JOINT ELECTORATE ACTIONS AT A PARALLEL
SHAREHOLDER MEETING AND CALCULATION OF SPECIFIED NUMBER
2.1 Notification by Carnival
Carnival agrees with the P&O Princess Trustee and P&O Princess that, in
relation to each meeting of Carnival shareholders at which any resolution
relating to a Joint Electorate Action is to be considered, Carnival
shall, as soon as possible after the Carnival shareholders (other than
the Carnival SVC) entitled to vote on any such resolution Cast those
votes at such shareholder meeting, deliver to the P&O Princess Trustee
and P&O Princess in writing in accordance with clause 17.4 a report of
the
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inspectors of election for such shareholder meeting setting forth the
details in (a) below and a statement by a duly authorised officer of
Carnival setting forth the details in (b) below:
(a) how the votes were Cast (including the number of votes Cast) at the
meeting of Carnival shareholders in relation to each such
Equivalent Resolution; and
(b) its calculation of the Carnival Specified Numbers applicable to the
P&O Princess Special Voting Share for each Equivalent Resolution
for a Joint Electorate Action and of the way in which the P&O
Princess Trustee is required to vote the Carnival Specified Numbers
attaching to the P&O Princess Special Voting Share in relation to
each such Equivalent Resolution at the Parallel Shareholder Meeting
of P&O Princess in accordance with this Deed and the P&O Princess
Articles.
2.2 Notification by P&O Princess
P&O Princess agrees with Carnival SVC and Carnival that, in relation to
each meeting of P&O Princess shareholders at which any resolution
relating to a Joint Electorate Action is to be considered, P&O Princess
shall, as soon as possible after the P&O Princess shareholders (other
than the P&O Princess Trustee) entitled to vote on any such resolution
Cast those votes at such shareholder meeting, deliver to Carnival SVC and
Carnival in writing in accordance with clause 17.4 a report of the
inspectors of election for such shareholder meeting setting forth the
details in (a) below and a statement by a duly authorised officer of P&O
Princess setting forth the details in (b) below:
(a) how the votes were Cast (including the number of votes Cast) at the
meeting of P&O Princess shareholders in relation to each such
Equivalent Resolution; and
(b) its calculation of the P&O Princess Specified Numbers applicable to
the Carnival Special Voting Share for each Equivalent Resolution
for a Joint Electorate Action and of the way in which Carnival SVC
is required to vote the P&O Princess Specified Numbers attaching to
the Carnival Special Voting Share in relation to each such
Equivalent Resolution at the Parallel Shareholder Meeting of
Carnival in accordance with this Deed and the Carnival
Constitution.
3. NOTIFICATION OF OUTCOME ON VOTE ON CLASS RIGHTS ACTIONS
3.1 Notification by Carnival
Carnival agrees with P&O Princess and the P&O Princess Trustee that, in
relation to each meeting of Carnival shareholders at which any resolution
or resolutions relating to a Class Rights Action is to be considered,
Carnival shall, as soon as possible after the Carnival shareholders
(other than Carnival SVC) entitled to vote on any such resolution Cast
those votes at such shareholder meeting, deliver to the P&O Princess
Trustee and P&O Princess in writing and in accordance with clause 17.4:
(a) a report of the inspectors of election for such shareholder meeting
setting forth how the votes were Cast (including the number of votes
Cast) at the meeting of Carnival shareholders in relation to each such
Equivalent Resolution; and (b) a statement by a duly authorised officer
of Carnival setting forth whether or not each such Equivalent
7
Resolution or resolutions was approved by the requisite majority pursuant
to the Carnival Constitution and/or Applicable Regulations.
3.2 Notification by P&O Princess
P&O Princess agrees with Carnival and Carnival SVC that, in relation to
each meeting of P&O Princess shareholders at which any resolution or
resolutions relating to a Class Rights Action is to be considered, P&O
Princess shall, as soon as possible after the P&O Princess shareholders
(other than the P&O Princess Trustee) entitled to vote on any such
resolution Cast those votes at such shareholder meeting, deliver to
Carnival SVC and Carnival in writing and in accordance with clause 17.4:
(a) a report of the inspectors of election for such shareholder meeting
setting forth how the votes were Cast (including the number of votes
Cast) at the meeting of P&O Princess shareholders in relation to each
such Equivalent Resolution; and (b) a statement by a duly authorised
officer of P&O Princess setting forth whether or not the Equivalent
Resolution or resolutions were approved by the requisite majority
pursuant to the P&O Princess Articles and/or Applicable Regulations.
4. ATTENDANCE AT MEETINGS AND VOTING
4.1 Attendance at meetings
(a) Carnival SVC agrees with P&O Princess that, at every meeting of
Carnival shareholders at which any resolution relating to a Joint
Electorate Action or a Class Rights Action is to be considered,
Carnival SVC shall be present by its duly appointed corporate
representative or by proxy or proxies. Carnival agrees to notify
Carnival SVC in writing and in accordance with clause 17.4 at the
time it sends notice to its shareholders of a shareholder meeting
whether any resolution to be proposed at such meeting is a Joint
Electorate Action or a Class Rights Action and Carnival SVC shall
be entitled to rely on any such notice for the purposes of this
Deed. Carnival also agrees to notify Carnival SVC in advance and in
writing in accordance with clause 17.4 of the time and place at
which an adjourned or postponed meeting will be held and whether
any resolution to be proposed at such meeting is a Joint Electorate
Action or a Class Rights Action and Carnival SVC shall be entitled
to rely on any such notice for the purpose of this Deed.
(b) The P&O Princess Trustee agrees with Carnival that, at every
meeting of P&O Princess at which any resolution relating to a Joint
Electorate Action or a Class Rights Action is to be considered, the
P&O Princess Trustee shall be present by its duly appointed
corporate representative or by proxy or proxies. P&O Princess
agrees to notify the P&O Princess Trustee in writing and in
accordance with clause 17.4 at the time it sends notice to its
shareholders of a shareholder meeting whether any resolution to be
proposed at such meeting is a Joint Electorate Action or a Class
Rights Action and the P&O Princess Trustee shall be entitled to
rely on any such notice for the purposes of this Deed. P&O Princess
also agrees to notify the P&O Princess Trustee in advance and in
writing in accordance with clause 17.4 of the time and place at
which an adjourned or postponed meeting will be held and whether
any resolution to be proposed at such meeting is a Joint Electorate
Action or a Class Rights Action and Carnival SVC shall be entitled
to rely on any such notice for the purpose of this Deed.
8
4.2 Vote in accordance with constitution
(a) Carnival SVC agrees with Carnival and P&O Princess that it shall
vote the Carnival Special Voting Share in accordance with the
requirements of the Carnival Constitution and this Deed.
(b) The P&O Princess Trustee agrees with Carnival and P&O Princess that
it shall vote the P&O Princess Special Voting Share in accordance
with the requirements of the P&O Princess Articles and this Deed.
4.3 Vote on Joint Electorate Action
(a) Carnival SVC agrees with Carnival and P&O Princess that on any
resolution that relates to a Joint Electorate Action it will
exercise the voting rights attached to the Carnival Special Voting
Share in accordance with the reports and the statement delivered
under clause 2.2.
(b) The P&O Princess Trustee agrees with Carnival and P&O Princess that
on any resolution that relates to a Joint Electorate Action it will
exercise the voting rights attached to the P&O Princess Special
Voting Share in accordance with the reports and the statement
delivered under clause 2.1.
4.4 Vote on Class Rights Action
(a) Carnival SVC agrees with Carnival and P&O Princess that where it
has been notified by P&O Princess in accordance with clause 3.2
that a Class Rights Action has (pursuant to the P&O Princess
Articles and/or Applicable Regulations) not been approved by the
requisite majority of votes at a P&O Princess meeting of
shareholders then:
(i) if the resolution needs to be passed by a Majority Resolution
it shall vote the Carnival Special Voting Share to cast such
number of votes representing the largest whole percentage that
is less than the percentage of the number of votes as would be
necessary to defeat a Majority Resolution if the total votes
capable of being cast by the outstanding Carnival Common Stock
and other class of shares of Carnival that are entitled to
vote pursuant to Applicable Regulations and/or the Carnival
Articles and By-laws (including the Carnival Special Voting
Share) were cast in favour of the resolution at the Carnival
Parallel Shareholder Meeting; and
(ii) if the resolution needs to be passed by a Supermajority
Resolution it shall vote the Carnival Special Voting Share to
cast such number of votes representing the largest whole
percentage that is less than the percentage of the number of
votes as would be necessary to defeat a Supermajority
Resolution if the total votes capable of being cast by the
outstanding Carnival Common Stock and other class of shares of
Carnival that are entitled to vote pursuant to Applicable
Regulations and/or the Carnival Articles and By-laws
(including the Carnival Special Voting Share) were cast in
favour of the resolution at the Carnival Parallel Shareholder
Meeting.
9
(b) The P&O Princess Trustee agrees with Carnival and P&O Princess that
where it has been notified by Carnival in accordance with clause
3.1 that a Class Rights Action has (pursuant to the Carnival
Constitution and/or Applicable Regulations) not been approved by
the requisite majority of votes at a Carnival meeting of
shareholders then:
(i) if the resolution needs to be passed by an ordinary
resolution, it shall vote the P&O Princess Special Voting
Share to cast such number of votes representing the largest
whole percentage that is less than the percentage of the
number of votes as would be necessary to defeat an ordinary
resolution if the total votes capable of being cast by the
outstanding P&O Princess Ordinary Shares and other class of
shares of P&O Princess that are entitled to vote pursuant to
Applicable Regulations and/or the P&O Princess Memorandum and
Articles (including the P&O Princess Special Voting Share)
were cast in favour of the resolution at the P&O Princess
Parallel Shareholder Meeting; and
(ii) if the resolution needed to be passed by a special (or
extraordinary) resolution, it shall vote the P&O Princess
Special Voting Share to cast such number of votes representing
the largest whole percentage that is less than the percentage
of the number of votes (less one vote) as would be necessary
to defeat a special (or extraordinary) resolution if the total
votes capable of being cast by the outstanding P&O Princess
Ordinary Shares and other class of shares of P&O Princess that
are entitled to vote pursuant to Applicable Regulations and/or
the P&O Princess Memorandum and Articles (including the P&O
Princess Special Voting Share) were cast in favour of the
resolution at the P&O Princess Parallel Shareholder Meeting.
4.5 Amendments to resolutions
(a) Carnival SVC is entitled to rely on a certificate from a duly
authorised officer of Carnival and a duly authorised officer of P&O
Princess that for all purposes of this Deed an amendment to a
resolution to approve a Joint Electorate Action is made in
accordance with the Carnival Constitution and Applicable
Regulations and that the resolution as amended is the Equivalent
Resolution to the resolution considered at the Parallel Shareholder
Meeting of P&O Princess Such certificate shall be given in
accordance with clause 17.4.
(b) The P&O Princess Trustee are entitled to rely on a certificate from
a duly authorised officer of P&O Princess and a duly authorised
officer of Carnival that for all purposes of this Deed an amendment
to a resolution to approve a Joint Electorate Action is made in
accordance with the P&O Princess Articles and Applicable
Regulations and that the resolution as amended is the Equivalent
Resolution to the resolution considered at the Parallel Shareholder
Meeting of Carnival. Such certificate shall be given in accordance
with clause 17.4.
10
4.6 No discretion as to voting
Each of Carnival SVC and the P&O Princess Trustee agrees with Carnival
and P&O Princess that it has no discretion as to how to vote the P&O
Princess Special Voting Share and/or the Carnival Special Voting Share
(as applicable) and that it shall only vote those shares in accordance
with this Deed and in accordance with the P&O Princess Articles and/or
the Carnival Constitution.
4.7 Procedural and technical resolutions
Carnival SVC and the P&O Princess Trustee will be entitled to rely on a
certificate given to it in writing (in accordance with clause 17.4) by
the Chairman of the relevant shareholder meeting that a resolution is a
procedural or technical resolution (in accordance with the P&O Princess
Articles or the Carnival Constitution (as applicable)) and the Carnival
Special Voting Share or the P&O Princess Special Voting Share (as
applicable) will not have any votes in respect of such resolution. If a
resolution is proposed for the first time during a meeting of
shareholders of either P&O Princess or Carnival (whereby "proposed for
the first time" means it was not set out in the notice of the relevant
shareholders' meeting) and is determined by the Chairman of the relevant
shareholder meeting (in accordance with the P&O Princess Articles or the
Carnival Constitution (as applicable)) not to be a resolution of a
procedural or technical nature then, if such resolution is to be voted on
by shareholders, it will be voted on in the same way as any other Joint
Electorate Action or Class Rights Action (as applicable) (and, for the
avoidance of doubt, proper notice of such resolution will first be given
to shareholders, including to the Carnival SVC and the P&O Princess
Trustee).
5. DEALINGS
5.1 P&O Princess SVT
Subject to clause 16.3, the P&O Princess Trustee agrees with Carnival and
P&O Princess that it shall not deal with the P&O Princess Special Voting
Share or any interest in (or right attaching to) such share without the
prior written consent of both Carnival and P&O Princess, such consent to
be in the absolute discretion of Carnival and P&O Princess. No transfer
of the P&O Princess Special Voting Share shall be effective unless and
until the transferee of such share, as consented to by Carnival and P&O
Princess, has agreed to be bound by this Deed or entered into a deed on
equivalent terms. Any dealing by the P&O Princess Trustee in violation of
this clause 5.1 shall be null and void.
5.2 Carnival SVC
Subject to clause 16.2, Carnival SVC agrees with P&O Princess and
Carnival that it shall not deal with the Carnival Special Voting Share or
any interest in (or right attaching to) such share without the prior
written consent of both Carnival and P&O Princess, such consent to be in
the absolute discretion of Carnival and P&O Princess. No transfer of the
Carnival Special Voting Share shall be effective unless and until the
transferee of such share, as consented to by Carnival and P&O Princess,
has agreed to be bound by this Deed or entered into a deed on equivalent
terms. Any Dealing by the Carnival SVC in violation of this clause 5.2
shall be null and void.
11
6. OBLIGATIONS SUBJECT TO APPLICABLE REGULATIONS
The obligations of the parties under this Deed will be subject to any
Applicable Regulations. The parties will use their best endeavours to
remedy a situation where Applicable Regulations prevent any party from
performing its obligations hereunder.
7. DEFAULT BY CARNIVAL OR P&O PRINCESS
If at any time Carnival or P&O Princess defaults in the performance or
observance of any obligation or other provision binding on it under or
pursuant to this Deed and owed to Carnival SVC or the P&O Princess
Trustee, respectively, Carnival SVC or the P&O Princess Trustee, as the
case may be, shall take such actions or institute such proceedings as it
may reasonably consider to be appropriate in relation to any such default
and shall not be obliged to give notice of its intention to do so.
8. SUPPLY OF INFORMATION; CONFIDENTIALITY
8.1 Supply of information
So long as Carnival SVC is registered as the holder of the Carnival
Special Voting Share and the P&O Princess Trustee is registered as the
holder of the P&O Princess Special Voting Share, Carnival and P&O
Princess shall each give to the P&O Princess Trustee and Carnival SVC, as
the case may be, or any person approved by Carnival or P&O Princess and
appointed in writing by Carnival SVC or the P&O Princess Trustee, as the
case may be, such information as Carnival SVC or the P&O Princess
Trustee, as the case may be, or such appointed person shall reasonably
require (other than information which is of a price-sensitive nature and
not generally available) for the purpose of the discharge of the powers,
duties and discretions vested in Carnival SVC or the P&O Princess
Trustee, as the case may be, under this Deed. All information provided by
P&O Princess and Carnival under this clause 8.1 shall (if requested by
Carnival SVC or the P&O Princess Trustee) be in writing and in accordance
with clause 17.4 and contained in a certificate of a duly authorised
officer of P&O Princess or a duly authorised officer of Carnival.
8.2 Confidentiality
Each of Carnival SVC and the P&O Princess Trustee shall not, and will use
its respective best endeavours to ensure that any person appointed in
writing by it in accordance with clause 8.1 shall not divulge any
information given to it pursuant to clauses 2, 3, 4.5 and 8.1 which is
confidential or proprietary to the party which gave it the information,
in each case, unless prior written approval is given by the party which
gave the information or unless required by Applicable Regulations. If
disclosure of any such information is required by Applicable Regulations,
the Carnival SVC and/or the P&O Princess Trustee (as relevant) will, to
the extent practicable, first consult with P&O Princess and Carnival as
to the form, content and timing of such disclosure.
12
9. REMUNERATION AND EXPENSES OF CARNIVAL SVC AND P&O PRINCESS TRUSTEE
9.1 Fees and expenses
Carnival shall pay or ensure that payment is made to the P&O Princess
Trustee or as it shall otherwise direct, and P&O Princess shall pay or
ensure that payment is made to Carnival SVC or as it shall otherwise
direct, such fees and expenses as may be agreed from time to time between
Carnival, P&O Princess, Carnival SVC and the P&O Princess Trustee for the
performance by Carnival SVC and the P&O Princess Trustee of their
obligations pursuant to this Deed.
9.2 Period of remuneration
The remuneration referred to in clause 9.1 shall continue to be payable
(a) by Carnival until the later of: (a) the P&O Princess Trustee
ceasing to be registered as the holder of the P&O Princess Special
Voting Share and (b) the termination of this Deed in accordance
with clause 16; and
(b) by P&O Princess until the later of (a) Carnival SVC ceasing to be
registered as the holder of the Carnival Special Voting Share and
(b) the termination of this Deed in accordance with clause 16.
9.3 Exceptional duties
In the event either Carnival SVC or the P&O Princess Trustee finds it is
necessary or otherwise required to undertake any duties which would not
have been reasonably contemplated in relation to the performance of its
obligations and the exercise of the powers, authorities and discretions
vested in it under this Deed, Carnival shall pay to P&O Princess Trustee
or as it shall otherwise direct and P&O Princess shall pay to Carnival
SVC or as it shall otherwise direct such special remuneration in addition
to that referred to in clause 9.1 as shall be mutually agreed.
9.4 VAT and similar taxes
The remuneration referred to in clause 9.1, any additional special
remuneration payable under clause 9.3 shall be exclusive of any value
added tax, sales tax, use tax or any similar transaction tax which shall
be added at the rate applicable in the circumstances and paid by P&O
Princess and/or Carnival, as the case may be.
9.5 Expenses
Carnival and P&O Princess shall pay all travelling and other costs,
charges and expenses including legal costs and other professional fees
(including, where applicable, value added tax or any similar tax) which
each of the SVEs may properly incur in relation to the performance of its
obligations and the exercise of the powers, authorities and discretions
vested in it under this Deed and/or any costs and expenses incurred in
connection with the valid termination of this Deed and the resulting
transfer in accordance with clause 16.2 or 16.3 of the Carnival Special
Voting Share or the P&O Princess Special Voting Share, as the case may be
or with the transfer of the P&O Princess Special Voting Share or the
Carnival Special Voting Share under clause 16.4.
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10. POWER OF CARNIVAL SVC AND P&O PRINCESS TRUSTEE
10.1 Act on advice
Each of the Carnival SVC and the P&O Princess Trustee may in the proper
performance of its obligations and the exercise of the powers,
authorities and discretion vested in it under this Deed act on the
opinion or advice of or information obtained from any lawyer, banker,
valuer, accountant, transfer agent, the share registrar or inspector of
election at such time of Carnival or P&O Princess or other expert,
whether obtained by Carnival or P&O Princess or by Carnival SVC or the
P&O Princess Trustee or otherwise, and in such case, provided that the
Carnival SVC or the P&O Princess Trustee (as the case may be) shall have
acted reasonably in its choice of any such person, the relevant Carnival
SVCs and/or the P&O Princess Trustee (as the case may be) shall not be
responsible for any losses, liabilities, costs, claims, actions, damages,
expenses or demands which it may incur or which may be made against it in
connection with or occasioned by so acting. Any such opinion, advice or
information may be sought or obtained by electronic mail, letter,
facsimile or other means of written communication. The Carnival SVCs and
the P&O Princess Trustee shall not be liable for acting on any opinion,
advice or information or for acting on, implementing and giving effect to
any decision, determination or adjustment purporting to be conveyed by
any such written communication reasonably appearing on its face to be
authentic even though it contains an error or is not authentic.
10.2 Powers of Carnival SVC and the P&O Princess Trustee
Each of the Carnival SVCs and the P&O Princess Trustee shall have all
requisite powers, authorities and discretions as shall be necessary or
appropriate to enable it to take all and any such actions as are
contemplated by the provisions of this Deed and the relevant provisions
of the Carnival Constitution and the P&O Princess Articles.
10.3 Act on resolution
Carnival SVC and the P&O Princess Trustee shall not be responsible,
respectively, for having acted upon or having implemented or given effect
to any resolution purporting to have been passed:
(a) as a resolution of Carnival at any meeting of Carnival
shareholders; or
(b) as a resolution of P&O Princess at any meeting of P&O Princess
shareholders,
minutes for which have been made and signed (or in respect of which it
has been informed in accordance with this Deed by any director of
Carnival or P&O Princess or the secretary of Carnival or P&O Princess or
other duly authorised person that the resolution has been passed) even
though it may subsequently be found that there was some defect in the
constitution of the meeting or the passing of the resolution or that for
any reason the resolution was not valid or binding upon the holders of
the relevant shares or (as the case may be) was not in accordance with
this Deed.
10.4 Validity of notices
Carnival SVC and the P&O Princess Trustee shall be at liberty to accept a
notice given under clause 17.4 signed or purporting to be signed by any
director of Carnival
14
or P&O Princess or the secretary of Carnival or P&O Princess or any
other duly authorised officer or person, as appropriate, and shall be
at liberty to accept such certificate or notice in order to satisfy any
factor or matter upon which Carnival SVC the P&O Princess Trustee may
in the performance of any of its obligations and the exercise of any of
the powers, authorities and discretions under this Deed (including a
notification, report, statement or certificate referred to in clauses
2.1, 2.2, 3.1, 3.2, 4.1, 4.3, 4.4 or 4.5) or a statement to the effect
that in the opinion of the persons so certifying any particular
dealing, transaction, step or thing is expedient. Carnival SVC and the
P&O Princess Trustee shall not be in any way bound to call for further
evidence nor to verify the accuracy of the contents of such
certificate, report, statement or notice nor to be responsible for any
losses, liabilities, costs, damages, actions, demands or expenses or
for any breach of any of the provisions of this Deed that may be
occasioned by accepting or acting or relying on any such certificate,
report, statement or notice.
10.5 Assumption of no breach
Carnival SVC and the P&O Princess Trustee shall not be bound to take
any steps to ascertain whether any breach of any of the provisions of
this Deed has occurred and, until it has actual knowledge to the
contrary, Carnival SVC and the P&O Princess Trustee shall be entitled
to assume that no such breach has occurred.
10.6 Discretions
Save as otherwise expressly provided in this Deed (including for the
avoidance of doubt in clauses 4, 5 and 16), each of Carnival SVC and
the P&O Princess Trustee shall, as regards all powers, authorities and
discretions vested in it under this Deed, have absolute and
uncontrolled discretion as to the exercise or non-exercise thereof and,
provided it shall have acted honestly and reasonably, it shall be in no
way responsible for any losses, costs, damages, expenses, liabilities,
actions, demands or inconveniences that may result from the exercise or
non-exercise thereof.
11. INDEMNITIES
11.1 Indemnity by P&O Princess
Subject to clause 11.2, P&O Princess agrees with Carnival SVC to
indemnify it, its directors, officers, employees, controlling persons
and every attorney, manager, agent, delegate or other person appointed
by it under this Deed against all liabilities and expenses properly
incurred by it or such persons in the performance or purported
performance of its obligations under this Deed and of any powers,
authorities or discretions vested in it or such persons pursuant to
this Deed and against all actions, proceedings, costs, claims, damages,
expenses and demands in respect of any matter or thing done or omitted
in any way relating to this Deed, including the institution by Carnival
SVC of any proceedings pursuant to clause 7 in respect of any default
by Carnival or P&O Princess.
11.2 Limitation to indemnities
Nothing contained in this Deed shall, in any circumstance in which
Carnival SVC or, as the case may be, any attorney, manager, agent,
delegate or other person appointed by Carnival SVC under this Deed
(collectively "Indemnified Parties") has been guilty of fraud or
negligence in the performance of any of its duties under this Deed or
15
has willfully defaulted in its obligations, or has willfully breached its
obligations, under this Deed, exempt such Indemnified Party or Parties
from, or indemnify such Indemnified Party or Parties against, any
liability for breach of contract or any liability which by virtue of any
rule of law would otherwise attach to such Indemnified Party or Parties
in respect of any fraud, negligence or willful default of which such
Indemnified Party or Parties may be guilty in relation to their duties
under this Deed.
12. ACTIVITIES
For as long as Carnival SVC shall be registered as the holder of the
Carnival Special Voting Share and the P&O Princess Trustee shall be
registered as the holder of the P&O Princess Special Voting Share, (i)
the Carnival SVC Owner agrees that the only activities carried out by
Carnival SVC shall be such activities as are necessary or expedient in
order for Carnival SVC and (ii) the P&O Princess Trustee agrees that the
only activities carried out by the P&O Princess Trustee, in its capacity
as trustee, shall be such activities as are necessary or expedient in
order for the P&O Princess Trustee, in each case, to perform its
respective obligations and exercise its respective powers, authorities
and discretions pursuant to this Deed, the P&O Princess SVT Constitution,
the Carnival Constitution, the P&O Princess Articles and the Pairing
Agreement among the P&O Princess Trustee, Carnival and the transfer agent
named therein, as the case may be, and enforce the performance by each of
Carnival and P&O Princess of its obligations under them (unless both
Carnival and P&O Princess otherwise expressly agree in writing).
13. GOVERNANCE MATTERS
13.1 Members of Carnival SVC
For as long as Carnival SVC is registered as the holder of the Carnival
Special Voting Share, the Carnival SVC Owner, Carnival and P&O Princess
agree that the Carnival SVC will have only one member, being the Carnival
SVC Owner, and that Carnival SVC shall maintain its status as a limited
liability company under the laws of England and Wales.
13.2 Directors of Carnival SVC
For as long as Carnival SVC is registered as the holder of the Carnival
Special Voting Share, the board of directors of the Carnival SVC shall
comprise such persons as are appointed or approved by the Carnival SVC
Owner. The Carnival SVC Owner shall not appoint any person as a director
of the Carnival SVC who is an employee or director of either the Carnival
Group or the P&O Princess Group.
13.3 The P&O Princess Trustee
The Trustee of P&O Princess SVT shall initially be the P&O Princess
Trustee, in accordance with the P&O Princess SVT Constitution. Carnival
agrees with P&O Princess that it shall not replace the P&O Princess
Trustee pursuant to Section 7.08 of the P&O Princess SVT Constitution
without the prior written consent of P&O Princess. If the P&O Princess
Trustee is replaced at any time in accordance with Section 7.08 of the
P&O Princess SVT Constitution, the P&O Princess Trustee shall novate its
rights and obligations under this Deed to the successor trustee appointed
16
thereunder, and all references to the P&O Princess Trustee in this Deed
shall be deemed to be reference to such successor trustee.
14. AMENDMENTS TO THIS DEED
Carnival SVC, the P&O Princess Trustee and the Carnival SVC Owner shall
at any time concur with P&O Princess and Carnival in making any
modifications to the provisions of this Deed which:
(a) are formal or technical amendments and which Carnival and P&O
Princess notify are not materially prejudicial to the interests of
either Carnival or P&O Princess shareholders;
(b) are necessary to correct manifest errors in this Deed or
inconsistencies between provisions of this Deed or between
provisions of this Deed and the Equalization Agreement; or
(c) have previously been approved as a Class Rights Action,
provided in each case that if such modification affects (including
increasing or reducing respectively) the obligations or rights of
Carnival SVC, the P&O Princess Trustee and/or the Carnival SVC Owner
under this Deed or any provision affecting the performance by Carnival
SVC, the P&O Princess Trustee and/or the Carnival SVC Owner of its
obligations under this Deed, such modification shall require the consent
of Carnival SVC, the P&O Princess Trustee and/or the Carnival SVC Owner,
such consent not to unreasonably withheld or delayed.
15. DAMAGES NOT ADEQUATE REMEDY
Each of Carnival SVC, Carnival, P&O Princess, the P&O Princess Trustee
and the Carnival SVC Owner hereby acknowledge and agree with each other
that damages would not be an adequate remedy for the breach of any
provision of this Deed and, accordingly, each shall be entitled to the
remedies of injunction, specific performance and other equitable remedies
for any such threatened or actual breach.
16. TERMINATION
16.1 Automatic termination
This Deed shall automatically terminate:
(a) upon termination of the Equalization Agreement in accordance with
its terms; or
(b) if a resolution to terminate this Deed is approved by the
shareholders of Carnival and P&O Princess as a Class Rights Action,
provided that clauses 8.2, 9, 11, 16.1, 16.2, 16.3 and 16.4 shall
continue and bind the parties for so long as may be necessary to give
full effect to the rights and obligations arising under them and provided
that clauses 8.1 and 10.4 shall continue and bind the parties for so long
as Carnival SVC is registered as the holder of the Carnival Special
Voting Share or the P&O Princess Trustee is registered as the holder of
the P&O Princess Special Voting Share
17
16.2 Transfer of Carnival Special Voting Share
Upon termination of this Deed in accordance with clause 16.1, Carnival
SVC shall promptly, upon being requested to do so, transfer the Carnival
Special Voting Share to such person as the Board of Carnival directs it
to in writing. Pending notification, Carnival SVC shall have no
obligation whatsoever in respect of the Carnival Special Voting Share or
under this Deed except that Carnival SVC must not Deal with the Carnival
Special Voting Share or any interest in, or right attaching to, that
share other than in accordance with such notification, which is to be
given within 6 months after the date of termination of this Deed and must
be given in writing in accordance with clause 17.4.
16.3 Transfer of P&O Princess Special Voting Share
Upon termination of this Deed in accordance with clause 16.1, the P&O
Princess Trustee shall promptly, upon being requested to do so, transfer
the P&O Princess Special Voting Share to such person as is notified by
the Board of P&O Princess. Pending notification, the P&O Princess Trustee
shall have no obligation whatsoever in respect of the P&O Princess
Special Voting Share or under this Deed except that the P&O Princess
Trustee must not Deal with the P&O Princess Special Voting Share or any
interest in, or right attaching to, that share other than in accordance
with such notification, which is to be given within 6 months after the
date of termination of this Deed and must be given in writing in
accordance with clause 17.4.
16.4 Replacement of the Carnival SVC Owner
If given notice under clause 17.4 to do so by a duly authorised officer
of P&O Princess and by a duly authorised officer of Carnival, Carnival
SVC shall, within two months after receipt of such notice transfer the
Carnival Special Voting Share to such person as notified to in the
aforementioned notice (the "Novated Person"). Carnival SVC agrees to
novate its rights and obligations under this Deed to the Novated Person,
and the Carnival SVC Owner agrees to novate its rights and obligations
under this Deed to such person as notified in the aforementioned notice
("New SVC Owner"). The provisions of this clause 16.4 shall apply,
mutatis mutandis, to any subsequent notification by a duly authorised
officer of P&O Princess and by a duly authorised officer of Carnival to
replace the Novated Person and the New SVC Owner. Following any such
transfer, references in the Deed to the Carnival SVC shall be to the
Second Novated Person and references in this Deed to the Carnival SVC
Owner shall be to the New SVC Owner.
17. GENERAL
17.1 No assignment
This Deed shall not be assignable by operation of law or otherwise, and
any purported assignment (whether in whole or in part) in violation of
this provision shall be void.
17.2 No partnership or agency
This Deed is not intended to alter the status of the parties as separate,
independent entities, to create a partnership, joint venture or agency
relationship between the parties or their respective Subsidiaries or
shareholders, or to give any party (or its respective Subsidiaries or
shareholders) any legal or beneficial ownership interest in
18
the assets or income of the other parties, and they shall not be
construed as having that effect.
17.3 Regulatory
All parties to this Deed will co-operate with each other from time to
time to ensure that all information necessary or desirable for the making
of (or responding to any requests for further information with respect
to) any notifications or filings made in respect of this Deed, or the
transactions contemplated by this Deed, is supplied to the party dealing
with such notification and filings and that they are properly, accurately
and promptly made.
17.4 Notices
Any notice, certificate, report or statement given under this Deed:
(a) must be in writing addressed to the intended recipient at the
address shown below:
Carnival Corporation
3655 N.W. 87th Avenue
Miami, Florida 33178-2428
Attention: Chairman and Chief Executive Officer
Fax: [.]
with copies to
Carnival Corporation
3655 N.W. 87th Avenue
Miami, Florida 33178-2428
Attention: General Counsel
Fax: [.]
Carnival SVC Limited
[.]
Attention: The Company Secretary (Ref: [.])
Fax: [.]
P&O Princess Cruises plc
77 New Oxford Street
London WC1A 1PP
UK
Attention: Chief Executive Officer
Fax: (+44) 20 78051240
with copies to
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P&O Princess Cruises plc
77 New Oxford Street
London WC1A 1PP
UK
Attention: General Counsel
Fax: (+44) 20 7805 1240
[The P&O Princess Trustee]
[Address]
Attention:
Fax: (302) [.]
[The Carnival SVC Owner]
[Address]
Attention: The Company Secretary (Ref [.])
Fax: (+44) [.]
Or to such other persons or addresses as may be designated in
writing by any party pursuant to this clause 17.4.
(b) must be signed by a person duly authorised by the sender,
(c) Notices, certificates, reports and statements given under this Deed
shall be in writing and shall be deemed given (i) when sent if sent
by facsimile and promptly confirmed by telephone confirmation
thereof; or (ii) when delivered, if delivered personally to the
intended recipient or sent by overnight delivery via a national
courier service, and in each case, addressed to such person or
persons in accordance with this clause 17.4.
17.5 Severability
If any provision of this Deed is held to be invalid or unenforceable,
then such provision shall (so far as it is invalid or unenforceable) be
given no effect and shall be deemed not to be included in this Deed but
without invalidating any of the remaining provisions of this Deed. The
parties shall then use all reasonable endeavours to replace the invalid
or unenforceable provisions by a valid and enforceable substitute
provision the effect of which is as close as possible to the intended
effect of the invalid or unenforceable provision.
17.6 Waivers
(a) Waiver of any right arising from a breach of this Deed or of any
right, power, authority, discretion or remedy arising upon default
under this Deed must be in writing and signed by the party granting
the waiver.
(b) A failure or delay in exercise, or partial exercise, of
(i) a right arising from a breach of this Deed; or
20
(ii) a right, power, authority, discretion or remedy created or arising
upon default under this Deed,
does not result in a waiver of that right, power, authority, discretion
or remedy.
(c) A party is not entitled to rely on a delay in the exercise or
non-exercise of a right, power, authority, discretion or remedy
arising from a breach of this Deed or on a default under this Deed
as constituting a waiver of that right, power, authority,
discretion or remedy.
(d) A party may not rely on any conduct of another party as a defence
to exercise of a right, power, authority, discretion or remedy by
that other party.
(e) This clause may not itself be waived except by writing.
(f) No waiver by a party of a failure or failures by the other party to
perform any provision of this Deed shall operate or be construed as
a waiver in respect of any other or further failure whether of
alike or different character.
17.7 Variation
A variation of any term of this Deed must be in writing and signed by all
parties to this Deed.
17.8 Further assurances
Each party shall take all steps, execute all documents and do everything
reasonably required by the other parties to give effect to any of the
transactions contemplated by this Deed.
17.9 Counterparts
This Deed may be executed in any number of counterparts. All counterparts
taken together will be taken to constitute one and the same instrument.
17.10 Third Parties Rights
A person who is not a party to this Deed shall have no right under the
Contracts (Rights of Third Parties) Act 2001 to enforce any of its terms.
17.11 Governing law and jurisdiction
(a) This Deed and the relationship between the parties shall be
governed by, and interpreted in accordance with, the laws of the
Isle of Man.
(b) All of the parties agree that the courts of England are to have
exclusive jurisdiction to settle any disputes (including claims for
set-off and counterclaims) which may arise in connection with the
creation, validity, effect, interpretation or performance of, or
the legal relationships established by, this Deed or otherwise
arising in connection with this Deed, and for such purposes
irrevocably submit to the jurisdiction of the English courts.
(c) The parties irrevocably waive any objections to the jurisdiction of
any court referred to in this clause 17.11.
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(d) The parties irrevocably consent to service of process or any other
documents in connection with proceedings in any court by facsimile
transmission, personal service, delivery at any address specified
in this Deed or any other usual address, mail or in any other
manner permitted by English law, the law of the place of service or
the law of the jurisdiction where proceedings are instituted.
DULY delivered as a DEED on the date inserted above
22
EXECUTED as a DEED by )
CARNIVAL CORPORATION )
by a duly authorised officer )
_________________________________
Signature
_________________________________
Print name
_________________________________
Office held
EXECUTED as a DEED by )
CARNIVAL SVC LIMITED )
acting by two Directors/a Director and )
Secretary )
EXECUTED as a DEED by )
P&O PRINCESS CRUISES PLC )
acting by two Directors/a Director and )
Secretary )
23
EXECUTED as a DEED by )
[THE P&O PRINCESS TRUSTEE], )
AS TRUSTEE OF THE P&O PRINCESS )
_______________________________
Signature
_______________________________
Print name
_______________________________
Office held
EXECUTED as a DEED by )
[The Carnival SVC Owner] )
acting by two Directors/a Director and )
Secretary )
24
Annex A-4
AGREED FORM
THIRD AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CARNIVAL CORPORATION
We the undersigned, Micky Arison, Chairman of the Board of Directors and
Chief Executive Officer, and Arnaldo Perez, Senior Vice President, General
Counsel and Secretary, of Carnival Corporation, a corporation organized and
existing in accordance with the laws of the Republic of Panama (the
"Corporation"), do hereby certify that the Articles of Incorporation of said
corporation are hereby amended and restated as follows:
ARTICLE I
Corporate Name
The name of the Corporation is: "Carnival Corporation."
ARTICLE II
Duration
The duration of the Corporation shall be perpetual, but it may previously
be dissolved pursuant to Panamanian law.
ARTICLE III
Corporation Purposes
The purposes of the Corporation are:
(a) To make, purchase, barter, charter, acquire dominion upon or use of,
operate as owner, charteror or operator, to manage, equip and fit out all kinds
of ships and vessels of all types and kinds of propelling systems.
(b) To make all kinds of buildings and structures related to any kind of
legitimate maritime commercial business, merchandise warehousing, shipping and
transportation.
(c) To act as shipbroker, customs and maritime insurance broker, and to
administer the properties and assets and investments that maritime trade and
shipowners' business and ship exploitation may require.
(d) To act as principal and agent in all negotiations related to maritime
trade to such extent as the purposes of this Corporation may permit it.
(e) To solicit from the Government of the Republic of Panama or any other
government where it may be necessary and through such proceedings as may be
required by law, navigation licenses for ships and permits to enroll crewmen
for, and port clearance of, the ships in care of the Corporation.
(f) To perform transactions through negotiable instruments and real estate
related to maritime trade and shipowners' business and exploitation of ships.
(g) To deal in patents and improvements on patented methods related to the
business of maritime trade.
(h) To purchase and sell and deal in general with the shares of its own
capital stock pursuant to instructions from the Board of Directors. To acquire,
purchase, guarantee, hold, sell, assign, transfer, mortgage, pledge or otherwise
dispose of, deal in shares of the capital stock of, or bonds, securities or
other certificates of indebtedness created by other corporations.
(i) The Corporation shall have the power without any requirement to obtain
prior shareholder approval to give guarantees of the indebtedness or obligations
of related or unrelated persons deemed by the Board of Directors to be in
furtherance of its corporate purpose and to secure any such guarantee or any
other obligations by the creation of any security interest in all or any part of
its property or any interest therein (and for these purposes, the corporate
purposes of the Corporation shall include any and all lawful acts and activities
for which corporations may be organized under the Corporation Law), and it shall
not be necessary to seek or obtain the authorization of the shareholders of the
Corporation for the giving of any guarantee, indemnity or security in
furtherance of any of its corporate purposes.
(j) To purchase, sell, lease, mortgage, set up easements and encumbrances
upon real estate and in general upon all kinds of properties related to the
business of the Corporation.
(k) To sell, mortgage, encumber or otherwise charge its assets and to
perform any and all kinds of legitimate commercial transactions and any other
that may be permitted in the future pursuant to Panamanian laws.
(l) To borrow money from any persons, firms, banks or corporations as may
be necessary for its business and to guarantee such loans as the law may permit
and to loan money secured or unsecured to any persons, firms or corporations as
the law may permit and in general to engage in any legitimate commercial
undertaking in any country.
(m) To engage in the general business of travel and tour services, both
domestic and foreign; to dispense travel and tour information and to act as
agent for all transportation companies, including without limitation airline
companies, passenger
2
cruise line companies, steamship companies, railroad companies, bus companies,
car rental companies and any other mode of travel or transportation or touring
companies, both local and foreign; to engage in the preparation of travel and
tour itineraries, including without limitation hotel and motel accommodations
and sightseeing; and, in general, to engage in the business of all forms and
types of travel services.
(n) To dispense travel and tour counseling services, sell railroad,
airline, passenger cruise line, steamship and bus transportation; to sell
accommodations for hotels, resorts, sightseeing and feature attractions
throughout the United States, Canada, Mexico, Europe and every country
throughout the world; to create, plan, sell and carry through escorted vacation
tours; to own, operate, lease or otherwise acquire such real and personal
property suitable, useful or necessary in connection with any of the objects
aforementioned; to enter into, make, perform and carry out contracts of every
kind in connection with the sale and distribution of the aforementioned items or
services; to acquire, use, own, lease and dispose of trademarks, copyrights and
licenses.
(o) To acquire, hold, use, sell, assign, lease, grant licenses in respect
of, mortgage or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trademarks, service marks and trade
names relating or useful in connection with any business of the Corporation.
(p) To carry on the business of hotel, resort, casino, restaurant,
refreshment room and lodging-housekeepers, caterers for public amusements
generally, hairdressers, barbers, perfumers, proprietors, laundries, reading,
writing and newspaper room, libraries, places of amusements, recreation and
entertainment of all kinds, sport, theatrical and musical box office
proprietors, entrepreneurs and general agents, and any other business which can
be conveniently carried on in connection therewith.
(q) To take all such actions as the Board of Directors shall determine are
necessary or desirable to carry out the transactions contemplated by the
Equalization Agreement, the SVE Special Voting Deed and the Carnival Deed of
Guarantee.
(r) To engage in, carry on and conduct any lawful act or activity for which
corporations may be organized under the Corporation Law.
The foregoing clauses shall be construed both as objects and powers, and it
is hereby expressly provided that the foregoing enumeration of specific powers
shall not limit or restrict in any manner the powers of the Corporation, and are
in furtherance of, and in addition to, and not in limitation of the general
powers conferred by the laws of the Republic of Panama.
3
ARTICLE IV
Registered Agent
The Registered Agent of the Corporation in Panama City, until the Board of
Directors may provide otherwise, shall be the law firm of Tapia, Linares y
Alfaro, Plaza 2000, Calle 50, Apartado 7412, Panama 5, Republic of Panama.
ARTICLE V
Capitalization
The total number of shares of all classes of stock which the Corporation
shall have authority to issue is [2,000,000,000] registered shares comprised of
[1,959,999,998] shares of nominative common stock, par value US$.01 per share
("Common Stock"), 40,000,000 shares of preferred stock, par value US$.01 per
share ("Preferred Stock"), one (1) share of special voting stock, par value
US$.01 per share (such share of special voting stock, the "Carnival Special
Voting Share"), and one (1) share of special stock, par value US$.01 per share
(such share of special stock, the "Equalization Share"). Subject to the
provisions of these Articles of Incorporation and except as otherwise provided
by law, the stock of the Corporation, regardless of class, may be issued for
such consideration and for such corporate purposes as the Board of Directors may
from time to time determine.
The preferences, limitations and relative rights of the Common Stock, the
Preferred Stock and the Carnival Special Voting Share are as follows:
(a) Common Stock.
(1) All shares of the Common Stock shall have the same rights, powers,
preferences and privileges and shall rank equally, share ratably and be
identical in all respects as to all matters, including rights upon liquidation
and distribution of the assets of the Corporation and in respect of rights to
dividends and other distributions, when and as declared. The holders of shares
of Common Stock shall be entitled in accordance with the Equalization Agreement,
to the exclusion of the holders of shares of Preferred Stock of any and all
series, to receive such dividends as from time to time may be declared by the
Board of Directors, except as otherwise provided by the resolution or
resolutions providing for the issue of any series of shares of Preferred Stock.
In the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after payment shall have been made to the
holders of shares of Preferred Stock of the full amount to which they shall be
entitled pursuant to the resolution or resolutions providing for the issue of
any series of shares of Preferred Stock, the holders of shares of Common Stock
shall be entitled, to the exclusion of the holders of shares of Preferred Stock
of any and all series, to share, ratably according to the number of shares of
Common Stock held by them, in all remaining assets of the Corporation available
for distribution to its stockholders.
(2) Subject to the provisions of any applicable law, these Articles of
Incorporation or of the By-laws, with respect to the closing of the transfer
4
books or the fixing of a record date for the determination of stockholders
entitled to vote and except as otherwise provided by law or by the resolution or
resolutions providing for the issue of any series of shares of Preferred Stock,
the holders of outstanding shares of Common Stock shall exclusively possess
voting power for the election of directors and for all other purposes, each
holder of record of shares of Common Stock being entitled to one vote for each
share of Common Stock standing in his or her name on the books of the
Corporation.
(b) Preferred Stock. The Board of Directors may authorize by resolution or
resolutions from time to time the issuance of one or more classes or series of
Preferred Stock and fix the designations, powers, preferences and relative,
participating, optional or other rights (including, without limitation, rights
respecting conversion, exchange or redemption) and the qualifications,
limitations or other restrictions thereof (including restrictions respecting
conversion, exchange or redemption) with respect to each such class or series of
Preferred Stock, and the number of shares constituting each such class or
series. Unless otherwise provided in any such resolution or resolutions, the
number of shares of Preferred Stock of any such series to which such resolution
or resolutions apply may be increased (but not above the total number of
authorized shares of the class) or decreased (but not below the number of shares
thereof then outstanding) by a resolution or resolutions likewise adopted by the
Board of Directors, and the Board of Directors may otherwise increase or
decrease the number of shares of any such class or series to the extent
permitted by the Corporation Law. Any of the voting powers, designations,
preferences, rights and qualifications, limitations or restrictions of any such
series of Preferred Stock may be made dependent upon facts ascertainable outside
of the resolution or resolutions providing for the issue of such Preferred Stock
adopted by the Board pursuant to the authority vested in it by this Article V,
provided that the manner in which such facts shall operate upon the voting
powers, designations, preferences, rights and qualifications, limitations or
restrictions of such series of Preferred Stock is clearly and expressly set
forth in the resolution or resolutions providing for the issue of such Preferred
Stock. The term "facts" as used in the next preceding sentence shall have the
meaning given to it under Panamanian law. Shares of Preferred Stock of any
series that have been redeemed (whether through the operation of a sinking fund
or otherwise) or that if convertible or exchangeable, have been converted into
or exchanged for shares of any other class or classes shall have the status of
authorized and unissued shares of Preferred Stock of the same series and may be
reissued as a part of the series of which they were originally a part or may be
reclassified and reissued as part of a new series of shares of Preferred Stock
to be created by resolution or resolutions of the Board of Directors or as part
of any other series of shares of Preferred Stock, all subject to the conditions
or restrictions on issuance set forth in the resolution or resolutions adopted
by the Board of Directors providing for the issue of any series of shares of
Preferred Stock.
(c) Carnival Special Voting Share.
(1) The Carnival Special Voting Share shall confer on the holder of
such share the relevant rights and obligations set out in these Articles of
Incorporation and the By-Laws. The Carnival Special Voting Share shall cease to
confer
5
any right to attend or vote at any meeting of the shareholders of the
Corporation if either the Equalization Agreement is terminated or if a
resolution to terminate the SVE Special Voting Deed is approved as a Class
Rights Action.
(2) The Carnival Special Voting Share shall have the following voting
rights:
(A) In relation to a resolution of the Corporation to approve a Joint
Electorate Action at any meeting of the shareholders of the Corporation,
the Carnival Special Voting Share shall carry:
(i) such number of votes in favor of the resolution as were cast
in favor of the Equivalent Resolution at the Parallel Shareholder
Meeting of P&O Princess by holders of P&O Princess Ordinary Shares and
Other Voting Shares of P&O Princess;
(ii) such number of votes against the resolution as were cast
against the Equivalent Resolution at the Parallel Shareholder Meeting
of P&O Princess by holders of P&O Princess Ordinary Shares and Other
Voting Shares of P&O Princess; and
(iii) such number of abstentions as were recorded as abstentions
from the Equivalent Resolution at the Parallel Shareholder Meeting of
P&O Princess by holders of P&O Princess Ordinary Shares and Other
Voting Shares of P&O Princess;
in each case multiplied by the Carnival Equivalent Number in effect at the
time such meeting of the shareholders of the Corporation is held and in
each case rounded up to the nearest whole number, such votes to be cast by
the holder of the Carnival Special Voting Share in accordance with the
above provisions.
(B) In relation to a resolution of the Corporation to approve a Class
Rights Action at any meeting of the shareholders of the Corporation:
(i) if the Equivalent Resolution is approved by the requisite
majority (as determined in accordance with the P&O Princess Articles
and Applicable Regulations) of the holders of P&O Princess Ordinary
Shares and Other Voting Shares of P&O Princess at the Parallel
Shareholder Meeting of P&O Princess, then the Carnival Special Voting
Share shall carry no votes; and
(ii) if the Equivalent Resolution is not approved by the
requisite majority (as determined in accordance with the P&O Princess
Articles and Applicable Regulations) of the holders of P&O Princess
Ordinary Shares and Other Voting Shares of P&O Princess at the
Parallel Shareholder Meeting of P&O Princess, and (x) if the
resolution needs to be passed by a Majority Resolution, then the
Carnival Special Voting Share shall be entitled to cast such number of
votes, representing the
6
largest whole percentage that is less than the percentage of the
number of votes as would be necessary to defeat a Majority Resolution
if the total votes capable of being cast by the outstanding Carnival
Common Stock and Other Voting Shares entitled to vote pursuant to
Applicable Regulations and/or the Carnival Articles and By-Laws
(including the Carnival Special Voting Share) were cast in favour of
the resolution at the meeting of the Corporation's shareholders, and
all such votes shall be cast against approval of such resolution; or
(y) if the resolution needs to be passed by a Supermajority
Resolution, then the Carnival Special Voting Share shall be entitled
to cast such number of votes, representing the largest whole
percentage that is less than the percentage of the number of votes as
would be necessary to defeat a Supermajority Resolution if the total
votes capable of being cast by the outstanding Carnival Common Stock
and Other Voting Shares of Carnival that are entitled to vote pursuant
to Applicable Regulations and/or the Carnival Articles and By-Laws
(including the Carnival Special Voting Share) were cast in favour of
the resolution at the meeting, and all such votes shall be cast
against approval of such resolution.
(C) Except as set forth above, the Carnival Special Voting Share shall
not be entitled to vote on any matter submitted to the shareholders of the
Corporation.
(3) The rights and obligations attaching to the Carnival Special
Voting Share may be amended or modified only by a resolution approved as a Class
Rights Action; provided that where the proposed amendment or modification
increases the obligations of the holder of the Carnival Special Voting Share,
such amendment or modification shall also require the consent of the holder of
the Carnival Special Voting Share.
(4) Notwithstanding anything to the contrary in these Articles of
Incorporation, the By-Laws or any other agreement, under no circumstances shall
the Carnival Special Voting Share be entitled to any rights upon Liquidation and
distribution of assets of the Corporation or rights with respect to dividends or
other Distributions by the Corporation to its shareholders.
(d) The Equalization Share. The Equalization Share shall:
(1) have no rights to receive notice of, attend or vote at any meeting
of the Corporation;
(2) have rights to dividends as declared and paid by the Board in
accordance with Article XVI; and
(3) in the event of a voluntary or involuntary Liquidation, rank after
all other holders of shares with respect to a Liquidation Distribution paid in
accordance with Article XVII.
7
(e) Disenfranchised Carnival Common Stock. All shares in the capital of
Carnival carrying liquidation rights and/or voting rights acquired by any member
of the P&O Princess Group shall automatically be converted on the first day that
such shares are beneficially owned by a member of the P&O Princess Group into
disenfranchised shares ("Disenfranchised Carnival Common Stock") which will rank
pari passu with all of the shares of the same class except that such shares
shall not have any rights:
(1) to attend or vote at any general meeting or class meeting of the
Corporation, unless, as to any such shares, at the relevant date the P&O
Princess Group, beneficially owns 90 per cent. or more of the outstanding shares
of such class (whether or not for the purpose of such calculation any shares of
such class are Disenfranchised Carnival Common Stock); or
(2) to receive any distributions upon Liquidation.
Following the Transfer of any Disenfranchised Carnival Common Stock from a
member of the P&O Princess Group to a person who is not a member of the Combined
Group, such Disenfranchised Carnival Common Stock shall automatically be
converted on the day that such shares are registered in the register of members
of the Corporation into shares of the same class having liquidation rights
and/or voting rights.
ARTICLE VI
No Preemptive Rights
No holder of shares shall have any right, preemptive or other, to subscribe
for or to purchase from the Corporation any of the shares of the Corporation
hereinafter issued or sold.
ARTICLE VII
Address of Incorporators
The name and mailing address of each signatory to the original Articles of
Incorporation and the number of shares which each such signatory agreed to take
care is as follows:
No. of Shares of
Name Post Office Address Common Stock Subscribed
--------------------- ------------------------------- ------------------------
Mariano J. Oteiza No. 8 Aquilino de la 1
Guardia Street
Panama, R. of P.
Domingo Diaz A. No. 8 Aquilino de la 1
Guardia Street
Panama, R. of P.
8
ARTICLE VIII
Board of Directors
(a) The Board of Directors shall consist of no less than three (3), and no
more than twenty-five (25) members. Within said minimum and maximum, the number
shall be set forth by resolution of the stockholders or by resolution of the
Board of Directors. The meetings of the Board of Directors will be held in the
Republic of Panama or in any other country, and any director can be represented
and vote by proxy or proxies at any and all directors' meetings. The meetings
may also be held by means of telephone conference, fax or any other means of
electronic communication, in which the participants have been in direct contact.
Likewise, the resolutions of the Board of Directors may be adopted by minutes
which are circulated for signature by the directors or their proxies in
different dates and places. The Board of Directors shall have absolute control
and full powers of administration on all the matters of the Corporation, being
it understood that the Board of Directors is empowered to contract loans or
financing in general, to grant guarantees with respect to its properties,
subsidiaries, its obligations and those of third parties, and to mortgage its
properties and assets, and to sell less than all or substantially all of the
assets of the Corporation without shareholder approval. Directors shall be
elected as provided in the By-Laws. All directors shall have equal standing and
have equal voting powers.
(b) Each director of the Corporation shall also consent to serve, and be
properly appointed, as a director of P&O Princess in order to qualify to serve
as a director of the Corporation. Directors may be of any nationality and need
not be residents or citizens of Republic of Panama or shareholders. No
corporation may be appointed or elected a director of the Corporation.
(c) The Board of Directors are authorized to operate and carry into effect
the Equalization Agreement, the SVE Special Voting Deed and the Carnival Deed of
Guarantee. Subject to Applicable Regulations, nothing done by any director in
good faith pursuant to such authority and obligations shall constitute a breach
of the fiduciary duties of such director to the Corporation or its shareholders.
In particular, the directors shall, in addition to their duties to the
Corporation, be entitled to have regard to interests of the holders of the
Carnival Common Stock and P&O Princess Ordinary Shares as if the Corporation and
P&O Princess were a single entity.
(d) At all meetings of the Board of Directors the presence, in person or by
proxy, of at least one-third of the total number of directors shall constitute a
quorum for the transaction of business except as may be otherwise specifically
provided by Applicable Regulations, the Articles of Incorporation or By-Laws.
The act of a simple majority of the directors present in person or by proxy at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by Applicable
Regulations, the Articles of Incorporation or By-Laws.
(e) Authority of the Board of Directors. The Board of Directors shall have
the authority to exercise all rights and powers granted to or vested in the
Board of
9
Directors or the Corporation under Articles XII, XIII, XIV and XV and to take
any action as it deems necessary or advisable to give effect to the provisions
of Articles XII, XIII, XIV and XV, including the right and power to interpret
the provisions of Articles XII, XIII, XIV and XV and to make all determinations
deemed necessary or advisable to give effect to the provisions of Articles XII,
XIII, XIV and XV. Without limiting the generality of the foregoing, the
Corporation shall expressly have the right to effect or procure a transfer of
Carnival Common Stock (including Excess Shares and Combined Group Excess Shares)
as described in Articles XII, XIII, XIV and XV. In the case of ambiguity in the
application of any of the provisions of Articles XII, XIII, XIV and XV, the
Board of Directors shall, in its absolute discretion, have the power to
determine the application of such provisions with respect to any situation based
on the facts known to them, including, without limitation, any rulings,
regulations or waivers under, or amendments to, any Applicable Regulations or
that affect provisions of the City Code that are analogous to Articles XIV and
XV. All such actions, calculations, interpretations and determinations which are
done or made by the Board of Directors in good faith shall be final, conclusive
and binding on the Corporation and all other parties. No director shall be
liable for any act or omission pursuant to these Articles XII, XIII, XIV and XV
if such action was taken in good faith. Any one or more directors may act as the
attorney(s) of any holder of Carnival Common Stock (including any holder of
Excess Shares or Combined Group Excess Shares) with respect to the execution of
documents and other actions required to be taken for the sale or transfer of
Excess Shares pursuant to Article XIII or Combined Group Excess Shares pursuant
to Article XIV.
ARTICLE IX
Officers
The Board of Directors, as soon as possible after the annual election of
directors, may choose a Chairman of the Board, a Vice-Chairman of the Board, a
President, a Chief Executive Officer, a Chief Operating Officer, a Secretary, a
Treasurer, and one or more Vice Presidents, all of whom shall hold their offices
until their successors are chosen and qualify. More than one office may be held
by the same person. The Board of Directors may from time to time choose such
other officers and agents as are necessary, who shall hold their offices for
such terms as are determined by the Board of Directors. Any officer or agent
chosen by the Board of Directors may be removed at any time with or without
cause by the affirmative vote of a majority of the members of the Board of
Directors then in office. Until the Board of Directors provides otherwise, the
legal representative of the Corporation shall be the President and, in his
absence, the Corporation shall be represented by the Chairman of the Board.
ARTICLE X
Amendments to Articles of Incorporation and By-Laws
(a) Subject to subsections (b) and (c) of this Article X, any amendment to
these Articles of Incorporation shall require approval as a Joint Electorate
Action;
10
provided that no amendment to these Articles of Incorporation may be effected
unless a majority of all votes entitled to be cast with respect thereto
(including votes entitled to be cast by the Carnival Special Voting Share) have
been voted in favor of such amendment at a meeting of the shareholders of the
Corporation.
(b) Any amendment to the Carnival Entrenched Articles shall require
approval as a Class Rights Action; provided that no amendment to these Articles
of Incorporation may be effected unless a majority of all votes entitled to be
cast with respect thereto (including votes entitled to be cast by the Carnival
Special Voting Share) have been voted in favor of such amendment at a meeting of
the shareholders of the Corporation.
(c) Notwithstanding the foregoing, any amendment of these Articles of
Incorporation (1) to specify or change the location of the office or registered
agent of the Corporation, or (2) to make, revoke or change the designation of a
registered agent, or to specify or change the registered agent, may be approved
and effected by the Board of Directors without the approval of the shareholders
of the Corporation or the shareholders of P&O Princess.
(d) Any amendment to or repeal of the Carnival Entrenched By-Laws shall
require approval as a Class Rights Action.
(e) Any amendment to or repeal of any By-Law of the Corporation other than
any of the Carnival Entrenched By-Laws may be approved and effected by the Board
of Directors without the approval of the shareholders of the Corporation or the
shareholders of P&O Princess regardless of whether such By-Law has been
previously approved by the shareholders of the Corporation.
(f) Notwithstanding the provisions of this Article X, upon completion of a
Mandatory Exchange, the Articles of Incorporation and the By-Laws shall be
automatically amended without any further action of the Corporation or the
shareholders of the Corporation as set forth in Appendices I and II hereto,
respectively.
ARTICLE XI
Indemnification
(a) A director of the Corporation shall not be liable to the Corporation,
P&O Princess or their respective shareholders for monetary damages for breach of
fiduciary duty as a director.
(b) (1) Each person (and the heirs, executors or administrators of such
person) who was or is a party to or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director or an officer of the Corporation or P&O Princess or
is or was serving at the request of the Corporation or P&O Princess as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, shall be indemnified and held harmless by the
11
Corporation against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding to the fullest extent and in the manner set
forth in and permitted by the Corporation Law, and any other applicable law, as
from time to time in effect. The foregoing provisions of this Article XI shall
be deemed to be a contract between the Corporation and each director and officer
who serves in such capacity at any time while this Article XI and the relevant
provisions of the Corporation Law and other applicable law, if any, are in
effect.
(2) The Corporation may, by action of the Board of Directors, provide
indemnification to such of the employees and agents of the Corporation, P&O
Princess or any person who is or was serving at the request of the Corporation
or P&O Princess as an employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding to such
extent and to such effect as the Board of Directors shall determine to be
appropriate and permitted by the Corporation Law, and any other applicable law,
as from time to time in effect.
(c) The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation or P&O Princess, or is or was serving at the request of the
Corporation or P&O Princess as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss incurred by such person in any such capacity or
arising out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of this
Article XI or under the Corporation Law or any other provision of law.
(d) The rights and authority conferred in this Article XI shall not be
exclusive of any other right which any person may otherwise have or hereafter
acquire.
(e) Neither the amendment nor repeal of this Article XI nor the adoption or
any provision of the Articles of Incorporation or the By-Laws of the
Corporation, nor, to the fullest extent permitted by the Corporation Law and any
other applicable law, any modification or repeal of law, shall affect any rights
or obligations then existing with respect to any state of facts then or
theretofore existing or any action, suit or proceeding theretofore or thereafter
brought or threatened based in whole or in part upon any such state of facts.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article XI shall, unless otherwise provided when authorized or
ratified under subsection (b)(2) hereof, continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
12
(g) A member of the Board of Directors, or a member of any committee
designated by the Board of Directors, shall, in the performance of his duties,
be fully protected in relying in good faith upon the records of the Corporation
or P&O Princess and upon such information, opinions, reports or statements
presented to the Corporation by any of the Corporation's or P&O Princess'
officers or employees, or committees of the Board of Directors, or by any other
person as to matters the member reasonably believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation. In discharging their duties,
directors and officers, when acting in good faith, may rely upon financial
statements of the Corporation or P&O Princess represented to them to be correct
by the chief financial officer or the controller or other officer of the
Corporation or P&O Princess having charge of its books or accounts, or stated in
a written report by an independent public or certified public account or firm of
such accountants fairly to reflect the financial condition of the Corporation or
P&O Princess.
ARTICLE XII
Restrictions on Transfer
(a) Restriction of Transfers and Other Events. Except as provided in
section (g) hereof, from the Section 883 Amendment Date until the Restriction
Termination Date: (1) no Person (other than an Existing Holder) shall
Beneficially Own Shares in excess of the Ownership Limit; (2) any Transfer that,
if effective, would result in any Person (other than an Existing Holder)
Beneficially Owning Shares in excess of the Ownership Limit shall be void ab
initio as to the Transfer of that number of Shares which would be otherwise
Beneficially Owned by such Person in excess of the Ownership Limit and the
intended transferee shall acquire no rights in such Shares in excess of the
Ownership Limit; and (3) any Transfer of Shares that, if effective, would result
in the Corporation being "closely held" within the meaning of Section 883 of the
Code and the regulations promulgated thereunder shall be void ab initio as to
the Transfer of that number of Shares which would cause the Corporation to be
"closely held" within the meaning of Section 883 of the Code and the regulations
promulgated thereunder and the intended transferee shall acquire no rights in
such Shares.
(b) Excess Shares.
(1) If, notwithstanding the other provisions contained in these
Articles of Incorporation, at any time from the Section 883 Amendment Date until
the Restriction Termination Date, there is a purported Transfer or other event
such that any Person (other than an Existing Holder) would Beneficially Own
Shares in excess of the Ownership Limit, then, except as otherwise provided in
section (g) hereof, such Shares which would be in excess of the Ownership Limit
(rounded up to the nearest whole share), shall automatically be designated as
Excess Shares (without reclassification), as further described in subsection
(b)(2) hereof. The designation of such Shares as Excess Shares shall be
effective as of the close of business on the business day prior to the date of
the Transfer or other event. If, after designation of such Shares owned directly
by a Person as Excess Shares, such Person still owns Shares in excess of the
applicable Ownership Limit, Shares Beneficially Owned by such Person
constructively in excess of
13
the Ownership Limit shall be designated as Excess Shares until such Person does
not own Shares in excess of the applicable Ownership Limit. Where such Person
owns Shares constructively through one or more Persons and the Shares held by
such other Persons must be designated as Excess Shares, the designation of
Shares held by such other Persons as Excess Shares shall be pro rata.
(2) If, notwithstanding the other provisions contained in these
Articles of Incorporation, at any time from the Section 883 Amendment Date until
the Restriction Termination Date, there is a purported Transfer which, if
effective, would cause the Corporation to become "closely held" within the
meaning of Section 883 of the Code and regulations promulgated thereunder, then,
except as otherwise provided in section (g) hereof, the Shares being Transferred
and which would cause, when taken together with all other Shares, the
Corporation to be "closely held" within the meaning of Section 883 of the Code
and the regulations promulgated thereunder (rounded up to the nearest whole
share) shall automatically be designated as Excess Shares (without
reclassification). The designation of such Shares as Excess Shares shall be
effective as of the close of business on the business day prior to the date of
the Transfer. If, after designation of such Shares owned directly by a Person as
Excess Shares, such Person still owns Shares in excess of the applicable
Ownership Limit, Shares Beneficially Owned by such Person constructively in
excess of the Ownership Limit shall be designated as Excess Shares until such
Person does not own Shares in excess of the applicable Ownership Limit. Where
such Person owns Shares constructively through one or more Persons and the
Shares held by such other Persons must be designated as Excess Shares, the
designation of Shares held by such other Persons as Excess Shares shall be pro
rata.
(c) Remedies for Breach. If the Board of Directors or their designees shall
at any time determine in good faith that a purported Transfer or other event has
taken place in violation of section (a) hereof or that a Person intends to
acquire or has attempted to acquire Beneficial Ownership of any Shares in
violation of section (a) hereof, the Board of Directors or their designees may
take such action as they deem advisable to refuse to give effect to or to
prevent such Transfer or other event, including, but not limited to, refusing to
give effect to such Transfer or other event on the books of the Corporation or
instituting proceedings to enjoin such Transfer or other event or transaction;
provided, however, that any Transfers or attempted Transfers (or, in the case of
events other than a Transfer, Beneficial Ownership) in violation of section (a)
hereof shall be void ab initio and automatically result in the designation and
treatment described in section (b) hereof, irrespective of any action (or
non-action) by the Board of Directors or their designees.
(d) Notice of Restricted Transfer. Any Person who acquires or attempts to
acquire Shares in violation of section (a) hereof, or any Person who is a
purported transferee such that Excess Shares result under section (b) hereof,
shall immediately give written notice to the Corporation of such Transfer,
attempted Transfer or other event and shall provide to the Corporation such
other information as the Corporation may request in order to determine the
effect, if any, of such Transfer or attempted Transfer or other event on the
Corporation's status as qualifying for exemption
14
from taxation on gross income from the international operation of a ship or
ships within the meaning of Section 883 of the Code.
(e) Exclusion. The restrictions set forth in section (a) shall not apply to
any Shares with respect to which such restrictions are prohibited pursuant to
applicable provisions of the corporation laws of the Republic of Panama.
(f) Remedies Not Limited. Subject to section (j) hereof, nothing contained
in these Articles of Incorporation shall limit the authority of the Board of
Directors to take such other action as they deem necessary or advisable to
protect the interests of the Corporation's shareholders by preservation of the
Corporation's status as exempt from taxation on gross income from the
international operation of a ship or ships within the meaning of Section 883 of
the Code and to ensure compliance with the Ownership Limit.
(g) Exception. The Board of Directors upon receipt of a ruling from the
Internal Revenue Service or an opinion of tax counsel, satisfactory to them in
their sole and absolute discretion, in each case to the effect that the
Corporation's status as exempt from taxation on gross income from the
international operation of a ship or ships within the meaning of Section 883 of
the Code will not be jeopardized or worsened, may exempt a Person (or may
generally exempt any class of Persons) or any class of Shares from the Ownership
Limit if the Board of Directors, in its sole discretion, ascertains that such
Person's (or Persons') Beneficial Ownership of Shares or the Beneficial
Ownership of such class of Shares will not jeopardize or worsen the
Corporation's status as exempt from taxation on gross income from the
international operation of a ship or ships within the meaning of Section 883 of
the Code. The Board of Directors may require representations and undertakings
from such Person or Persons as are necessary to make such determination.
(h) Legend. After the Section 883 Amendment Date, and prior to the
Restriction Termination Date, each certificate for the Shares shall bear the
following legend:
The Shares represented by this certificate are subject to restrictions on
transfer. Unless excepted by the Board of Directors or exempted by the
terms of the Articles of Incorporation of Carnival Corporation, no Person
may (1) Beneficially Own Shares in excess of 4.9% of the outstanding
Shares, by value, vote or number, determined as provided in the Articles of
Incorporation of Carnival Corporation, and computed with regard to all
outstanding Shares and, to the extent provided by the Code, all Shares
issuable under existing options and exchange rights that have not been
exercised; or (2) Beneficially Own Shares which would result in the
Corporation being "closely held." Unless so excepted, any acquisition of
Shares and continued holding of ownership constitutes a continuous
representation of compliance with the above limitations, and any Person who
attempts to Beneficially Own Shares in excess of the above limitations has
an affirmative obligation to notify the Corporation immediately upon such
attempt. If the restrictions on transfer are violated, the transfer will be
15
void ab initio and the Shares represented hereby will be designated and
treated as Excess Shares that will be held in trust. Excess Shares may not
be transferred at a profit and may be purchased by the Corporation. In
addition, certain Beneficial Owners must give written notice as to certain
information on demand and on exceeding certain ownership levels. All terms
not defined in this legend have the meanings provided in the Articles of
Incorporation of Carnival Corporation. The Corporation will mail without
charge to any requesting shareholder a copy of the Articles of
Incorporation, including the express terms of each class and series of the
authorized Shares of the Corporation, within five (5) days after receipt by
the Secretary of the Corporation of a written request therefor.
(i) Severabilty. If any provision of Article XII or XIII or any application
of any such provision is determined to be invalid by any Panamanian court or
United States federal or state court having jurisdiction over the issues, the
validity of the remaining provisions shall not be affected, and other
applications of such provision shall be affected only to the extent necessary to
comply with the determination of such court.
(j) New York Stock Exchange Transactions. Nothing in these Articles of
Incorporation shall preclude the settlement of any transaction entered into
through the facilities of the New York Stock Exchange. The fact that the
settlement of any transaction occurs shall not negate the effect of any other
provision of these Articles of Incorporation and any transferee in such a
transaction shall be subject to all the provisions and limitations set forth in
these Articles of Incorporation.
(k) Owners Required to Provide Information. After the Amendment Date and
prior to the Restriction Termination Date: (1) Every Beneficial Owner of three
percent (3%) or more, by vote, value or number, or such lower percentages as
required pursuant to regulations under the Code, of the outstanding Shares shall
promptly after becoming such a three percent (3%) Beneficial Owner, give written
notice to the Corporation stating the name and address of such Beneficial Owner,
the general ownership structure of such Beneficial Owner, the number of shares
of each class of Shares Beneficially Owned, and a description of how such Shares
are held. (2) Each Person who is a Beneficial Owner of Shares and each Person
(including the shareholder of record) who is holding Shares for a Beneficial
Owner shall provide on demand to the Corporation such information as the
Corporation may request from time to time in order to determine the
Corporation's status as exempt from taxation on gross income from the
international operation of a ship or ships within the meaning of Section 883 of
the Code and to ensure compliance with the Ownership Limit.
ARTICLE XIII
Excess Shares
(a) Ownership in Trust. Upon any purported Transfer or other event that
results in Excess Shares pursuant to section (b) of Article XII hereof, such
Excess Shares shall be deemed to have been transferred to the Excess Share
Trustee, as trustee of the Excess Share Trust, for the benefit of the Charitable
Beneficiary effective as of the close of business on the business day prior to
the date of the Transfer or other event.
16
Excess Shares so held in trust shall be issued and outstanding shares of the
Corporation. The Purported Record Transferee or Purported Record Holder shall
have no rights in such Excess Shares. The Purported Beneficial Transferee or
Purported Beneficial Holder shall have no rights in such Excess Shares except as
provided in section (c) or (e) of Article XIII. The Excess Share Trustee may
resign at any time so long as the Corporation shall have appointed a successor
trustee. The Excess Share Trustee shall, from time to time, designate one or
more charitable organization or organizations as the Charitable Beneficiary.
(b) Dividend Rights. Excess Shares shall be entitled to the same dividends
determined as if the designation of Excess Shares had not occurred. Any dividend
or distribution paid prior to the discovery by the Corporation that the Shares
have been designated as Excess Shares shall be repaid to the Excess Share Trust
upon demand. Any dividend or distribution declared but unpaid shall be paid to
the Excess Share Trust. All dividends received or other income earned by the
Excess Share Trust shall be paid over to the Charitable Beneficiary.
(c) Rights Upon Liquidation. Upon liquidation, dissolution or winding up of
the Corporation, the Purported Beneficial Transferee or Purported Beneficial
Holder shall receive, for each Excess Share, the lesser of (1) the amount per
share of any distribution made upon liquidation, dissolution or winding up or
(2) (x) in the case of Excess Shares resulting from a purported Transfer, the
price per share of the Shares in the transaction that created such Excess Shares
(or, in the case of the devise, gift or other similar event, the Market Price of
such Shares on the date of such devise, gift or other similar event) or (y) in
the case of Excess Shares resulting from an event other than a purported
Transfer, the Market Price of the Shares on the date of such event. Any amounts
received in excess of such amount shall be paid to the Charitable Beneficiary.
(d) Voting Rights. The Excess Share Trustee shall be entitled to vote the
Excess Shares on behalf of the Charitable Beneficiary on any matter. Subject to
Panamanian law, any vote cast by a Purported Record Transferee with respect to
the Excess Shares prior to the discovery by the Corporation that the Excess
Shares were held in trust will be rescinded ab initio; provided, however, that
if the Corporation has already taken irreversible action with respect to a
merger, reorganization, sale of all or substantially all the assets, dissolution
of the Corporation or other action by the Corporation, then the vote cast by the
Purported Record Transferee shall not be rescinded. The purported owner of the
Excess Shares will be deemed to have given an irrevocable proxy to the Excess
Share Trustee to vote the Excess Shares for the benefit of the Charitable
Beneficiary.
Notwithstanding the provisions of these Articles of Incorporation, until
the Corporation has received notification that Excess Shares have been
transferred into an Excess Share Trust, the Corporation shall be entitled to
rely on its share transfer and other shareholder records for purposes of
preparing lists of shareholders entitled to vote at meetings, determining the
validity and authority of proxies and otherwise conducting votes of
shareholders.
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(e) Restrictions on Transfer; Designation of Excess Share Trust
Beneficiary. Excess Shares shall be transferable only as provided in this
section (e) of Article XIII. At the direction of the Board of Directors, the
Excess Share Trustee shall transfer the Excess Shares held in the Excess Share
Trust to a Person or Persons (including, without limitation, the Corporation
under section (f) below) whose ownership of such Shares shall not violate the
Ownership Limit or otherwise cause the Corporation to become "closely held"
within the meaning of Section 883 of the Code within 180 days after the later of
(i) the date of the Transfer or other event which resulted in Excess Shares and
(ii) the date the Board of Directors determines in good faith that a Transfer or
other event resulting in Excess Shares has occurred, if the Corporation does not
receive a notice of such Transfer or other event pursuant to section (d) hereof.
If such a transfer is made, the interest of the Charitable Beneficiary shall
terminate, the designation of such Shares as Excess Shares shall thereupon cease
and a payment shall be made to the Purported Beneficial Transferee, Purported
Beneficial Holder and/or the Charitable Trustee as described below. If the
Excess Shares resulted from a purported Transfer, the Purported Beneficial
Transferee shall receive a payment from the Excess Share Trustee that reflects a
price per share for such Excess Shares equal to the lesser of (A) the price per
share received by the Excess Share Trustee and (B) (x) the price per share such
Purported Beneficial Transferee paid for the Shares in the purported Transfer
that resulted in the Excess Shares, or (y) if the Purported Beneficial
Transferee did not give value for such Excess Shares (through a gift, devise or
other similar event) a price per share equal to the Market Price of the Shares
on the date of the purported Transfer that resulted in the Excess Shares. If the
Excess Shares resulted from an event other than a purported Transfer, the
Purported Beneficial Holder shall receive a payment from the Excess Share
Trustee that reflects a price per share of Excess Shares equal to the lesser of
(A) the price per share received by the Excess Share Trustee and (B) the Market
Price of the Shares on the date of the event that resulted in Excess Shares.
Prior to any transfer of any interest in the Excess Share Trust, the Corporation
must have waived in writing its purchase rights, if any, under section (f)
below. Any funds received by the Excess Share Trustee in excess of the funds
payable to the Purported Beneficial Holder or the Purported Beneficial
Transferee shall be paid to the Charitable Beneficiary. The Corporation shall
pay the costs and expenses of the Excess Share Trustee.
Notwithstanding the foregoing, if the provisions of this section (e) are
determined to be void or invalid by virtue of any legal decision, statute, rule
or regulation, then the Purported Beneficial Transferee or Purported Beneficial
Holder of any shares of Excess Shares may be deemed, at the option of the
Corporation, to have acted as an agent on behalf of the Corporation in acquiring
or holding such Excess Shares and to hold such Excess Shares on behalf of the
Corporation.
(f) Purchase Right in Excess Shares. Excess Shares shall be deemed to have
been offered for sale by the Excess Share Trustee to the Corporation, or its
designee, at a price per Excess Share equal to (i) in the case of Excess Shares
resulting from a purported Transfer, the lesser of (A) the price per share of
the Shares in the transaction that created such Excess Shares (or, in the case
of devise, gift or other similar event, the Market Price of the Shares on the
date of such devise, gift or other similar event), or (B) the lowest Market
Price of the class of Shares which resulted in the Excess
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Shares at any time after the date such Shares were designated as Excess Shares
and prior to the date the Corporation, or its designee, accepts such offer or
(ii) in the case of Excess Shares resulting from an event other than a purported
Transfer, the lesser of (A) the Market Price of the Shares on the date of such
event or (B) the lowest Market Price for Shares which resulted in the Excess
Shares at any time from the date of the event resulting in such Excess Shares
and prior to the date the Corporation, or its designee, accepts such offer. The
Corporation shall have the right to accept such offer for a period of ninety
(90) days after the later of (i) the date of the Transfer or other event which
resulted in such Excess Shares and (ii) the date the Board of Directors
determines in good faith that a Transfer or other event resulting in Excess
Shares has occurred, if the Corporation does not receive a notice of such
Transfer or other event pursuant to section (d) hereof.
(g) Underwritten Offerings. The Ownership Limit shall not apply to the
acquisition of Shares or rights, options or warrants for, or securities
convertible into, Shares by an underwriter in a public offering or placement
agent in a private offering, provided that the underwriter makes a timely
distribution of such Shares or rights, options or warrants for, or securities
convertible into, Shares.
ARTICLE XIV
Combined Group Ownership Restrictions
(a) Triggering Acquisition. From the Amendment Date: Subject to section (b)
below, if any person (an "Acquiring Person") acquires additional Ordinary Shares
or voting control over additional Ordinary Shares and, after giving effect to
such acquisition (or, if the Corporation is subject to the City Code, acquires
Ordinary Shares or voting control over Ordinary Shares) such Acquiring Person,
whether solely or together with any person or persons Acting in Concert with
such Acquiring Person, holds or exercises voting control over Ordinary Shares
which equal or are in excess of the Combined Group City Code Limit (such
acquisition of Ordinary Shares or voting control over Ordinary Shares, a
"Triggering Acquisition"), then all (x) Ordinary Shares held by the Acquiring
Person or over which the Acquiring Person exercises voting control, and (y)
Ordinary Shares held by any party or parties Acting in Concert with such
Acquiring Person or over which any party or parties Acting in Concert with such
Acquiring Person exercise(s) voting control (the "Acquiring Person Attributable
Shares") shall automatically be designated as "Combined Group Restricted Shares"
for the purposes of Articles XIV and XV. A Triggering Acquisition can occur more
than once, and the provisions set forth in Articles XIV and XV shall apply to
every separate Triggering Acquisition or series of Triggering Acquisitions.
(b) Qualifying Takeover Offer. Notwithstanding the provisions of section
(a) above, if:
(1) prior to or simultaneously with a Triggering Acquisition, such
Acquiring Person has made a Qualifying Takeover Offer (and, in the event that
the Qualifying Takeover Offer was made prior to the Triggering Acquisition, such
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Qualifying Takeover Offer has not been withdrawn, abandoned or terminated prior
to or simultaneously with the Triggering Acquisition), or
(2) the circumstances described in clause (1) have not occurred, and
such Acquiring Person (x) within 10 days after the date on which the applicable
Triggering Acquisition occurs, makes a binding public announcement to commence a
Qualifying Takeover Offer, and (y) within 28 days after making the public
announcement referred to in the preceding clause (x), commences a Qualifying
Takeover Offer,
then the Acquiring Person Attributable Shares shall not be designated Combined
Group Restricted Shares for the purposes of Articles XIV and XV hereof until the
earliest to occur (if at all) of (i) a withdrawal, abandonment or termination of
such Qualifying Takeover Offer other than in accordance with its terms, or (ii)
any amendment, modification or supplement to the terms of either offer
comprising the Qualifying Takeover Offer such that, as amended, modified or
supplemented, the offers would not constitute a Qualifying Takeover Offer;
provided, that immediately upon the earliest to occur of the events described in
clause (i) or (ii), such Acquiring Person Attributable Shares shall be
automatically designated as Combined Group Restricted Shares.
(c) Determination of Combined Group Excess Shares. In the event that any
Ordinary Shares are designated Combined Group Restricted Shares pursuant to
section (a) or (b):
(1) If the Combined Group Restricted Shares (A) consist entirely of
Carnival Common Stock, and (B) are held by or subject to the voting control of a
single person, then all Carnival Common Stock held by such person or over which
such person exercises voting control which cause the Combined Group City Code
Limit to be equaled or exceeded, shall automatically be designated as Combined
Group Excess Shares for the purposes of Article XV.
(2) If the Combined Group Restricted Shares (A) consist of both
Carnival Common Stock and P&O Princess Ordinary Shares, and (B) are held by or
subject to the voting control of a single person, then:
(A) if, after giving effect to the Equalization Ratio, (x) the
number of votes represented by such Carnival Common Stock that could be
cast with respect to a Joint Electorate Action exceeds (y) the number of
votes represented by such P&O Princess Ordinary Shares that could be cast
with respect to a Joint Electorate Action, then all Carnival Common Stock
held by such person or over which such person exercises voting control
which cause the Combined Group City Code Limit to be equaled or exceeded
shall automatically be designated as Combined Group Excess Shares for the
purposes of Article XV; and
(B) if, after giving effect to the Equalization Ratio, (x) the
number of votes represented by such Carnival Common Stock that could be
cast with respect to a Joint Electorate Action is less than or equal to (y)
the number of
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votes represented by such P&O Princess Ordinary Shares that could be cast
with respect to a Joint Electorate Action, such Carnival Common Stock shall
be automatically be designated as Combined Group Excess Shares for the
purposes of Article XV only to the extent that such Carnival Common Stock
would give such person ownership or voting control equal to or in excess of
the Combined Group City Code Limit, as if determined without regard to any
P&O Princess Ordinary Shares held or subject to the voting control of such
person.
(3) If the Combined Group Restricted Shares are held by or subject to
the voting control of two or more persons Acting in Concert, where:
(A) all or a part of such Combined Group Restricted Shares would
all have been designated as Combined Group Excess Shares pursuant to
subsection (c)(1) hereof had they been held by or subject to the voting
control of a single person; or
(B) all or a part of such Combined Group Restricted Shares would
have been designated as Combined Group Excess Shares pursuant to subsection
(c)(2) hereof had they been held by or subject to the voting control of a
single person,
then such automatic designation as Combined Group Excess Shares for the purposes
of Article XV shall be made with respect to the same number of Carnival Common
Stock held by or subject to the voting control of such persons Acting in Concert
as if they had been held by or subject to the voting control of a single person,
such designation to be made on a pro rata basis based on the number of Carnival
Common Stock each such person holds or over which each such person exercises
voting control.
(d) Notice.
(1) Any person whose acquisition of Ordinary Shares or voting control
over Ordinary Shares would or does result in any Ordinary Shares being
constituted as Combined Group Restricted Shares pursuant to section (a) or (b)
hereof shall immediately give written notice to the Corporation of such event
and shall provide to the Corporation such other information as the Corporation
may request in order to determine (i) whether any acquisition of Ordinary Shares
or voting control over Ordinary Shares has resulted or could result in any
Ordinary Shares being designated as Combined Group Restricted Shares under this
Article XIV, and/or (ii) to what extent any Combined Group Restricted Shares
should be designated as Combined Group Excess Shares pursuant to section (c)
hereof.
(2) The Corporation will, as soon as practicable after the Board of
Directors has knowledge thereof, notify in writing any Person who holds any
Combined Group Restricted Shares; provided that failure by the Corporation to
give any such notification shall in no way invalidate any of the provisions of
Article XIV and XV. Upon receipt of such notice from the Corporation, such
Person shall immediately provide
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to the Corporation such information described in subsection (d)(1) hereof as the
Corporation shall request.
(e) Exclusion. The restrictions set forth in Article XIV shall not apply
to:
(1) any Carnival Common Stock to the extent that such restrictions are
prohibited pursuant to Applicable Regulations.
(2) any acquisition of Ordinary Shares or voting control over Ordinary
Shares by any member of the Arison Group if, as a result, the aggregate of
the voting rights of the P&O Princess Ordinary Shares and of the Carnival
Common Stock held by the Arison Group and of the P&O Princess Ordinary
Shares and of the Carnival Common Stock over which the Arison Group, after
giving effect to the Equalization Ratio, exercises voting control does not
thereby (i) increase by one per cent. or more in any period of twelve
consecutive months and (ii) after giving effect to the Equalization Ratio,
equal or exceed forty per cent. of the aggregate voting rights attached to
the whole of the issued P&O Princess Ordinary Shares and the outstanding
Carnival Common Stock. For the avoidance of doubt, (x) a shareholder shall
not be deemed to have acquired Ordinary Shares or voting control over
Ordinary Shares if solely as a result of a share buyback, cancellation or
reduction of share capital, disenfranchisement of voting rights or any
other procedure which has the effect of reducing the share capital or the
voting share capital of the Corporation or of P&O Princess the percentage
holding of such person is increased; and (y) the transfer of Ordinary
Shares or voting control over Ordinary Shares among members of the Arison
Group shall not be deemed to be a Triggering Acquisition.
(3) any acquisition pursuant to a Mandatory Exchange.
(4) any acquisition by the Corporation or any of its Subsidiaries from time
to time of any Ordinary Shares.
(5) any acquisition by any member of the P&O Princess Group of any Ordinary
Shares.
(f) Legend. After the Amendment Date, each certificate for Carnival Common
Stock shall bear the following legend:
The shares represented by this certificate are subject to certain
restrictions on ownership of shares of Carnival Corporation and P&O
Princess Cruises plc. Under the terms of the Articles of Incorporation of
the Corporation, if any person acquires Carnival Common Stock and/or P&O
Princess Ordinary Shares or voting control over such shares, and after
giving effect to such acquisition, such person, together with any person or
persons Acting in Concert with such acquiring person, holds or exercises
voting control over Carnival Common Stock and/or P&O Princess Ordinary
Shares which is equal to or in excess of such number of
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shares which, in aggregate, represent the right to cast 30% or more of the
votes on a Joint Electorate Action, such shares which cause that ownership
limit to be equaled or exceeded may be designated as Combined Group Excess
Shares. In addition, any additional acquisition of Carnival Common Stock
and/or P&O Princess Ordinary Shares by a person that, together with any
person or persons Acting in Concert, holds or has voting control over
Carnival Common Stock and/or P&O Princess Ordinary Shares representing the
right to cast not less than 30% and not more than 50% of the votes on a
Joint Electorate Action, may result in certain shares being designated as
Combined Group Excess Shares. Any Carnival Common Stock that are designated
as Combined Group Excess Shares will be transferred to a trustee, and the
prior holder thereof will have no right to vote such shares or receive
dividends or other distributions with respect thereto. A person may exceed
the ownership limits described above if such person makes a Qualifying
Takeover Offer with respect to all Carnival Common Stock and P&O Princess
Ordinary Shares. Holders may be required to provide written notice and
other information to the Corporation if such ownership levels are equaled
or exceeded. The foregoing is only a summary of the applicable restrictions
and is qualified in its entirety by reference to the Articles of
Incorporation of the Corporation. The Corporation will mail without charge
to any requesting shareholder of the Corporation a copy of the Articles of
Incorporation, within five (5) days after receipt by the Secretary of the
Corporation of a written request therefor. All terms not defined in this
legend have the meanings provided in the Articles of Incorporation of
Carnival Corporation.
(g) Severability. If any provision of Articles XIV or XV or any application
of any such provision is determined to be invalid by any Panamanian court or
United States federal or state court having jurisdiction over the issues, the
validity of the remaining provisions shall not be affected, and other
applications of such provision shall be affected only to the extent necessary to
comply with the determination of such court.
(h) New York Stock Exchange Transactions. Nothing in these Articles of
Incorporation shall preclude the settlement of any transaction entered into
through the facilities of the New York Stock Exchange. The fact that the
settlement of any transaction occurs shall not negate the effect of any other
provision of these Articles of Incorporation and any transferee in such a
transaction shall be subject to all the provisions and limitations set forth in
these Articles of Incorporation.
ARTICLE XV
Combined Group Excess Shares
(a) Ownership in Trust. Upon the designation of any Carnival Common Stock
as Combined Group Excess Shares pursuant to section (c) of Article XIV hereof,
such Combined Group Excess Shares shall be transferred by or on behalf of the
Combined Group Excess Share Holder to the Excess Share Trustee, as trustee of
the Excess Share Trust, for the benefit of the Charitable Beneficiary. Until
such transfer to
23
the Excess Share Trustee, the Combined Group Excess Shares shall be held by the
Combined Group Excess Share Holder in trust for the benefit of the Charitable
Beneficiary in accordance with the terms of these Articles of Incorporation.
From the date that such shares of Carnival Common Stock are designated as
Combined Group Excess Shares, the Combined Group Excess Share Holder shall have
no rights in such Combined Group Excess Shares, except as provided in section
(c), (e) or (f) below. The Excess Share Trustee may resign at any time so long
as the Corporation shall have appointed a successor trustee. The Excess Share
Trustee shall, from time to time, designate one or more charitable organization
or organizations as the Charitable Beneficiary. More than one Excess Share
Trustee may be appointed to hold the Combined Group Excess Shares in trust for
one or more Charitable Beneficiaries.
(b) Dividend Rights. Combined Group Excess Shares shall be entitled to the
same dividends and other distributions determined as if the designation of
Combined Group Excess Shares had not occurred. Any dividend or distribution made
or paid on or after the date such shares of Carnival Common Stock are designated
as Combined Group Restricted Shares and prior to the designation of such shares
of Carnival Common Stock as Combined Group Excess Shares shall be repaid to the
Excess Share Trust upon demand. Any dividend or distribution declared but unpaid
or not made shall be paid to the Excess Share Trust. All dividends received or
other income earned by the Excess Share Trust shall be paid over to the
Charitable Beneficiary.
(c) Rights Upon Liquidation. Notwithstanding the fact that Combined Group
Excess Shares are held in trust for a Charitable Beneficiary, upon Liquidation
of the Corporation, the Combined Group Excess Share Holder shall receive (if it
has not already received consideration for such shares pursuant to section (e)
or (f) below), for each Combined Group Excess Share, the amount per share of any
distribution made upon Liquidation with respect to Carnival Common Stock
generally, less any costs and expenses incurred by the Corporation, the Excess
Share Trustee and the Charitable Beneficiary in connection with the transfer of
the Combined Group Excess Shares to the Excess Share Trustee and the holding of
such shares by the Excess Share Trustee.
(d) Voting Rights.
(1) The Excess Share Trustee shall be entitled, but shall not be
required, to vote the Combined Group Excess Shares on behalf of the Charitable
Beneficiary on any matter. Subject to Panamanian law, any vote cast by a
Combined Group Excess Share Holder with respect to the Combined Group Excess
Shares prior to the designation of such shares as Combined Group Restricted
Shares will be rescinded ab initio; provided, however, that if the Corporation
has already taken irreversible action with respect to a merger, reorganization,
sale of all or substantially all the assets, dissolution of the Corporation or
other action by the Corporation, then the vote cast by the Combined Group Excess
Share Holder shall not be rescinded. The purported owner of the Combined Group
Excess Shares will be deemed to have given an irrevocable proxy to the Excess
Share Trustee to vote the Combined Group Excess Shares for the benefit of the
Charitable Beneficiary.
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(2) Notwithstanding the provisions of these Articles of Incorporation,
until the Corporation has received notification that Combined Group Excess
Shares have been transferred into an Excess Share Trust, the Corporation shall
be entitled to rely on its share transfer and other shareholder records for
purposes of preparing lists of shareholders entitled to vote at meetings,
determining the validity and authority of proxies and otherwise conducting votes
of shareholders.
(e) Transfer of Combined Group Excess Shares.
(1) Combined Group Excess Shares shall be transferable only as
provided in this section (e). At the direction of the Board of Directors, the
Excess Share Trustee shall transfer the Combined Group Excess Shares held in the
Excess Share Trust to a person or persons (including, without limitation, the
Corporation under section (f) below) whose ownership of such Carnival Common
Stock would not result in a designation of any Carnival Common Stock as Combined
Group Restricted Shares pursuant to section (a) or (b) of Article XIV, within
180 days after the later of (i) the date of the event that resulted in such
shares being designated as Combined Group Restricted Shares pursuant to section
(a) or (b) of Article XIV, and (ii) the date that the Board of Directors
determines or is notified that an event resulting in Combined Group Restricted
Shares has occurred. If such a transfer is made, the interest of the Charitable
Beneficiary shall terminate, the designation of such Carnival Common Stock as
Combined Group Excess Shares shall thereupon cease and a payment shall be made
to the Combined Group Excess Share Holder as described below. The Combined Group
Excess Share Holder shall receive a payment from the Excess Share Trustee that
reflects a price per share of Combined Group Excess Shares equal to the price
per share received by the Excess Share Trustee upon such transfer, less any
costs and expenses incurred by the Corporation, the Excess Share Trustee upon
such transfer and the Charitable Beneficiary in connection with the transfer of
the Combined Group Excess Shares to the Excess Share Trustee, the holding of
such shares by the Excess Share Trustee and the transfer of such shares in
accordance with this section (e).
(2) Notwithstanding the foregoing, if the provisions of this section
(e) are determined to be void or invalid by virtue of any applicable law, then
the Combined Group Excess Share Holder may be deemed, at the option of the
Corporation, to have acted as an agent on behalf of the Corporation in acquiring
or holding such Combined Group Excess Shares and to hold such Combined Group
Excess Shares on behalf of the Corporation.
(f) Purchase Right in Combined Group Excess Shares. Combined Group Excess
Shares shall be deemed to have been offered for sale by the Excess Share Trustee
to the Corporation, or its designee, at a price per Combined Group Excess Share
equal to the Market Price of the Carnival Common Stock on the date that the
Corporation acquires the Combined Group Excess Shares, less any costs and
expenses incurred by the Corporation, the Excess Share Trustee and the
Charitable Beneficiary in connection with the transfer of the Combined Group
Excess Shares to the Excess Share Trustee, the holding of such shares by the
Excess Share Trustee and the transfer of such shares in accordance with this
section (f). The Corporation shall have the right to accept such offer
25
for a period of ninety (90) days after the later of (i) the date of the event
that resulted in such shares being designated as Combined Group Restricted
Shares pursuant to section (a) or (b) of Article XIV, and (ii) the date the
Board of Directors determines in good faith that an event resulting in Combined
Group Restricted Shares has occurred, if the Corporation does not receive a
notice of such Transfer or other event pursuant to section (d) of Article XIV.
(g) Underwritten Offerings. The provisions of Articles XIV and XV shall not
apply to the acquisition of Carnival Common Stock or rights, options or warrants
for, or securities convertible into, Carnival Common Stock by an underwriter in
a public offering or placement agent in a private offering; provided, that the
underwriter or placement agent makes a timely distribution of such Carnival
Common Stock or rights, options or warrants for, or securities convertible into,
Carnival Common Stock such that, after the distribution, such underwriter or
placement agent does not hold or exercise voting control over Ordinary Shares
equal to or in excess of the Combined Group City Code Limit.
(h) Applicability of Ownership Limit and Combined Group City Code Limit.
Notwithstanding anything in these Articles to the contrary, in the event of any
occurrence that results in Carnival Common Stock being designated as both Excess
Shares pursuant to Article XII and Combined Group Restricted Shares pursuant to
Article XIV, such Shares shall be designated as Excess Shares and not Combined
Group Excess Shares.
(i) Voting Control. For purposes of Articles XIV and XV: (i) references to
holding or acquiring shares will also be deemed to include holding or acquiring
voting control over shares; (ii) a person will be deemed to have voting control
over shares if such person has the power to direct the voting of such shares;
(iii) a person will be deemed to acquire shares upon the occurrence of any event
which results in such person Acting in Concert with another person with respect
to such other person's shares; and (iv) for the avoidance of doubt, for purposes
of calculating the voting power held by a person, any voting power represented
by the P&O Princess Special Voting Share or the Carnival Special Voting Share
shall be ignored.
ARTICLE XVI
Dividends and Distributions
(a) Subject to the Equalization Agreement and the provisions of these
Articles of Incorporation, the Corporation shall not pay or make any
Distribution in cash unless P&O Princess also pays or makes a Distribution in
cash at approximately the same time and the ratio of the Equalized Distribution
Amount so paid or made by the Corporation to the Equalized Distribution Amount
so paid or made by P&O Princess (converted, if applicable, at the Applicable
Exchange Rate for such Distributions and rounded to five decimal places) equals
the Equalization Ratio in effect on the Distribution Determination Date for such
Distributions (each, an "Equivalent Distribution").
26
(b) The Corporation shall not declare or otherwise become obligated to pay
or make a Distribution in cash unless (i) on the date on which such declaration
is made or such obligation is created, P&O Princess has sufficient Distributable
Reserves to make an Equivalent Distribution with respect to such Distribution or
(ii) the Corporation agrees to pay, and does pay, to P&O Princess (before P&O
Princess pays or makes such Distribution) the minimum amount required by P&O
Princess so that it will have sufficient Distributable Reserves to pay or make
such an Equivalent Distribution. Notwithstanding compliance with the preceding
sentence, if P&O Princess shall have declared or otherwise become obligated to
pay or make an Equivalent Distribution and does not have sufficient
Distributable Reserves to pay or make such Equivalent Distribution when due,
then the Corporation shall pay to P&O Princess the minimum amount required by
P&O Princess so that P&O Princess will have sufficient Distributable Reserves to
pay or make such Equivalent Distribution; provided, however, that if the
Corporation does not have sufficient Distributable Reserves to pay or make in
full both the Equivalent Distribution that it declared or became obligated to
make and the payment required by this sentence, then (i) the Corporation shall
only pay or make the portion of that Equivalent Distribution (and any related
payment that would have been required by this sentence in respect of such
portion if it were the entire Equivalent Distribution that the Corporation had
declared or became obligated to make) that it can make out of its Distributable
Reserves, and (ii) P&O Princess shall only pay or make the portion of its
Equivalent Distribution that it can make out of its Distributable Reserves
following receipt of such payment.
(c) For purposes of section (b) above, any amount the Corporation is
required to pay to P&O Princess shall be determined after taking into account
all Taxes payable by, and all Tax credits of, the Corporation and P&O Princess
with respect to the payment or receipt of such payment and any such payment may
be made on the Equalization Share, if any, issued by the Corporation if both the
Board of Directors and the P&O Princess Board deem it appropriate.
(d) The Board of Directors shall:
(1) insofar as is practicable in relation to any proposed cash
Distribution, cooperate with the P&O Princess Board to agree the amount of the
Equivalent Distribution to be paid by the Corporation and P&O Princess;
(2) determine to pay or recommend to pay Equivalent Distributions at
Board of Directors meetings convened as close in time to those similarly
convened by the P&O Princess Board as is practicable;
(3) cooperate with the P&O Princess Board to announce and pay
Equivalent Distributions simultaneously or as close in time as practicable;
(4) ensure that the record dates for receipt of the Equivalent
Distribution, in respect of the Corporation and P&O Princess, are on the same
date; and
27
(5) generally coordinate with the P&O Princess Board the timing of all
other aspects of the payment or making of Equivalent Distributions.
ARTICLE XVII
Liquidation
(a) In the event of a voluntary or involuntary Liquidation of the
Corporation, the Corporation will, subject to subsection (b) below, make such
payments or take such other actions required to ensure that the holders of
Carnival Common Stock and P&O Princess Ordinary Shares would, had each of the
Corporation and P&O Princess gone into Liquidation on the same date, be entitled
to receive a Liquidation Distribution which is equivalent on a per share basis
in accordance with the Equalization Ratio then in effect and having regard to
the Liquidation Exchange Rate, but disregarding any shareholder Tax or Tax
Benefit.
(b) To establish the amount payable under section (a) above, each of the
Corporation and P&O Princess will determine the amount of assets (if any) it
will have available for distribution in a Liquidation on the date of the
Liquidation (or notional date of Liquidation) to holders of Carnival Common
Stock or P&O Princess Ordinary Shares, as the case may be, after payment of all
debts and other financial obligations, including any Tax costs associated with
the realization of any assets on a Liquidation and any payments due with respect
to any securities ranking in preference to the Carnival Common Stock or the P&O
Princess Ordinary Shares, as the case may be (each such amount, the "Net
Assets"). To the extent that the Net Assets of the Corporation or P&O Princess
would enable such company to make a Liquidation Distribution to the holders of
Carnival Common Stock or P&O Princess Ordinary Shares, as the case may be, that
is greater than the Liquidation Distribution that the other company could pay
from its Net Assets to the holders of its Ordinary Shares, adjusting such
comparative Liquidation Distribution in accordance with the Equalization Ratio
then in effect and having regard to the Liquidation Exchange Rate, but
disregarding any shareholder Tax (including any withholding Tax required to be
deducted by the company concerned) or Tax Benefit, then, subject to subsection
(c) below, such company will make a balancing payment (or take any other action
described in subsection (d) below) in such amount as will ensure that both
companies can make equivalent Liquidation Distributions to the holders of their
Ordinary Shares in accordance with the then existing Equalization Ratio and
having regard to the Liquidation Exchange Rate, but ignoring any shareholder Tax
(including any withholding Tax required to be deducted by the company concerned)
or Tax Benefit; provided that neither the Corporation nor P&O Princess need make
a balancing payment (or take any other action) as described in this subsection
(b) if it would result in neither the holders of Carnival Common Stock nor the
holders of P&O Princess Ordinary Shares being entitled to receive any
Liquidation Distribution at all.
(c) For purposes of subsection (b) above, any amount a company is required
to pay the other company shall be determined after taking into account all Taxes
payable by, and all Tax credits, losses or deductions of, the Corporation and
P&O Princess with respect to the payment or receipt of such payment and any such
payment
28
may be made on the Equalization Share, if any, issued by the paying party if
both the Board of Directors and the P&O Princess Board deem it appropriate.
(d) In giving effect to the principles regarding a Liquidation of the
Corporation and/or P&O Princess described above, the Corporation shall take such
action as may be required to give effect to such principles, which may include:
(i) making a payment (of cash or in specie) to P&O Princess in
accordance with the provisions of the Equalization Agreement;
(ii) issuing shares (which may include the Equalization Share) to P&O
Princess or to holders of P&O Princess Ordinary Shares and making a
distribution or return on such shares; or
(iii) taking any other action that the Board of Directors and the P&O
Princess Board shall both consider appropriate to give effect to such
principles
provided that any action other than a payment of cash by one company to the
other company shall require the prior approval of both the Board of Directors
and the P&O Princess Board.
ARTICLE XVIII
Pairing
(a) For so long as the P&O Princess SVT Shares and the Carnival Common
Stock remain outstanding:
(i) the P&O Princess SVT Shares and the shares of Carnival Common
Stock shall not be represented by separate instruments but shall be
represented by certificates representing the shares of Carnival Common
Stock, which shall also represent the P&O Princess SVT Shares;
(ii) each share of Carnival Common Stock shall not be transferred
without the corresponding P&O Princess SVT Share; and
(iii) upon each issuance of additional shares of Carnival Common Stock
by the Corporation, once the P&O Princess Trustee authorizes and issues a
number of additional P&O Princess SVT Shares to the Corporation equal to
the number of shares of Carnival Common Stock to be issued by the
Corporation, the Corporation shall cause the shares of Carnival Common
Stock to be issued together with the P&O Princess SVT Shares, which P&O
Princess SVT Shares shall be represented by the certificates representing
such shares of Carnival Common Stock.
(b) Each certificate representing shares of Carnival Common Stock issued
after the Amendment Date shall:
29
(i) subject to the other provisions of this Article XVIII, take the
form of the certificate representing shares of Carnival Common Stock as of
immediately prior to the Amendment Date;
(ii) bear the following legend: "THIS CERTIFICATE ALSO REPRESENTS A
NUMBER OF SHARES OF BENEFICIAL INTEREST ("TRUST SHARES") IN THE P&O
PRINCESS SPECIAL VOTING TRUST, A TRUST FORMED UNDER THE LAWS OF
[____________] ("P&O PRINCESS TRUST"), EQUAL TO THE NUMBER OF SHARES OF
COMMON STOCK OF CARNIVAL CORPORATION (THE "CARNIVAL COMMON STOCK")
REPRESENTED BY THIS CERTIFICATE. THE TRUST SHARES EACH REPRESENT A
FRACTIONAL, UNDIVIDED INTEREST IN THE TRUST PROPERTY (INCLUDING A SPECIAL
VOTING SHARE ISSUED BY P&O PRINCESS CRUISES PLC) THAT IS HELD IN THE P&O
PRINCESS TRUST. THE TRUST SHARES ARE REPRESENTED BY THIS CERTIFICATE
PURSUANT TO THE TERMS OF A SPECIAL VOTING TRUST AGREEMENT ESTABLISHING P&O
PRINCESS TRUST, DATED AS OF [ ], 2003 BETWEEN CARNIVAL CORPORATION AND [ ],
AS TRUSTEE (THE "SPECIAL VOTING TRUST AGREEMENT") AND A PAIRING AGREEMENT
AMONG CARNIVAL CORPORATION, P&O PRINCESS TRUST AND [TRANSFER AGENT], DATED
AS OF [ ], 2003 (THE "PAIRING AGREEMENT"), AND THE TRUST SHARES REPRESENTED
BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED TOGETHER WITH THE CARNIVAL
COMMON STOCK PURSUANT TO THE PAIRING AGREEMENT. THE TRUST AND THE TRUST
SHARES ARE SUBJECT TO AND THE TRUST SHARES ARE ISSUED PURSUANT TO, THE
SPECIAL VOTING TRUST AGREEMENT. BY ACCEPTING THE TRUST SHARES REPRESENTED
BY THIS CERTIFICATE, THE HOLDER OF THIS CERTIFICATE AGREES TO BE BOUND BY
THE PROVISIONS OF THE SPECIAL VOTING TRUST AGREEMENT. COPIES OF THE PAIRING
AGREEMENT AND THE SPECIAL VOTING TRUST AGREEMENT MAY BE OBTAINED FROM
CARNIVAL CORPORATION BY CONTACTING [APPROPRIATE CARNIVAL CONTACT PERSON]";
and
(iii) be in a form that complies with all Applicable Regulations.
(c) Upon the conversion or exercise of any securities convertible into
shares of Carnival Common Stock or any rights, options or warrants to purchase
shares of Carnival Common Stock (collectively, "Derivative Securities"), which
were issued by the Corporation prior to the Amendment Date, once the P&O
Princess Trustee has authorized and issued to the Corporation a number of the
P&O Princess Trustee Shares equal to the number of shares of Carnival Common
Stock the exercising or converting holder of such
30
Derivative Securities is entitled to receive upon such exercise or conversion,
the Corporation shall issue to the exercising or converting holder of such
Derivative Securities a certificate or certificates representing the number of
shares of Carnival Common Stock that such holder is entitled to receive upon
such exercise or conversion, which certificate or certificates shall also
represent an equivalent number of P&O Princess SVT Shares in accordance with the
terms of the Pairing Agreement and of the P&O Princess SVT Agreement.
(d) After the Amendment Date, after the P&O Princess Trustee has taken such
action (including, without limitation, the authorization and issuance of
additional P&O Princess SVT Shares to the Corporation) as is required to be
taken by it to effect the issuance of P&O Princess SVT Shares as contemplated
herein, represented by the certificates representing the shares of Carnival
Common Stock issuable upon conversion or exercise of such Derivative Securities,
the Corporation shall (i) take all actions as may be necessary to permit the P&O
Princess Trustee to effect such action and (ii) upon conversion or exercise of
such Derivative Securities, issue to the exercising or converting holder of such
Derivative Securities a certificate or certificates representing the number of
shares of Carnival Common Stock that such holder is entitled to receive upon
such exercise or conversion, which certificate or certificates shall also
represent an equivalent number of P&O Princess SVT Shares in accordance with the
terms of the Pairing Agreement and of the P&O Princess SVT Agreement.
ARTICLE XIX
Domicile
The domicile of the Corporation shall be in Panama City, Republic of
Panama. However, the Corporation may, as provided for by the Board of Directors,
engage in business and establish branches and keep its files and assets anywhere
in the world. Likewise, the Corporation may change its domicile of incorporation
and continue to exist under the laws or jurisdiction of another country, if
authorized by a resolution of the shareholders of the Corporation or of the
Board of Directors.
ARTICLE XX
Directors and Officers
The names and addresses of the directors and officers of the Corporation in
office as of the date hereof are as follows:
Name Address Office
--------------------- ------------------------------ ------------------------------------------
Micky Arison 3655 N.W. 87 Avenue Director, Chairman of the Board and
Miami, Florida 33178 Chief Executive Officer
Richard G. Capen, Jr. 6077 San Elijo Director
Rancho Santa Fe,
California 92067
31
Name Address Office
--------------------- ------------------------------ ------------------------------------------
Robert H. Dickinson 3655 N.W. 87 Avenue Director, President and Chief
Miami, Florida 33178 Operating Officer - Carnival Cruise
Lines
Arnold W. Donald 3655 N.W. 87 Avenue Director
Miami, Florida 33178
Pier L. Foschi 3655 N.W. 87 Avenue Miami, Director, Chairman and Chief Executive
Florida 33178 Officer - Costa Crociere S.p.A
Howard S. Frank 3655 N.W. 87 Avenue Director, Vice Chairman of the Board
Miami, Florida 33178 and Chief Operating Officer
Baroness Hogg [ ] Director
A. Kirk Lanterman 300 Elliott Avenue West Director, Chairman of the Board and
Seattle, Washington 98119 Chief Executive Officer - Holland
America Line - Westours Inc.
Sir John Parker [ ] Director
Peter G. Ratcliffe [ ] Director
Modesto A. Maidique Florida International Director
University
Office of the President
University Park Campus
Miami, Florida 33199
Stuart S. Subotnick 215 East 67th Street Director
New York, New York 10021
Uzi Zucker 245 Park Avenue Director
New York, New York 10167
Richard D. Ames 3655 N.W. 87 Avenue Miami, Senior Vice President - Audit Services
Florida 33178
Gerald R. Cahill 3655 N.W. 87 Avenue Senior Vice President Finance and
Miami, Florida 33178 Chief Financial Officer
Pamela C. Conover 3655 N.W. 87 Avenue President and Chief Operating Officer,
Miami, Florida 33178 Cunard Line Limited
Kenneth D. Dubbin 3655 N.W. 87 Avenue Miami, Vice President - Corporate Development
Florida 33178
Ian Gaunt 3655 N.W. 87 Avenue Miami, Senior Vice President - International
Florida 33178
32
Name Address Office
--------------------- ------------------------------ ------------------------------------------
Lowell Zemnick 3655 N.W. 87 Avenue Vice President and Treasurer
Miami, Florida 33178
Arnaldo Perez 3655 N.W. 87 Avenue Senior Vice President, General Counsel
Miami, Florida 33178 and Secretary
ARTICLE XXI
Miscellaneous
(a) Ambiguity. In the case of an ambiguity in the application of any of the
provisions of these Articles of Incorporation, including any definition
contained in Article XXI hereof, the Board of Directors shall have the power to
determine the application of the provisions of these Articles of Incorporation
with respect to any situation based on the facts known to them.
(b) Enforcement. The Corporation is authorized specifically to seek
equitable relief, including injunctive relief, to enforce the provisions of
these Articles of Incorporation.
(c) Non-Waiver. No delay or failure on the part of the Corporation or the
Board of Directors in exercising any right hereunder shall operate as a waiver
of any right of the Corporation or the Board of Directors, as the case may be,
except to the extent specifically waived in writing.
(d) No Trust Business. Notwithstanding anything to the contrary included in
these Articles of Incorporation, the creation and continued existence of the
Excess Share Trust may not be regarded as constituting the exercise by the
Excess Share Trustee of trust business in Panama in violation of the trust laws
of Panama.
ARTICLE XXII
Definitions
For purposes of these Articles of Incorporation, except where the context
otherwise requires, the following terms shall have the following meanings:
"Acting in Concert" shall have the same meaning as it has in the City Code;
provided that, notwithstanding anything to the contrary, none of (x) the Arison
Group, (y) the Carnival Group or (z) the P&O Princess Group (each, a
"Non-Concert Group"), shall be deemed to be Acting in Concert with any other
Non-Concert Group for the purpose of these Articles of Incorporation.
"Amendment Date" shall mean [.], 2003.
"Applicable Exchange Rate" shall mean, in relation to any proposed
Distributions by the Corporation and P&O Princess in relation to which a foreign
33
exchange rate is required, the average of the closing mid-point spot U.S.
dollar-sterling exchange rate on the five Business Days ending on the Business
Day before the Distribution Determination Date relating to such Distributions
(as shown in the London edition of the Financial Times, or such other point of
reference as the parties shall agree), or such other spot U.S. dollar-sterling
exchange rate or average U.S. dollar-sterling exchange rate as at such other
date (or over such other period) before a Distribution Determination Date as the
Board of Directors and the P&O Princess Board shall agree, in each case rounded
to five decimal places.
"Applicable Regulations" shall mean (a) any law, statute, ordinance,
regulation, judgment, order, decree, license, permit, directive or requirement
of any Governmental Agency having jurisdiction over the Corporation and/or P&O
Princess; and (b) the rules, regulations, and guidelines of (i) any stock
exchange or other trading market on which any shares or other securities or
depositary receipts representing such shares or securities of either the
Corporation or P&O Princess are listed, traded or quoted; and (ii) any other
body with which entities with securities listed or quoted on such exchanges
customarily comply (but, if not having the force of law, only if compliance with
such directives, requirements, rules, regulations or guidelines is in accordance
with the general practice of persons to whom they are intended to apply), in
each case for the time being in force and taking into account all exemptions,
waivers or variations from time to time applicable (in particular situations or
generally) to the Corporation or, as the case may be, P&O Princess.
"Arison Group" shall mean each of Marilyn B. Arison, Micky Arison, Shari
Arison, Michael Arison or their spouses or children or lineal descendants of
Marilyn B. Arison, Micky Arison, Shari Arison, Michael Arison or their spouses,
any trust established by Theodore Arison, any trust established for the benefit
of any Arison family member mentioned in this definition, or any "person" (as
such term is used in Section 13(d) or 14(d) of the US Securities Exchange Act of
1934, directly or indirectly, controlling, controlled by or under common control
with any Arison family member mentioned in this paragraph or any trust
established for the benefit of any such Arison family member or any charitable
trust or non-profit entity established by a member of the Arison Group but
excluding (for the avoidance of doubt) Carnival or P&O Princess or any of their
respective Subsidiaries or affiliates.
"Articles of Incorporation" shall mean the articles of incorporation of the
Corporation, as amended from time to time.
"Associated Tax Credit" shall mean, in relation to any Distribution
proposed to be made by either the Corporation or P&O Princess, the amount of any
imputed or associated Tax credit or rebate or exemption (or the value of any
other similar associated Tax Benefit) which would be available to a shareholder
receiving or entitled to receive the Distribution, together with the amount of
any credit or benefit in respect of any Tax required to be deducted or withheld
from the Distribution by or on behalf of the paying company.
34
"beneficial ownership" shall mean beneficial ownership as determined under
Rule 13d-3 under the U.S. Securities Exchange Act of 1934, and the terms
"beneficially own" and "beneficially owned" shall have the correlative meanings.
"Beneficial Ownership" shall mean ownership of Shares by a Person who would
be treated as the owner of such Shares directly, indirectly or constructively,
as determined for purposes of Section 883(c)(3) of the Code and the regulations
promulgated thereunder, and shall include any Shares Beneficially Owned by any
other Person who is a "related person" with respect to such Person through the
application of Section 267(b) of the Code, as modified in any way for the
purposes of Section 883(c)(3) of the Code and the regulations promulgated
thereunder. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially
Owned" shall have correlative meanings.
"Board of Directors" or "Board" shall mean the board of directors of the
Corporation (or a duly authorised committee of the board of directors of the
Corporation) from time to time.
"Business Day" shall mean, for purposes of the definitions of "Applicable
Exchange Rate" and "Liquidation Exchange Rate" only, any day other than a
Saturday, Sunday or day on which banking institutions in the cities of both New
York and London are authorized or obligated by law or executive order to close
in the United States or England (or on which such banking institutions are open
solely for trading in euros).
"By-Laws" shall mean the by-laws of the Corporation, as from time to time
amended.
"Carnival Common Stock" shall mean issued and outstanding shares of Common
Stock from time to time, as the same may be subdivided or consolidated from time
to time and any shares of capital stock into which such Common Stock may be
reclassified, converted or otherwise changed, excluding the Carnival Special
Voting Share and the Carnival Equalization Share and, except with respect to any
voting rights and rights on a Liquidation as described in Article V(e), shall
include the Disenfranchised Carnival Common Stock.
"Carnival Deed of Guarantee" shall mean the deed of guarantee dated as of
[.], 2003, between the Corporation and P&O Princess pursuant to which the
Corporation guarantees certain obligations of P&O Princess for the benefit of
certain future creditors of P&O Princess, as amended from time to time.
"Carnival Entrenched Articles" shall mean section (a) (2), (c), (d) and (e)
of Article V, sections (b) and (d) of Article X, Article XIV, Article XV,
Article XVI and Article XVII and the definitions referred to therein.
"Carnival Entrenched By-Laws" shall mean the following sections of the
By-Laws 2.06, 2.08(b), 2.10, 2.15, 2.16, 2.17, 2.18, 2.19, 2.20, 3.03(a),
3.03(b), 3.07, 3.19, 3.20 and 5.03 and the definitions referred to therein.
35
"Carnival Entrenched Provisions" shall mean the Carnival Entrenched
Articles and the Carnival Entrenched By-Laws.
"Carnival Equivalent Number" means the number of shares of Carnival Common
Stock that have the same rights to distributions of income and capital and
voting rights as one P&O Ordinary Share. Initially, the Carnival Equivalent
Number shall be 0.30040, but it shall adjust as provided in Clause 4 of the
Equalization Agreement and the Schedule thereto. In all cases, the Carnival
Equivalent Number shall be rounded to five decimal places;
"Carnival Group" shall mean the Corporation and its Subsidiaries and
associated undertakings from time to time, and a member of the Carnival Group
means any one of them.
"Carnival Special Voting Share" shall mean the special voting share, par
value $.01 per share, of the Corporation.
"Carnival SVC" shall mean the holder, from time to time, of the Carnival
Special Voting Share.
"Carnival SVC Owner" shall mean the holder, from time to time, of the
equity interests in Carnival SVC.
"Charitable Beneficiary" shall mean the organization or organizations
described in Section 170(c)(2) and 501(c)(3) of the Code selected by the Excess
Share Trustee.
"City Code" shall mean the United Kingdom City Code on Takeovers and
Mergers, as amended from time to time (including any supplemental or replacement
Applicable Regulations), and including any actions required, or approved, by any
relevant governing or supervisory body with authority in relation to the United
Kingdom City Code on Takeovers and Mergers (or any replacement).
"Class Rights Action" shall mean the following actions:
(1) the voluntary Liquidation of the Corporation or P&O Princess for
which the approval of shareholders of the Corporation is required by Applicable
Regulations or proposed other than a voluntary Liquidation of both P&O Princess
and the Corporation at or about the same time with the purpose or effect of no
longer continuing the operation of the businesses of the companies as a combined
going concern and not as part of a scheme, plan, transaction or series of
related transactions the primary purpose or effect of which is to reconstitute
all or a substantial part of such businesses in one or more successor entities;
(2) the sale, lease, exchange or other disposition of all or
substantially all of the assets of either P&O Princess or the Corporation, other
than in a bona fide commercial transaction undertaken for a valid business
purpose in which such
36
company receives consideration with a fair market value reasonably equivalent to
the assets disposed of and not as part of a scheme, plan, transaction or series
of related transactions the primary purpose or effect of which is to collapse or
unify the DLC Structure.
(3) any adjustment to the Equalization Ratio, otherwise than in
accordance with the provisions of the Equalization Agreement;
(4) except where specifically provided for in such agreements, any
amendment to the terms of, or termination of, the Equalization Agreement, the
SVE Special Voting Deed, the Carnival Deed of Guarantee or the P&O Princess Deed
of Guarantee (including, for the avoidance of doubt, the voluntary termination
of either Deed of Guarantee);
(5) any amendment to, removal or alteration of the effect of (which
shall include the ratification of or any breach of) any Carnival Entrenched
Provision or any P&O Princess Entrenched Provision;
(6) any amendment to, removal or alteration of the effect of (which
shall include the ratification of any breach of) Article XII or XIII of the
Articles of Incorporation that would cause, or at the time of implementation
would be reasonably likely to cause, an Exchange Event described in clause (a)
of the definition thereof in the P&O Princess Articles to occur; and
(7) the doing of anything which the Board of Directors and the P&O
Princess Board agree (either in a particular case or generally), in their
absolute discretion, should be approved as a Class Rights Action.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time.
"Combined Group" means the Corporation, P&O Princess and their respective
Subsidiaries.
"Combined Group City Code Limit" shall mean, at any time (i) with respect
to any person other than a Significant Combined Group Holder (or persons Acting
in Concert) such Ordinary Shares (which may include either or both of Carnival
Common Stock or P&O Princess Ordinary Shares) representing, in aggregate and
after giving effect to the Equalization Ratio, the right to cast 30% of the
votes on a Joint Electorate Action from time to time, or (ii) with respect to a
Significant Combined Group Holder only, any further Ordinary Shares (which may
include either or both of Carnival Common Stock or P&O Princess Ordinary Shares)
which increase that person's percentage of votes which could be cast on a Joint
Electorate Action from time to time.
"Combined Group Excess Share Holder" shall mean the holder of Combined
Group Excess Shares as of the date such shares of Carnival Common Stock
37
were designated as Combined Group Excess Shares pursuant to section (c) of
Article XIV.
"Combined Group Excess Shares" shall mean Carnival Common Stock designated
as such pursuant to section (c) of Article XIV.
"Combined Group Restricted Shares" shall mean Carnival Common Stock
designated as such pursuant to sections (a) or (b) of Article XIV.
"Common Stock" shall mean the nominative common stock, par value $.01 per
share, of the Corporation.
"Corporation" shall mean Carnival Corporation, a corporation organized and
existing in accordance with the laws of the Republic of Panama.
"Corporation Law" shall mean the Corporation Law of the Republic of Panama.
"Derivative Securities" shall have the meaning given in Article XVIII(c).
"Disenfranchised Carnival Common Stock" has the meaning given to it in
Article V(e).
"Distributable Reserves" shall mean, with respect to any Distribution by
the Corporation or P&O Princess, the total funds available to such company which
it is permitted to use to pay or make such Distribution under Applicable
Regulations relating to the Corporation or P&O Princess, as the case may be.
"Distribution" shall mean, in relation to the Corporation or P&O Princess,
any dividend or other distribution, whether of income or capital, and in
whatever form, made by such company or any of its Subsidiaries to the holders of
such company's Ordinary Shares by way of pro rata entitlement, excluding any
Liquidation Distribution or buy back or repurchase or cancellation of Ordinary
Shares.
"Distribution Determination Date" shall mean, with respect to any parallel
Distributions to be made by the Corporation and P&O Princess, the date on which
the Board of Directors and the P&O Princess Board resolve to pay or make such
parallel Distributions (or if they resolve on different dates to pay or make
such parallel Distributions, the later of those dates).
"Equalization Agreement" shall mean the Equalization and Governance
Agreement, dated as of [.], 2003, between the Corporation and P&O Princess, as
the same may be amended or modified from time to time in accordance with its
terms.
"Equalization Ratio" shall mean the ratio of (i) one P&O Princess Ordinary
Share to (ii) the Carnival Equivalent Number;
38
"Equalization Share" shall mean, in relation to the Corporation, any share
designated as an Equalization Share in the Corporation from time to time by the
Board and, in relation to P&O Princess, the Equalization Share of (pound)50,000
in the capital of P&O Princess.
"Equalized Distribution Amount" shall mean, in relation to either the
Corporation or P&O Princess, the amount of any Distribution proposed to be paid
or made by such company at any particular time on its Ordinary Shares, before
deduction of any amount in respect of Tax required to be deducted or withheld
from such Distribution by or on behalf of such company and excluding the amount
of any Associated Tax Credit, all such amounts being expressed in the currency
of declaration and on a per share basis.
"Equivalent Distribution" shall have the meaning set forth in section (a)
of Article XVI.
"Equivalent Resolution" shall mean a resolution of either the Corporation
or P&O Princess that is equivalent in nature and effect to a resolution of the
other company.
"Excess Shares" shall mean Shares resulting from an event described in
section (b) of Article XII.
"Excess Share Trust" shall mean a trust created pursuant to Article XIII or
Article XV hereof, as applicable.
"Excess Share Trustee" shall mean a Person, who shall be unaffiliated with
the Corporation, any Purported Beneficial Transferee, any Purported Record
Transferee and any Combined Group Excess Share Holder, appointed by the Board of
Directors as the trustee of the Excess Share Trust.
"Existing Holders" shall mean (i) any member of the group of Persons that
jointly filed the Schedule 13D with the United States Securities and Exchange
Commission on November 22, 1999, with respect to the beneficial ownership of
shares of Carnival Common Stock and (ii) any Permitted Transferee.
"Governmental Agency" shall mean a court of competent jurisdiction or any
government or governmental, regulatory, self regulatory or administrative
authority, agency, commission, body or other governmental entity and shall
include without limitation any relevant competition authorities, the UK Panel on
Takeovers and Mergers, the London Stock Exchange, the UK Listing Authority, the
U.S. Securities and Exchange Commission and the New York Stock Exchange.
"Joint Electorate Action" shall have the meaning set forth in the
Corporation's By-Laws.
"Liquidation" shall mean, with respect to the Corporation or P&O Princess,
any liquidation, winding up, receivership, dissolution, insolvency or equivalent
39
proceedings pursuant to which the assets of such company will be liquidated and
distributed to creditors and other holders of provable claims against such
company.
"Liquidation Distribution" shall mean, in relation to the Corporation or
P&O Princess, any dividend or other distribution per Carnival Common Stock or
P&O Princess Ordinary Share, respectively, whether of income or capital and in
whatever form, made or to be made by such company or any of its Subsidiaries to
the holders of Carnival Common Stock or P&O Princess Ordinary Shares, as the
case may be, by way of pro rata entitlement in connection with the Liquidation
of such company.
"Liquidation Exchange Rate" shall mean, as at any date, the average of the
closing mid-point spot U.S. dollar-U.K. pound sterling exchange rate on the five
Business Days ending on the Business Day before such date (as shown in the
London Edition of the Financial Times), or such other U.S. dollar-U.K. pound
sterling exchange rate as the Board of Directors and the P&O Princess Board or
the P&O Princess Board and the liquidators of Carnival or the Board of Directors
and the liquidators of P&O Princess or the liquidators of both P&O Princess and
Carnival Corporation, as the case may be, may determine, in each case rounded to
five decimal places.
"Majority Resolution" means a resolution duly approved at a meeting of the
Corporation's shareholders by the affirmative vote of a majority of all the
votes cast on such resolution by all Shareholders of the Corporation entitled to
vote thereon (including, where applicable, the Carnival SVC) who are present in
person or by proxy at such meeting; provided that abstentions shall not be
counted as votes "cast" for these purposes.
"Mandatory Exchange " shall have the meaning set forth in the P&O Princess
Articles.
"Market Price" of any class of Shares on any date shall mean the average of
the daily closing prices for any such class of Shares for the five (5)
consecutive trading days ending on such date, or if such date is not a trading
date, the five consecutive trading days preceding such date. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to any class of Shares listed or
admitted to trading on the New York Stock Exchange, or if such class of Shares
are not listed or admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which such class of Shares are listed
or admitted to trading, or if such class of Shares are not listed or admitted to
trading on any national securities exchange, the last quoted price, or if not so
quoted, the average of the high bid and low asked prices in the over the counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or such other system then in use, or if such class of
Shares are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
such class of Shares selected by the Board of Directors.
40
"Ordinary Shares" shall mean the Carnival Common Stock and/or the P&O
Princess Ordinary Shares, as the context requires.
"Other Voting Shares" shall mean, with respect to any resolution to be
acted on by the shareholders of the Corporation or P&O Princess, as the case may
be, such shares of capital stock of that company that are entitled to vote on
such resolution at a meeting of the shareholders of such company, other than the
Carnival Special Voting Share, the P&O Princess Special Voting Share and the
Ordinary Shares.
"Ownership Limit" shall mean, in the case of a Person other than an
Existing Holder, Beneficial Ownership of more than four and nine tenths percent
(4.9%), by value, vote or number, of any class of Shares. The Ownership Limit
shall not apply to any Existing Holder or to any class of Shares exempted in
accordance with the provisions of section (g) of Article XII.
"P&O Princess" shall mean P&O Princess Cruises plc, a public limited
company incorporated in England and Wales.
"P&O Princess Articles" shall mean the articles of association of P&O
Princess, as amended from time to time.
"P&O Princess Board" shall mean the Board of Directors of P&O Princess (or
a duly authorized committee of the board of directors of P&O Princess) from time
to time.
"P&O Princess Deed of Guarantee" means the guarantee dated as of January
___, 2003 between P&O Princess and the Corporation, pursuant to which P&O
Princess guarantees certain obligations of the Corporation for the benefit of
certain future creditors of the Corporation, as amended from time to time.
"P&O Princess Group" means P&O Princess and its Subsidiaries from time to
time, and a member of the P&O Princess Group means any one of them.
"P&O Princess Ordinary Shares" shall have the meaning given to it in the
P&O Princess Articles.
"P&O Princess Special Voting Share" shall mean the special voting share of
[(pound)1] in P&O Princess.
"P&O Princess SVT" shall mean P&O Princess Special Voting Trust, a trust
organized under the laws of __________, or such other entity as replaces it
pursuant to the terms of the SVE Special Voting Deed.
"P&O Princess SVT Agreement" shall mean the Voting Trust Agreement,
establishing P&O Princess SVT, between P&O Princess Trustee and Carnival, dated
as of [.] 2003, as amended from time to time.
41
"P&O Princess SVT Shares" shall mean the shares of beneficial interest in
the P&O Princess SVT.
"P&O Princess Trustee" means [.], as trustee of P&O Princess SVT pursuant
to the P&O Princess SVT Agreement (or any successor trustee appointed pursuant
to Section 7.08 thereof).
"Parallel Shareholder Meeting" shall have the same meaning as it has in the
By-Laws.
"Pairing Agreement" means the Pairing Agreement, dated as of [.], 2003,
among the Corporation, the P&O Princess Trustee and [.], as transfer agent, as
amended from time to time.
"Permitted Transfer" shall mean a Transfer by an Existing Holder to any
Person which does not result in the Corporation losing its exemption from
taxation on gross income derived from the international operation of a ship or
ships within the meaning of Section 883 of the Code. Any such transferee is
herein referred to as a "Permitted Transferee."
"Person" shall mean a person as defined by Section 7701(a) of the Code.
"Preferred Stock" shall mean preferred stock, par value $.01 share, of the
Corporation.
"Purported Beneficial Holder" shall mean, with respect to any event (other
than a purported Transfer, but including holding Shares in excess of the
Ownership Limitation on the Amendment Date) which results in Excess Shares, the
Person for whom the Purported Record Holder held Shares that, pursuant to
section (b) of Article XII, became Excess Shares upon the occurrence of such
event.
"Purported Beneficial Transferee" shall mean, with respect to any purported
Transfer which results in Excess Shares, the purported beneficial transferee for
whom the Purported Record Transferee would have acquired Shares if such Transfer
had been valid under section (a) of Article XII.
"Purported Record Holder" shall mean, with respect to any event (other than
a purported Transfer, but including holding Shares in excess of the Ownership
Limitation on the Amendment Date) which results in Excess Shares, the record
holder of the Shares that, pursuant to section (b) of Article XII, became Excess
Shares upon the occurrence of such event.
"Purported Record Transferee" shall mean, with respect to any purported
Transfer which results in Excess Shares, the record holder of the Shares if such
Transfer had been valid under section (a) of Article XII.
42
"Qualifying Acquisition" shall mean an acquisition of Ordinary Shares
consummated pursuant to a Qualifying Takeover Offer.
"Qualifying Takeover Offer" shall mean an offer or offers to acquire
Carnival Common Stock and P&O Princess Ordinary Shares (i) which are made in
accordance with the City Code to the extent that the City Code applies to the
Combined Group, and (ii) which (provided that compliance with the following is
not inconsistent with the City Code):
(a) are made to all holders of Carnival Common Stock and P&O Princess
Ordinary Shares; or
(b) are undertaken with respect to the Carnival Common Stock and P&O
Princess Ordinary Shares at or about the same time; and
(c) comply with all Applicable Regulations and these Articles of
Incorporation and the P&O Princess Articles; and
(d) each of the Board of Directors and the P&O Princess Board determines
are equivalent to the holders of Carnival Common Stock, on the one hand, and the
holders of P&O Princess Ordinary Shares, on the other hand, with respect to:
(1) the consideration offered for such shares (taking into account
exchange rates and any difference in the share price of P&O Princess Ordinary
Shares and Carnival Common Stock determined by the Board of Directors and the
P&O Princess Board in their sole discretion to be appropriate and taking into
account the Equalization Ratio);
(2) the information provided to such holders;
(3) the time available to such holders to consider such offer;
(4) the conditions to which the offers are subject; and
(5) such other terms of the offers which the Board of Directors and
the P&O Princess Board shall determine are relevant.
"Restriction Termination Date" shall mean such date as may be determined by
the Board of Directors in its sole discretion (and for any reason) as the date
on which the ownership and transfer restrictions set forth in Articles XII and
XIII should cease to apply.
"Section 883 Amendment Date" means August 2, 2002.
"Shares" shall mean shares of the Corporation of any class or classes
traded on an established securities market as may be authorized and issued from
time to time pursuant to Article V.
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"Significant Combined Group Holder" shall mean any person who, whether
solely or together with any party or parties Acting in Concert with such person,
after complying with the provisions of Articles XIV and XV, holds or exercises
voting control over Ordinary Shares (which may include either or both of P&O
Princess Ordinary Shares or Carnival Common Stock) representing, in aggregate
and after giving effect to the Equalization Ratio, the right to cast not less
than thirty percent (30%) and not more than fifty percent (50%) of the votes on
a Joint Electorate Action from time to time.
"Subsidiary" shall mean with respect to the Corporation or P&O Princess,
any entity, whether incorporated or unincorporated, in which such company owns,
directly or indirectly, a majority of the securities or other ownership
interests having by their terms ordinary voting power to elect a majority of the
directors or other persons performing similar functions, or the management and
policies of which such party otherwise has the power to direct.
"Supermajority Resolution" means a resolution required by Applicable
Regulations, these Articles of Incorporation or the By-Laws, as relevant, to be
approved by a higher percentage of votes cast than required under a Majority
Resolution, or where the percentage of votes in favour and against the
resolution is required to be calculated by a different mechanism to that
required by a Majority Resolution.
"SVE Special Voting Deed" means the SVE Special Voting Deed, dated as of
[.], 2003, by and among the Corporation, Carnival SVC, Carnival SVC Owner, P&O
Princess and P&O Princess Trustee.
"Tax" shall mean any taxes, levies, imposts, deductions, charges,
withholdings or duties levied by any authority (including stamp and transaction
duties) (together with any related interest, penalties, fines and expenses in
connection with them).
"Tax Benefit" shall mean any credit, rebate, exemption or benefit in
respect of Tax available to any person.
"Transfer" shall mean any sale, transfer, gift, hypothecation, pledge,
assignment, devise or other disposition of Shares (including (i) the granting of
any option or interest similar to an option (including an option to acquire an
option or any series of such options) or entering into any agreement for the
sale, transfer or other disposition of Shares or (ii) the sale, transfer,
assignment or other disposition of any securities or rights convertible into or
exchangeable for Shares), whether voluntary or involuntary, whether of record,
constructively or beneficially and whether by operation of law or otherwise. For
purposes of this definition, whether securities or rights are convertible or
exchangeable for Shares shall be determined in accordance with Sections 267(b)
and 883 of the Code.
44
In witness whereof, the undersigned have executed the Third Amended and
Restated Articles of Incorporation of Carnival Corporation this __ day of
__________, 2003.
----------------------------------------- -------------------------------------
By: Micky Arison By: Arnaldo Perez
Title: Chairman of the Board of Directors Title: Secretary
and Chief Executive Officer
45
Annex A-5
[AGREED FORM]
AMENDED AND RESTATED BY-LAWS
OF
CARNIVAL CORPORATION
ARTICLE I
Offices
Section 1.1 Offices. The Corporation may have and maintain an office or
offices at such places within or without the Republic of Panama as the Board of
Directors may from time to time determine or the business of the Corporation
requires.
ARTICLE II
Meetings of Shareholders
Section 2.1 Place of Meeting. Every meeting of the Shareholders the
Corporation shall be held at the office of the Corporation or at such place or
places within or outside the Republic of Panama as shall be specified or fixed
in the notice of such meeting or in the waiver of notice thereof.
Section 2.2 Annual Meeting. The Annual Meeting of the Shareholders
shall be held annually at such hour and on such business day in March or April
as may be determined by the Board of Directors and designated in the notice of
meeting. At such Annual Meeting, the Shareholders then entitled to vote shall
elect directors and shall transact such other business as may properly be
brought before the meeting.
Section 2.3 Deferred Meeting for Election of Directors, Etc. If the
Annual Meeting for the election of directors and the transaction of other
business is not held within the months specified in Section 2.2, the Board shall
call a meeting of Shareholders for the election of directors and the transaction
of other business as soon thereafter as convenient.
Section 2.4 Special Meetings. A Special Meeting of Shareholders (other
than special meting for the election of directors), unless otherwise prescribed
by statute, may be called at any time by the Board or by the President or by the
Secretary. At any Special Meeting of Shareholders only such business may be
transacted as is related to the purpose or purposes of such meeting set forth in
the notice thereof or in any waiver of notice thereof.
Section 2.5 Notice of Meetings. Except as provided in Section 6.2,
written notice of all meetings of Shareholders stating the purpose or purposes
for which the meeting is called, including whether the resolution relates to a
Joint Electorate Action
or a Class Rights Action, the name of the person or persons at whose direction
the notice is being given, and the date, time and place where it is to be held,
shall be given, personally or by mail, at least ten (10) but not more than sixty
(60) days before such meeting, to each Shareholder of record entitled to vote at
such meeting and to each member of the Board of Directors. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
with postage prepaid directed to the Shareholder at his address as it appears on
the records of the Corporation. An affidavit of the Secretary or an Assistant
Secretary or of the transfer agent of the Corporation that the notice required
by this Section 2.5 has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. When a meeting is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken, and at the adjourned meeting any business may be transacted that might
have been transacted at the meeting as originally called. If, however, the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each Shareholder of record entitled to vote at the
meeting.
Section 2.6 Notice with Respect to Joint Electorate Action or Class
Rights Action. If the Corporation proposes to undertake a Joint Electorate
Action or Class Rights Action, the Corporation shall immediately give notice to
P&O Princess of the nature of the Joint Electorate Action or the Class Rights
Action it proposes to take. Unless such action is proposed to be taken at the
Annual Meeting of Shareholders, the Board of Directors shall convene a Special
Meeting for the purpose of considering a resolution to approve the Joint
Electorate Action or Class Rights Action. Such meeting shall be held as close in
time as practicable with the Parallel Shareholder Meeting convened by P&O
Princess for purposes of considering such Joint Electorate Action or Class
Rights Action.
(a) The Corporation shall cooperate fully with P&O Princess in
preparing resolutions, explanatory memoranda or any other information or
material required in connection with the proposed Joint Electorate Action or
Class Rights Action.
Section 2.7 Quorum, Manner of Acting and Adjournment.
(a) The presence in person or by proxy at any meeting of
Shareholders holding at least one-third of the total votes entitled to be cast
shall constitute a quorum for the transaction of business at such meeting except
as otherwise required by Applicable Regulation, the Articles of Incorporation or
these By-Laws. When a quorum is once present to organize a meeting of
Shareholders, it is not broken by the subsequent withdrawal of any Shareholders.
The holders of a majority of the shares of stock present in person or
represented by proxy at any meeting of Shareholders, including an adjourned
meeting, whether or not a quorum is present, may adjourn such meeting to another
time and place. The Secretary shall give notice to P&O Princess as soon as
possible of an adjournment and of the business to be transacted at an adjourned
meeting.
2
(b) When a quorum for the transaction of business is present at
any meeting, a Majority Resolution shall decide such question brought before
such meeting, unless the question is one upon which, by express provision of
Applicable Regulation, the Articles of Incorporation or as provided in these
By-Laws, a Supermajority Resolution is required, in which case such express
provision shall govern the decision of such question. Shareholders present in
person or by proxy at a duly convened meeting can continue to transact business
until adjournment, notwithstanding withdrawal of Shareholders so as to leave
fewer than a quorum present.
Section 2.8 Quorum for Joint Electorate Actions and Class Rights
Actions.
(a) For purposes of determining whether a quorum exists at any
meeting of Shareholders where a Joint Electorate Action or a Class Rights Action
is to be considered:
(i) if the meeting of Shareholders convenes before the
Parallel Shareholder Meeting of P&O Princess, the Carnival Special Voting Share
shall, at the commencement of the meeting, have no votes and therefore shall not
be counted for purposes of determining the total number of shares entitled to
vote at such meeting or whether a quorum exists at such meeting, although the
Carnival Special Voting Share itself must be present, either in person (through
a representative of Carnival SVC) or by proxy;
(ii) if the meeting of the Shareholders convenes at
substantially the same time as or after the Parallel Shareholder Meeting of P&O
Princess with respect to one or more Joint Electorate Actions, the Carnival
Special Voting Share will have the maximum number of votes attached to it as
were cast on such Joint Electorate Actions, either for, against or abstained, at
the Parallel Shareholder Meeting of P&O Princess, and such maximum number of
votes (including abstentions) shall constitute shares entitled to vote and
present for purposes of determining whether a quorum exists at such meeting; and
(iii) if the meeting of Shareholders convenes at
substantially the same time as or after the Parallel Shareholder Meeting of P&O
Princess with respect to a Class Rights Action, the Carnival Special Voting
Share shall, at the commencement of the meeting, have no votes and therefore
shall not be counted for purposes of determining the total number of shares
entitled to vote at such meeting or whether a quorum exists at such meeting,
although the Carnival Special Voting Share itself must be present, either in
person (through a representative of Carnival SVC) or by proxy.
(b) Notwithstanding the foregoing, in order for a quorum to be
validly constituted with respect to meetings of Shareholders convened to
consider a Joint Electorate Action or Class Rights Action, Carnival SVC must be
present at such meeting.
3
Section 2.9 Organization. At every meeting of Shareholders, the
Chairman of the Board, if there be one, or in the case of vacancy in the office
or absence of the Chairman of the Board, one of the following persons present in
the order stated: the vice chairman of the Board, if there be one or in their
order of rank or seniority if there be more than one, the Chief Executive
Officer, the President, the vice presidents in their order of rank or seniority,
a chairman designated by those members of the Board of Directors present at the
meeting or a chairman chosen by Shareholders shall act as chairman, and the
Secretary, or in his absence, an assistant secretary, or in the absence of the
Secretary and assistant secretaries, a person appointed by the Chairman, shall
act as secretary.
Section 2.10 Voting by Ballot. Any resolution to be considered at a
meeting of Shareholders in relation to which the Carnival SVC is or may be
entitled to vote shall be decided by ballot. The ballot shall be kept open for
such time as to allow the Parallel Shareholder Meeting of P&O Princess to be
held and for the votes attaching to the Carnival Special Voting Share to be
calculated and cast on such ballot, although such ballot may be closed earlier
in respect of shares of other classes. The chairman of the meeting shall direct
the procedures for voting by ballot.
Section 2.11 Voting by Proxy. Each Shareholder entitled to vote at a
meeting of Shareholders may authorize any person to act for him by proxy. A
proxy deposited by Carnival SVC will be valid if it is received by or delivered
to the chairman of the meeting before the close of the ballot to which it
relates. To be valid, a proxy must comply in form and substance with all
applicable provisions of Panamanian law.
Section 2.12 Cumulative Voting. Cumulative voting for directors shall
not be permitted.
Section 2.13 List of Shareholders. The Secretary shall prepare and
make, or cause to be prepared and made, at least ten days before every meeting
of Shareholders, a complete list of Shareholders, entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
Shareholder and the number of shares registered in the name of each Shareholder.
Such list shall be open to the examination of any Shareholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any Shareholder who is
present.
Section 2.14 Inspectors of Election.
(a) In advance of any meeting of Shareholders, the Board of
Directors may appoint inspectors of election, who need not be Shareholders, to
act at such meeting or any adjournment thereof. If inspectors of election are
not so appointed, the person presiding at any such meeting may, and on the
request of any Shareholder entitled to vote at the meeting and before voting
begins shall, appoint inspectors of
4
election. In case any absence of the Chairman of the Board and the President,
the persons designated pursuant to Section 2.9 shall act as chairman and
secretary of the meeting.
(b) On request of the person presiding at the meeting or any
Shareholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge or question or matter determined by them, and execute a
sworn certificate of any fact found by them. Any such report or certificate
shall be prima facie evidence of the facts stated and on the vote as certified
by him or them.
Section 2.15 Actions for Shareholder Approval.
(a) All actions to be approved by the holders of Carnival
Common Stock shall be Joint Electorate Actions, Class Rights Actions or
Procedural Resolutions.
(b) No resolution with respect to a Joint Electorate Action or
a Class Rights Action shall be approved unless the Parallel Shareholder Meeting
of P&O Princess is validly held and a vote of the holders of P&O Princess
Ordinary Shares is held on an Equivalent Resolution.
Section 2.16 Joint Electorate Actions. All actions put to the holders
of Carnival Common Stock or P&O Princess Ordinary Shares, except for Class
Rights Actions and Procedural Resolutions, shall constitute Joint Electorate
Actions. For the avoidance of doubt, the following actions, if put to the
holders of Carnival Common Stock or P&O Princess Ordinary Shares, shall
constitute Joint Electorate Actions:
(a) the appointment, removal or re-election of any director of
the Corporation or P&O Princess, or both of them;
(b) to the extent such receipt or adoption is required by
Applicable Regulations, the receipt or adoption of the Corporation's or P&O
Princess' financial statements, or both of them, or accounts prepared on a
combined basis, other than any accounts in respect of the period(s) ended prior
to the date of the Equalization Agreement;
(c) a change of name of either the Corporation, P&O Princess,
or both of them; and
(d) the appointment or removal of the auditors of the
Corporation or P&O Princess, or both of them.
Section 2.17 Procedure for Approval of Joint Electorate Actions.
(a) If the Corporation proposes to take any Joint Electorate
Action, such action shall require approval by Majority Resolution (or if
Applicable Regulations, the Articles of Incorporation or these By-Laws require
the action to be approved by a Supermajority Resolution, by the vote required
thereby) of the holders of
5
Carnival Common Stock, holders of the Corporation's Other Voting Shares and the
Carnival SVC, voting together as a single class by ballot.
(b) No resolution will be approved with respect to a Joint
Electorate Action unless at least one-third of the total votes entitled to be
cast by (i) the holders of Carnival Common Stock, and (ii) the Carnival SVC
(assuming for purposes of this calculation only that all holders of issued and
outstanding P&O Princess Ordinary Shares voted at the Parallel Shareholder
Meeting of P&O Princess) are cast on the resolution proposing such Joint
Electorate Action.
(c) If P&O Princess proposes to take any Joint Electorate
Action, the Corporation shall convene a Special Meeting, unless such action is
proposed for an Annual Meeting, as close in time as practicable to such P&O
Princess shareholders meeting to consider such action and shall propose a
resolution which is an Equivalent Resolution to the proposed P&O Princess
resolution with respect to such Joint Electorate Action. Such Equivalent
Resolution shall be proposed as a Majority Resolution, unless Applicable
Regulations, the Articles of Incorporation or these By-Laws require the Joint
Electorate Action to be approved by a Supermajority Resolution.
(d) In relation to a resolution of the Corporation to approve
a Joint Electorate Action at any meeting of Shareholders, the Carnival Special
Voting Share shall carry:
(i) such number of votes in favour of the resolution as
were cast in favour of the Equivalent Resolution at the Parallel Shareholder
Meeting of P&O Princess by holders of P&O Princess Ordinary Shares and Other
Voting Shares of P&O Princess;
(ii) such number of votes against the resolution as were
cast against the Equivalent Resolution at the Parallel Shareholder Meeting of
P&O Princess by holders of P&O Princess Ordinary Shares and Other Voting Shares
of P&O Princess; and
(iii) such number of abstentions as were recorded as
abstentions from the Equivalent Resolution at the Parallel Shareholder Meeting
of P&O Princess by holders of P&O Princess Ordinary Shares and Other Voting
Shares of P&O Princess;
in each case, multiplied by the Carnival Equivalent Number in effect at the time
such meeting of the Shareholders is held and in each case rounded up to the
nearest whole number, such votes to be cast by the holder of the Carnival
Special Voting Share in accordance with the above provisions.
Section 2.18 Class Rights Action. The following actions constitute
Class Rights Actions:
(a) the voluntary Liquidation of the Corporation or P&O
Princess for which the approval of shareholders of the Corporation is required
by
6
Applicable Regulations or proposed other than a voluntary Liquidation of both
P&O Princess and the Corporation at or about the same time with the purpose or
effect of no longer continuing the operation of the businesses of the companies
as a combined going concern and not as part of a scheme, plan, transaction, or
series of related transactions the primary purpose or effect of which is to
reconstitute all or a substantial part of such businesses in one or more
successor entities;
(b) the sale, lease, exchange or other disposition of all or
substantially all of the assets of either P&O Princess or the Corporation, other
than in a bona fide commercial transaction undertaken for a valid business
purpose in which such company receives consideration with a fair market value
reasonably equivalent to the assets disposed of and not as a part of a scheme,
plan, transaction or series of related transactions the primary purpose of which
is to collapse or unify the DLC Structure;
(c) any adjustment to the Equalization Ratio, otherwise than
in accordance with the provisions of the Equalization Agreement;
(d) except where specifically provided for in such agreements,
any amendment to the terms of, or termination of, the Equalization Agreement,
the SVE Special Voting Deed, the Carnival Deed of Guarantee or the P&O Princess
Deed of Guarantee (including, for the avoidance of doubt, the voluntary
termination of either Deed of Guarantee);
(e) any amendment to, removal or alteration of the effect of
(which shall include the ratification of any breach of) any Carnival Entrenched
Provision or any P&O Princess Entrenched Provision;
(f) any amendment to, removal or alteration of the effect of
(which shall include the ratification of any breach of) Article XII or XIII of
the Articles of Incorporation that would cause, or at the time of implementation
would be reasonably likely to cause, an Exchange Event described in clause (a)
of the definition of such term in the P&O Princess Articles of Association to
occur; and
(g) the doing of anything which the Board of Directors and the
P&O Princess Board agree (either in a particular case or generally), in their
absolute discretion, should be approved as a Class Rights Action.
Notwithstanding anything in these By-Laws to the contrary, none of the foregoing
actions may be taken by the Corporation unless it has been approved as a Class
Rights Action in accordance with Section 2.19.
Section 2.19 Procedure for Approval of Class Rights Actions.
(a) If the Corporation proposes to take any Class Rights
Action, such action shall require approval by a Majority Resolution (or, if
Applicable Regulations, the Articles of Incorporation or these By-Laws require
the action to be approved by a Supermajority Resolution, by the vote required
thereby) of holders of
7
Carnival Common Stock, holders of Other Voting Shares of the Corporation, and
the Carnival SVC, voting together as a single class by ballot.
(b) If the proposed Class Rights Action is approved by the
requisite vote (as determined in accordance with the P&O Princess Memorandum and
Articles) of the holders of P&O Princess Ordinary Shares and Other Voting Shares
of P&O Princess entitled to vote thereon at the Parallel Shareholder Meeting of
P&O Princess, the Carnival Special Voting Share shall have no votes with respect
to such proposed Class Rights Action. If the proposed Class Rights Action is not
approved by the requisite vote (as determined in accordance with the P&O
Princess Memorandum and Articles) of the holders of P&O Princess Ordinary Shares
and Other Voting Shares of P&O Princess, entitled to vote thereon at the
Parallel Shareholder Meeting of P&O Princess:
(i) if the resolution needs to be passed by a Majority
Resolution, then the Carnival Special Voting Share shall be entitled to cast
such number of votes representing the largest whole percentage that is less than
the percentage of the number of votes as would be necessary to defeat a Majority
Resolution if the total votes capable of being cast by the outstanding Carnival
Common Stock and Other Voting Shares of Carnival that are entitled to vote
pursuant to Applicable Regulations and/or the Carnival Articles and By-Laws
(including the Carnival Special Voting Share) were cast in favour of the
resolution at the Carnival Special Meeting, and all such votes shall be cast
against approval of such resolution; and
(ii) if the resolution needs to be passed by a
Supermajority Resolution, then the Carnival Special Voting Share shall be
entitled to cast such number of votes representing the largest whole percentage
that is less than the percentage of the number of votes as would be necessary to
defeat a Supermajority Resolution if the total votes capable of being cast by
the outstanding Carnival Common Stock and Other Voting Shares of Carnival that
are entitled to vote pursuant to Applicable Regulations and/or the Carnival
Articles and By-Laws (including the Carnival Special Voting Share) were cast in
favour of the resolution at the Carnival Special Meeting, and all such votes
shall be cast against approval of such resolution.
(c) If P&O Princess proposes to take any Class Rights Action,
the Corporation shall convene a Special Meeting, unless such action is proposed
for an Annual Meeting, as close in time as practicable to the P&O Princess
shareholders meeting at which the P&O Princess resolution in respect of such
Class Rights Action is to be proposed, and shall propose an Equivalent
Resolution. Such Equivalent Resolution shall be proposed as a Majority
Resolution, unless Applicable Regulations, the Articles of Incorporation or
these By-Laws require the Class Rights Action to be approved by a Supermajority
Resolution.
Section 2.20 Procedural Resolutions. The Carnival Special Voting Share
shall have no right to vote on any resolution of a procedural or technical
nature, which does not adversely affect the shareholders of P&O Princess in any
material respect, put to the Shareholders at a meeting ("Procedural
Resolutions"), nor shall notice of such
8
meeting to Shareholders be required to include reference to these matters. The
Chairman of the Board will, in his absolute discretion, determine whether a
resolution is a Procedural Resolution. Subject to the foregoing and without
limitation, to the extent that such matters require the approval of
Shareholders, any of the following shall be Procedural Resolutions:
(a) that certain people be allowed to attend or be excluded
from attending the meeting;
(b) that discussion be closed and the question put to the vote
(provided no amendments have been raised);
(c) that the question under discussion not be put to the vote
(where a shareholder feels the original motion should not be put to the meeting
at all, if such original motion was brought during the course of that meeting);
(d) to proceed with matters in an order other than that set
out in the notice of the meeting;
(e) to adjourn the debate (for example, to a subsequent
meeting);and
(f) to adjourn the meeting.
ARTICLE III
Board of Directors
Section 3.1 Powers. All powers of the Corporation, except those
specifically reserved or granted to Shareholders by Applicable Regulation, the
Articles of Incorporation or these By-Laws, are hereby granted to and vested in
the Board of Directors; all such powers shall be exercised by or under the
authority of, and the business and affairs of the Corporation shall be managed
by, the Board of Directors.
Section 3.2 Number and Term of Office.
(a) The Board of Directors shall consist of no less than three
(3) nor more than twenty-five (25) members. Directors need not be Shareholders.
Each director shall hold office until his successor is elected and qualified or
until his earlier death, resignation or removal.
(b) The Board of Directors shall consist of the identical
individuals that constitute the P&O Princess Board.
Section 3.3 Eligibility for Election, Effectiveness of Appointment,
Reciprocal Appointment.
(a) No person shall be a director of the Corporation unless
they are also a director of P&O Princess. The appointment of a person as a
director of the
9
Corporation shall only take effect at the same time as that person's appointment
as a director of P&O Princess takes effect.
(b) If a person is appointed as a director of P&O Princess by
the P&O Princess Board in accordance with the P&O Princess Memorandum and
Articles, the Board of Directors shall also appoint that person as a director of
the Corporation.
Section 3.4 Vacancies. Vacancies on the Board of Directors shall be
filled by a majority of the directors then in office, even though less than a
quorum, provided that any such person is appointed to both the Board of
Directors and P&O Princess Board at the same time. If only one director remains
in office, this director shall have the power to fill all vacancies. If there
are no directors, the Secretary may call a meeting at the request of any two
shareholders of the Corporation for the purpose of appointing one or more
directors.
Section 3.5 Resignation of Directors. Any director of the Corporation
may resign at any time by written notice to the Corporation. Such director must,
concurrently with his or her resignation as director of the Corporation, also
resign as director of P&O Princess. Such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein, but
in all events, only concurrently with the effectiveness of the director's
resignation from the P&O Princess Board, and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
Section 3.6 Removal of Directors. Subject to the provisions of the
Corporation Law, any or all of the directors may be removed with or without
cause only by a Majority Resolution.
Section 3.7 Disqualification of Directors. A director shall be
disqualified from continuing to serve on the Board of Directors if (i) he ceases
to be a director by virtue of any provisions of Applicable Regulation, the
Articles of Incorporation or these By-Laws; (ii) he resigns from office by
giving written notice to the Corporation or, having been appointed for a fixed
term, the term expires or his office as a director is vacated pursuant to
Section 3.6; or (iii) he ceases to be a director of P&O Princess.
Section 3.8 Organization. At every meeting of the Board of Directors,
the Chairman of the Board, if there be one, or, in the case of a vacancy in the
office or absence of the Chairman of the Board, one of the following officers
present in the order stated: the vice chairman of the Board of Directors, if
there be one or in their order of rank and seniority if more than one, the Chief
Executive Officer, the President, the vice presidents in their order of rank and
seniority, or a chairman chosen by a majority of the directors present, shall
preside, and the Secretary, or, in his absence, an assistant secretary, or in
the absence of the Secretary and the assistant secretaries, any person appointed
by the chairman of the meeting shall act as secretary.
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Section 3.9 Place of Meeting. The Board of Directors may hold its
meetings, both regular and special, at such place or places within or outside
the Republic of Panama as the Board of Directors may from time to time appoint,
or as may be designated in the notice calling the meeting.
Section 3.10 Annual Meetings. On the day when and at the place where
the Annual Meeting of Shareholders is held, and as soon as practicable
thereafter, the Board of Directors may hold its annual meeting, for the purposes
of organization, the election of officers and the transaction of other business.
Such annual meeting may be held at any other time and place specified in a
notice given as provided in Section 3.11 or in a waiver of notice thereof.
Section 3.11 Regular Meetings. Unless otherwise required by the Board
of Directors, regular meetings of the Board of Directors may be held without
notice at such time and place as shall be designated from time to time by
resolution of the Board of Directors. At such meetings, the directors may
transact such business as may properly be brought before the meeting. If any day
fixed for a regular meeting of the Board shall be a Saturday or Sunday or a
legal holiday at the place where such meeting is to be held, then such meeting
shall be held at the same hour at the same place on the first business day
thereafter which is not a Saturday, Sunday or legal holiday.
Section 3.12 Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board, the
President or the Secretary or by two or more directors. Notice of each such
meeting shall be given to each director by telephone or in writing at least 24
hours (in the case of notice by telephone) or 48 hours (in the case of notice by
electronic mail or facsimile) or 10 days (in the case of notice by mail) before
the time at which the meeting is to be held. Each such notice shall state the
time and place of the meeting but need not state the purpose or purposes of the
meeting. If mailed, each notice shall be deemed given when deposited, with
postage thereon prepaid, in a post office or official depository under the
exclusive care and custody of the United States post office department. Such
mailing shall be by first class mail.
Section 3.13 Voting by Proxy. Each director may authorize another
director to act for him by proxy at meetings of the Board of Directors, at
meetings of committees of the Board of Directors of which he is a member and in
giving a written consent in lieu of meetings of the Board of Directors and such
committees on behalf of his appointor. A proxy to a director shall be given in
an instrument in writing including a facsimile or similar communication method
and shall be produced to the first meeting at which it is used or otherwise
delivered to the Secretary of the Corporation. A proxy shall be conclusive
evidence of its validity until notice of revocation of such proxy in writing
including a facsimile or similar method of communication has been delivered to
the Secretary of the Corporation.
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Section 3.14 Quorum, Manner of Acting, Adjournment and Action without
Meeting.
(a) At all meetings of the Board of Directors the presence, in
person or by proxy, of one-third of the total number of directors shall
constitute a quorum for the transaction of business except as may be otherwise
specifically provided by Applicable Regulation, the Articles of Incorporation or
these By-Laws. The act of a simple majority of the directors present in person
or by proxy at any meeting at which there is a quorum shall be the act of the
Board of Directors, except as may be otherwise specifically provided by
Applicable Regulation, the Articles of Incorporation or these By-Laws. A
majority of the directors present at any meeting of the Board, including an
adjourned meeting, whether or not a quorum is present, may adjourn such meeting
to another time and place. Notice of any adjourned meeting of the Board need not
be given to any director whether or not present at the time of the adjournment.
Any business may be transacted at any adjourned meeting that might have been
transacted at the meeting as originally called.
(b) Any person who is himself a director and acting as a proxy
for any other director shall be entitled to have one vote for each capacity in
which he so acts (in addition to any vote he may have as a director).
(c) Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting, if all of the members of the Board of Directors or committee (or
other proxies) consent thereto in writing, and the writings are filed with the
minutes of proceedings of the Board of Directors or committee.
Section 3.15 Conference Telephone Meetings. One or more directors may
participate in a meeting of the Board of Directors, or of a committee of the
Board of Directors, by means of conference telephone or similar communications
equipment by means of which all persons can hear each other. Participation in a
meeting pursuant to this Section shall constitute presence in person at such
meeting.
Section 3.16 Committees of the Board of Directors.
(a) The Board of Directors may, by resolutions adopted by a
majority vote of the entire Board of Directors, designate from among its members
one or more other committees (having such name or names as may be determined
from time to time by resolution adopted by the Board of Directors), each
committee to consist of two or more directors. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified member.
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(b) Any committee designated by the Board of Directors shall
have and may exercise such powers and authorities as shall be provided in the
resolution of the Board of Directors establishing such committee; but no
committee of the Board of Directors shall have the power or authority in
reference to the submission to Shareholders of any action that requires
Shareholders' authorization under Applicable Regulation, the Articles of
Incorporation, or these By-Laws, the filling of vacancies in the Board of
Directors or in a committee, the fixing of the compensation of the directors for
serving on the Board of Directors or on any committee, the adoption of an
agreement of merger or consolidation, the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to
Shareholders a dissolution of the Corporation or revocation of a dissolution,
the amendment or repeal of the By-Laws or the adoption of new By-Laws, or the
amendment or repeal of any resolution of the Board of Directors other than one
which is by its terms so amendable or repealable.
Section 3.17 Compensation of Directors. Each director, in consideration
of his service as such, shall be entitled to receive from the Corporation such
amount per annum or such fees for attendance at directors' meetings, or both, as
the Board may from time to time determine, together with reimbursement for the
reasonable expenses incurred by him in connection with the performance of his
duties. Each director who shall serve as a member of any committee of directors
in consideration of his serving as such shall be entitled to such additional
amount per annum or such fees for attendance at committee meetings, or both, as
the Board may from time to time determine, together with reimbursement for the
reasonable expenses incurred by him in the performance of his duties. Nothing
contained in this section shall preclude any director from serving the
Corporation or its subsidiaries in any other capacity and receiving proper
compensation therefor.
Section 3.18 Specific and General Powers of Directors. Subject to any
regulations from time to time made by Shareholders, the Board of Directors shall
have the management of the affairs, business and property of the Corporation and
may do all such acts as are not prohibited by Applicable Regulation, by the
Articles of Incorporation, or by these By-Laws, and as are not reserved to the
Shareholders.
Section 3.19 Directors' Power to Give Effect to the DLC Agreements.
(a) The directors are authorized to operate and carry into
effect the Equalization Agreement, the SVE Special Voting Deed and the Carnival
Deed of Guarantee with full power to:
(i) enter into, operate and carry into effect any further
or other agreements or arrangements with or in connection with P&O Princess or
the holder of the P&O Princess Special Voting Share; and
(ii) do all such things as, in the opinion of the
directors, are necessary or desirable for the application, implementation,
protection, furtherance or maintenance of the dual listed company relationship
with P&O Princess constituted by or arising out of any agreement or arrangement.
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(b) Subject to Applicable Regulation, nothing done by any
director in good faith pursuant to such authority and obligations shall
constitute a breach of the fiduciary duties of such director to the Corporation
or Shareholders. In particular, the directors shall, in addition to their duties
to the Corporation, be entitled to have regard to the interests of the Combined
Shareholders as if the Corporation and P&O Princess were a single legal entity.
They are also authorized to provide to P&O Princess and any officer, employee or
agent of P&O Princess any information relating to the Corporation.
Section 3.20 Discretionary Matters. The Board of Directors may, by
agreement with the P&O Princess Board:
(a) decide to seek the approval of the shareholders (or any
class of shareholders) of either or both of the Corporation and P&O Princess for
any matter that would not otherwise require such approval;
(b) require any Joint Electorate Action to be approved instead
as a Class Rights Action; or
(c) specify a higher majority vote than the required majority
that would otherwise be required for any shareholder vote provided for in
Section 2.7.
ARTICLE IV
Officers
Section 4.1 Number, Qualifications and Designation. The officers of
the Corporation shall be chosen by the Board of Directors and shall be a Chief
Executive Officer, a President, one or more vice presidents, a Secretary, a
Treasurer, and such other officers as may be elected or appointed in accordance
with the provisions of Section 4.2. Officers may be of any nationality and need
not be residents or citizens of the Republic of Panama. One person may hold more
than one office. Officers may be, but need not be, directors of the Corporation
or Shareholders.
Section 4.2 Election and Term of Office. The officers of the
Corporation, except those appointed by delegated authority pursuant to Section
4.3, shall be elected annually by the Board of Directors, and each such officer
shall hold his office until his successor shall have been elected or appointed
and qualified, or until his earlier death, resignation or removal. More than two
offices may be held by the same person. Any officer may resign at any time upon
written notice to the Corporation. Any officer elected by the Board of Directors
or appointed by delegated authority may be removed at any time with or without
cause by the affirmative vote of a majority of members of the Board of Directors
then in office. The removal of an officer without cause shall be without
prejudice to his contract rights, if any. The election or appointment of an
officer shall not of itself create contract rights. Any vacancy occurring in the
office of the Corporation may be filled by the Board of Directors.
Section 4.3 Powers and Duties. The Chairman of the Board, or, if a
Chairman of the Board has not been chosen or is unavailable, the Vice-Chairman
of the Board, or, if neither has been chosen or are unavailable, the President,
shall preside at all
14
meetings of the Shareholders and of the Board. The Chairman of the Board and the
Vice-Chairman of the Board shall be executive officers of the Corporation and
shall exercise such executive duties as may be prescribed from time to time by
the Board. The officers and agents of the Corporation shall each have such
powers and perform such duties in the management of the business and affairs of
the Corporation as generally pertain to their respective offices, as well as
such powers and duties as from time to time may be prescribed by the Board.
Section 4.4 Other Officers, Subordinate Officers, Non-Board Committees
and Agents. The Board of Directors may from time to time elect such other
officers and appoint such employees or other agents, or such committees (not
constituting committees of the Board of Directors), as it deems necessary, who
shall hold their offices for such terms and shall exercise such powers and
perform such duties as are provided in these By-Laws, or as the Board of
Directors may from time to time determine. The Board of Directors may delegate
to any officer or committee of the Board of Directors referred to in Section
3.16 the power to appoint subordinate officers and to retain or appoint
employees or other agents, or committees (not constituting committees of the
Board of Directors) and to prescribe the authority, duties and compensation of
such subordinate officers, committees, employees or other agents.
ARTICLE V
Certificates of Stock, Transfer, Etc.
Section 5.1 Issue. Each Shareholder shall be entitled to a certificate
or certificates for shares of the Corporation owned by him upon his request
thereof. All share certificates of the Corporation shall be issued in registered
form only, consistent with the provisions of Article 27 of the Corporation Law.
They shall be signed by the President or a vice president and by the Secretary
or an assistant secretary or the Treasurer or an assistant treasurer, and may
bear the corporate seal, which may be a facsimile. The signatures of the
officers upon such certificate may be facsimiles, if the certificate is
countersigned by a transfer agent or registered by a registrar other than the
Corporation itself or its employees. In case any officer who has signed, or
whose facsimile signature has been placed upon, any share certificate shall have
ceased to be such officer before the certificate is issued it may be issued or
delivered with the same effect as if he were such officer at the date of its
issue or delivery. The Corporation shall keep a record containing the names and
addresses of all registered Shareholders, the number and class of shares held by
each and the date when they respectively became the owners of record thereof.
Section 5.2 Transfer.
(a) Transfer of shares issued in the name of a holder of
record shall be made only on the books of the Corporation only by the person
named in the certificate or by his attorney lawfully constituted and upon
surrender of and cancellation of the certificate therefor. Every transfer of
shares by holders of record shall be entered on the stock book of the
Corporation. Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for registered shares duly endorsed or
15
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. No transfer of shares of capital stock shall be
valid as against the Corporation, its shareholders and creditors for any purpose
except to render the transferee liable for the debts of the Corporation to the
extent provided by law until such transfer shall have been entered on the books
of the Corporation by an entry showing from and to whom transferred.
(b) Any applicant wishing to transfer shares shall pay to the
Corporation any stamp or other duties or taxes payable in respect of the
transfer, together with any charges imposed by the Corporation in respect of
such transfer, all prior to and as a condition precedent to the issuance of any
new certificates to such applicant.
Section 5.3 Transfer of the Carnival Special Voting Share. No transfer
of the Carnival Special Voting Share will take effect until the transfer has
been approved in accordance with the SVE Special Voting Deed and until the
transferee has agreed to be bound by the terms of the SVE Special Voting Deed.
Section 5.4 Lost, Stolen, Destroyed or Mutilated Certificates. The
holder of any shares of capital stock of the corporation shall immediately
notify the Corporation of any loss, destruction, theft or mutilation of the
certificate representing such shares, and the corporation may issue a new
certificate to replace the certificate alleged to have been lost, destroyed,
stolen or mutilated. The Board may, in its discretion, as a condition to the
issue of any such new certificate, require the owner of the lost, destroyed,
stolen or mutilated certificate, or his legal representatives, to make proof
satisfactory to the Board of such loss, destruction, theft or mutilation and to
advertise such fact in such manner as the Board may require, and to give the
Corporation and its transfer agents and registrars, or such of them as the Board
may require, a bond in such form, in such sums and with such surety or sureties
as the Board may direct, to indemnify the Corporation and its transfer agents
and registrars against any claim that may be made against any of them on account
of the continued existence of any such certificate so alleged to have been lost,
destroyed, stolen or mutilated and against any expense in connection with such
claim.
Section 5.5 Record Holder of Shares. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of registered shares to receive dividends, to vote and to exercise any
other rights in respect of the shares held as the owner thereof.
Section 5.6 Determination of Shareholders of Record. In order that the
Corporation may determine the holders of registered shares entitled to notice of
meeting of Shareholders, or entitled to express consent to or dissent from any
proposed corporate action without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights in respect of any
change, conversion or exchange of shares or for the purposes of any other
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days
16
before the date of such meeting, nor more than sixty (60) days prior to any
other action. If no such record is fixed:
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the date next preceding the day on
which the meeting is held;
(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the Board is necessary, shall be the day on which the first written
consent is expressed; and
(c) The record date for determining stockholders for any
purpose other than those specified in subsections (a) and (b) shall be at the
close of business on the day on which the Board adopts resolution relating
thereto.
A determination of registered Shareholders of record entitled to notice of or to
vote at a meeting of Shareholders shall apply to any adjournment of the meeting;
except that the Board of Directors may fix a new record date for an adjourned
meeting.
ARTICLE VI
Notices
Section 6.1 Notice to Corporation. Whenever, under the provisions of
the statutes of the Republic of Panama or the Articles of Incorporation or these
By-Laws, any notice, request, demand or other communication is required to be or
may be given or made to the Corporation, it shall also not be construed to mean
that such notice, request, demand or other communication must be given or made
in person, but the same may be given or made to the Corporation by mail or
facsimile. Any such notice, request, demand or other communication shall be
considered to have been properly given or made, in the case of mail when
deposited in the mail, and in other cases when transmitted by the party giving
or making the same, directed to the Corporation at its then registered address,
provided that a copy of the same is sent by like medium of communication to the
attention of the secretary at the Corporation's then principal place of
business.
Section 6.2 Waiver of Notice.
(a) Whenever any written notice is required to be given under
the provision of Applicable Regulation, the Articles of Incorporation or these
By-Laws, a waiver thereof in writing, signed by the person or persons entitled
to such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
(b) Attendance of a person, either in person or by proxy, at
any meeting, without protesting prior to the conclusion of the meeting the lack
of notice of such meeting, shall constitute a waiver of notice of such meeting.
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ARTICLE VII
Indemnification
Section 7.1 Indemnification of Officers and Directors. The Corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director or an officer of the Corporation or P&O Princess,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding to the fullest extent and in the manner set forth in
and permitted by the Corporation Law, and any other applicable law, as from time
to time in effect. Such right of indemnification shall not be deemed exclusive
of any other rights to which such director or officer may be entitled apart from
the foregoing provisions. The foregoing provisions of this Section 7.1 shall be
deemed to be a contract between the Corporation and each director and officer of
the Corporation or P&O Princess who serves in such capacity at any time while
this Article VII and the relevant provisions of the Corporation Law and other
applicable law, if any, are in effect, and any repeal or modification thereof
shall not affect any rights or obligations then existing with respect to any
state of facts then or theretofore existing or any action, suit or proceeding
theretofore or thereafter brought or threatened based in whole or in part upon
any such state of facts.
Section 7.2 Indemnification of Other Persons. The Corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative by reason of the fact that he
is or was an employee or agent of the Corporation or P&O Princess, or is or was
serving at the request of the Corporation or P&O Princess as a director,
officer, employee or agent or another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding to the extent and in
the manner set forth in and permitted by the Corporation Law, and any other
applicable law, as from time to time in effect. Such right of indemnification
shall not be deemed exclusive of any other rights to which any such person may
be entitled apart from he foregoing provisions.
Section 7.3 Insurance. The Corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation or P&O Princess, or is or was
serving at the request of the Corporation or P&O Princess as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of Sections 7.1 and 7.2 hereof or under the
Corporation Law or any other provision of law.
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ARTICLE VIII
General Provisions
Section 8.1 Dividends.
(a) Dividends upon the capital stock of the Corporation,
subject to the provisions of the Articles of Incorporation, and the Equalization
Agreement, may be declared by the Board of Directors at any regular or special
meeting, pursuant to Applicable Regulation. Dividends may be paid in cash, in
property or in shares of the capital stock of the Corporation, subject to the
provisions of the Articles of Incorporation and the Equalization Agreement.
Before payment of any dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, thinks proper as a reserve or
reserves to meet contingencies, or for repairing or maintaining any property of
the Corporation, or for such other purposes as the Board of Directors shall
think conducive to the interests of the Corporation, and the Board of Directors
may modify or abolish any such reserve in the manner in which it was created.
(b) The Corporation or other person paying any dividend or
issuing any right on behalf of the Corporation shall be entitled to withhold
therefrom any taxes required to be withheld by the laws and regulations of any
taxing authority having jurisdiction in the circumstances.
Section 8.2 Contracts. Except as otherwise provided in these By-Laws,
the Board of Directors may authorize any officer or officers or any agent or
agents, to enter into any contract or to execute or deliver any instrument on
behalf of the Corporation and such authority may be general or confined to
specific instances.
Section 8.3 Loans. The President or any other officer, employee or
agent authorized to do so by the Board may effect loans and advances at any time
for the Corporation from any bank, trust company or other institutions or from
any firm, corporation or individual and for such loans and advances may make,
execute and deliver promissory notes, bonds or other certificates or evidences
of indebtedness of the Corporation, and, when authorized by the Board so to do,
may pledge and hypothecate or transfer any securities or the property of the
Corporation as security for any such loans or advances. Such authority conferred
by the Board may be general or confined to specific instances or otherwise
limited.
Section 8.4 Checks, Drafts, Etc. All checks, drafts and other orders
for the payment of money out of the funds of the Corporation and all notes or
other evidences of indebtedness of the Corporation shall be signed on behalf of
the Corporation in such manner as shall from time to time be determined by
resolution of the Board.
Section 8.5 Deposits. The funds of the Corporation otherwise employed
shall be deposited from time to time to the order of the Corporation in such
banks, trust companies or other depositaries as the Board may select or as may
be
19
selected by a officer, employee or agent of the Corporation to whom such power
may from time to time be delegated by the Board.
Section 8.6 Corporate Seal. The corporate seal shall be in the form of
a circle and shall have inscribed thereon the name of the Corporation, the year
of its incorporation and the words "Republic of Panama." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or otherwise
reproduced.
Section 8.7 Corporate Records. Every Shareholder shall, upon written
demand stating the purpose thereof, have a right to inspect, in person or by
agent or attorney, during the usual hours of business, for a purpose reasonably
related to his interests as a Shareholder, the share register, books of account,
and minutes of all proceedings, and make copies or extracts therefrom.
Section 8.8 Fiscal Year. The fiscal year of the Corporation shall be
determined, and may be changed, by resolution of the Board.
Section 8.9 Amendment of By-Laws. These By-Laws may be amended in
accordance with the Articles of Incorporation.
Section 8.10 Effective Date. Any amendment to or any amendment and
restatement of these By-Laws shall govern the affairs of the Corporation from
and after the date stated in the resolution adopting the same.
ARTICLE IX
Definitions
Section 9.1 For purposes of these By-Laws:
"Amendment Date" means [.], 2003.
"Annual Meeting" means the annual meeting of the Shareholders as
described in Section 2.2.
"Applicable Exchange Rate" means, in relation to any proposed
Distributions by the Corporation and P&O Princess in relation to which a foreign
exchange rate is required, the average of the closing mid-point spot US
dollar-sterling exchange rate on the five Business Days ending on the Business
Day before the Distribution Determination Date relating to such Distributions
(as shown in the London edition of the Financial Times, or such other point of
reference as the parties shall agree), or such other spot US dollar-sterling
exchange rate or average US dollar-sterling exchange rate as at such other date
(or over such other period) before a Distribution Determination Date as the
Board of Directors and the P&O Princess Board shall agree, in each case rounded
to five decimal places.
"Applicable Regulation" means
20
(a) any law, statute, ordinance, regulation, judgment, order,
decree, license, permit, directive or requirement of any Governmental Agency
having jurisdiction over the Corporation; and
(b) the rules, regulations, and guidelines of:
(i) any stock exchange or other trading market on which
any shares or other securities or depositary receipts representing such shares
or securities of the Corporation or P&O Princess are listed, traded or quoted;
and
(ii) any other body with which entities with securities
listed or quoted on such exchanges customarily comply,
(but, if not having the force of law, only if compliance with such directives,
requirements, rules, regulations or guidelines is in accordance with the general
practice of persons to whom they are intended to apply) in each case for the
time being in force and taking account all exemptions, waivers or variations
from time to time applicable (in particular situations or generally) to the
Corporation or, as the case may be, P&O Princess.
"Articles of Incorporation" means the articles of incorporation of the
Corporation, as amended from time to time.
"Board of Directors" or "Board" means the board of directors of the
Corporation (or a duly authorized committee of the board of directors of the
Corporation) from time to time.
"Carnival Common Stock" has the same meaning as described in the
Articles of Incorporation.
"Carnival Deed of Guarantee" means the deed of guarantee dated as of
[.], 2003, between the Corporation and P&O Princess pursuant to which the
Corporation guarantees certain obligations of P&O Princess for the benefit of
certain future creditors of P&O Princess, as amended from time to time.
"Carnival Entrenched Provision" shall have the meaning given to such
term in the Articles of Incorporation.
"Carnival Equivalent Number" means the number of shares of Carnival
Common Stock that have the same rights to distributions of income and capital
and voting rights as one P&O Ordinary Share. Initially, the Carnival Equivalent
Number shall be 0.30040, but it shall adjust as provided in Clause 4 of the
Equalization Agreement and the Schedule thereto. In all cases, the Carnival
Equivalent Number shall be rounded to five decimal places;
"Carnival Special Voting Share" means the special voting share, par
value $.01 per share, of the Corporation.
21
"Carnival SVC" means the holder, from time to time, of the Carnival
Special Voting Share.
"Carnival SVC Owner" shall mean the holder, from time to time, of the
equity interests in Carnival SVC.
"Class Rights Action" means any of the actions listed in Section 2.18.
"Combined Shareholders" means the holders of Carnival Common Stock and
the holders of P&O Princess Ordinary Shares.
"Corporation" means Carnival Corporation, a corporation organized and
existing in accordance with the laws of the Republic of Panama.
"Corporation Law" shall mean Law 32 of the Corporation Law of 1927 of
the Republic of Panama, as amended.
"Deeds of Guarantee" means the Carnival Deed of Guarantee and the P&O
Princess Deed of Guarantee.
"Disenfranchised Carnival Common Stock" has the meaning in the Articles
of Incorporation.
"Equalization Agreement" means the Equalization and Governance
Agreement, dated as of [.], 2003, between the Corporation and P&O Princess, as
amended from time to time.
"Equalization Ratio" means the ratio of (i) one P&O Princess Ordinary
Share to (ii) the Carnival Equivalent Number;
"Equalization Share" shall mean, in relation to the Corporation, any
share designated as an Equalization Share in the Corporation from time to time
by the Board and, in relation to P&O Princess, the Equalization Share of
(Pounds)50,000 in the capital of P&O Princess.
"Equivalent Resolution" means a resolution of either the Corporation or
P&O Princess that is equivalent in nature and effect to a resolution of the
other company.
"Governmental Agency" means a court of competent jurisdiction or any
government or any governmental, regulatory, self-regulatory, or administrative
authority, agency, commission, body or other governmental entity and shall
include any relevant competition authorities, the U.S. Securities and Exchange
Commission, the New York Stock Exchange, the UK Panel on Takeovers and Mergers,
the London Stock Exchange and the UK Listing Authority.
"Implementation Agreement" means the Offer and Implementation
Agreement, dated as of January 8, 2003, between the Corporation and P&O
Princess.
22
"Joint Electorate Action" has the meaning set forth in Section 2.16.
"Liquidation" means, with respect to either the Corporation or P&O
Princess, any liquidation, winding up, receivership, dissolution, insolvency or
equivalent proceedings pursuant to which the assets of such company will be
liquidated and distributed to creditors and other holders of provable claims
against such company.
"London Stock Exchange" means the London Stock Exchange plc.
"Majority Resolution" means a resolution duly approved at a meeting of
the Corporation's Shareholders by the affirmative vote of a majority of all the
votes cast on such resolution by all shareholders of the Corporation entitled to
vote thereon (including, where applicable, the Carnival SVC) who are present in
person or by proxy at such meeting; provided that abstentions shall not be
deemed to be "votes cast" for these purposes.
"New York Stock Exchange" means the New York Stock Exchange, Inc.
"Ordinary Shares" means that Carnival Common Stock and the P&O Princess
Ordinary Shares, as the context requires.
"Other Voting Shares" means, with respect to any resolution to be acted
on by the shareholders of the Corporation or P&O Princess, as the case may be,
such shares of capital stock of that company that are entitled to vote on such
resolution at a meeting of the shareholders of such company, other than the
Carnival Special Voting Share, the P&O Princess Special Voting Share and the
Ordinary Shares (including the Disenfranchised Carnival Common Stock).
"P&O Princess Articles" means the P&O Princess articles of association,
as amended from time to time.
"P&O Princess" means P&O Princess Cruises plc, a public limited company
incorporated in England and Wales.
"P&O Princess Board" means the Board of Directors of P&O Princess.
"P&O Princess Deed of Guarantee" means the deed of guarantee dated as
of [.], 2003, between P&O Princess and the Corporation whereby P&O Princess
agrees to guarantee certain obligations of the Corporation for the benefit of
certain future creditors of the Corporation, as amended from time to time.
"P&O Princess Entrenched Provision" means those provisions designated
as such in the P&O Princess Memorandum and Articles.
"P&O Princess Equivalent Number" has the meaning given in the
definition of "Equalization Ratio."
23
"P&O Princess Memorandum and Articles" means the P&O Princess
memorandum and articles of association, as amended from time to time.
"P&O Princess Ordinary Shares" has the meaning given to in the P&O
Princess Articles.
"P&O Princess Special Voting Share" means the special voting share of
(Pounds)1 in P&O Princess.
"P&O Princess SVT" shall mean P&O Princess Special Voting Trust, a
trust organized under the laws of __________, or such other entity as replaces
it pursuant to the terms of the SVE Special Voting Deed.
"P&O Princess SVT Agreement" shall mean the Voting Trust Agreement,
forming P&O Princess SVT, between P&O Princess Trustee and Carnival, dated as of
[.] 2003, as amended from time to time.
"P&O Princess Trustee" means [.], as trustee of P&O Princess SVT
pursuant to the P&O Princess SVT Agreement (or any successor trustee appointed
pursuant to Section 7.08 thereof).
"Parallel Shareholder Meeting" means, in relation to P&O Princess, any
meeting of the shareholders of P&O Princess which is:
(a) nearest in time to, or is contemporaneous with, the
meeting of the Shareholders of the Corporation and at which some or all of the
same resolutions or some or all Equivalent Resolutions are to be considered; or
(b) designated by the P&O Princess Board as the parallel
meeting of shareholders of a particular meeting of Shareholders of the
Corporation.
"Procedural Resolutions" shall have the meaning set forth in Section
2.20.
"Shareholders" means the holders of shares of the Corporation's capital
stock.
"Special Meeting" means a meeting of the Shareholders other than an
Annual Meeting as described in Section 2.4.
"Special Voting Share" means, in relation to the Corporation, the
Carnival Special Voting Share and, in relation to P&O Princess, the P&O Princess
Special Voting Share.
"Supermajority Resolution" means a resolution required by Applicable
Regulations, the Articles of Incorporation or these By-Laws, as relevant, to be
approved by a higher percentage of votes cast than required under a Majority
Resolution, or where the percentage of votes in favour and against the
resolution is required to be calculated by a different mechanism to that
required by a Majority Resolution.
24
"SVE Special Voting Deed" means the SVE Special Voting Deed, dated as
of [.], 2003, by and among the Corporation, Carnival SVC, Carnival SVC Owner,
P&O Princess and P&O Princess Trustee, as amended from time to time.
25
Annex A-6
AGREED FORM
THE COMPANIES ACT 1985
-------------------------------------
A PUBLIC COMPANY LIMITED BY SHARES
-------------------------------------
MEMORANDUM OF ASSOCIATION
of
P&O PRINCESS CRUISES PLC
-------------------------------------
1. The name of the Company is "P&O Princess Cruises plc".
2. The Company is to be a public company.
3. The registered office of the Company is to be situated in England and
Wales.
4. The objects for which the Company is established are:
4.1 To enter into, operate and carry into effect the Equalization and
Governance Agreement between the Company and Carnival Corporation, a
corporation organized under the laws of the Republic of Panama
("Carnival"), the SVE Special Voting Deed among, inter alia, the Company,
Carnival, Carnival SVC Limited, a limited liability company organized
under the laws of England and Wales, [.] as trustee of the P&O Princess
Special Voting Trust, a trust organized under the laws of ______________,
[.] and [.] and the Deed of Guarantee made between the Company and
Carnival in favour of certain creditors of Carnival each as described in
the circular to shareholders of the Company dated [.] 2003 with full power
to:
4.1.1 agree any amendment or termination of all or any of the terms of
the said Agreement or the said Deeds in accordance with the terms
thereof;
4.1.2 enter into, operate and carry into effect any further or other
agreements or arrangements with or in connection with Carnival;
and
4.1.3 do all such things as in the opinion of the Directors are
necessary or desirable for the furtherance of this object or for
the furtherance, maintenance or development of the relationship
with Carnival constituted by or arising out of
1
any agreement, deed or other arrangement mentioned in or made in
accordance with this sub-clause.
4.2.
4.2.1 To carry on the business of ship and boat owners, forwarding and
general agents, organising and conducting cruises, tours, holidays
and excursions and to carry on the business as carriers of
passengers and goods by sea, river, land and air, travel agents,
tourist agents and contractors, insurance brokers, agents for the
operators of sea, river, land and air carriage undertakings, and
to provide passengers, travellers and tourists with hotel and
other services and conveniences of all kinds.
4.2.2 To co-ordinate, finance and manage all or any part of the
operations of any company which is a subsidiary company of or
otherwise under the control of the Company and generally to carry
on the business of a holding company.
4.2.3 To carry out such operations and to manufacture or deal with such
goods and to purchase or otherwise acquire, take options over,
construct, lease, hold, manage, maintain, alter, develop, exchange
or deal with such property, rights or privileges (including the
whole or part of the business, property or liabilities of any
other person or company) as may seem to the board of directors
directly or indirectly to advance the interests of the Company.
4.2.4 To enter into such commercial or other transactions in connection
with any trade or business of the Company as may seem to the board
of directors desirable for the purpose of the Company's affairs.
4.2.5 To apply for, purchase or otherwise acquire, protect, maintain and
renew any patents, patent rights, trade marks, designs, licences
and other intellectual property rights of all kinds or any secret
or other information as to any invention and to use, exercise,
develop or grant licences in respect of, or otherwise turn to
account the property, rights or information so acquired and to
experiment with any such rights which the Company may propose to
acquire.
4.2.6 To invest and deal with the moneys of the Company not immediately
required in any manner and hold and deal with any investment so
made.
4.2.7 To pay or to provide or to make such arrangements for providing
such gratuities, pensions, benefits, share option and acquisition
schemes, loans and other matters and to establish, support,
subsidise and subscribe to any institutions, associations, clubs,
schemes, funds or trusts (whether to or for the benefit of present
or past directors or employees of the Company or its predecessors
in business or of any company which is a subsidiary company of the
Company or is allied to or associated with the Company or with any
such subsidiary company or to or for or for the benefit of persons
who are or were related to or connected with or dependants of any
such directors or employees) as may seem to the board of directors
directly or indirectly to advance the interests of the Company.
2
4.2.8 To draw, make, accept, endorse, discount, negotiate, execute and
issue promissory notes, bills of exchange, bills of lading,
warrants, debentures and other negotiable and transferable
instruments.
4.2.9 To act as agents, brokers or trustees, and to enter into such
arrangements (whether by way of amalgamation, partnership, profit
sharing, union of interests, co-operation, joint venture or
otherwise) with other persons or companies as may seem to the
board of directors to advance the interests of the Company and to
vest any property of the Company in any person or company on
behalf of the Company and with or without any declaration of trust
in favour of the Company.
4.2.10 To apply for, promote and obtain any Act of Parliament, charter,
privilege, concession, licence or authorisation of any government,
state or municipality, or any other department or authority, or
enter into arrangements with any such body, for enabling the
Company to carry any of its objects into effect or for extending
any of the powers of the Company or for effecting any modification
of the constitution of the Company or for any other purpose which
may seem to the board of directors to be expedient, and to oppose
any proceedings or applications which may seem calculated directly
or indirectly to prejudice the interests of the Company.
4.2.11 To sell, lease, dispose of, grant rights over or otherwise deal
with the whole or any part of the undertaking, property or assets
of the Company on such terms as the board of directors may decide,
and to distribute any property or assets of the Company of
whatever kind in specie among the members of the Company.
4.2.12 To pay for any rights or property acquired by the Company or any
of its subsidiaries and to remunerate any person or company,
whether by cash payment or by the allotment of shares, debentures
or other securities of the Company credited as paid up in full or
in part, or by any other method the board of directors thinks fit.
4.2.13 To establish or promote companies and to place or guarantee the
placing of, underwrite, subscribe for or otherwise acquire, hold,
dispose of and deal with, and guarantee the payment of interest,
dividends and capital on all or any of the shares, debentures,
debenture stock or other securities or obligations of any company
or association and to pay or provide for brokerage, commission and
underwriting in respect of any such issue on such terms as the
board of directors may decide.
4.2.14 To carry on through any subsidiary or associated company any
activities which the Company is authorised to carry on and to make
any arrangements whatsoever with such company (including any
arrangements for taking the profits or bearing the losses of any
such activities) as the board of directors thinks fit.
4.2.15 To raise or borrow money in such manner as the board of directors
thinks fit and to receive deposits and to mortgage, charge, pledge
or give liens or other security over the whole or any part of the
Company's undertaking, property and assets (whether present or
future), including its uncalled capital, for such
3
purposes and in such circumstances and on such terms and
conditions as the board of directors thinks fit.
4.2.16 To lend or advance money and to give credit and to enter (whether
gratuitously or otherwise) into guarantees or indemnities of all
kinds, and whether secured or unsecured, whether in respect of its
own obligations or those of some other person or company, in such
circumstances and on such terms and conditions as the board of
directors thinks fit.
4.2.17 To pay or agree to pay all or any of the promotion, formation and
registration expenses of the Company.
4.2.18 To contribute to or support any public, general, political,
charitable, benevolent or useful object, which it seems to the
board of directors to be in the interests of the Company or its
members to contribute to or support.
4.2.19 To do all or any of the things stated in this clause 4 in any part
of the world whether as principal, agent or trustee or otherwise
and either alone or jointly with others and either by or through
agents, subcontractors, trustees or otherwise.
4.2.20 To do all such other things as the board of directors considers
will further the interests of the Company or to be incidental or
conducive to the attainment of all or any of the objects stated in
this clause 4.
5. The objects stated in each part of clause 4 shall not be restrictively
construed but shall be given the widest interpretation. In clause 4, the
word "company" shall be deemed, except where used to refer to the Company,
to include any partnership or other body of persons, whether corporate or
unincorporate and whether domiciled in the United Kingdom or elsewhere.
Except where the context expressly so requires, none of the sub-clauses of
clause 4, or the objects stated in clause 4, or the powers conferred by
clause 4 shall be limited by, or be deemed subsidiary or auxiliary to, any
other sub-clause of clause 4, or any other object stated in clause 4 or
any other power conferred by clause 4.
6. The liability of the members is limited.
7. The share capital of the Company is (Pounds)50,000 divided into 2
subscriber shares of (Pounds)1 each and 49,998 redeemable preference
shares of (Pounds)1 each/1/.
---------------------
/1/ This is the share capital of the Company as at 28 July 2000. A statement
of the Company's share capital on incorporation is given at the end of the
memorandum of association.
4
We, the subscribers to this memorandum of association, wish to be formed into a
company pursuant to this memorandum. We agree to take the number of shares shown
opposite our respective names.
Name and address of subscriber Number of shares taken
Michael Gradon One Subscriber Share
The Summer House
18 Granville Road
Limpsfield, Oxted
Surrey
RH8 0DA
Nicholas Luff One Subscriber Share
30 Kings Avenue
Carshalton
Surrey
SM5 4NX
Total shares taken
Two Subscriber Shares
Date:
Witness to signatures:
5
Annex A-7
AGREED FORM
------------------------------------------
A PUBLIC COMPANY LIMITED BY SHARES
------------------------------------------
ARTICLES OF ASSOCIATION
of
P&O PRINCESS CRUISES PLC
(the Company)
([ ])
----------------------------------------
1
CONTENTS ARTICLE
Preliminary ...................................................... 1-2
Construction. .................................................... 3-15
Share Capital .................................................... 16-34
Redeemable Shares ................................................ 35-51
Variation of Rights .............................................. 52
Share Certificates ............................................... 53-55
Lien ............................................................. 56-59
Calls on Shares .................................................. 60-66
Forfeiture and Surrender ......................................... 67-73
Transfer of Shares ............................................... 74-83
Transmission of Shares ........................................... 84-87
Alteration of Share Capital ...................................... 88-91
Purchase of Own Shares ........................................... 92
General Meetings ................................................. 93-98
Notice of General Meetings ....................................... 99-110
Proceedings at General Meetings .................................. 111-123
Voting rights and procedures under the
Equalization Agreement ........................................... 124-146
Voting rights and procedures ..................................... 147-160
Proxies and Corporate Representatives ............................ 161-169
Number of Directors .............................................. 170
Appointment and Retirement of Directors .......................... 171-181
Alternate Directors .............................................. 182-187
Powers of the Board .............................................. 188-190
Delegation of powers of the Board ................................ 191-194
Disqualification and Removal of Directors ........................ 195
Remuneration of Non-Executive Directors .......................... 196-197
Directors' Expenses .............................................. 198
Executive Directors .............................................. 199-201
Directors' Interests ............................................. 202-203
Gratuities, Pensions and Insurance ............................... 204-207
Proceedings of the Board ......................................... 208-217
Secretary ........................................................ 218
Minutes .......................................................... 219-220
The Seal ......................................................... 221-223
Registers ........................................................ 224-225
Dividends ........................................................ 226-247
Capitalisation of Profits and Reserves ........................... 248
Record Dates ..................................................... 249
Accounts ......................................................... 250-252
Notices .......................................................... 253-265
Destruction of Documents ......................................... 266-267
Untraced Shareholders ............................................ 268-271
Liquidation ...................................................... 272-276
Share Control Limit .............................................. 277-285
Combined Group Excess Shares ..................................... 286
Voting Control ................................................... 287
Indemnity ........................................................ 288
Mandatory Exchange ............................................... 289-292
2
PRELIMINARY
Table A
1. Regulations in Table A as in force at the date of the incorporation of the
Company shall not apply to the Company.
Definitions
2. In these Articles, except where the subject or context otherwise requires:
"Act" means the Companies Act 1985 including any modification or
re-enactment of it for the time being in force;
"Acting in Concert" has the same meaning as it has in the City Code
provided that, notwithstanding anything to the contrary, none of (x) the
Arison Group, (y) the Carnival Group or (z) the P&O Princess Group (each, a
"Non-Concert Group"), shall be deemed to be Acting in Concert with any
other Non-Concert [Group] for the purposes of these Articles;
"Action" means, in relation to Carnival or the Company, any action
affecting the amount or nature of issued share capital of such company,
including any non-cash Distribution, offer by way of rights, bonus issue,
sub-division or consolidation, or buy-back;
"Acts" means the Act and all other statutes and subordinate legislation for
the time being in force concerning companies so far as they apply to the
Company;
"address" in relation to electronic communications, includes any number or
address used for the purposes of such communications;
a person shall be treated as "Appearing to be Interested" in any Ordinary
Shares if:
(a) the Company has received a notification which either:
(i) states that such person is, or may be, Interested in such
Ordinary Shares;
(ii) fails to establish the identities of those Interested in the
Ordinary Shares and (after taking into account any notification
and any relevant information) the directors know or have
reasonable cause to believe that the person in question is, or
may be, Interested in the Ordinary Shares; or
(b) the directors know or have reasonable cause to believe that the person
in question is, or may be, Interested in the Ordinary Shares;
"Applicable Exchange Rate" means, in relation to any proposed Distributions
by the Company and Carnival in relation to which a foreign exchange rate is
required, the average of the closing mid-point spot US dollar-sterling
exchange rate on the five Business Days ending on the Business Day before
the Distribution Determination Date relating to such Distributions (as
shown in the London edition of the Financial Times, or such other point of
reference as the parties shall agree), or such other spot US
dollar-sterling exchange rate or average US dollar-sterling exchange rate
as at such other date (or over such other period) before a Distribution
Determination Date as the Board and the Board of Carnival shall agree, in
each case rounded to five decimal places;
3
"Applicable Regulations" means;
(a) any law, statute, ordinance, regulation, judgement, order, decree,
licence, permit, directive or requirement of any Governmental Agency
having jurisdiction over P&O Princess and/or Carnival; and
(b) the rules, regulations, and guidelines of:
(i) any stock exchange or other trading market on which any shares
or other securities or depositary receipts representing such
shares or securities of either P&O Princess or Carnival are
listed, traded or quoted; and
(ii) any other body with which entities with securities listed or
quoted on such exchanges customarily comply,
(but, if not having the force of law, only if compliance with such
directives, requirements, rules, regulations or guidelines is in
accordance with the general practice of persons to whom they are
intended to apply) in each case for the time being in force and taking
account all exemptions, waivers or variations from time to time
applicable (in particular situations or generally) to the Company or,
as the case may be, Carnival;
"Arison Group" shall mean each of Marilyn B. Arison, Micky Arison, Shari
Arison, Michael Arison or their spouses or children or lineal descendants
of Marilyn B. Arison, Micky Arison, Shari Arison, Michael Arison of their
spouses, any trust established by Theodore Arison, any trust established
for the benefit of any Arison family member mentioned in this definition,
or any "person" (as such term is used in Section 13(d) or 14(d) of the
United States Securities Exchange Act of 1934), directly or indirectly,
controlling, controlled by or under common control with any Arison family
member mentioned in this definition or any trust established for the
benefit of any such Arison family member or any charitable trust or
non-profit entity established by a member of the Arison Group but excluding
(for the avoidance of doubt) Carnival, the Company or any of their
respective Subsidiaries or affiliates.
"Articles" means these articles of association as altered from time to time
by special resolution;
"Associated Tax Credit" means, in relation to any Distribution proposed to
be made by the Company, the amount of any imputed or associated Tax credit
or rebate or exemption (or the value of any other similar associated Tax
Benefit) which would be available to a holder of P&O Princess Ordinary
Shares receiving or entitled to receive the Distribution, together with the
amount of any credit or benefit in respect of any Tax required to be
deducted or withheld from the Distribution by or on behalf of the Company;
"Auditors" means the auditors of the Company;
"beneficially own" shall mean to possess beneficial ownership as determined
under Rule 13d-3 under the U.S. Securities Exchange Act of 1934;
"Board" means the board of directors of the Company (or a duly authorised
committee of the board of directors of the Company) from time to time;
4
"Board of Carnival" means the board of directors of Carnival (or a duly
authorised committee of the board of directors of Carnival) from time
to time;
"Business Day" means any day other than a Saturday, Sunday or day on
which banking institutions in the cities of both New York and London
are authorised or obligated by law or executive order to close in the
United Sates or England (or on which day such banking institutions are
open solely for trading in euros);
"Carnival" means Carnival Corporation;
"Carnival Common Stock" has the meaning set out in the Carnival
Constitution;
"Carnival Constitution" means the Articles of Incorporation and
By-Laws of Carnival as amended from time to time;
"Carnival Entrenched Provisions" means the Carnival Entrenched
Articles and the Carnival Entrenched By-Laws as defined in the
Carnival Constitution;
"Carnival Equivalent Number" means the number of shares of Carnival
Common Stock that have the same rights to distributions of income and
capital and voting rights as one P&O Ordinary Share. Initially, the
Carnival Equivalent Number shall be 0.30040 but it shall adjust as
provided in Clause 4 of the Equalization Agreement and the Schedule
thereto. In all cases, the Carnival Equivalent Number shall be rounded
to five decimal places;
"Carnival Group" means Carnival and its Subsidiaries and associated
undertakings from time to time;
"Carnival Guarantee" means the guarantee of the same date as the
Equalization Agreement between Carnival and the Company under which
Carnival agrees to guarantee certain obligations of the Company for the
benefit of certain future creditors of the Company, as amended from
time to time;
"Carnival Special Voting Share" means the special voting share in the
capital of Carnival having the rights set out in the Carnival
Constitution;
"Carnival SVC" means the holder, from time to time, of the Carnival
Special Voting Share;
"Carnival SVC Owner" means the holder, from time to time, of the
equity interests in Carnival SVC;
"certificated share" means a share in the capital of the Company that
is not an uncertificated share and references in these Articles to a
share being held in certificated form shall be construed accordingly;
"Charitable Beneficiary" means any registered charity or similar body
or organisation;
"City Code" means the UK City Code on Takeovers and Mergers as amended
from time to time (including any supplemental or replacement Applicable
Regulations), and including any actions required, or approved, by any
relevant governing or supervisory body with authority in relation to
the UK City Code on Takeovers and Mergers (or any replacement);
5
"Class Rights Action" means any of the actions listed in Article 124;
"clear days" in relation to the sending of a notice means the period
excluding the day on which a notice is sent or deemed to be sent and
the day for which it is sent or on which it is to take effect;
"Combined Group" means the Company, Carnival and their respective
subsidiaries;
"Combined Group City Code Limit" means, at any time (i) with respect to
any person other than a Significant Combined Group Holder (or persons
Acting in Concert), such Ordinary Shares (which may include either or
both of P&O Princess Ordinary Shares and Carnival Common Stock)
representing, in aggregate and after giving effect to the Equalization
Ratio, the right to cast 30 per cent. of the votes on a Joint
Electorate Action from time to time, or (ii) with respect to a
Significant Combined Group Holder only, any further Ordinary Shares
(which may include either or both of P&O Princess Ordinary Shares or
Carnival Common Stock) which increase that person's percentage of votes
which could be cast on a Joint Electorate Action from time to time;
"Combined Group Excess Shares" means the Ordinary Shares designated as
such pursuant to Article 279;
"Combined Group Excess Share Trust" means any trust established by the
Company for the purposes, inter alia, of holding Combined Group
Restricted Shares on behalf of, and for the benefit of, a Charitable
Beneficiary;
"Combined Group Excess Share Trustee" means any body corporate,
association or other person appointed as a trustee by the Company who
is empowered to hold, possess, dispose of and/or deal with the Combined
Group Restricted Shares;
"Combined Group Restricted Shares" means the Ordinary Shares as
determined by reference to Article 277;
"Combined Shareholders" means the holders of P&O Princess Ordinary
Shares and the holders of Carnival Common Stock;
"Companies Acts" has the meaning given by section 744 of the Act and
includes any enactment passed after those Acts which may, by virtue of
that or any other such enactment, be cited together with those Acts as
the "Companies Acts" (with or without the addition of an indication of
the date of any such enactment);
"Compulsory Acquisition" means, with respect to a class of shares in
the capital of P&O Princess, a compulsory acquisition of such class of
shares in accordance with section 428 of the Act;
"director" means a director of the Company;
"Disenfranchised P&O Ordinary Shares" has the meaning given to it in
Article 21A;
"Distribution" means, in relation to the Company or Carnival, any
dividend or other distribution, whether of income or capital, and in
whatever form, made by the Company or Carnival (or any of their
subsidiaries) to the holders of Ordinary Shares by way of pro rata
entitlement, excluding any Liquidation Distribution, buy-back,
repurchase or cancellation of Ordinary Shares;
6
"Distribution Determination Date" means, with respect to any parallel
Distributions to be made by the Company and Carnival, the date on which
the Board and the Board of Carnival resolve to pay or make such
parallel Distributions (or if they resolve on different dates to pay or
make such parallel Distributions, the later of those dates);
"dividend" means dividend or bonus;
"electronic signature" has the meaning given by section 7(2) of the
Electronic Communications Act 2000;
"employees' share scheme" has the meaning given by section 743 of the
Act;
"entitled by transmission" means, in relation to a share in the capital
of the Company, entitled as a consequence of the death or bankruptcy of
the holder or otherwise by operation of law;
"Equalization Agreement" means the agreement entered into between the
Company and Carnival and entitled the Equalization and Governance
Agreement, as amended from time to time;
"Equalization Distribution" shall have the meaning set out in Article
234;
"Equalization Distribution Amount" means the amount of any Distribution
proposed to be paid or made by the Company or Carnival on its Ordinary
Shares, before deduction of any amount in respect of Tax required to be
deducted or withheld from such Distribution by or on behalf of such
company and excluding the amount of any Associated Tax Credit, all such
amounts being expressed in the currency of payment and on a per share
basis;
"Equalization Ratio" means, at any time, the ratio of (i) one P&O
Princess Ordinary Share to (ii) the Carnival Equivalent Number as of
such time;
"Equalization Share" means, in relation to the Company, an Equalization
Share in the capital of the Company with a par value of (pound)50,000
having the rights set out in Article 22 and, in relation to Carnival,
any share in the capital of Carnival designated as an Equalization
Share from time to time by the Board of Carnival;
"Equivalent Resolution" means a resolution of either the Company or
Carnival that is equivalent in nature and effect to a resolution of the
other company;
"Exchange Event" means any of the following:
(a) there shall have occurred any change in the tax laws, rules or
regulations applicable to the Company and/or Carnival and/or
their shareholders or in the application or interpretation
thereof (collectively, a "Change In Tax Law") and the Board shall
have reasonably determined, based on an opinion of a recognised
independent tax counsel experienced in such matters and after
using its commercially reasonable efforts to explore the
available alternatives to the Mandatory Exchange in consultation
with such counsel and external financial advisors, that (x) such
Change In Tax Law is reasonably likely to have a material adverse
effect on the Company and Carnival, considered as a single
enterprise (a "Material Adverse Tax Effect"), (y) it is
reasonably likely that such Material Adverse Tax Effect would be
eliminated or substantially reduced by a Mandatory
7
Exchange and (z) such Material Adverse Tax Effect could not
be substantially eliminated by any commercially reasonable
alternative to such Mandatory Exchange;
(b) either (A) there shall have occurred any change in the
non-tax laws, rules or regulations applicable to the Company
and/or Carnival or in the application or interpretation
thereof (collectively, a "Change In Other Law") as a result
of which the Board has reasonably determined that, and has
received a written legal opinion from independent counsel to
the effect that, it is reasonably likely that, or (B) any
court, governmental entity or regulatory body of competent
jurisdiction shall have issued any ruling, judgement, decree
or order which has been appealed to the extent the Board
reasonably determined was appropriate in the circumstances
(the "Final Order") finding, holding or declaring that, in
either of cases (A) or (B), all or a substantial part of the
contracts between, and the constituent documents of, the
Company and Carnival that create the Combined Group (the
"DLC Arrangements") are unlawful, illegal or unenforceable
(collectively, an "Illegality Event") and the Board shall
have reasonably determined, based on an opinion of a
recognised independent counsel and after using its
commercially reasonable efforts to explore the available
alternatives to the Mandatory Exchange in consultation with
such counsel and external financial advisors, that (x) the
legal basis for the Illegality Event would be eliminated by
a Mandatory Exchange, (y) the Illegality Event could not be
eliminated by any amendments to the DLC Arrangements that
would not materially and adversely affect the rights of the
shareholders of the Company or Carnival, taken together or
in relation to each other and (z) the Change in Other Law or
Final Order is reasonably likely to be enforced in a way
that will have a material adverse effect on the Company and
Carnival, considered as a single enterprise;
"Exchange Notice" means a notice that is served on the holders of P&O
Princess Ordinary Shareholders subsequent to the occurrence of an
Exchange Event;
"Governmental Agency" means a court of competent jurisdiction or any
government or governmental, regulatory, self-regulatory or
administrative authority, agency, commission, body or other
governmental entity and shall include without limitation any relevant
competition authorities, the UK Panel on Takeovers and Mergers, the
London Stock Exchange, the UK Listing Authority, the US Securities and
Exchange Commission and the New York Stock Exchange;
"holder" in relation to a share in the capital of the Company means the
member whose name is entered in the register as the holder of that
share;
A person shall be deemed to be "Interested" or to have an "Interest" in
Ordinary Shares if such person has an interest which would be taken
into account, or which he would be taken as having, in determining for
the purposes of Part VI of the Act whether a person has a notification
interest in a share (including any interest which he would be taken as
having for the purposes) but shall not be deemed to be "Interested" or
to have an "Interest" in shares which he holds as a bare or custodian
trustee under the law of England or as a simple trustee under the law
of Scotland;
"Joint Electorate Action" shall have the meaning set out in Article
126;
8
"Liquidation" means, with respect to either the Company or Carnival,
any liquidation, winding up, receivership, dissolution, insolvency or
equivalent proceedings pursuant to which the assets of either the
Company or Carnival will be liquidated and distributed to creditors and
other holders of recognisable claims against such company;
"Liquidation Distribution" means in relation to the Company or
Carnival, any dividend or other distribution per Ordinary Share,
whether of income or capital and in whatever form, made or to be made
by such company or any of its Subsidiaries to the holders of such
company's Ordinary Shares by way of pro rata entitlement in connection
with the Liquidation of such company;
"Liquidation Exchange Rate" means as at any date, the average of the
closing mid-point spot US dollar-sterling exchange rate on the five
Business Days ending on the Business Day before such date (as shown in
the London edition of the Financial Times), or such other point of
reference as the Board and the Board of Carnival or the Board and
liquidators of Carnival or the Board of Carnival and the liquidators of
the Company or the liquidators of both the Company and Carnival, as the
case may be, may determine in each case rounded to five decimal places;
"London Stock Exchange" means London Stock Exchange plc;
"Mandatory Exchange" shall have the meaning set out in Article 289;
"Market Price" means the average of the daily closing price of an
Ordinary Share on the London Stock Exchange, as derived from the Daily
Official List, over the five consecutive Dealing Days prior to the
relevant date;
"member" means, unless the context otherwise requires, a member of the
Company;
"Member Present" means, in connection with a meeting, a member present
at the venue or venues for the meeting, in person or by proxy, by
attorney or, where the member is a body corporate, by representative;
"Memorandum" means the memorandum of association of the Company as
amended from time to time;
"NYSE" means New York Stock Exchange, Inc;
"office" means the registered office of the Company;
"Operator" means the "Operator" of the "relevant system", in each case
as defined in the Regulations;
"Ordinary Share" means a P&O Princess Ordinary Share and/or a share of
Carnival Common Stock, as the context requires;
"paid" means paid or credited as paid;
"Parallel Shareholder Meeting" means, in relation to Carnival, any
meeting of the shareholders of Carnival which is:
(a) nearest in time to, or contemporaneous with, the meeting of the
shareholders of the Company and at which some or all of the same
resolutions or some or all Equivalent Resolutions are to be
considered; or
9
(b) designated by the Board of Carnival as the parallel meeting of
shareholders of a particular general meeting of the shareholders
of the Company;
"P&O Princess" means the Company;
"P&O Princess Entrenched Provision" means Articles 19, 20, 21, 21A, 22,
52, 76, 77, 96, 97, 98, 112, 113, 124 to 132 (inclusive), 136, 147,
174, 177, 189, 194, 195(c), 234 to 237 (inclusive), 272 to 275
(inclusive), 277 to 287 (inclusive) and 289 to 292 (inclusive) and the
definitions referred to therein;
"P&O Princess Guarantee" means the guarantee of the same date as the
Equalization Agreement between the Company and Carnival under which the
Company agrees to guarantee certain obligations of Carnival for the
benefit of certain future creditors of Carnival, as amended from time
to time;
"P&O Princess Group" means the Company and its Subsidiaries and
associated undertakings from time to time;
"P&O Princess Ordinary Shares" means ordinary shares in the capital of
the Company (and, in respect of Articles 125 and 128 only, will include
any class of share entitled to vote on the relevant resolution),
excluding the P&O Princess Special Voting Share and the Equalization
Share, and except with respect to any voting rights (as described in
Articles 147 and 148), on a Liquidation (as described in Articles
272-276 inclusive) and rights on a Mandatory Exchange (as described in
Articles 289-292 inclusive), shall also include the Disenfranchised P&O
Ordinary Shares;
"P&O Princess Special Voting Share" means the special voting share in
the capital of the Company (having the rights set out in and referred
to in Article 19);
"P&O Princess SVT" means P&O Princess Special Voting Trust, a trust
organized under the laws of _____________, or such other entity as
replaces it pursuant to the terms of the SVE Special Voting Deed;
"P&O Princess SVT Agreement" means the Voting Trust Agreement,
establishing P&O Princess SVT, between P&O Princess Trustee and
Carnival, dated as of [.] 2003, as amended from time to time;
"P&O Princess Trustee" means [.], as trustee of P&O Princess SVT
pursuant to the P&O Princess SVT Agreement (or any successor trustee
appointed pursuant to Section 7.08 thereof);
"Qualifying Takeover Offer" means an offer or offers to acquire
Carnival Common Stock and P&O Princess Ordinary shares (i) which would
be in accordance with the provisions of the City Code to the extent
that the City Code applies to the Combined Group, and (ii) which:
(a) are made to all holders of Carnival Common Stock and P&O Princess
Ordinary Shares; and
(b) are undertaken with respect to the Carnival Common Stock and P&O
Princess Ordinary Shares at or about the same time; and
(c) comply with all Applicable Regulations, the Carnival Constitution
and these Articles; and
10
(d) each of the Board of Directors of Carnival and the Board
determines are equivalent to the holders of Carnival Common
Stock, on the one hand, and the holders of P&O Princess
Ordinary Shares, on the other hand, with respect to:
(1) the consideration offered for such shares (taking
into account exchange rates and any difference in the
share price of P&O Princess Ordinary Shares and
Carnival Common Stock determined by the Board and the
Board of Carnival in their sole discretion to be
appropriate and taking into account the Equalization
Ratio);
(2) the information provided to such holders;
(3) the time available to such holders to consider such
offers;
(4) the conditions to which the offer(s) is subject; and
(5) such other terms of the offer(s) which the Board and
the Board of Carnival shall determine are relevant.
"recognised person" means a recognised clearing house or a nominee of a
recognised clearing house or of a recognised investment exchange, each
of which terms having the meaning given to it by section 185(4) of the
Act;
"register" means the register of members of the Company;
"Regulations" means the Uncertificated Securities Regulations 2001;
"seal" means the common seal of the Company and includes any official
seal kept by the Company by virtue of section 39 or 40 of the Act;
"secretary" means the secretary of the Company and includes a joint,
assistant, deputy or temporary secretary and any other person appointed
to perform the duties of the secretary;
"Significant Combined Group Holder" means any person who, after
complying with the provisions of Articles 277 to 287, whether solely or
together with any party Acting in Concert with such person, holds or
exercises voting control over Ordinary Shares (which may include either
or both of P&O Princess Ordinary Shares or Carnival Common Stock)
representing, in aggregate and after giving effect to the Equalization
Ratio, the right to cast not less than 30 per cent and not more than 50
per cent of the votes on a Joint Electorate Action from time to time;
"Special Resolution" means, with respect to the Company or Carnival, a
resolution required by Applicable Regulations and/or the Carnival
Constitution or the Memorandum and these Articles, as relevant, to be
approved by a higher percentage of votes voted than required under an
ordinary resolution, or where the percentages of votes in favour and
against the resolution is required to be calculated by a different
mechanism to that required by an ordinary resolution;
"subsidiary" means with respect to the Company or Carnival, any entity,
whether incorporated or unincorporated, in which such company owns,
directly or indirectly, a majority of the securities or other ownership
interests having by their terms ordinary voting power to elect a
majority of the directors or other persons performing similar
11
functions, or the management and policies of which such company
otherwise has the power to direct;
"Substantive Resolution" means any resolution of the Company to be
considered at a general meeting other than a resolution of a
procedural or technical nature;
"Tax" means any taxes, levies, imposts, deductions, charges,
withholdings or duties levied by any authority (including stamp and
transaction duties) (together with any related interest, penalties,
fines and expenses in connection with them);
"Tax Benefit" means any credit, rebate, exemption or benefit in
respect of Tax available to any person;
"uncertificated share" means a share in the capital of the Company
which is recorded on the register as being held in uncertificated form
and title to which may, by virtue o the Regulations, be transferred by
means of a relevant system and references in these Articles to a share
being held in uncertificated form shall be construed accordingly;
"United Kingdom" means Great Britain and Northern Ireland; and
"Voting Agreement" means the deed entered into among the Company,
Carnival, Carnival SVC, Carnival SVC Owner and P&O Princess Trustee and
entitled the SVE Special Voting Deed, as amended or novated from time
to time, and shall include any deed entered into to replace that deed
or any such replacement.
CONSTRUCTION
3. References to a document include, unless the context otherwise
requires, references to an electronic communication.
4. References to an electronic communication mean, unless the contrary is
stated, an electronic communication (as defined in the Act) comprising
writing.
5. References to a document being executed include references to its being
executed under hand or under seal or, in the case of an electronic
communication, by electronic signature.
6. References to an instrument mean, unless the contrary is stated, a
written document having tangible form and not comprised in an
electronic communication (as defined in the Act).
7. Where, in relation to a share, these Articles refer to a relevant
system, the reference is to the relevant system in which that share is
a participating security at the relevant time.
8. References to a notice or other document being sent to a person by the
Company include references to such notice or other document, or a copy
of such notice or other document, being sent, given, delivered, issued
or made available to, or served on, that person by any method
authorised by these Articles, and sending shall be construed
accordingly.
9. References to writing mean the representation or reproduction of words,
symbols or other information in a visible form by any method or
combination of methods, whether
12
comprised in an electronic communication (as defined in the Act) or
otherwise, and written shall be construed accordingly.
10. Words denoting the singular number include the plural number and vice
versa; words denoting the masculine gender include the feminine gender; and
words denoting persons include corporations.
11. Words or expressions contained in these Articles which are not defined in
Article 2 but are defined in the Act have the same meaning as in the Act
(but excluding any modification of the Act not in force at the date of
adoption of these Articles) unless inconsistent with the subject or
context.
12. Words or expressions contained in these Articles which are not defined in
Article 2 but are defined in the Regulations have the same meaning as in
the Regulations (but excluding any modification of the Regulations not in
force at the date of adoption of these Articles) unless inconsistent with
the subject or context.
13. Subject to the preceding two paragraphs, references to any provision of any
enactment or of any subordinate legislation (as defined by section 21(1) of
the Interpretation Act 1978) include any modification or re-enactment of
that provision for the time being in force.
14. Headings and marginal notes are inserted for convenience only and do not
affect the construction of these Articles.
15. In these Articles, (a) powers of delegation shall not be restrictively
construed but the widest interpretation shall be given to them; (b) the
word Board or board in the context of the exercise of any power contained
in these Articles includes any validly appointed committee; (c) no power of
delegation shall be limited by the existence or, except where expressly
provided by the terms of delegation, the exercise of that or any other
power of delegation; and (d) except where expressly provided by the terms
of delegation, the delegation of a power shall not exclude the concurrent
exercise of that power by any other body or person who is for the time
being authorised to exercise it under these Articles or under another
delegation of the power.
SHARE CAPITAL
Share capital
16. The authorised share capital of the Company on the adoption of these
Articles is (Pounds)100,001 divided into 2 subscriber shares of (Pounds)1
each, 49,998 redeemable preference shares of (Pounds)1 each, one P&O
Princess Special Voting Share of (Pounds)1 and one Equalization Share of
(Pounds)50,000 and US$375 million divided into 750,000,000 ordinary shares
of US$0.50 each.
17. The two subscriber shares have no rights whatsoever, including without
limitation the right to receive notice, attend and vote at a general or
extraordinary meeting, the right to receive dividends and the right to
receive the payment of capital upon a distribution of assets.
Return of Capital
18. If on any return of capital to a shareholder of the Company there is any
fraction of a cent, or pence as the case may be in respect of the amount
due to be paid to holder of any P&O
13
Princess Ordinary Share, such fraction shall, to the extent permitted
by Applicable Regulations, be rounded up to the nearest whole cent or
pence as the case may be.
P&O Princess Special Voting Share
19. The P&O Princess Special Voting Share shall confer on the holder of
such share the relevant rights set out in these Articles, but shall
cease to confer any right to receive notice of, attend or vote at any
general meeting if either:
(a) the Equalization Agreement is terminated; or
(b) a resolution to terminate the Voting Agreement is approved by
both Carnival and the Company as a Class Rights Action.
20. On a distribution of assets of the Company on a Liquidation of the
Company, the P&O Princess Special Voting Share shall rank after the
holders of Ordinary Shares and redeemable preference shares but ahead
of the Equalization Share for repayment of any capital paid up or
credited as paid up and shall only be entitled to repayment of the
nominal value paid up on its share. The P&O Princess Special Voting
Share shall not be entitled to receive any dividends.
21. The rights attaching to the P&O Princess Special Voting Share may be
varied by a resolution approved as a Class Rights Action. Where the
proposed variation increases the obligations of the holder of the P&O
Princess Special Voting Share, such variation shall also require the
consent of the holder of the P&O Princess Special Voting Share.
21A. All shares in the capital of the Company carrying liquidation rights
and/or voting rights acquired by any member of the Carnival Group,
whether pursuant to the partial share offer by Carnival for up to 20
per cent. of the P&O Princess Ordinary Shares dated [.] or otherwise,
shall automatically be converted on the first day that such shares are
beneficially owned by such member of the Carnival Group into
disenfranchised shares ("Disenfranchised P&O Ordinary Shares") which
will rank pari passu with all of the shares of the same class, save
that such shares shall not have any rights:
(a) to attend or vote at any general meeting or class meeting of the
Company unless at the relevant date the Carnival Group is
entitled to effect a Compulsory Acquisition of such class of
shares (treating for the purpose of such calculation, any shares
of such class that are Disenfranchised P&O Ordinary Shares as if
this Article 21A did not apply to such shares); or
(b) to receive any distribution upon Liquidation.
Following the transfer of any Disenfranchised P&O Ordinary Shares from
the Carnival Group to a person who is not a member of, or Acting in
Concert with, the Combined Group such Disenfranchised P&O Ordinary
Shares shall automatically be reclassified on the day that such shares
are, following such transfer, registered in the register of members of
the Company into shares of the same class carrying liquidation rights
and/or voting rights.
Equalization Share
22. The Equalization Share shall:
14
(a) have no rights to receive notice of, attend or vote at any
general meeting of the Company;
(b) have rights to dividends as declared and paid by the Board as
interim dividends declared on that share from time to time; and
(c) on a distribution of assets of the Company on a Liquidation of
the Company, rank after all other holders of shares for repayment
of any capital paid up or credited as paid up.
Shares with special rights
23. Subject to the provisions of the Companies Acts and the provisions of
Articles 124 to 129 and without prejudice to any rights attached to any
existing shares or class of shares, any share may be issued with such
rights or restrictions as the Company, as to any such class, may by
ordinary resolution determine or, subject to and in default of such
determination, as the Board shall determine.
Share warrants to bearer
24. Subject to the provisions of Articles 124 to 129, the Board may issue
share warrants to bearer in respect of any fully paid shares under a
seal of the Company or in any other manner authorised by the Board. Any
share while represented by such a warrant shall be transferable by
delivery of the warrant relating to it. In any case in which a warrant
is so issued, the Board may provide for the payment of dividends or
other moneys on the shares represented by the warrant by coupons or
otherwise. The Board may decide, either generally or in any particular
case or cases, that any signature on a warrant may be applied by
mechanical means or printed on it or that the warrant need not be
signed by any person.
Conditions of issue of share warrants
25. The Board may determine, and from time to time vary, the conditions on
which share warrants to bearer shall be issued and, in particular, the
conditions on which:
(a) a new warrant or coupon shall be issued in place of one which has
been worn-out, defaced, lost or destroyed (but no new warrant
shall be issued unless the Company is satisfied beyond reasonable
doubt that the original has been destroyed); or
(b) the bearer shall be entitled to attend and vote at general
meetings; or
(c) a warrant may be surrendered and the name of the bearer entered
in the register in respect of the shares specified in the
warrant.
The bearer of such a warrant shall be subject to the conditions for the
time being in force in relation to the warrant, whether made before or
after the issue of the warrant. Subject to those conditions and to the
provisions of the Companies Acts, the bearer shall be deemed to be a
member of the Company and shall have the same rights and privileges as
he would have if his name had been included in the register as the
holder of the shares comprised in the warrant.
15
No right in relation to share
26. The Company shall not be bound by or be compelled in any way to
recognise any right in respect of the share represented by a share
warrant other than the bearer's absolute right to the warrant.
Uncertificated shares
27. Subject to the provisions of the Regulations, the Board may permit the
holding of shares in any class of shares in uncertificated form and the
transfer of title to shares in that class by means of a relevant system
and may determine that any class of shares shall cease to be a
participating security.
Not separate class of shares
28. Shares in the capital of the Company that fall within a certain class
shall not form a separate class of shares from other shares in that
class because any share in that class:
(a) is held in uncertificated form; or
(b) is permitted in accordance with the Regulations to become a
participating security.
Exercise of Company's entitlements in respect of uncertificated shares
29. Where any class of shares is a participating security and the Company
is entitled under any provision of the Companies Acts, the Regulations
or these Articles to sell, transfer or otherwise dispose of, forfeit,
re-allot, accept the surrender of or otherwise enforce a lien over a
share held in uncertificated form, the Company shall be entitled,
subject to the provisions of the Companies Acts, the Regulations, these
Articles and the facilities and requirements of the relevant system:
(a) to require the holder of that uncertificated share by notice
to change that share into certificated form within the period
specified in the notice and to hold that share in certificated
form so long as required by the Company;
(b) to require the holder of that uncertificated share by notice
to give any instructions necessary to transfer title to that
share by means of the relevant system within the period
specified in the notice;
(c) to require the holder of that uncertificated share by notice
to appoint any person to take any step, including without
limitation the giving of any instructions by means of the
relevant system, necessary to transfer that share within the
period specified in the notice; and
(d) to take any action that the Board considers appropriate to
achieve the sale, transfer, disposal, forfeiture, re-allotment
or surrender of that share or otherwise to enforce a lien in
respect of that share, including giving notice to any person
that the share should be converted into certificated form.
16
Section 80 authority
30. The Board has general and unconditional authority to exercise all the
powers of the Company to allot relevant securities up to an aggregate
nominal amount equal to the section 80 amount, for each prescribed
period.
Section 89 disapplication
31. The Board is empowered for each prescribed period to allot equity
securities for cash pursuant to the authority conferred by Article 30
as if section 89(1) of the Act did not apply to any such allotment,
provided that its power shall be limited to:
(a) the allotment of equity securities in connection with an issue
in favour of ordinary shareholders where the equity securities
respectively attributable to the interests of all ordinary
shareholders are proportionate (as nearly as practicable) to
the respective numbers of ordinary shares held by them, but
subject to such exclusions or other arrangements as the Board
may deem necessary or expedient in relation to fractional
entitlements or any legal, regulatory or practical problems
under the laws or regulations of any overseas territory or the
requirements of any regulatory body or stock exchange; and
(b) the allotment (otherwise than pursuant to Article 31) of equity
securities up to an aggregate nominal amount equal to the section
89 amount.
Allotment after expiry
32. Before the expiry of a prescribed period the Company may make an offer
or agreement which would or might require equity securities or other
relevant securities to be allotted after such expiry. The Board may
allot equity securities or other relevant securities in pursuance of
that offer or agreement as if the prescribed period during which that
offer or agreement was made had not expired.
Further Definitions
33. In Articles 30 to 33:
"prescribed period" means any period for which the authority conferred
by Article 30 is given by ordinary or special resolution stating the
section 80 amount and/or the power conferred by Article 31 is given by
special resolution stating the section 89 amount;
"section 80 amount" means, for any prescribed period, the amount stated
in the relevant ordinary or special resolution; and
"section 89 amount" means, for any prescribed period, the amount stated
in the relevant special resolution.
Residual allotment powers
34. Subject to Articles 124 to 129, the provisions of the Companies Acts
relating to authority, pre-emption rights or otherwise and of any
resolution of the Company in general meeting passed pursuant to those
provisions, the provisions of Articles 124 to 129 and, in the case of
redeemable shares, the provisions of Article 35:
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(a) all unissued shares for the time being in the capital of the
Company shall be at the disposal of the Board; and
(b) the Board may allot (with or without conferring a right of
renunciation), grant options over, or otherwise dispose of
them to such persons on such terms and conditions and at such
times as it thinks fit.
REDEEMABLE SHARES
Redeemable shares
35. Subject to the provisions of the Companies Acts, and without prejudice
to any rights attached to any existing shares or class of shares,
shares may be issued which are to be redeemed or are to be liable to be
redeemed at the option of the Company on such terms and in such manner
as may be provided by these Articles.
Redeemable Preference Shares
36. The rights attaching to the redeemable preference shares are as
follows:
Dividends
37. The holders of redeemable preference shares shall be entitled, in
priority to the holders of any other class of shares in the Company's
share capital, to receive out of the profits of the Company available
for distribution and resolved under the Articles to be distributed in
respect of each financial year of the Company a fixed cumulative
preferential dividend (the "Preference Dividend") at the rate of 8 per
cent. per annum on the amount for the time being paid up on each
redeemable preference share held by them respectively, save that no
Preference Dividend shall accrue in respect of any redeemable
preference share not in issue.
38. The Preference Dividend shall accrue on a daily basis and shall be
payable annually in arrears on 31 December ("Annual Preference Dividend
Payment Date"), or if such date is not a Business Day, on the next
following Business Day, in respect of the year ending on that date. The
first such payment shall be made on the 31 December following the issue
in respect of the period from the date of the issue of the redeemable
preference shares concerned until such date. The Preference Dividend
shall be paid to the holders of the issued redeemable preference shares
whose names appear on the register at 12 noon on any date selected by
the directors up to 42 days before the relevant dividend payment date.
Capital
39. On a distribution of assets of the Company among its members on a
winding up or other return of capital (other than a redemption or
purchase by the Company of its own shares), the holders of the
redeemable preference shares shall rank behind the holders of Ordinary
Shares but ahead of the holders of any other classes of shares of the
Company in relation to the payment of any capital paid up or credited
as paid up on each redeemable preference share.
No further rights to dividends or capital
40. Save as provided in Articles 37, 38 and 39, the holders of the
redeemable preference shares shall not be entitled to any participation
in the profits or assets of the Company.
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Voting
41. The holders of redeemable preference shares shall not have any rights
to vote.
Redemption
42. Subject to the Act, the Company shall have the right at any time to
redeem any redeemable preference shares (provided that they are
credited as fully paid) by giving to the registered holder written
notice of its intention to do so (the "Redemption Notice").
43. The Redemption Notice must specify the number of redeemable preference
shares to be redeemed, the amount payable on redemption and the date
and time (the "Redemption Date") and place in England at which:
(a) the share certificates in respect of the redeemable preference
shares must be delivered to the Company for cancellation; and
(b) the Company shall pay to the registered holders of the
redeemable preference shares to be redeemed the redemption
money in respect of such redeemable preference shares together
with a sum equal to any arrears and accruals of the Preference
Dividend (whether accrued or declared or not) and any interest
payable calculated down to the date of such repayment.
The holders of the redeemable preference shares to be redeemed shall be
bound by the Redemption Notice.
44. The amount to be paid on redemption of each redeemable preference share
shall equal the amount credited as paid up on it (including any share
premium) together with all arrears or accruals of the Preference
Dividend (whether accrued, declared or not) calculated up to and
including the Redemption Date and in the case of a partial redemption
proportionately in respect of each holding of redeemable preference
shares.
45. The redeemable preference shares shall be redeemed on or before 31
December 2050 and if, in accordance with the Act, the redeemable
preference shares shall not on any such date be capable of being
redeemed by the Company, such redemption shall be effected as soon as
possible after the redeemable preference shares have become capable of
being redeemed.
46. The Preference Dividend shall cease to accrue on any redeemable
preference shares, which are to be redeemed, on the Redemption Date.
47. If any holder of a redeemable preference share to be redeemed fails or
refuses to surrender the share certificate for such redeemable
preference share (or fails or refuses to accept the redemption money
payable in respect of it), the Company shall retain such money and hold
it on trust for such holder but without interest or further obligation
whatever.
48. No redeemable preference share shall be redeemed otherwise than out of
distributable profits or the proceeds of a fresh issue of shares made
for the purposes of the redemption or out of capital to the extent
permitted by the Act but any premium payable on redemption shall be
paid either out of distributable profits, or to the extent permitted by
law, out of the share premium account of the Company.
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49. No redeemable preference share redeemed by the Company shall be capable
of re-issue and on redemption of any redeemable preference shares the
directors may convert the authorised share capital created as a
consequence of such redemption into shares of any other class of share
capital into which the authorised share capital of the Company is or
may at that time be divided of a like nominal amount (as nearly as may
be) as the shares of such class then in issue or into unclassified
shares of the same nominal amount as the redeemable preference shares.
Commissions
50. The Company may exercise all powers of paying commissions or brokerage
conferred or permitted by the Companies Acts. Subject to the provisions
of the Companies Acts, any such commission or brokerage may be
satisfied by the payment of cash or by the allotment of fully or partly
paid shares or partly in one way and partly in the other.
Trusts not recognised
51. Except as required by law or as otherwise provided by these Articles,
the Company shall recognise no person as holding any share on any trust
and (except as otherwise provided by these Articles or by law) the
Company shall not be bound by or recognise any interest in any share
(or in any fractional part of a share) except the holder's absolute
right to the entirety of the share (or fractional part of the share).
VARIATION OF RIGHTS
Method of varying rights
52. Subject to the provisions of the Companies Acts and the provisions of
Articles 124 to 129, if at any time the capital of the Company is
divided into different classes of shares, the rights attached to any
class may (unless otherwise provided by the terms of allotment of the
shares of that class) be varied or abrogated, whether or not the
Company is being wound up, either:
(a) with the consent of the holders of three-quarters in nominal
value of the issued shares of the class, which consent shall be
by means of one or more instruments or contained in one or more
electronic communications sent to such address (if any) as may
for the time being be notified by or on behalf of the Company for
that purpose or a combination of both; or
(b) with the sanction of an extraordinary resolution passed at a
separate general meeting of the holders of the shares of the
class,
but not otherwise.
SHARE CERTIFICATES
Members' rights to certificates
53. Every member, on becoming the holder of any certificated share (except
a recognised person in respect of whom the Company is not required by
law to complete and have ready for delivery a certificate) shall be
entitled, without payment, to one certificate for all the certificated
shares of each class held by him (and, on transferring a part of his
holding of certificated shares of any class, to a certificate for the
balance of his holding of certificated shares). He may elect to receive
one or more additional certificates for any of
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his certificated shares if he pays for every certificate after the first a
reasonable sum determined from time to time by the Board. Every certificate
shall:
(a) be executed under the seal or otherwise in accordance with Article 222
or in such other manner as the Board may approve; and
(b) specify the number, class and distinguishing numbers (if any) of the
shares to which it relates and the amount or respective amounts paid
up on the shares.
54. The Company shall not be bound to issue more than one certificate for
certificated shares held jointly by more than one person and delivery of a
certificate to one joint holder shall be a sufficient delivery to all of
them. Shares of different classes may not be included in the same
certificate.
Replacement certificates
55. If a share certificate is defaced, worn out, lost or destroyed, it may be
renewed on such terms (if any) as to evidence and indemnity and payment of
any exceptional out-of-pocket expenses reasonably incurred by the Company
in investigating evidence and preparing the requisite form of indemnity as
the Board may determine but otherwise free of charge, and (in the case of
defacement or wearing out) on delivery up of the old certificate.
LIEN
Company to have lien on shares
56. The Company shall have a first and paramount lien on every share (not being
a fully paid share) for all moneys payable to the Company (whether
presently or not) in respect of that share. The Board may at any time
(generally or in a particular case) waive any lien or declare any share to
be wholly or in part exempt from the provisions of this Article. The
Company's lien on a share shall extend to any amount (including without
limitation dividends) payable in respect of it.
Enforcement of lien by sale
57. The Company may sell, in such manner as the Board determines, any share on
which the Company has a lien if a sum in respect of which the lien exists
is presently payable and is not paid within 14 clear days after notice has
been sent to the holder of the share, or to the person entitled to it by
transmission, demanding payment and stating that if the notice is not
complied with the share may be sold.
Giving effect to sale
58. To give effect to that sale the Board may, if the share is a certificated
share, authorise any person to execute an instrument of transfer in respect
of the share sold to, or in accordance with the directions of, the buyer.
If the share is an uncertificated share, the Board may exercise any of the
Company's powers under Article 29 to require the share to be changed into
certificated form and to effect the sale of the share to, or in accordance
with the directions of, the buyer. The buyer shall not be bound to see to
the application of the purchase money and his title to the share shall not
be affected by any irregularity in or invalidity of the proceedings in
relation to the sale.
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Application of proceeds
59. The net proceeds of the sale, after payment of the costs, shall be applied
in or towards payment or satisfaction of so much of the sum in respect of
which the lien exists as is presently payable. Any residue shall (if the
share sold is a certificated share, on surrender to the Company for
cancellation of the certificate in respect of the share sold and, whether
the share sold is a certificated or uncertificated share, subject to a like
lien for any moneys not presently payable as existed on the share before
the sale) be paid to the person entitled to the share at the date of the
sale.
CALLS ON SHARES
Power to make calls
60. Subject to the terms of allotment, the Board may from time to time make
calls on the members in respect of any moneys unpaid on their shares
(whether in respect of nominal value or premium). Each member shall
(subject to receiving at least 14 clear days' notice specifying when and
where payment is to be made) pay to the Company the amount called on his
shares as required by the notice. A call may be required to be paid by
instalments. A call may be revoked in whole or part and the time fixed for
payment of a call may be postponed in whole or part as the Board may
determine. A person on whom a call is made shall remain liable for calls
made on him even if the shares in respect of which the call was made are
subsequently transferred.
Time when call made
61. A call shall be deemed to have been made at the time when the resolution of
the Board authorising the call was passed.
Liability of joint holders
62. The joint holders of a share shall be jointly and severally liable to pay
all calls in respect of it.
Interest payable
63. If a call or any instalment of a call remains unpaid in whole or in part
after it has become due and payable the person from whom it is due and
payable shall pay interest on the amount unpaid from the day it became due
and payable until it is paid. Interest shall be paid at the rate fixed by
the terms of allotment of the share or in the notice of the call or, if no
rate is fixed, the rate determined by the Board, not exceeding 15 per cent.
per annum, or, if higher, the appropriate rate (as defined in the Act), but
the Board may in respect of any individual member waive payment of such
interest wholly or in part.
Deemed calls
64. An amount payable in respect of a share on allotment or at any fixed date,
whether in respect of nominal value or premium or as an instalment of a
call, shall be deemed to be a call duly made and notified and payable on
the date so fixed or in accordance with the terms of the allotment. If it
is not paid the provisions of these Articles shall apply as if that amount
had become due and payable by virtue of a call duly made and notified.
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Differentiation on calls
65. Subject to the terms of allotment, the Board may make arrangements on the
issue of shares for a difference between the allottees or holders in the
amounts and times of payment of calls on their shares.
Payment of calls in advance
66. The Board may, if it thinks fit, receive from any member all or any part of
the moneys uncalled and unpaid on any share held by him. Such payment in
advance of calls shall extinguish the liability on the share in respect of
which it is made to the extent of the payment. The Company may pay on all
or any of the moneys so advanced (until they would but for such advance
become presently payable) interest at such rate agreed between the Board
and the member not exceeding (unless the Company by ordinary resolution
otherwise directs) 15 per cent. per annum or, if higher, the appropriate
rate (as defined in the Act).
FORFEITURE AND SURRENDER
Notice requiring payment of call
67. If a call or any instalment of a call remains unpaid in whole or in part
after it has become due and payable, the Board may give to the person from
whom it is due not less than 14 clear days' notice requiring payment of the
amount unpaid together with any interest which may have accrued and any
costs, charges and expenses incurred by the Company by reason of such
non-payment. The notice shall name the place where payment is to be made
and shall state that if the notice is not complied with the shares in
respect of which the call was made will be liable to be forfeited.
Forfeiture for non-compliance
68. If that notice is not complied with, any share in respect of which it was
given may, at any time before the payment required by the notice has been
made, be forfeited by a resolution of the Board. The forfeiture shall
include all dividends or other moneys payable in respect of the forfeited
share which have not been paid before the forfeiture. When a share has been
forfeited, notice of the forfeiture shall be sent to the person who was the
holder of the share before the forfeiture. An entry shall be made promptly
in the register opposite the entry of the share showing that notice has
been sent, that the share has been forfeited and the date of forfeiture. No
forfeiture shall be invalidated by the omission or neglect to give that
notice or to make those entries.
Sale of forfeited shares
69. Subject to the provisions of the Companies Acts, a forfeited share shall be
deemed to belong to the Company and may be sold, re-allotted or otherwise
disposed of on such terms and in such manner as the Board determines,
either to the person who was the holder before the forfeiture or to any
other person. At any time before sale, re-allotment or other disposal, the
forfeiture may be cancelled on such terms as the Board thinks fit. Where
for the purposes of its disposal a forfeited share held in certificated
form is to be transferred to any person, the Board may authorise any person
to execute an instrument of transfer of the share to that person. Where for
the purposes of its disposal a forfeited share held in uncertificated form
is to be transferred to any person, the Board may exercise any of the
Company's powers under Article 29. The Company may receive the
23
consideration given for the share on its disposal and may register the
transferee as holder of the share.
Liability following forfeiture
70. A person shall cease to be a member in respect of any share which has been
forfeited and shall, if the share is a certificated share, surrender the
certificate for any forfeited share to the Company for cancellation. The
person shall remain liable to the Company for all moneys which at the date
of forfeiture were presently payable by him to the Company in respect of
that share with interest on that amount at the rate at which interest was
payable on those moneys before the forfeiture or, if no interest was so
payable, at the rate determined by the Board, not exceeding 15 per cent.
per annum or, if higher, the appropriate rate (as defined in the Act), from
the date of forfeiture until payment. The Board may waive payment wholly or
in part or enforce payment without any allowance for the value of the share
at the time of forfeiture or for any consideration received on its
disposal.
Surrender
71. The Board may accept the surrender of any share which it is in a position
to forfeit on such terms and conditions as may be agreed. Subject to those
terms and conditions, a surrendered share shall be treated as if it had
been forfeited.
Extinction of rights
72. The forfeiture of a share shall involve the extinction at the time of
forfeiture of all interest in and all claims and demands against the
Company in respect of the share and all other rights and liabilities
incidental to the share as between the person whose share is forfeited and
the Company, except only those rights and liabilities expressly saved by
these Articles, or as are given or imposed in the case of past members by
the Companies Acts.
Evidence of forfeiture or surrender
73. A statutory declaration by a director or the secretary that a share has
been duly forfeited or surrendered on a specified date shall be conclusive
evidence of the facts stated in it as against all persons claiming to be
entitled to the share. The declaration shall (subject if necessary to the
execution of an instrument of transfer or transfer by means of the relevant
system, as the case may be) constitute a good title to the share. The
person to whom the share is disposed of shall not be bound to see to the
application of the purchase money, if any, and his title to the share shall
not be affected by any irregularity in, or invalidity of, the proceedings
in reference to the forfeiture, surrender, sale, re-allotment or disposal
of the share.
TRANSFER OF SHARES
Form and execution of transfer of certificated share
74. The instrument of transfer of a certificated share may be in any usual form
or in any other form which the Board may approve. An instrument of transfer
shall be signed by or on behalf of the transferor and, unless the share is
fully paid, by or on behalf of the transferee. An instrument of transfer
need not be under seal.
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Right to refuse Registration
75. The Board may, in its absolute discretion and without giving any reason,
refuse to register the transfer of a certificated share which is not fully
paid, provided that the refusal does not prevent dealings in shares in the
Company from taking place on an open and proper basis.
76. The Board shall decline to register any transfer of the P&O Princess
Special Voting Share unless the transfer has been approved in accordance
with, and the transferee complies with, the relevant provisions of the
Voting Agreement.
77. The Board shall refuse to register any transfer of the Equalization Share
unless such transfer is to a member of the Carnival Group or to a trustee
for the benefit of one or more members of the Carnival Group.
78. The Board may, in its absolute discretion, also refuse to register the
transfer of a certificated share unless the instrument of transfer:
(a) is lodged, duly stamped (if stampable), at the office or at another
place appointed by the Board accompanied by the certificate for the
share to which it relates and such other evidence as the Board may
reasonably require to show the right of the transferor to make the
transfer;
(b) is in respect of only one class of shares; and
(c) is in favour of not more than four transferees.
Transfers by recognised persons
79. In the case of a transfer of a certificated share by a recognised person,
the lodgement of a share certificate will only be necessary if and to the
extent that a certificate has been issued in respect of the share in
question.
Notice of refusal to register
80. If the Board refuses to register a transfer of a share, it shall send the
transferee notice of its refusal within two months after the date on which
the instrument of transfer was lodged with the Company or the
Operator-instruction was received, as the case may be.
Suspension of registration
81. The registration of transfers of shares or of transfers of any class of
shares may be suspended at such times and for such periods (not exceeding
30 days in any year) as the Board may determine, except that the Board may
not suspend the registration of transfers of any participating security
without the consent of the Operator of the relevant system.
No fee payable on registration
82. No fee shall be charged for the registration of any instrument of transfer
or other document relating to or affecting the title to a share.
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Retention of transfers
83. The Company shall be entitled to retain an instrument of transfer which is
registered, but an instrument of transfer which the Board refuses to
register shall be returned to the person lodging it when notice of the
refusal is given.
TRANSMISSION OF SHARES
Transmission
84. If a member dies, the survivor or survivors where he was a joint holder,
and his personal representatives where he was a sole holder or the only
survivor of joint holders, shall be the only persons recognised by the
Company as having any title to his interest. Nothing in these Articles
shall release the estate of a deceased member (whether a sole or joint
holder) from any liability in respect of any share held by him.
Elections permitted
85. A person becoming entitled by transmission to a share may, on production of
any evidence as to his entitlement properly required by the Board, elect
either to become the holder of the share or to have another person
nominated by him registered as the transferee. If he elects to become the
holder he shall give notice to the Company to that effect. If he elects to
have another person registered and the share is a certificated share, he
shall execute an instrument of transfer of the share to that person. If he
elects to have himself or another person registered and the share is an
uncertificated share, he shall take any action the Board may require
(including without limitation the execution of any document and the giving
of any instruction by means of a relevant system) to enable himself or that
person to be registered as the holder of the share. All the provisions of
these Articles relating to the transfer of shares apply to that notice or
instrument of transfer as if it were an instrument of transfer executed by
the member and the death or bankruptcy of the member or other event giving
rise to the transmission had not occurred.
Elections required
86. The Board may at any time send a notice requiring any such person to elect
either to be registered himself or to transfer the share. If the notice is
not complied with within 60 days, the Board may after the expiry of that
period withhold payment of all dividends or other moneys payable in respect
of the share until the requirements of the notice have been complied with.
Rights of persons entitled by transmission
87. A person becoming entitled by transmission to a share shall, on production
of any evidence as to his entitlement properly required by the Board and
subject to the requirements of Articles 85 and 86, have the same rights in
relation to the share as he would have had if he were the holder of the
share, subject to Article 241. That person may give a discharge for all
dividends and other moneys payable in respect of the share, but he shall
not, before being registered as the holder of the share, be entitled in
respect of it to receive notice of, or to attend or vote at, any meeting of
the Company or to receive notice of or to attend or vote at any separate
meeting of the holders of any class of shares in the capital of the
Company.
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ALTERATION OF SHARE CAPITAL
Alterations by ordinary resolution
88. Subject to Articles 124 to 129 and the provisions of the Equalization
Agreement, the Company may by ordinary resolution:
(a) increase its share capital by such sum to be divided into shares of
such amount as the resolution prescribes;
(b) consolidate and divide all or any of its share capital into shares of
larger amount than its existing shares;
(c) subject to the provisions of the Companies Acts, sub-divide its
shares, or any of them, into shares of smaller amount than is fixed by
the Memorandum and the resolution may determine that, as between the
shares resulting from the sub-division, any of them may have any
preference or advantage as compared with the others; and
(d) cancel shares which, at the date of the passing of the resolution,
have not been taken or agreed to be taken by any person and diminish
the amount of its share capital by the amount of the shares so
cancelled.
New shares subject to these Articles
89. All shares created by ordinary resolution pursuant to Article 88 shall be:
(a) subject to all the provisions of these Articles including, without
limitation, provisions relating to payment of calls, lien, forfeiture,
transfer and transmission; and
(b) ordinary shares, unless otherwise provided by these Articles, by the
resolution creating the shares or by the terms of allotment of the
shares.
Fractions arising
90. Whenever any fractions arise as a result of a consolidation or sub-division
of shares, the Board may on behalf of the members deal with the fractions
as it, in its absolute discretion, thinks fit. In particular, without
limitation, the Board may sell shares representing fractions to which any
members would otherwise become entitled to any person (including, subject
to the provisions of the Companies Acts, the Company) and distribute the
net proceeds of sale in due proportion among those members. Where the
shares to be sold are held in certificated form the Board may authorise
some person to execute an instrument of transfer of the shares to, or in
accordance with the directions of, the buyer. Where the shares to be sold
are held in uncertificated form, the Board may do all acts and things it
considers necessary or expedient to rematerialize the shares into
certificated form and/or to effect the transfer of the shares to, or in
accordance with the directions of, the buyer. The buyer shall not be bound
to see to the application of the purchase moneys and his title to the
shares shall not be affected by any irregularity in, or invalidity of, the
proceedings in relation to the sale.
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Power to reduce capital
91. Subject to Articles 124 to 129, the provisions of the Companies Acts, and
the provisions of the Equalization Agreement, the Company may by special
resolution reduce its share capital, capital redemption reserve and share
premium account in any way.
PURCHASE OF OWN SHARES
Power to purchase own shares
92. Subject to Articles 124 to 129, and in accordance with the provisions of
the Companies Acts and the provisions of the Equalization Agreement, and
without prejudice to any relevant special rights attached to any class of
shares, the Company may purchase any of its own shares of any class
(including without limitation redeemable shares) in any way and at any
price (whether at par or above or below par).
GENERAL MEETINGS
Types of general meeting
93. All general meetings of the Company other than annual general meetings
shall be called extraordinary general meetings. The Board shall convene and
the Company shall hold general meetings as annual general meetings in
accordance with the requirements of the Act.
Convening general meetings
94. The Board may call general meetings whenever and at such times and places
as it shall determine. On the requisition of members pursuant to the
provisions of the Companies Acts, the Board shall promptly convene an
extraordinary general meeting in accordance with the requirements of the
Companies Acts. If there are no directors of the Company at any time, any
two members of the Company may summon a meeting for the purpose of
appointing one or more directors.
Recipients of notice
95. Subject to the provisions of the Companies Acts, to the provisions of these
Articles and to any restrictions imposed on any shares, any notice of
general meeting shall be sent to all the members, to each of the directors
and to the auditors.
96. If the Company proposes to undertake a Joint Electorate Action or a Class
Rights Action:
(a) the Company shall immediately give notice to Carnival of the nature of
the Joint Electorate Action or the Class Rights Action it proposes to
take; and
(b) the Board shall convene a general meeting for the purpose of
considering the Joint Electorate Action or Class Rights Action to be
held as close in time as practicable with the Parallel General Meeting
convened by Carnival for the purposes of considering that Joint
Electorate Action or Class Rights Action.
97. If the Company receives notice that Carnival proposes to undertake a Joint
Electorate Action or Class Rights Action, the directors shall convene a
general meeting for the purposes of considering that Joint Electorate
Action or Class Rights Action, such meeting to be held as close in time as
practicable with the Parallel General Meeting and shall
28
propose a resolution which is an Equivalent Resolution to the Carnival
Joint Electorate Action or Class Rights Action.
98. The Company shall co-operate fully with Carnival in the preparation of any
information or material required in connection with any general meeting to
consider a proposed Joint Electorate Action or Class Rights Action.
NOTICE OF GENERAL MEETINGS
Period of notice
99. An annual general meeting and an extraordinary general meeting called for
the passing of a special resolution shall be called by at least 21 clear
days' notice. All other extraordinary general meetings shall be called by
at least 14 clear days' notice.
Contents of notice: general
100. The notice shall specify the time and place of the meeting (including
without limitation any satellite meeting place arranged for the purposes of
Article 103, which shall be identified as such in the notice) and the
general nature of that business.
Contents of notice: additional requirements
101. In the case of an annual general meeting, the notice shall specify the
meeting as such. In the case of a meeting to pass a special or
extraordinary resolution, the notice shall specify the intention to propose
the resolution as a special or extraordinary resolution, as the case may
be. The notice shall also state whether the resolution relates to a Joint
Electorate Action or a Class Rights Action.
Article 105 arrangements
102. The notice shall include details of any arrangements made for the purpose
of Article 105 making clear that participation in those arrangements will
not amount to attendance at the meeting to which the notice relates.
General meetings at more than one place
103. The Board may resolve to enable persons entitled to attend a general
meeting to do so by simultaneous attendance and participation at a
satellite meeting place anywhere in the world. The members present in
person or by proxy at satellite meeting places shall be counted in the
quorum for, and entitled to vote at, the general meeting in question, and
that meeting shall be duly constituted and its proceedings valid if the
chairman of the general meeting is satisfied that adequate facilities are
available throughout the general meeting to ensure that members attending
at all the meeting places are able to:
(a) participate in the business for which the meeting has been convened;
(b) hear and see all persons who speak (whether by the use of microphones,
loudspeakers, audio-visual communications equipment or otherwise) in
the principal meeting place and any satellite meeting place; and
(c) be heard and seen by all other persons so present in the same way, and
the meeting shall be deemed to take place at the principal meeting
place.
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Interruption or adjournment where facilities inadequate
104. If it appears to the chairman of the general meeting that the facilities at
the principal meeting place or any satellite meeting place have become
inadequate for the purposes referred to in Article 103, then the chairman
may, without the consent of the meeting, interrupt or adjourn the general
meeting. All business conducted at that general meeting up to the time of
that adjournment shall be valid. The provisions of Article 119 shall apply
to that adjournment.
Other arrangements for viewing/hearing proceedings
105. The Board may make arrangements for persons entitled to attend a general
meeting or an adjourned general meeting to be able to view and hear the
proceedings of the general meeting or adjourned general meeting and to
speak at the meeting (whether by the use of microphones, loudspeakers,
audio-visual communications equipment or otherwise) by attending at a venue
anywhere in the world not being a satellite meeting place. Those attending
at any such venue shall not be regarded as present at the general meeting
or adjourned general meeting and shall not be entitled to vote at the
meeting at or from that venue. The inability for any reason of any member
present in person or by proxy at such a venue to view or hear all or any of
the proceedings of the meeting or to speak at the meeting shall not in any
way affect the validity of the proceedings of the meeting.
Controlling level of attendance
106. The Board may from time to time make any arrangements for controlling the
level of attendance at any venue for which arrangements have been made
pursuant to Article 105 (including without limitation the issue of tickets
or the imposition of some other means of selection) which it in its
absolute discretion considers appropriate, and may from time to time change
those arrangements. If a member, pursuant to those arrangements, is not
entitled to attend in person or by proxy at a particular venue, he shall be
entitled to attend in person or by proxy at any other venue for which
arrangements have been made pursuant to Article 105. The entitlement of any
member to be present at such venue in person or by proxy shall be subject
to any such arrangement then in force and stated by the notice of meeting
or adjourned meeting to apply to the meeting.
Change in place and/or time of meeting
107. If, after the sending of notice of a general meeting but before the meeting
is held, or after the adjournment of a general meeting but before the
adjourned meeting is held (whether or not notice of the adjourned meeting
is required), the Board decides that it is impracticable or unreasonable
for a reason beyond its control to hold the meeting at the declared place
(or any of the declared places, in the case of a meeting to which Article
103 applies) and/or time, it may change the place (or any of the places, in
the case of a meeting to which Article 103 applies) and/or postpone the
time at which the meeting is to be held. If such a decision is made, the
Board may then change the place (or any of the places, in the case of a
meeting to which Article 103 applies) and/or postpone the time again if it
decides that it is reasonable to do so. In either case:
(a) no new notice of the meeting need be sent, but the Board shall, if
practicable, advertise the date, time and place of the meeting in at
least two newspapers having a national circulation and shall make
arrangements for notices of the
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change of place and/or postponement to appear at the original place
and/or at the original time; and
(b) a proxy appointment in relation to the meeting may, if by means of an
instrument, be delivered to the office or to such other place within
the United Kingdom as may be specified by or on behalf of the Company
in accordance with Article 165(a) or, if contained in an electronic
communication, be received at the address (if any) specified by or on
behalf of the Company in accordance with Article 165(b), at any time
not less than 48 hours before any postponed time appointed for holding
the meeting; and
(c) any valid proxy duly delivered to the Company in respect of a meeting
which is postponed in accordance with these Articles shall be valid
and subsisting in respect of that meeting when held notwithstanding
that the time and/or place for the meeting changes unless expressly
provided otherwise in the relevant proxy.
Meaning of participate
108. For the purposes of Articles 103 to 107, the right of a member to
participate in the business of any general meeting shall include, without
limitation, the right to speak, vote on a show of hands (to the extent
applicable), vote on a poll, be represented by a proxy and have access to
all documents which are required by the Companies Acts or these Articles to
be made available at the meeting.
Accidental omission to give notice etc.
109. The accidental omission to send a notice of a meeting, or to send any
notification where required by the Companies Acts or these Articles in
relation to the publication of a notice of meeting on a website, or to send
a form of proxy where required by the Companies Acts or these Articles, to
any person entitled to receive it, or the non-receipt for any reason of any
such notice or notification or form of proxy by that person, whether or not
the Company is aware of such omission or non-receipt, shall not invalidate
the proceedings at that meeting.
Security
110. The Board and, at any general meeting, the chairman may make any
arrangement and impose any requirement or restriction it or he considers
appropriate to ensure the security of a general meeting including, without
limitation, requirements for evidence of identity to be produced by those
attending the meeting, the searching of their personal property and the
restriction of items that may be taken into the meeting place. The Board
and, at any general meeting, the chairman are entitled to refuse entry to a
person who refuses to comply with these arrangements, requirements or
restrictions.
PROCEEDINGS AT GENERAL MEETINGS
Quorum
111. No business shall be transacted at any general meeting unless a quorum is
present, but the absence of a quorum shall not preclude the choice or
appointment of a chairman, which shall not be treated as part of the
business of the meeting. Save as otherwise provided by these Articles and
subject to Articles 112 and 130, three Members Present in person or by
proxy and entitled to vote on the business to be transacted shall be a
quorum (and for the
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avoidance of doubt, the holder of the P&O Princess Special Voting Share
shall be treated as being entitled to vote for the purposes of determining
whether a quorum exists notwithstanding the operation of Articles 125 and
131).
112. Where a Joint Electorate Action or a Class Rights Action is to be
considered at the general meeting, one of the Members Present must be the
holder of the P&O Princess Special Voting Share. Notwithstanding the
provisions of Article 111, no resolution will be approved as a Joint
Electorate Action unless one third of the total votes capable of being cast
by (i) the holders of the P&O Princess Ordinary Shares, and (ii) the holder
of the P&O Princess Special Voting Share (assuming all holders of
outstanding Carnival Common Stock vote at the Parallel General Meeting),
are cast on the resolution proposing such Joint Electorate Action.
113. For the purposes of Article 112, (i) votes which a holder of P&O Princess
Ordinary Shares specifically elects to abstain from voting in accordance
with Article 148; and (ii) votes which the P&O Princess Special Voting
Share carries as abstentions in accordance with Article 129 shall in each
case be counted as having been "cast".
If quorum not present
114. If such a quorum is not present within five minutes (or such longer time
not exceeding 60 minutes as the chairman of the meeting may decide to wait)
from the time appointed for the meeting, or if during a meeting such a
quorum ceases to be present, the meeting, if convened on the requisition of
members, shall be dissolved, and in any other case shall stand adjourned to
such time and place as the chairman of the meeting may determine. The
adjourned meeting shall be dissolved if a quorum is not present within 15
minutes after the time appointed for holding the meeting.
Chairman
115. The chairman, if any, of the Board or, in his absence, any deputy chairman
of the Board or, in his absence, some other director nominated by the
Board, shall preside as chairman of the meeting. If neither the chairman,
deputy chairman nor any such other director is present within thirty
minutes after the time appointed for holding the meeting or is not willing
to act as chairman, the directors present shall elect one of their number
to be chairman. If there is only one director present and willing to act,
he shall be chairman. If no director is willing to act as chairman, or if
no director is present within thirty minutes after the time appointed for
holding the meeting, the members present and entitled to vote shall choose
one of their number to be chairman.
Directors entitled to attend and speak
116. A director shall, notwithstanding that he is not a member, be entitled to
attend and speak at any general meeting and at any separate meeting of the
holders of any class of shares in the capital of the Company.
Adjournments: chairman's powers
117. The chairman may, with the consent of a meeting at which a quorum is
present (and shall if so directed by the meeting), adjourn the meeting from
time to time and from place to place. No business shall be transacted at an
adjourned meeting other than business which might properly have been
transacted at the meeting had the adjournment not taken place. In addition
(and without prejudice to the chairman's power to adjourn a meeting
32
conferred by Article 104), the chairman may adjourn the meeting to another
time and place without such consent if it appears to him that:
(a) any amendment to a Substantive Resolution has been approved at the
meeting;
(b) it is likely to be impracticable to hold or continue that meeting
because of the number of members wishing to attend who are not
present; or
(c) the unruly conduct of persons attending the meeting prevents or is
likely to prevent the orderly continuation of the business of the
meeting; or
(d) an adjournment is otherwise necessary so that the business of the
meeting may be properly conducted; or
(e) notice is received of any adjournment of the Parallel General Meeting.
118. In determining whether to adjourn the meeting under Article 117, the
chairman shall have regard to the Company's obligations under Articles 106
and 109 and the impact of any adjournment on the Parallel General Meeting
(if any).
Adjournments: procedures
119. Any such adjournment may be for such time and to such other place (or, in
the case of a meeting held at a principal meeting place and a satellite
meeting place, such other places) as the chairman may, in his absolute
discretion, determine, notwithstanding that by reason of such adjournment
some members may be unable to be present at the adjourned meeting. Any such
member may nevertheless appoint a proxy for the adjourned meeting either in
accordance with Article 163 or by means of an instrument which, if
delivered by him at the meeting which is adjourned to the chairman or the
secretary or any director, shall be valid even though it is given at less
notice than would otherwise be required by Article 165(a). When a meeting
is adjourned for 30 days or more or for an indefinite period, notice shall
be sent at least seven clear days before the date of the adjourned meeting
specifying the time and place (or places, in the case of a meeting to which
Article 103 applies) of the adjourned meeting and the general nature of the
business to be transacted. Otherwise it shall not be necessary to send any
notice of an adjournment or of the business to be transacted at an
adjourned meeting.
120. The Company shall as soon as possible give notice to Carnival of an
adjournment and of the business to be transacted at an adjourned meeting.
Class meetings
121. Subject to Articles 122 and 123 below, all provisions of these Articles
relating to general meetings of the Company shall, mutatis mutandis, apply
to every separate general meeting of the holders of any class of shares in
the capital of the Company, except that:
(a) the necessary quorum shall be two or more persons holding or
representing by proxy at least one-third in nominal value of the
issued shares of the class or, at any adjourned meeting of such
holders, one holder present in person or by proxy, whatever the amount
of his holding, who shall be deemed to constitute a meeting;
(b) any holder of shares of the class present in person or by proxy may
demand a poll; and
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(c) each holder of shares of the class shall, on a poll, be entitled to
such aggregate number of votes as are attached to every share of the
class held by him.
122. Any separate class meeting of the holder of the P&O Princess Special Voting
Share shall take effect by written resolution.
123. Any separate class meeting of the holder of the Equalization Share shall
take effect by written resolution.
VOTING RIGHTS AND PROCEDURES UNDER THE EQUALIZATION AGREEMENT
Class Rights Actions
124. The following actions constitute Class Rights Actions:
(a) the voluntary Liquidation of the Company or Carnival for which the
approval of the members is required by Applicable Regulations or
otherwise sought other than a voluntary Liquidation of both the
Company and Carnival at or about the same time with the purpose or
effect of no longer continuing the operation of the businesses of the
companies as a combined going concern and not as part of a scheme,
plan, transaction, or series of related transactions the primary
purpose or effect of which is to reconstitute all or a substantial
part of such businesses in one or more successor entities;
(b) the sale, lease, exchange or other disposition of all or substantially
all of the assets of either Carnival or the Company, other than in a
bona fide commercial transaction undertaken for a valid business
purpose in which such company receives consideration with a fair
market value reasonably equivalent to the assets disposed of and not
as a part of a scheme, plan, transaction or series of related
transactions the primary purpose or effect of which is to collapse or
unify the DLC Structure;
(c) any adjustment to the Carnival Equivalent Number or the Equalization
Ratio otherwise than in accordance with the provisions of the
Equalization Agreement;
(d) except where specifically provided for in the relevant agreements, any
amendment to the terms of, or termination of, the Equalization
Agreement, the Voting Agreement, the P&O Princess Guarantee or the
Carnival Guarantee (including, for the avoidance of doubt, the
voluntary termination of either the P&O Princess Guarantee or the
Carnival Guarantee);
(e) any amendment to, or removal of, or alteration of the effect of (which
shall include the ratification of any breach of) any P&O Princess
Entrenched Provision or any Carnival Entrenched Provision;
(f) any amendment to, removal or alteration of the effect of (which shall
include the ratification of any breach of) Article XII or XIII of the
Articles of Incorporation of Carnival that would cause, or at the time
of implementation would be reasonably likely to cause, an Exchange
Event described in clause (a) of the definition thereof to occur; and
34
(g) the doing of anything which the Board and the Board of Carnival agree
(either in a particular case or generally), in their absolute
discretion, should be approved as a Class Rights Action.
Notwithstanding anything to the contrary contained in these Articles, none
of the foregoing actions may be undertaken by the Company unless it has
been approved as a Class Rights Action in accordance with Article 125.
Class Rights Action Procedure
125. If the Company proposes to take any Class Rights Action or is required to
put a resolution pursuant to Article 97:
(a) such action (either by the Company or by Carnival) shall require
approval by an ordinary resolution (or, if required by these Articles
or Applicable Regulations, by a Special Resolution) passed at a
general meeting of the members of the Company in relation to which the
holders of P&O Princess Ordinary Shares and the holder of the P&O
Princess Special Voting Share shall be entitled to vote as a single
class on a poll; and
(b) in relation to such resolution:
(i) if the proposed action is approved by the requisite majority (as
determined in accordance with the Carnival Constitution and
Applicable Regulations) of the holders of Carnival Common Stock
entitled to vote thereon at the Parallel General Meeting, the P&O
Princess Special Voting Share shall have no votes; and
(ii) if the proposed action is not approved by the holders of Carnival
Common Stock (on the basis described in Article 125(b)(i) above)
at the Parallel General Meeting, the P&O Princess Special Voting
Share shall vote as follows:
(x) if the resolution needs to be passed at the Company's general
meeting by an ordinary resolution, the P&O Princess Special
Voting Share shall be entitled to cast such number of votes
representing the largest whole percentage that is less than the
percentage of the number of votes as would be necessary to defeat
an ordinary resolution if the total votes capable of being cast
by the issued P&O Princess Ordinary Shares and other class of
shares of P&O Princess that are entitled to vote pursuant to
Applicable Regulations and/or the P&O Princess Memorandum and
Articles (including the P&O Princess Special Voting Share) were
cast in favour of the resolution at the Company's general
meeting, and all such votes shall be cast against approval of
such resolution; or (y) if the resolution needs to be passed at
the Company's general meeting by a special (or extraordinary)
resolution, then the P&O Princess Voting Share shall be entitled
to cast such number of votes representing the largest whole
percentage that is less than the percentage of the number of
votes (less one vote) as would be necessary to defeat a special
(or extraordinary) resolution if the total votes capable of being
cast by the issued P&O Princess Ordinary Shares and the other
class of shares of P&O Princess that are entitled to vote
pursuant to Applicable Regulations
35
and/or the P&O Princess Memorandum and Articles (including the
P&O Princess Special Voting Share) were cast in favour of the
resolution at the Company's general meeting, and all such votes
shall be cast against approval of such resolution.
Joint Electorate Actions
126. All actions put to the holders of P&O Princess Ordinary Shares or Carnival
Common Stock, except for Class Rights Actions and resolutions of a
procedural or technical nature (described in Article 131 below) shall
constitute Joint Electorate Actions. For the avoidance of doubt, the
following actions, if put to the holders of P&O Princess Ordinary Shares or
Carnival Common Stock, shall constitute Joint Electorate Actions:
(a) the appointment, removal or re-election of any director of the Company
or Carnival, or both of them;
(b) to the extent such receipt or adoption is required by Applicable
Regulations, the receipt or adoption of the financial statements of
the Company or Carnival, or both of them, or accounts prepared on a
combined basis, other than any accounts in respect of the period(s)
ended prior to the date of the Equalization Agreement;
(c) a change of name of either the Company or Carnival, or both of them;
and
(d) the appointment or removal of the auditors of either the Company or
Carnival or both of them.
127. If a particular matter falls both within Articles 124 and 126, then it
shall be treated as a Class Rights Action falling exclusively within
Article 124.
Joint Electorate Action Procedure
128. If the Company proposes to take any Joint Electorate Action or is required
to propose a resolution pursuant to Article 97, such action (either by the
Company or by Carnival) shall require approval by ordinary resolution (or,
if required by these Articles or Applicable Regulations, approval by a
Special Resolution) of the holders of the P&O Princess Ordinary Shares and
the holder of the P&O Princess Special Voting Share, voting as a single
class.
129. In relation to a resolution of the Company to approve a Joint Electorate
Action, the P&O Princess Special Voting Share shall carry:
(a) such number of votes in favour of the resolution as were cast in
favour of the Equivalent Resolution at the Parallel Shareholder
Meeting; and
(b) such number of votes against the resolution as were cast against the
Equivalent Resolution at the Parallel Shareholder Meeting; and
(c) solely for the purposes of Article 112, such number of abstentions as
is equivalent to the number of votes which holders of Carnival Common
Stock have specifically elected to abstain from the Equivalent
Resolution at the Parallel Shareholder Meeting in accordance with the
Carnival Constitution and/or Applicable Regulations,
36
in each case divided by the Carnival Equivalent Number in effect at
the time such general meeting of the Company is held and in each case
rounded up to the nearest whole number, such votes to be cast by the
holder of the P&O Princess Special Voting Share in accordance with the
above provisions.
Resolutions Generally
130. No resolution to approve a Class Rights Action or a Joint Electorate
Action shall be approved unless the Parallel General Meeting of
Carnival is validly held and a vote of the holders of Carnival Common
Stock is held on an Equivalent Resolution.
131. The P&O Princess Special Voting Share shall have no right to vote on
any resolution of a procedural or technical nature put to a general
meeting of the Company provided it has no adverse effect on the
holders of Carnival Common Stock in any material respect. Resolutions
of a procedural or technical nature will not be included in any notice
of general meeting to the Company's shareholders. The Chairman will,
in his absolute discretion, determine whether a resolution is of a
procedural or technical nature. Subject to the foregoing, without
limitation, the following resolutions shall constitute resolutions of
a procedural or technical nature:
(a) that certain people be allowed to attend or excluded from
attending the Company's general meeting;
(b) that discussion be closed and the question put to the vote
(provided no amendments have been raised);
(c) that the question under discussion not be put to the vote;
(d) to proceed to the next item of business;
(e) to proceed with matters in an order other than that set out in
the notice of the meeting;
(f) to adjourn the debate (for example, to a subsequent meeting);
and
(g) to adjourn the general meeting.
Methods of voting
132. Every resolution put to the vote of a general meeting on which the
holder of the P&O Princess Special Voting Share is or may be entitled
to vote shall be decided on a poll.
133. Subject to Article 132, any resolution to be put to the vote of a
general meeting shall be decided on a show of hands unless, before or
on the declaration of the result of a vote on the show of hands or on
the withdrawal of any other demand for a poll, a poll is duly
demanded. Subject to the provisions of the Companies Acts, a poll may
be demanded by:
(a) the chairman of the meeting; or
(b) at least five Members Present in person or by proxy having the
right to vote at the meeting; or
37
(c) any member or Members Present in person or by proxy representing
not less than one-tenth of the total voting rights of all the
members having the right to vote at the meeting; or
(d) any member or Members Present in person or by proxy holding
shares conferring a right to vote at the meeting being shares on
which an aggregate sum has been paid up equal to not less than
one-tenth of the total sum paid up on all the shares conferring
that right.
134. A demand by a person as proxy for a member shall be the same as a
demand by the member.
Declaration of result in the absence of a poll
135. Unless a poll is required pursuant to Article 132 or is duly demanded
pursuant to Article 133 (and the demand is not withdrawn before the
poll is taken) a declaration by the chairman that a resolution has
been carried or carried unanimously, or by a particular majority, or
lost, or not carried by a particular majority shall be conclusive
evidence of the fact without proof of the number or proportion of the
votes recorded in favour of or against the resolution.
Procedure on a poll
136. A poll on a resolution on which the holder of the P&O Princess Special
Voting Share is or may be entitled to vote shall be kept open for such
time as to allow the Parallel General Meeting to be held and for the
votes attaching to the P&O Princess Special Voting Share to be
calculated and cast on such poll.
137. A poll shall, subject to Article 136, be taken in such manner as the
chairman directs. He may appoint scrutineers, who need not be members,
and may fix a time and place for declaring the result of the poll. The
result of the poll is deemed to be the resolution of the meeting at
which the poll is demanded.
138. A poll shall be taken at such time and place as the chairman decides,
either at once or after an interval or adjournment (but not more than
30 clear days after the date of the demand).
139. The chairman may determine that any poll may close at different times
for different classes of shareholder or for different shareholders of
the same class entitled to vote on the relevant resolution.
140. No notice need be given of a poll not taken immediately if the time
and place at which it is to be taken are announced at the meeting at
which it is demanded. In any other case at least seven clear days'
notice shall be given specifying the time and place at which the poll
is to be taken.
141. A demand for a poll may be withdrawn but only with the consent of the
chairman. A demand withdrawn in this way validates the result of a
show of hands declared before the demand is made. If a poll is
demanded before the declaration of the result of a show of hands and
the demand is duly withdrawn, the meeting shall continue as if the
demand has not been made. If the demand for a poll is withdrawn, the
chairman or any other member entitled may demand a poll.
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142. The requirement for a poll (whether automatic or on demand) does not
prevent the meeting continuing for the transaction of business other than
the question on which a poll is to be held.
143. On a poll, votes may be given in person or by proxy and a member entitled
to more than one vote need not, if he votes, use all his votes or cast
all the votes he uses in the same way, whether present in person or by
proxy.
144. The chairman shall determine any dispute as to the admission or rejection
of a vote and such determination made in good faith shall be final and
conclusive.
Effectiveness of special and extraordinary resolutions
145. Where for any purpose an ordinary resolution of the Company is required,
a special or extraordinary resolution shall also be effective. Where for
any purpose an extraordinary resolution is required, a special resolution
shall also be effective.
146. [Intentionally left blank]
VOTING RIGHTS AND PROCEDURES
Right to vote
147. Subject to any special terms as to voting on which shares have been
allotted or issued, or a suspension or abrogation of voting rights
pursuant to the Articles, at a general meeting or meeting of members of a
class every Member Present has on a show of hands one vote and has on a
poll:
(a) one vote for each fully paid P&O Princess Ordinary Share; and
(b) in the case of a partly paid share, that fraction of a vote
equivalent to the proportion which the amount paid up (not credited)
on that member's share bears to the total amount paid and payable
for that share (excluding amounts credited). Amounts paid in advance
of a call shall be ignored when calculating the proportion; and
(c) in the case of the P&O Princess Special Voting Share, such number of
votes as are determined in accordance with Articles 125, 129 and
131.
148. On a poll, every Member Present may cast the votes attaching to his
Ordinary Shares either for or against the resolution or may specifically
elect to abstain from voting, in which case his vote shall, subject to
Article 112, neither be counted as a vote in favour or against such
resolution.
Votes of joint holders
149. In the case of joint holders of a share, the vote of the senior who
tenders a vote, whether in person or by proxy, shall be accepted to the
exclusion of the votes of he other joint holders. For this purpose
seniority shall be determined by the order in which the names of the
holders stand in the register.
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Member under incapacity
150. A member in respect of whom an order has been made by a court or official
having jurisdiction (whether in the United Kingdom or elsewhere) in
matters concerning mental disorder may vote, whether on a show of hands
or on a poll, by his receiver, curator bonis or other person authorised
for that purpose appointed by that court or official. That receiver,
curator bonis or other person may, on a poll, vote by proxy. The right to
vote shall be exercisable only if evidence satisfactory to the Board of
the authority of the person claiming to exercise the right to vote has
been deposited at the office, or at another place specified in accordance
with these Articles for the delivery of proxy appointments, not less than
48 hours before the time appointed for holding the meeting or adjourned
meeting at which the right to vote is to be exercised.
Calls in arrears
151. No member shall be entitled to vote at a general meeting or at a separate
meeting of the holders of any class of shares in the capital of the
Company, either in person or by proxy, in respect of any share held by
him unless all moneys presently payable by him in respect of that share
have been paid.
Errors in voting
152. If any votes are counted which ought not to have been counted, or might
have been rejected, the error shall not vitiate the result of the voting
unless it is pointed out at the same meeting, or at any adjournment of
the meeting, and, in the opinion of the chairman (in his absolute
discretion), it is of sufficient magnitude to vitiate the result of the
voting.
Objection to voting
153. No objection shall be raised to the qualification of any voter except at
the meeting or adjourned meeting or poll at which the vote objected to is
tendered. Every vote not disallowed at such meeting shall be valid and
every vote not counted which ought to have been counted shall be
disregarded. Any objection made in due time shall be referred to the
chairman whose decision shall be final and conclusive.
Disclosure Notice
154. The directors may by notice in writing (a "Disclosure Notice") require
any member or other person Appearing to be Interested or Appearing to
have been Interested in the Ordinary Shares to disclose to the Company in
writing such information as directors require relating to the ownership
of, or Interests in, the Ordinary Shares in question as lies within the
knowledge of such member or other person (supported, if the directors so
require, by a statutory declaration and/or by such independent evidence
as the directors reasonably require) including:
(a) any information which the Company is entitled to seek pursuant to
Part VI of the Act; and
(b) any information which the directors shall deem necessary or
desirable in order to determine whether any Ordinary Shares are
Combined Group Restricted Shares.
The directors may give a Disclosure Notice at any time and may give one
or more notices to the same members or other person in respect of the
same Ordinary Shares.
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Failure to comply with Disclosure Notice
155. If any member or any other person Appearing to be Interested in Ordinary
Shares has been served with a Disclosure Notice or a notice under Section
212 of the Act and has failed to supply the Company with the information
required within 14 days from the date of service of the notice (or, such
other period of time as the directors may, in their absolute discretion,
prescribe in the notice), then the directors may, in their absolute
discretion, at any time thereafter by notice (a "Direction Notice") to
such member direct that in respect of the Ordinary Shares in relation to
which the default occurred (the "Default Shares") the member shall not be
entitled to vote either personally or by proxy at a general meeting of
the Company or to exercise any other right conferred by membership in
relation to general meetings of the Company or meetings of the holders of
any class of shares of the Company. The Company shall send to each other
person Appearing to be Interested in Ordinary Shares which are the
subject of a Direction Notice a copy of the notice, but the failure or
omission by the Company to do so shall not invalidate such notice. Any
Direction Notice shall have effect, in accordance with its terms, for so
long as the default in respect of which the Direction Notice was issued
continues. The Direction Notice shall cease to have effect five days
after confirmation by the Company that the information required by the
Disclosure Notice has been provided to the Company.
Additional directions
156. Where the Default Shares represent at least 0.25 per cent. in nominal
value of the issued shares of that class then the Direction Notice may
additionally direct:
(a) that any dividend or other money (or shares instead of such amount)
payable in respect of the Default Shares shall (in whole or part) be
retained by the Company without any liability to pay interest on it
when it is finally paid to the member; and/or
(b) that no transfer of any Default Shares held by such member shall be
registered unless:
(i) the member is not in default as regards supplying the
information required;
(ii) the member proves to the satisfaction of the directors that
no person in default as regards supplying such information is
Interested in any of the Ordinary Shares which are the
subject of the transfer;
(iii) registration of the transfer is required by the Regulations;
or
(iv) the transfer is an approved transfer if:
(A) it is a transfer of shares pursuant to an acceptance of
a takeover offer (within the meaning of section 428(1)
of the Act); or
(B) the Board is satisfied that the transfer is made
pursuant to a sale of the shares the subject of the
transfer to a party unconnected with the member and with
any other person appearing to be interested in the
shares; or
41
(C) the transfer results from a sale made through a recognised
investment exchange as defined in the Financial Services and
Markets Act 2000 or any other stock exchange outside the
United Kingdom on which the Company's shares are normally
traded.
Additional Shares
157. Any new Ordinary Shares in the Company issued in right of Default Shares
shall be subject to the same sanctions as apply to the Default Shares, and
the directors may make any right to an allotment of new Ordinary Shares
subject to sanctions corresponding to those which will apply to those
Ordinary Shares on issue, provided that:
(a) any sanctions applying to, or to a right to, new Ordinary Shares
by virtue of this Article 157 shall cease to have effect when the
sanctions applying to the related Default Shares cease to have
effect (and shall be suspended or cancelled if and to the extent
that the sanctions applying to the related Default Shares are
suspended or cancelled); and
(b) Article 154 shall apply to the exclusion of this Article 157 if
the Company issues a separate Disclosure Notice in respect of the
new shares.
Section 216 of the Act
158. The provisions of Article 157 are without prejudice to the provisions of
section 216 of the Act and, in particular, the Company may apply to the
court under section 216(1) of the Act whether or not the provisions of
Article 157 have been applied.
Conversion of uncertificated shares
159. The Company may exercise any of its powers under Article 29 in respect of
any Default Shares that are held in uncertificated form.
Notification of interests
160. In addition to the obligation to disclose interests in shares pursuant to
Part VI of the Act and the regulations made under it, any person with an
interest in Ordinary Shares and any person treated as Appearing to be
Interested in Ordinary Shares shall notify the Company in writing as soon
as practicable following any event which would cause such person to
disclose interests in shares pursuant to Part VI of the Act and any
regulations made under it as if such obligation applied by reference to
interests in Ordinary Shares.
PROXIES AND CORPORATE REPRESENTATIVES
Appointment of proxy: execution
161. The appointment of a proxy, whether by means of an instrument or contained
in an electronic communication, shall be executed in such manner as the
Board may approve. Subject thereto, the appointment of a proxy shall be
executed by the appointor or his attorney or, if the appointor is a
corporation, executed by a duly authorised officer, attorney or other
authorised person or under its common seal. For the purpose of this
Article and Articles 162 to 166, an electronic communication which
contains a proxy appointment need not comprise writing if the Board so
determines and in such a case, if the Board so determines, the appointment
need not be executed but shall instead be subject to such conditions as
the Board may approve.
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Method of proxy appointment
162. The appointment of a proxy shall be in any usual form or in any other form
which the Board may approve. Subject thereto, the appointment of a proxy
may be:
(a) by means of an instrument; or
(b) contained in an electronic communication sent to such address (if
any) as may for the time being be notified by or on behalf of the
Company for that purpose, provided that the electronic
communication is received in accordance with Article 163 not less
than 48 hours before the time appointed for holding the meeting or
adjourned meeting (or any postponed time appointed for holding the
meeting pursuant to Article 107) or, where a poll is taken more
than 48 hours after it is demanded, after the poll has been
demanded and not less than 24 hours before the time appointed for
the taking of the poll, and
the Board may, if it thinks fit, but subject to the provisions of the
Companies Acts, at the Company's expense send forms of proxy for use at
the meeting and issue invitations contained in electronic communications
to appoint a proxy in relation to the meeting in such form as may be
approved by the Board. The appointment of a proxy shall not preclude a
member from attending and voting in person at the meeting or poll
concerned. A member may appoint more than one proxy to attend on the same
occasion.
Sending of proxy appointment
163. Without prejudice to Article 107(b) or to the second sentence of Article
119, the appointment of a proxy shall:
(a) in the case of an instrument, be delivered personally or by post
to the office or such other place within the United Kingdom as may
be specified by or on behalf of the Company for that purpose:
(i) in the notice convening the meeting, or
(ii) in any form of proxy sent by or on behalf of the Company in
relation to the meeting,
not less than 48 hours before the time appointed for holding the
meeting or adjourned meeting (or any postponed time appointed for
holding the meeting pursuant to Article 107) at which the person
named in the appointment proposes to vote; or
(b) in the case of an appointment contained in an electronic
communication, where an address has been specified by or on behalf
of the Company for the purpose of receiving electronic
communications:
(i) in the notice convening the meeting, or
(ii) in any form of proxy sent by or on behalf of the Company in
relation to the meeting, or
(iii) in any invitation contained in an electronic communication
to appoint a proxy issued by or on behalf of the Company in
relation to the meeting,
43
be received at that address not less than 48 hours before the time
appointed for holding the meeting or adjourned meeting (or any
postponed time appointed for holding the meeting pursuant to
Article 107) at which the person named in the appointment proposes
to vote; or
(c) in either case, where a poll is automatic, the appointment of a
proxy shall be delivered or received not less than 48 hours before
the meeting at which the poll is to be held, and, in circumstances
where a poll is demanded and taken more than 48 hours after it is
demanded, be delivered or received as aforesaid after the poll has
been demanded and not less than 24 hours before the time appointed
for the taking of the poll; or
(d) in the case only of an instrument, where a poll is not taken
forthwith but is, in respect of resolutions on which the P&O
Princess Special Voting Share has no vote, taken not more than 48
hours after it was demanded, be delivered at the meeting at which
the poll was demanded to the chairman or to the secretary or to
any director.
164. A proxy deposited by the holder of the P&O Princess Special Voting Share
will be valid if it is received by or delivered to the chairman of the
meeting before the close of the poll to which it relates.
Delivery of authority
165. Except in relation to an instrument deposited by the holder of the P&O
Princess Special Voting Share (which is governed by Article 164 above),
any power of attorney or other written authority under which a proxy
appointment is executed or an office or notarially certified copy or a
copy certified in accordance with the Powers of Attorney Act 1971 of such
power or written authority shall be:
(a) delivered personally or by post to the office, or to such other
place within the United Kingdom as may be specified by or on
behalf of the Company in accordance with Article 163(a), not less
than 48 hours before the time appointed for holding the meeting or
adjourned meeting (or any postponed time appointed for holding the
meeting pursuant to Article 107) at which the person named in the
appointment proposes to vote; or
(b) in respect of resolutions on which the P&O Princess Special Voting
Share has no vote, where a poll is taken more than 48 hours after
it is demanded, be delivered as aforesaid after the poll has been
demanded and not less than 24 hours before the time appointed for
the taking of the poll; or
(c) in the case only of a proxy appointment by means of an instrument,
in respect of resolutions on which the P&O Princess Special Voting
Share has no vote, where a poll is not taken forthwith but is
taken not more than 48 hours after it was demanded, be delivered
at the meeting at which the poll was demanded to the chairman or
to the secretary or to any director together with the proxy
appointment to which it relates.
166. A proxy appointment which is not delivered or received in accordance with
Articles 163 or 164, or in respect of which Article 165 has not been
complied with, shall be invalid. No proxy appointment shall be valid more
than twelve months after the date stated in it as the date of its
execution. When two or more valid proxy appointments are delivered or
44
received in respect of the same share for use at the same meeting, the one
which was executed last shall be treated as replacing and revoking the
others as regards that share; if the Company is unable to determine which
was executed last, none of them shall be treated as valid in respect of
that share.
Validity of proxy appointment
167. A proxy appointment shall be deemed to include the right to demand, or
join in demanding, a poll but shall not confer any further right to speak
at a meeting, except with the permission of the chairman. Save in respect
of a proxy delivered in respect of the P&O Princess Special Voting Share,
the proxy appointment shall also be deemed to confer authority to vote on
any amendment of a resolution put to the meeting for which it is given as
the proxy thinks fit. The proxy appointment shall, unless it provides to
the contrary, be valid for any adjournment of the meeting as well as for
the meeting to which it relates.
Corporate representatives
168. Any corporation which is a member of the Company (in this Article the
"grantor") may, by resolution of its directors or other governing body,
authorise such person as it thinks fit to act as its representative at any
meeting of the Company or at any separate meeting of the holders of any
class of shares. A person so authorised shall be entitled to exercise the
same power on behalf of the grantor as the grantor could exercise if it
were an individual member of the Company, save that a director, the
secretary or other person authorised for the purpose by the secretary may
require such person to produce a certified copy of the resolution of
authorisation before permitting him to exercise his powers. The grantor
shall for the purposes of these Articles be deemed to be present in person
at any such meeting if a person so authorised is present at it.
Revocation of authority
169. A vote given or poll demanded by a proxy or by the duly authorised
representative of a corporation shall be valid notwithstanding the
previous determination of the authority of the person voting or demanding
the poll unless notice of the determination was either delivered or
received as mentioned in the following sentence at least three hours
before the start of the meeting or adjourned meeting at which the vote is
given or the poll demanded or (in the case of a poll taken otherwise than
on the same day as the meeting or adjourned meeting) the time appointed
for taking the poll. Such notice of determination shall be either by means
of an instrument delivered to the office or to such other place within the
United Kingdom as may be specified by or on behalf of the Company in
accordance with Article 163(a) or contained in an electronic communication
received at the address (if any) specified by or on behalf of the Company
in accordance with Article 163(b), regardless of whether any relevant
proxy appointment was effected by means of an instrument or contained in
an electronic communication. For the purpose of this Article, an
electronic communication which contains such notice of determination need
not comprise writing if the Board has determined that the electronic
communication which contains the relevant proxy appointment need not
comprise writing.
45
NUMBER OF DIRECTORS
Limits on number of directors
170. Unless otherwise determined by ordinary resolution, the number of
directors (other than alternate directors) shall be not less than three
nor more than a maximum of twenty five in number (or such lesser maximum
as the directors may from time to time resolve).
APPOINTMENT AND RETIREMENT OF DIRECTORS
Directors
Number of directors to retire
171. At every subsequent annual general meeting following the adoption of these
Articles one-third of the directors who are subject to retirement by
rotation or, if their number is not three or a multiple of three, the
number nearest to one-third shall retire from office, but;
(a) if any director has at the start of the annual general meeting
been in office for more than three years since his last
appointment or re-appointment, he shall retire; and
(b) if there is only one director who is subject to retirement by
rotation, he shall retire.
Which directors to retire
172. Subject to the provisions of the Companies Acts and these Articles, the
directors to retire by rotation shall be those who have been longest in
office since their last appointment or re-appointment. As between persons
who became or were last re-appointed directors on the same day those to
retire shall (unless they otherwise agree among themselves) be determined
by lot. The directors to retire on each occasion (both as to number and
identity) shall be determined by the composition of the board at the date
of the notice convening the annual general meeting. No director shall be
required to retire or be relieved from retiring or be retired by reason of
any change in the number or identity of the directors after the date of
the notice but before the close of the meeting. If the Company does not
fill the vacancy at the meeting at which a director retires by rotation or
otherwise, the retiring director shall, if willing to act, be deemed to
have been re-appointed unless at the meeting it is resolved not to fill
the vacancy or unless a resolution for the re-appointment of the director
is put to the meeting and lost.
Eligibility for election and effectiveness of appointment
173. No person shall be appointed a director at any general meeting unless:
(a) he is recommended by the Board; or
(b) not less than seven nor more than 42 days before the earlier of
the date appointed for the meeting and the date appointed for the
Parallel General Meeting, notice executed by a member qualified to
vote at the meeting (not being the person to be proposed) has been
received by the Company of the intention to propose that person
for appointment stating the particulars which would, if he were so
appointed, be required to be included in the Company's register of
directors, together with notice executed by that person of his
willingness to be appointed.
46
174. No person shall be a director of the Company unless he is also a director
of Carnival. The appointment of a person as a director of the Company
shall only take effect at the same time as that person's appointment as a
director of Carnival takes effect. Any director who resigns from his
office will be obliged to resign as a director of Carnival at the same
time as he resigns from the Board and his resignation from the Board shall
not take effect until he does so.
Separate resolutions on appointment
175. Except as otherwise authorised by the Companies Acts, the appointment of
any person proposed as a director shall be effected by a separate
resolution.
Additional powers of the Company
176. Subject to Articles 124 to 129 and to Article 174, the Company may by
ordinary resolution appoint a person who is willing to act to be a
director either to fill a vacancy or as an additional director. The
appointment of a person to fill a vacancy or as an additional director
shall take effect from the end of the meeting.
Appointment by Board
177. The Board may appoint a person who is willing to act to be a director,
either to fill a vacancy or as an additional director and in either case
whether or not for a fixed term, provided that the appointment does not
cause the number of directors to exceed the number, if any, fixed by or in
accordance with these Articles as the maximum number of directors. If a
person is appointed as a director of Carnival by the Board of Carnival in
accordance with the Carnival Constitution, the Board shall also appoint
that person as a director of the Company.
178. Irrespective of the terms of his appointment, a director so appointed
shall hold office only until the next following annual general meeting and
shall not be taken into account in determining the directors who are to
retire by rotation at the meeting. If not re-appointed at such annual
general meeting, he shall vacate office at its conclusion.
Position of retiring directors
179. A director who retires at an annual general meeting may, if willing to
act, be re-elected. If he is not re-elected, he shall retain office until
the meeting appoints someone in his place, or if it does not do so, until
the later of the end of the meeting at which the director retires and the
end of the Parallel General Meeting.
Age limit
180. No person shall be disqualified from being appointed or re-appointed a
director, and no director shall be required to vacate that office, by
reason only of the fact that he has attained the age of 70 years or any
other age nor shall it be necessary by reason of his age to give special
notice under the Companies Acts of any resolution for his appointment or
re-appointment.
No share qualification
181. A director shall not be required to hold any shares in the capital of the
Company by way of qualification.
47
ALTERNATE DIRECTORS
Power to appoint alternates
182. Any director (other than an alternate director) may appoint any other
director, willing to act, to be an alternate director and may remove from
office an alternate director so appointed by him.
Alternates entitled to receive notice
183. An alternate director shall be entitled to receive notice of all meetings
of the Board and of all meetings of committees of the Board of which his
appointor is a member, to attend and vote at any such meeting at which his
appointor is not personally present, and generally to perform all the
functions of his appointor (except as regards power to appoint an
alternate) as a director in his absence.
Alternates representing more than one director
184. A director may act as alternate director to represent more than one
director, and an alternate director shall be entitled at meetings of the
Board or any committee of the Board to one vote for every director whom he
represents (and who is not present) in addition to his own vote as a
director, and shall count for the purpose of determining whether a quorum
is present both in his capacity as a director and in his capacity as an
alternate director.
Termination of appointment
185. An alternate director shall cease to be an alternate director:
(a) if his appointer ceases to be a director; but, if a director
retires by rotation or otherwise but is re-appointed or deemed to
have been re-appointed at the meeting at which he retires, any
appointment of an alternate director made by him which was in
force immediately prior to his retirement shall continue after his
re-appointment; or
(b) on the happening of any event which would cause him to vacate his
office as director; or
(c) if he resigns his office as a director by notice to the Company;
or
(d) if he notifies the Board and his appointer that he no longer
wishes to serve as an alternate director.
Method of appointment and revocation
186. Any appointment or removal of an alternate director shall be by notice to
the Company signed by the director making or revoking the appointment and
shall take effect in accordance with the terms of the notice on receipt of
such notice by the Company which shall, in the case of a notice contained
in an instrument, be at the office or, in the case of a notice contained
in an electronic communication, be at such address (if any) as may for the
time being be notified by or on behalf of the Company for that purpose.
48
Alternate not an agent of appointor
187. Except as otherwise expressly provided in these Articles, an alternate
director shall be deemed for all purposes to be a director. Accordingly,
except where the context otherwise requires, a reference to a director
shall be deemed to include a reference to an alternate director. An
alternate director shall alone be responsible for his own acts and
defaults and he shall not be deemed to be the agent of the director
appointing him.
POWERS OF THE BOARD
Business to be managed by Board
188. Subject to the provisions of the Companies Acts, the Memorandum and these
Articles and to any directions given by special resolution, the business
of the Company shall be managed by the Board which may pay all expenses
incurred in forming and registering the Company and may exercise all the
powers of the Company, including without limitation the power to dispose
of all or any part of the undertaking of the Company. No alteration of the
Memorandum or Articles and no such direction shall invalidate any prior
act of the Board which would have been valid if that alteration had not
been made or that direction had not been given. The powers given by this
Article shall not be limited by any special power given to the Board by
these Articles. A meeting of the Board at which a quorum is present may
exercise all powers exercisable by the Board.
Discretionary Matters
189. The Board may, by agreement with the Board of Carnival:
(a) decide to seek the approval of the shareholders (or any class of
shareholders) of either or both of the Company and Carnival for
any matter that would not otherwise require such approval;
(b) require any Joint Electorate Action to be approved instead as a
Class Rights Action; or
(c) specify a higher majority vote than the required majority that
would otherwise be required for any shareholder vote provided for
in Articles 125(a) and 128.
Exercise by Company of voting rights
190. The Board may exercise the voting power conferred by the shares in any
body corporate held or owned by the Company in such manner in all respects
as it thinks fit (including without limitation the exercise of that power
in favour of any resolution appointing its members or any of them as
directors of such body corporate, or voting or providing for the payment
of remuneration to the directors of such body corporate).
DELEGATION OF POWERS OF THE BOARD
Committees of the Board
191. A majority of the Board may delegate any of its powers to any committee
consisting of two or more directors. Any such delegation may be made
subject to such conditions as the majority of the Board may specify and
may be revoked or altered. Subject to any conditions imposed by a majority
of the Board, the proceedings of a committee with two or more directors
shall be governed by these Articles regulating the proceedings of
49
directors so far as they are capable of applying. For the avoidance of
doubt, Article 209 shall not apply with regard to determining whether a
committee of the Board is quorate. A committee of the Board will be
quorate if at least a majority of the directors appointed to that
committee is present.
Agents
192. A majority of the Board or of a committee of the Board may, by power of
attorney or otherwise, appoint any person to be the agent of the Company
for such purposes, with such powers, authorities and discretions (not
exceeding those vested in the Board) and on such conditions as the Board
or the relevant committee determines, including without limitation
authority for the agent to delegate all or any of his powers, authorities
and discretions, and may revoke or vary such delegation.
Offices including the title "director"
193. A majority of the Board may appoint any person to any office or employment
having a designation or title including the word "director" or attach to
any existing office or employment with the Company such a designation or
title and may terminate any such appointment or the use of any such
designation or title. The inclusion of the word "director" in the
designation or title of any such office or employment shall not imply that
the holder is a director of the Company, and the holder shall not thereby
be empowered in any respect to act as, or be deemed to be, a director of
the Company for any of the purposes of these Articles.
Director's power to give effect to the DLC agreements
194. The directors are authorised and directed to carry into effect the
provisions of the Equalization Agreement, the Voting Agreement, the P&O
Princess Guarantee and any further agreements or arrangements that the
Company is party to which are mentioned in or contemplated by such
agreements. Subject to the Acts, nothing done in good faith by any
director pursuant to such authority and obligations shall constitute a
breach of the fiduciary duties of such director to the Company or its
shareholders. In particular:
(a) the directors shall, in addition to their duties to the Company, be
entitled to have regard to the interests of the Combined
Shareholders and to the interests of Carnival, as if the Company and
Carnival were a single legal entity;
(b) the directors are authorised to provide to Carnival and any officer,
employee or agent of Carnival any information relating to the
Company; and
(c) the directors are authorised to enter into, operate and carry into
effect the Equalization Agreement, the Voting Agreement and the P&O
Princess Guarantee with full power to:
(i) enter into, operate and carry into effect any further or other
agreements or arrangements with or in connection with Carnival
or the holder of the P&O Princess Special Voting Share; and
(ii) do all such things as, in the opinion of the directors, are
necessary or desirable for the application, implementation,
protection, furtherance or maintenance of the dual listed
company relationship with Carnival constituted by or arising
out of any agreement or arrangement.
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DISQUALIFICATION AND REMOVAL OF DIRECTORS
Disqualification as a director
195. The office of a director shall be vacated immediately if:
(a) he ceases to be a director by virtue of any provisions of the
Companies Acts or these Articles or he becomes prohibited by
applicable law from being a director; or
(b) he resigns his office by notice to the Company or, having been
appointed for a fixed term, the term expires or his office as a
director is vacated pursuant to Article 177; or
(c) he ceases to be a director of Carnival.
REMUNERATION OF NON-EXECUTIVE DIRECTORS
Ordinary remuneration
196. The ordinary remuneration of the directors who do not hold executive
office for their services (excluding amounts payable under any other
provision of these Articles) shall not exceed in aggregate
(pound)1,000,000 per annum or such higher amount as the Company may from
time to time by ordinary resolution determine and shall be satisfied in
such manner as the Board or any validly formed committee thereof shall
from time to time determine, which includes without limitation
satisfaction in Company shares. Subject thereto, each such director shall
be paid a fee (which shall be deemed to accrue from day to day) at such
rate as may from time to time be determined by the Board.
Additional remuneration for special services
197. Any director who does not hold executive office and who serves on any
committee of the Board, by the request of the Board goes or resides abroad
(from his normal country of residence) for any purpose of the Company or
otherwise performs special services which in the opinion of the Board are
outside the scope of the ordinary duties of a director, may (without
prejudice to the provisions of Article 196) be paid such extra
remuneration by way of salary, commission or otherwise as the Board may
determine.
DIRECTORS' EXPENSES
Directors may be paid expenses
198. The directors may be paid all travelling, hotel, and other expenses
properly incurred by them in connection with their attendance at meetings
of the Board or the Board of Carnival, meetings of any committees of the
Board or of the Board of Carnival, or general meetings or separate
meetings of the holders of any class of shares or of debentures of the
Company or Carnival, or otherwise in connection with the discharge of
their duties.
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EXECUTIVE DIRECTORS
Appointment to executive office
199. Subject to the provisions of the Companies Acts, the Board may appoint one
or more of its body to be the holder of any executive office (except that
of auditor) in the Company and may enter into an agreement or arrangement
with any director for his employment by the Company or for the provision
by him of any services outside the scope of the ordinary duties of a
director. Any such appointment, agreement or arrangement may be made on
such terms, including without limitation terms as to remuneration, as the
Board determines. The Board may revoke or vary any such appointment but
without prejudice to any rights or claims which the person whose
appointment is revoked or varied may have against the Company because of
the revocation or variation.
Termination of appointment to executive office
200. Any appointment of a director to an executive office shall terminate if he
ceases to be a director but without prejudice to any rights or claims
which he may have against the Company by reason of such cessation. A
director appointed to an executive office shall not cease to be a director
merely because his appointment to such executive office terminates.
Emoluments to be determined by the Board
201. The emoluments of any director holding executive office for his services
as such shall be determined by the Board, and may be of any description,
including without limitation admission to, or continuance of, membership
of any scheme (including any share acquisition scheme) or fund instituted
or established or financed or contributed to by the Company for the
provision of pensions, life assurance or other benefits for employees or
their dependants, or the payment of a pension or other benefits to him or
his dependants on or after retirement or death, apart from membership of
any such scheme or fund.
DIRECTORS' INTERESTS
Directors may contract with the Company
202. Subject to the provisions of the Companies Acts, and provided that he has
disclosed to the Board the nature and extent of any material interest of
his, a director notwithstanding his office:
(a) may be a party to, or otherwise interested in, any transaction or
arrangement with the Company or in which the Company is otherwise
interested;
(b) may act by himself or his firm in a professional capacity for the
Company (otherwise than as auditor) and he or his firm shall be
entitled to remuneration for professional services as if he were not
a director;
(c) may be a director or other officer of, or employed by, or a party to
any transaction or arrangement with, or otherwise interested in, any
body corporate promoted by the Company or in which the Company is
otherwise interested; and
(d) shall not, by reason of his office, be accountable to the Company
for any benefit which he derives from any such office or employment
or from any such transaction or arrangement or from any interest in
any such body corporate and
52
no such transaction or arrangement shall be liable to be avoided on
the ground of any such interest or benefit.
Notification of interests
203. For the purposes of this Article:
(a) a general notice given to the Board that a director is to be
regarded as having an interest of the nature and extent specified in
the notice in any transaction or arrangement in which a specified
person or class of persons is interested shall be deemed to be a
disclosure that the director has an interest in any such transaction
of the nature and extent so specified; and
(b) an interest of which a director has no knowledge and of which it is
unreasonable to expect him to have knowledge shall not be treated as
an interest of his.
GRATUITIES, PENSIONS AND INSURANCE
Gratuities and pensions
204. The Board may (by establishment of, or maintenance of, schemes or
otherwise) provide benefits, whether by the payment of gratuities or
pensions or by insurance or otherwise, for any past or present director or
employee of the Company or any of its subsidiary undertakings or any body
corporate associated with, or any business acquired by, any of them, and
for any member of his family (including a spouse and a former spouse) or
any person who is or was dependent on him, and may (as well before as
after he ceases to hold such office or employment) contribute to any fund
and pay premiums for the purchase or provision of any such benefit.
Insurance
205. Without prejudice to the provisions of Article 288, the Board may exercise
all the powers of the Company to purchase and maintain insurance for or
for the benefit of any person who is or was:
(a) a director, officer, employee or auditor of the Company or Carnival,
or any body which is or was the holding company or subsidiary
undertaking of the Company or Carnival, or in which the Company or
Carnival or a holding company or subsidiary undertaking of the
Company or Carnival has or had any interest (whether direct or
indirect) or with which the Company or Carnival or a holding company
or subsidiary undertaking of the Company or Carnival is or was in
any way allied or associated; or
(b) a trustee of any pension fund in which employees of the Company,
Carnival or, any other body referred to in Article 205(a) is or has
been interested,
including without limitation insurance against any liability incurred by
such person in respect of any act or omission in the actual or purported
execution or discharge of his duties or in the exercise or purported
exercise of his powers or otherwise in relation to his duties, powers or
offices in relation to the relevant body or fund.
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Directors not liable to account
206. No director or former director shall be accountable to the Company or the
members for any benefit provided pursuant to Article 204. The receipt of
any such benefit shall not disqualify any person from being or becoming a
director of the Company.
Section 719 of the Act
207. Pursuant to section 719 of the Act, the Board is hereby authorised to make
such provision as may seem appropriate for the benefit of any persons
employed or formerly employed by the Company or any of its subsidiary
undertakings in connection with the cessation or the transfer of the whole
or part of the undertaking of the Company or any subsidiary undertaking.
Any such provision shall be made by a resolution of the Board in
accordance with section 719.
PROCEEDINGS OF THE BOARD
Convening meetings
208. Subject to the provisions of these Articles, the Board may regulate its
proceedings as it thinks fit. The Chairman or any two directors may, and
the secretary at the request of the Chairman or any two directors shall,
call a meeting of the Board. Notice of a Board meeting shall be deemed to
be properly sent to a director if it is sent to him personally or by word
of mouth or sent by instrument to him, at his last known address (whether
within or outside the United Kingdom) or such other address (if any) as
may for the time being be notified by him or on his behalf to the Company
for that purpose, or sent using electronic communications to such address
(if any) as may for the time being be notified by him or on his behalf to
the Company for that purpose. Questions arising at a meeting shall be
decided by a majority of directors present at any meeting (provided that
the meeting is quorate). Any director may waive notice of a meeting and
any such waiver may be retrospective. Any electronic communication
pursuant to this Article need not comprise writing if the Board so
determines.
Quorum
209. The quorum for the transaction of the business shall be a majority of the
directors of the Company. A person who holds office as an alternate
director shall, if his appointor is not present, be counted in the quorum
in his capacity as an alternate director (on behalf of his appointor) in
addition to in his capacity as a director of the Company. Any director who
ceases to be a director at a Board meeting may continue to be present and
to act as a director and be counted in the quorum until the termination of
the Board meeting if no director objects.
Powers of directors if number falls below minimum
210. The continuing directors or a sole continuing director may act
notwithstanding any vacancies in their number.
Chairman and deputy chairman
211. The Board may appoint one of their number to be the chairman, and one of
their number to be the deputy chairman, of the Board and may at any time
remove either of them from such office. Unless he is unwilling to do so,
the director appointed as chairman, or in his
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stead the director appointed as deputy chairman, shall preside at every
meeting of the Board at which he is present. If there is no director
holding either of those offices, or if neither the chairman nor the deputy
chairman is willing to preside or neither of them is present within five
minutes after the time appointed for the meeting, the directors present
may appoint one of their number to be chairman of the meeting.
Validity of acts of the Board
212. All acts done by a meeting of the Board, or of a committee of the Board,
or by a person acting as a director or alternate director, shall,
notwithstanding that it be afterwards discovered that there was a defect
in the appointment of any director or any member of the committee or
alternate director or that any of them were disqualified from holding
office, or had vacated office, or were not entitled to vote, be as valid
as if every such person had been duly appointed and was qualified and had
continued to be a director or, as the case may be, an alternate director
and had been entitled to vote.
Resolutions in writing
213. A resolution in writing signed by all of the directors entitled to receive
notice and vote at a meeting of the Board or of a committee of the Board
shall be as valid and effectual as if it had been passed at a meeting of
the Board or (as the case may be) a committee of the Board duly convened
and held. For this purpose:
(a) a resolution may be by means of an instrument or contained in an
electronic communication sent to such address (if any) as may for
the time being be notified by the Company for that purpose;
(b) a resolution may consist of several instruments or several
electronic communications, each executed by one or more directors,
or a combination of both;
(c) a resolution signed by an alternate director need not also be signed
by his appointor; and
(d) a resolution signed by a director who has appointed an alternate
director need not also be signed by the alternate director in that
capacity.
Meetings by telephone, etc.
214. Without prejudice to the first sentence of Article 209, a person entitled
to be present at a meeting of the Board or of a committee of the Board
shall be deemed to be present for all purposes if he is able (directly or
by telephonic communication) to speak to and be heard by all those present
or deemed to be present simultaneously. A director so deemed to be present
shall be entitled to vote and be counted in a quorum accordingly. Such a
meeting shall be deemed to take place where it is convened to be held or
(if no director is present in that place) where the largest group of those
participating is assembled, or, if there is no such group, where the
chairman of the meeting is. The word "meeting" in these Articles shall be
construed accordingly.
Directors' power to vote on contracts in which they are interested
215. Except as otherwise provided by these Articles, a director shall not vote
at a meeting of the Board or a committee of the Board on any resolution of
the Board concerning a
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matter in which he has an interest (other than by virtue of his interests
in shares or debentures or other securities of, or otherwise in or
through, the Company or Carnival) which (together with any interest of any
person connected with him) is to his knowledge material unless his
interest arises only because the resolution concerns one or more of the
following matters:
(a) the giving of a guarantee, security or indemnity in respect of money
lent or obligations incurred by him or any other person at the
request of or for the benefit of, the Company or Carnival or any of
their respective subsidiary undertakings;
(b) the giving of a guarantee, security or indemnity in respect of a
debt or obligation of the Company or Carnival or any of their
respective subsidiary undertakings for which the director has
assumed responsibility (in whole or part and whether alone or
jointly with others) under a guarantee or indemnity or by the giving
of security;
(c) a contract, arrangement, transaction or proposal concerning an offer
of shares, debentures or other securities of the Company or Carnival
or any of their respective subsidiary undertakings for subscription
or purchase, in which offer he is or may be entitled to participate
as a holder of securities or in the underwriting or sub-underwriting
of which he is to participate;
(d) a contract, arrangement, transaction or proposal concerning any
other body corporate in which he or any person connected with him is
interested, directly or indirectly, and whether as an officer,
shareholder, creditor or otherwise, if he and any persons connected
with him do not to his knowledge hold an interest (as that term is
used in sections 198 to 211 of the Act) representing one per cent or
more of either any class of the equity share capital of such body
corporate (or any other body corporate through which his interest is
derived) or of the voting rights available to members of the
relevant body corporate (any such interest being deemed for the
purpose of this Article to be material interest in all
circumstances);
(e) a contract, arrangement, transaction or proposal for the benefit of
employees of the Company or Carnival or any of their respective
subsidiary undertakings which does not award him any privilege or
benefit not generally accorded to the employees to whom the
arrangement relates; and
(f) a contract, arrangement, transaction or proposal concerning any
insurance which the Company or Carnival is empowered to purchase or
maintain for, or for the benefit of, any directors of the Company or
of Carnival, or for persons who include directors of the Company or
of Carnival.
Interests of connected person and alternate director
216. For the purposes of this Article, an interest of a person who is, for any
purpose of the Companies Acts (excluding any statutory modification of the
Companies Acts not in force when this Article is adopted), connected with
a director shall be treated as an interest of the director and, in
relation to an alternate director, an interest of his appointor shall be
treated as an interest of the alternate director without prejudice to any
interest which the alternate director has otherwise.
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Division of proposals
217. Where proposals are under consideration concerning the appointment
(including without limitation fixing or varying the terms of appointment)
of two or more directors to offices or employments with the Company or any
body corporate in which the Company is interested, the proposals may be
divided and considered in relation to each director separately. In such
cases each of the directors concerned shall be entitled to vote in respect
of each resolution except that concerning his own appointment.
SECRETARY
Appointment and removal of secretary
218. Subject to the provisions of the Companies Acts, the secretary shall be
appointed by the Board for such term, at such remuneration and on such
conditions as it may think fit. Any secretary so appointed may be removed
by the Board, but without prejudice to any claim for damages for breach of
any contract of service between him and the Company.
MINUTES
Minutes required to be kept
219. The Board shall cause minutes to be made in books kept for the purpose of:
(a) all appointments of officers made by the Board; and
(b) all proceedings at meetings of the Company, the holders of any class
of shares in the capital of the Company, the Board and committees of
the Board, including the names of the directors present at each such
meeting.
Conclusiveness of minutes
220. Any such minutes, if purporting to be signed by the chairman of the
meeting to which they relate or of the meeting at which they are read,
shall be sufficient evidence of the proceedings at the meeting without any
further proof of the facts stated in them.
THE SEAL
Authority required for execution of deed
221. The seal shall only be used by the authority of a resolution of the Board
or a duly appointed committee of the Board. The Board may determine who
shall sign any instrument executed under the seal. If they do not, it
shall be signed by at least one director and the secretary or by at least
two directors. Any instrument may be executed under the seal by impressing
the seal by mechanical means or by printing the seal or a facsimile of it
on the instrument or by applying the seal or a facsimile of it by any
other means to the instrument. An instrument signed, with the authority of
a resolution of the Board, by a director and the secretary or by two
directors and expressed (in whatever form of words) to be executed by the
Company has the same effect as if executed under the seal. For the purpose
of the preceding sentence only, "secretary" shall have the same meaning as
in the Act and not the meaning given to it by Article 2.
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Certificates for shares and debentures
222. The Board may by resolution determine either generally or in any
particular case that any certificate for shares or debentures or
representing any other form of security may have any signature affixed to
it by some mechanical means, or printed on it or, in the case of a
certificate executed under the seal, need not bear any signature.
Official seal for use abroad
223. The Company may exercise the powers conferred by section 39 of the Act
with regard to having an official seal for use abroad.
REGISTERS
Overseas and local registers
224. Subject to the provisions of the Companies Acts and the Regulations, the
Company may keep an overseas or local or other register in any place, and
the Board may make, amend and revoke any regulations it thinks fit about
the keeping of that register.
Authentication and certification of copies and extracts
225. Any director or the secretary or any other person appointed by the Board
for the purpose shall have power to authenticate and certify as true
copies of and extracts from:
(a) any document comprising or affecting the constitution of the Company
whether in physical form or electronic form;
(b) any resolution passed by the Company, the holders of any class of
shares in the capital of the Company, the Board or any committee of
the Board whether in physical form or electronic form; and
(c) any book, record and document relating to the business of the
Company whether in physical form or electronic form (including
without limitation the accounts), and
if certified in this way, a document purporting to be a copy of a
resolution, or the minutes or an extract from the minutes of a meeting of
the Company, the holders of any class of shares in the capital of the
Company, the Board or a committee of the Board, whether in physical form
or electronic form, shall be conclusive evidence in favour of all persons
dealing with the Company in reliance on it or them that the resolution was
duly passed or that the minutes are, or the extract from the minutes is, a
true and accurate record of proceedings at a duly constituted meeting.
DIVIDENDS
Declaration of dividends
226. Subject to the provisions of the Companies Acts and the Equalization
Agreement, the Company may by ordinary resolution declare dividends in
accordance with the respective rights of the members, but no dividend
shall exceed the amount recommended by the Board.
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227. The Board shall announce any dividends on ordinary shares in US dollars
(or such other currency as it shall determine from time to time) together
with a sterling equivalent for any such dividend in accordance with
Article 232 below.
228. The Board may at its discretion make provisions to enable a member to
receive dividends duly payable in a currency or currencies other than
dollars or sterling.
229. Holders of ordinary shares shall be entitled to be paid dividends in
sterling for so long as sterling remains the national currency of the
United Kingdom or in any replacement currency if sterling ceases to be the
only national currency of the United Kingdom.
Interim dividends
230. Subject to the provisions of the Companies Acts, the Equalization
Agreement and Articles 234 to 236 (inclusive), the Board may pay interim
dividends if it appears to the Board that they are justified by the
profits of the Company available for distribution. If the share capital is
divided into different classes, the Board may pay interim dividends on
shares which confer deferred or non-preferred rights with regard to
dividend as well as on shares which confer preferential rights with regard
to dividend, but no interim dividend shall be paid on shares carrying
deferred or non-preferred rights if, at the time of payment, any
preferential dividend is in arrear. The Board may also pay at intervals
settled by it any dividend payable at a fixed rate if it appears to the
Board that the profits available for distribution justify the payment. If
the Board acts in good faith it shall not incur any liability to the
holders of shares conferring preferred rights for any loss they may suffer
by the lawful payment of an interim dividend on any shares having deferred
or non-preferred rights.
Apportionment of dividends
231. Except as otherwise provided by the rights attached to shares, all
dividends shall be declared and paid according to the amounts paid up on
the shares on which the dividend is paid; but no amount paid on a share in
advance of the date on which a call is payable shall be treated for the
purposes of this Article as paid on the share. All dividends shall be
apportioned and paid proportionately to the amounts paid up on the shares
during any portion or portions of the period in respect of which the
dividend is paid; but, if any share is allotted or issued on terms
providing that it shall rank for dividend as from a particular date, that
share shall rank for dividend accordingly.
Exchange rate dividend calculation
232. For the purposes of the calculation of the amount receivable in respect of
any dividend payable in a currency or currencies other than US dollars,
the rate of exchange to be used to determine the relevant currency
equivalent of any sum payable as a dividend shall be such market rate
(whether spot or forward) selected by the Board as it shall consider
appropriate by reference to such market rate or rates or the mean of such
market rates prevailing at such time or times or on such date or dates as
the Board may in its discretion select.
Ranking of shares for dividends
233. The rights attaching to the shares of the Company, as regards the
participation in the profits available for distribution and resolved to be
distributed, are as follows:
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(a) the holders of preference shares shall be entitled, in priority to
any payment of dividends to the holders of any other class of
shares, to a preferred right to participate as regards dividends up
to but not beyond a specified amount; and
(b) any surplus remaining after payment of the dividends under paragraph
(a) shall be payable to the holders of the P&O Princess Ordinary
Shares in equal amounts per share.
Matching cash dividends or distributions of an income nature
234. Subject to the other provisions of these Articles, the Company shall not
pay or make any Distribution in cash unless Carnival also pays or makes a
Distribution in cash at or about the same time and the ratio of the
Equalization Distribution Amount so paid or made by Carnival to the
Equalization Distribution Amount so paid or made by the Company
(converted, if applicable, at the Applicable Exchange Rate for such
Distributions and rounded to five decimal places) equals the Equalization
Ratio in effect on the Distribution Determination Date for such
Distributions (each, an "Equivalent Distribution").
235. The Company shall not declare or otherwise become obligated to pay or make
a Distribution in cash unless (i) on the date on which such declaration is
made or such obligation is created, Carnival has sufficient distributable
reserves to make an Equivalent Distribution with respect to such
Distribution; or (ii) the Company agrees to pay, and does pay, to Carnival
(before Carnival pays or makes such Distribution) the minimum amount
required by Carnival so that it will have sufficient distributable
reserves to pay or make such an Equivalent Distribution. Notwithstanding
compliance with the preceding sentence, if Carnival shall have declared or
otherwise become obligated to pay or make such Equivalent Distribution
when due, then the Company shall pay to Carnival the minimum amount
required by Carnival so that Carnival will have sufficient distributable
reserves to pay or make such Equivalent Distribution; provided however
that if the Company does not have sufficient distributable reserves to pay
or make in full both the Equivalent Distribution that it declared or
became obligated to make and the payment required by this sentence, then
(i) the Company shall only pay or make the portion of that Equivalent
Distribution (and any related payment that would have been required by
this sentence in respect of such portion if it were the entire Equivalent
Distribution that it had declared or became obligated to make) that it can
make with its distributable reserves and (ii) Carnival shall only pay or
make the portion of its Equivalent Distribution that it can make out of
its distributable reserves following receipt of such payment.
236. For purposes of Article 235, the amount the Company is required to pay
Carnival shall be determined after taking into account all Taxes payable
by, and all Tax credits of, the Company and Carnival with respect to the
payment or receipt of such payment and any such payment may be made on the
Equalization Share issued by the Company if both the Board and the Board
of Carnival deem it appropriate.
Timing of dividends and distributions
237. The Board, insofar as is practical, will:
(a) in relation to any proposed cash Distribution, agree with the Board
of Carnival the amount of the Equivalent Distribution to be made by
each company;
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(b) determine to pay or recommend to pay Equivalent Distributions at a
meeting of the Board convened as close in time as is practicable to
the respective meeting of the Board of Carnival;
(c) announce and pay any Equivalent Distributions simultaneously or as
close in time as is practicable to the announcement or payment of
any Equivalent Distribution made by the Board of Carnival;
(d) ensure that the record dates for receipt of the Equivalent
Distribution, in respect of the Company and Carnival, are on the
same date; and
(e) generally co-ordinate the timing of all other aspects of the payment
or making of Equivalent Distributions with the Board of Carnival.
Dividends in specie
238. Subject to the provisions of Articles 124 to 129 and the provisions of the
Equalization Agreement, a general meeting declaring a dividend may, on the
recommendation of the Board, by ordinary resolution direct that it shall
be satisfied wholly or partly by the distribution of assets, including
without limitation paid up shares or debentures of another body corporate.
The Board may make any arrangements it thinks fit to settle any difficulty
arising in connection with the distribution, including without limitation
(a) the fixing of the value for distribution of any assets, (b) the
payment of cash to any member on the basis of that value in order to
adjust the rights of members, and (c) the vesting of any asset in a
trustee.
Scrip dividends: authorising resolution
239. Subject to the Companies Acts and the provisions of Articles 124 to 129,
the Board may, if authorised by an ordinary resolution of the Company (the
"Resolution"), offer any holder of ordinary shares the right to elect to
receive Ordinary Shares, credited as fully paid, instead of cash in
respect of the whole (or some part, to be determined by the Board) of all
or any dividend specified by the Resolution. The offer shall be on the
terms and conditions and be made in the manner specified in Article 240
or, subject to those provisions, specified in the Resolution.
Scrip dividends: procedures
240. The following provisions shall apply to the Resolution and any offer made
pursuant to it and Article 239.
(a) The Resolution may specify a particular dividend, or may specify all
or any dividends declared within a specified period.
(b) Each holder of Ordinary Shares shall be entitled to that number of
new shares as are together as nearly as possible equal in value to
(but not greater than) the cash amount (disregarding any tax credit)
of the dividend that such holder elects to forgo (each a "new
share"). For this purpose, the value of each new share shall be:
(i) equal to the average quotation for the Company's Ordinary
Shares, that is, the average of the middle market quotations
for those shares on the London Stock Exchange, as derived from
the Daily Official List, on the
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day on which such shares are first quoted ex the relevant
dividend and the four subsequent dealing days; or
(ii) calculated in any other manner specified by the Resolution,
but shall never be less than the par value of the new share. A
certificate or report by the auditors as to the value of a new share
in respect of any dividend shall be conclusive evidence of that
value.
(c) On or as soon as practicable after announcing that any dividend is
to be declared or recommended, the Board, if it intends to offer an
election in respect of that dividend, shall also announce that
intention. If, after determining the basis of allotment, the Board
decides to proceed with the offer, it shall notify the holders of
Ordinary Shares of the terms and conditions of the right of election
offered to them, specifying the procedure to be followed and place
at which, and the latest time by which, elections or notices
amending or terminating existing elections must be lodged in order
to be effective.
(d) The Board shall not proceed with any election unless the Company has
sufficient unissued Ordinary Shares authorised for issue and
sufficient reserves or funds that may be appropriated to give effect
to it after the basis of allotment is determined.
(e) The Board may exclude from any offer any holders of Ordinary Shares
where the Board believes the making of the offer to them would or
might involve the contravention of the laws of any territory or that
for any other reason the offer should not be made to them.
(f) The dividend (or that part of the dividend in respect of which a
right of election has been offered) shall not be payable in cash on
Ordinary Shares in respect of which an election has been made (the
"elected shares") and instead such number of new shares shall be
allotted to each holder of elected shares as is arrived at on the
basis stated in Article 240(b). For that purpose the Board shall
appropriate out of any amount for the time being standing to the
credit of any reserve or fund (including without limitation the
profit and loss account), whether or not it is available for
distribution, a sum equal to the aggregate nominal amount of the new
shares to be allotted and apply it in paying up in full the
appropriate number of new shares for allotment and distribution to
each holder of elected shares as is arrived at on the basis stated
in Article 240(b).
(g) The new shares when allotted shall rank equally in all respects with
the fully paid shares of the same class then in issue except that
they shall not be entitled to participate in the relevant dividend.
(h) No fraction of an Ordinary Share shall be allotted. The Board may
make such provision as it thinks fit for any fractional entitlements
including without limitation payment in cash to holders in respect
of their fractional entitlements, provision for the accrual,
retention or accumulation of all or part of the benefit of
fractional entitlements to or by the Company or to or by or on
behalf of any holder or the application of any accrual, retention or
accumulation to the allotment of fully paid shares to any holder.
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(i) The Board may do all acts and things it considers necessary or
expedient to give effect to the allotment and issue of any share
pursuant to this Article or otherwise in connection with any offer
made pursuant to this Article and may authorise any person, acting
on behalf of the holders concerned, to enter into an agreement with
the Company providing for such allotment or issue and incidental
matters. Any agreement made under such authority shall be effective
and binding on all concerned.
(j) The Board may, at its discretion, amend, suspend or terminate any
offer pursuant to this Article.
Permitted deductions and retentions
241. The Board may deduct from any dividend or other moneys payable to any
member in respect of a share any moneys presently payable by him to the
Company in respect of that share. Where a person is entitled by
transmission to a share, the Board may retain any dividend payable in
respect of that share until that person (or that person's transferee)
becomes the holder of that share.
Procedure for payment to holders and others entitled
242. Any dividend or other moneys payable in respect of a share may be paid:
(a) in cash; or
(b) by cheque or warrant made payable to or to the order of the holder
or person entitled to payment; or
(c) by any direct debit, bank or other funds transfer system to the
holder or person entitled to payment or, if practicable, to a person
designated by notice to the Company by the holder or person entitled
to payment; or
(d) by any other method approved by the Board and agreed (in such form
as the Company thinks appropriate) by the holder or person entitled
to payment including (without limitation) in respect of an
uncertificated share by means of the relevant system (subject to the
facilities and requirements of the relevant system).
Joint entitlement
243. If two or more persons are registered as joint holders of any share, or
are entitled by transmission jointly to a share, the Company may:
(a) pay any dividend or other moneys payable in respect of the share to
any one of them and any one of them may give effectual receipt for
that payment; and
(b) for the purposes of Article 242, rely in relation to the share on
the written direction, designation or agreement of, or notice to the
Company by, any one of them.
Payment by post
244. A cheque or warrant may be sent by post to:
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(a) where a share is held by a sole holder, the registered address of
the holder of the share; or
(b) if two or more persons are the holders, to the registered address of
the person who is first named in the register; or
(c) if a person is entitled by transmission to the share, as if it were
a notice to be given under Articles 254 to 260; or
(d) in any case, to such person and to such address as the person
entitled to payment may direct by notice to the Company.
Discharge to Company and risk
245. Payment of a cheque or warrant by the bank on which it was drawn or the
transfer of funds by the bank instructed to make the transfer or, in
respect of an uncertificated share, the making of payment in accordance
with the facilities and requirements of the relevant system (which, if the
relevant system is CREST, shall be the creation of an assured payment
obligation in respect of the dividend or other moneys payable in favour of
the settlement bank of the member or other person concerned) shall be a
good discharge to the Company. Every cheque or warrant sent in accordance
with these Articles shall be at the risk of the holder or person entitled.
The Company shall have no responsibility for any sums lost or delayed in
the course of payment by any other method used by the Company in
accordance with Article 242.
Interest not payable
246. No dividend or other moneys payable in respect of a share shall bear
interest against the Company unless otherwise provided by the rights
attached to the share.
Forfeiture of unclaimed dividends
247. Any dividend which has remained unclaimed for 12 years from the date when
it became due for payment shall, unless the Board resolves otherwise, be
forfeited and cease to remain owing by the Company. The payment of any
unclaimed dividend or other moneys payable in respect of a share may (but
need not) be paid by the Company into an account separate from the
Company's own account. Such payment shall not constitute the Company a
trustee in respect of it. The Company shall be entitled to cease sending
dividend warrants and cheques by post or otherwise to a member if those
instruments have been returned undelivered to, or left uncashed by, that
member on at least two consecutive occasions, or, following one such
occasion, reasonable enquiries have failed to establish the member's new
address. The entitlement conferred on the Company by this Article in
respect of any member shall cease if the member claims a dividend or
cashes a dividend warrant or cheque.
CAPITALISATION OF PROFITS AND RESERVES
Power to capitalise
248. Subject to the provisions of Articles 124 to 129 and the provisions of the
Equalization Agreement, the Board may with the authority of an ordinary
resolution of the Company:
(a) subject to the provisions of this Article, resolve to capitalise any
undistributed profits of the Company not required for paying any
preferential dividend
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(whether or not they are available for distribution) or any sum
standing to the credit of any reserve or other fund, including
without limitation the Company's share premium account and capital
redemption reserve, if any;
(b) appropriate the sum resolved to be capitalised to the members or any
class of members on the record date specified in the relevant
resolution who would have been entitled to it if it were distributed
by way of dividend and in the same proportions;
(c) apply that sum on their behalf either in or towards paying up the
amounts, if any, for the time being unpaid on any shares held by
them respectively, or in paying up in full unissued shares,
debentures or other obligations of the Company of a nominal amount
equal to that sum but the share premium account, the capital
redemption reserve, and any profits which are not available for
distribution may, for the purposes of this Article, only be applied
in paying up unissued shares to be allotted to members credited as
fully paid;
(d) allot the shares, debentures or other obligations credited as fully
paid to those members, or as they may direct, in those proportions,
or partly in one way and partly in the other;
(e) where shares or debentures become, or would otherwise become,
distributable under this Article in fractions, make such provision
as they think fit for any fractional entitlements including without
limitation authorising their sale and transfer to any person,
resolving that the distribution be made as nearly as practicable in
the correct proportion but not exactly so, ignoring fractions
altogether or resolving that cash payments be made to any members in
order to adjust the rights of all parties;
(f) authorise any person to enter into an agreement with the Company on
behalf of all the members concerned providing for either:
(i) the allotment to the members respectively, credited as fully
paid, of any shares, debentures or other obligations to which
they are entitled on the capitalisation; or
(ii) the payment up by the Company on behalf of the members of the
amounts, or any part of the amounts, remaining unpaid on their
existing shares by the application of their respective
proportions of the sum resolved to be capitalised,
and any agreement made under that authority shall be binding
on all such members; and
(g) generally do all acts and things required to give effect to the
ordinary resolution.
RECORD DATES
Record dates for dividends, etc.
249. Notwithstanding any other provision of these Articles, the Company or the
Board may:
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(a) fix any date as the record date for any dividend, distribution,
allotment or issue, which may be on or at any time before or after
any date on which the dividend, distribution, allotment or issue is
declared, paid or made;
(b) for the purpose of determining which persons are entitled to attend
and vote at a general meeting of the Company, or a separate general
meeting of the holders of any class of shares in the capital of the
Company, and how many votes such persons may cast, specify in the
notice of meeting a time, not more than 48 hours before the time
fixed for the meeting, by which a person must be entered on the
register in order to have the right to attend or vote at the
meeting; changes to the register after the time specified by virtue
of this Article 249(b) shall be disregarded in determining the
rights of any person to attend or vote at the meeting; and
(c) for the purpose of sending notices of general meetings of the
Company, or separate general meetings of the holders of any class of
shares in the capital of the Company, under these Articles,
determine that persons entitled to receive such notices are those
persons entered on the register at the close of business on a day
determined by the Company or the Board, which day may not be more
than 21 days before the day that notices of the meeting are sent.
ACCOUNTS
Rights to inspect records
250. No member shall (as such) have any right to inspect any accounting records
or other book or document of the Company except as conferred by statute or
authorized by the Board or by ordinary resolution of the Company or order
of a court of competent jurisdiction.
Sending of annual accounts
251. Subject to the Companies Acts, a copy of the Company's annual accounts,
together with a copy of the directors' report for that financial year and
the auditors' report on those accounts shall, at least 21 clear days
before the date of the meeting at which copies of those documents are to
be laid in accordance with the provisions of the Companies Acts, be sent
to every member and to every holder of the Company's debentures of whose
address the Company is aware, and to every other person who is entitled to
receive notice of meetings from the Company under the provisions of the
Companies Acts or of these Articles or, in the case of joint holders of
any share or debenture, to one of the joint holders.
Summary financial statements
252. Subject to the Companies Acts, the requirements of Article 251 shall be
deemed satisfied in relation to any person by sending to the person,
instead of such copies, a summary financial statement derived from the
Company's annual accounts and the directors' report, which shall be in the
form and containing the information prescribed by the Companies Acts and
any regulations made under the Companies Acts.
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NOTICES
When notice required to be in writing: use of electronic communications
253. Any notice to be sent to or by any person pursuant to these Articles
(other than a notice calling a meeting of the Board) shall be in writing.
Any such notice may be sent using electronic communications to such
address (if any) as may for the time being be notified for that purpose to
the person giving the notice by or on behalf of the person to whom the
notice is sent.
Methods of giving notice
254. The Company may send any notice or other document pursuant to these
Articles to a member by whichever of the following methods it may in its
absolute discretion determine:
(a) personally; or
(b) by posting the notice or other document in a prepaid envelope
addressed to the member at his registered address; or
(c) by leaving the notice or other document at that address; or
(d) by sending the notice or other document using electronic
communications to such address (if any) as may for the time being be
notified to the Company by or on behalf of the member for that
purpose.
Website publication
255. Subject to the Companies Acts, the Company may also send any notice or
other document pursuant to these Articles to a member by publishing that
notice or other document on a website where:
(a) the Company and the member have agreed to him having access to the
notice or document on a website (instead of it being sent to him);
(b) the notice or document is one to which that agreement applies;
(c) the member is notified, in a manner for the time being agreed
between him and the Company for the purpose, of:
(i) the publication of the notice or document on a website;
(ii) the address of that website; and
(iii) the place on that website where the notice or document may be
accessed, and how it may be accessed; and
(d) the notice or document is published on that website throughout the
publication period, provided that, if the notice or document is
published on that website for a part, but not all of, the
publication period, the notice or document shall be treated as being
published throughout that period if the failure to publish that
notice or document throughout that period is wholly attributable to
circumstances which it would not be reasonable to have expected the
Company to prevent or avoid.
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In this Article 255, "publication period" means:
(e) in the case of a notice of an adjourned meeting pursuant to Article
104, a period of not less than seven clear days before the date of
the adjourned meeting, beginning on the day following that on which
the notification referred to in sub-paragraph (c) above is sent or
(if later) is deemed sent;
(f) in the case of a notice of a poll pursuant to Article 136, a period
of not less than seven clear days before the taking of the poll,
beginning on the day following that on which the notification
referred to in sub-paragraph (c) above is sent or (if later) is
deemed sent; and
(g) in any other case, a period of not less than the relevant notice
period, beginning on the day following that on which the
notification referred to in sub-paragraph (c) above is sent or (if
later) is deemed sent.
Notice to joint holders
256. In the case of joint holders of a share, all notices or other documents
shall be sent to the joint holder whose name stands first in the register
in respect of the joint holding. Any notice or other document so sent
shall be deemed for all purposes sufficient sending to all the joint
holders.
Registered address outside United Kingdom
257. A member whose registered address is not within the United Kingdom and who
gives to the Company an address within the United Kingdom at which a
notice or other document may be sent to him by instrument or an address to
which a notice or other document may be sent using electronic
communications shall (provided that, in the case of electronic
communications, the Company so agrees) be entitled to have notices or
other documents sent to him at that address but otherwise:
(a) no such member shall be entitled to receive any notice or other
document from the Company; and
(b) without prejudice to the generality of the foregoing, any notice of
a general meeting of the Company which is in fact sent or purports
to be sent to such member shall be ignored for the purpose of
determining the validity of the proceedings at such general meeting.
Deemed receipt of notice
258. A member present, either in person or by proxy, at any meeting of the
Company or of the holders of any class of shares in the capital of the
Company shall be deemed to have been sent notice of the meeting and, where
requisite, of the purposes for which it was called.
Terms and conditions for electronic communications
259. The Board may from time to time issue, endorse or adopt terms and
conditions relating to the use of electronic communications for the
sending of notices, other documents and proxy appointments by the Company
to members and by members to the Company.
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Notice includes website notification
260. In this Article and in Articles 261, 262 and 263, references to a notice
include without limitation references to any notification required by the
Companies Acts or these Articles in relation to the publication of any
notices or other documents on a website.
Notice to persons entitled by transmission
261. A notice or other document may be sent by the Company to the person or
persons entitled by transmission to a share by sending it in any manner
the Company may choose authorised by these Articles for the sending of a
notice or other document to a member, addressed to them by name, or by the
title of representative of the deceased, or trustee of the bankrupt or by
any similar description at the address, if any, in the United Kingdom as
may be supplied for that purpose by or on behalf of the person or persons
claiming to be so entitled. Until such an address has been supplied, a
notice or other document may be sent in any manner in which it might have
been sent if the death or bankruptcy or other event giving rise to the
transmission had not occurred.
Transferees etc. bound by prior notice
262. Every person who becomes entitled to a share shall be bound by any notice
in respect of that share which, before his name is entered in the
register, has been sent to a person from whom he derives his title,
provided that no person who becomes entitled by transmission to a share
shall be bound by any direction notice issued under Article 154 to a
person from whom he derives his title.
Proof of sending when sent by post
263. Proof that an envelope containing a notice or other document was properly
addressed, prepaid and posted shall be conclusive evidence that the notice
or document was sent. Proof that a notice or other document contained in
an electronic communication was sent in accordance with guidance issued by
the Institute of Chartered Secretaries and Administrators current at the
date of adoption of these Articles, or, if the Board so resolves, any
subsequent guidance so issued, shall be conclusive evidence that the
notice or document was sent. A notice or other document sent by the
Company to a member by post shall be deemed to be sent:
(a) if sent by first class post or special delivery post from an address
in the United Kingdom to another address in the United Kingdom, or
by a postal service similar to first class post or special delivery
post from an address in another country to another address in that
other country, on the day following that on which the envelope
containing it was posted;
(b) if sent by airmail from an address in the United Kingdom to an
address outside the United Kingdom, or from an address in another
country to an address outside that country (including without
limitation an address in the United Kingdom), on the third day
following that on which the envelope containing it was posted; and
(c) in any other case, on the second day following that on which the
envelope containing it was posted.
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When notices etc. deemed sent by electronic communication
264. A notice or other document sent by the Company to a member contained in an
electronic communication shall be deemed sent to the member on the day
following that on which the electronic communication was sent to the
member. Such a notice or other document shall be deemed sent to the member
on that day notwithstanding that the Company becomes aware that the member
has failed to receive the relevant notice or other document for any reason
and notwithstanding that the Company subsequently sends a copy of such
notice or other document by post to the member.
Notice during disruption of postal services
265. If at any time the Company is unable effectively to convene a general
meeting by notices sent through the post in the United Kingdom as a result
of the suspension or curtailment of postal services, notice of general
meeting may be sufficiently given by advertisement in the United Kingdom.
Any notice given by advertisement for the purpose of this Article shall be
advertised on the same date in at least one newspaper having a national
circulation. Such notice shall be deemed to have been sent to all persons
who are entitled to have notice of meetings sent to them on the day when
the advertisement appears. In any such case the Company shall send
confirmatory copies of the notice by post if at least seven days before
the meeting the posting of notices to addresses throughout the United
Kingdom again becomes practicable. The foregoing shall not absolve the
Company from any duty to send notice of a general meeting by use of
electronic communications pursuant to these Articles.
DESTRUCTION OF DOCUMENTS
Power of Company to destroy documents
266. The Company shall be entitled to destroy:
(a) all instruments of transfer of shares which have been registered,
and all other documents on the basis of which any entry is made in
the register, at any time after the expiration of six years from the
date of registration;
(b) all dividend mandates, variations or cancellations of dividend
mandates, and notifications of change of address at any time after
the expiration of two years from the date of recording;
(c) all share certificates which have been cancelled at any time after
the expiration of one year from the date of the cancellation;
(d) all paid dividend warrants and cheques at any time after the
expiration of one year from the date of actual payment;
(e) all proxy appointments which have been used for the purpose of a
poll at any time after the expiration of one year from the date of
use; and
(f) all proxy appointments which have not been used for the purpose of a
poll at any time after one month from the end of the meeting to
which the proxy appointment relates and at which no poll was
demanded.
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Presumption in relation to destroyed documents
267. It shall conclusively be presumed in favour of the Company that:
(a) every entry in the register purporting to have been made on the
basis of an instrument of transfer or other document destroyed in
accordance with Article 266 was duly and properly made;
(b) every instrument of transfer destroyed in accordance with Article
266 was a valid and effective instrument duly and properly
registered;
(c) every share certificate destroyed in accordance with Article 266 was
a valid and effective certificate duly and properly cancelled; and
(d) every other document destroyed in accordance with Article 266 was a
valid and effective document in accordance with its recorded
particulars in the books or records of the Company,
but:
(e) the provisions of this Article apply only to the destruction of a
document in good faith and without notice of any claim (regardless
of the parties) to which the document might be relevant;
(f) nothing in this Article shall be construed as imposing on the
Company any liability in respect of the destruction of any document
earlier than the time specified in Article 266 or in any other
circumstances which would not attach to the Company in the absence
of this Article; and
(g) any reference in Articles 266 and 267 to the destruction of any
document includes a reference to its disposal in any manner.
UNTRACED SHAREHOLDERS
Power to dispose of shares of untraced shareholders
268. The Company shall be entitled to sell, at the best price reasonably
obtainable, the shares of a member or the shares to which a person is
entitled by transmission if:
(a) during the period of 12 years before the date of the publication of
the advertisements referred to in Article 268(b) (or, if published
on different dates, the first date) (for the purposes of this
Article, the "relevant period") at least three dividends in respect
of the shares in question have been declared and all dividend
warrants and cheques which have been sent in the manner authorized
by these Articles in respect of the shares in question have remained
uncashed;
(b) the Company shall as soon as practicable after expiry of the
relevant period have inserted advertisements both in a national
daily newspaper and in a newspaper circulating in the area of the
last known address of such member or other person giving notice of
its intention to sell the shares;
(c) during the relevant period and the period of three months following
the publication of the advertisements referred to in Article 268(b)
(or, if published on
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different dates, the first date) the Company has received no
indication either of the whereabouts or of the existence of such
member or person; and
(d) if the shares are listed on the London Stock Exchange, notice has
been given to the London Stock Exchange of the Company's intention
to make such sale before the publication of the advertisements.
Transfer on sale
269. To give effect to any sale pursuant to Article 268, the Board may:
(a) where the shares are held in certificated form, authorise any person
to execute an instrument of transfer of the shares to, or in
accordance with the directions of, the buyer; or
(b) where the shares are held in uncertificated form, do all acts and
things it considers necessary or expedient to rematerialise shares
into certificated form and/or to effect the transfer of the shares
to, or in accordance with the directions of, the buyer.
Effectiveness of transfer
270. An instrument of transfer executed by that person in accordance with
Article 269(a) shall be as effective as if it had been executed by the
holder of, or person entitled by transmission to, the shares. An exercise
by the Company of its powers in accordance with Article 269(b) shall be as
effective as if exercised by the registered holder of or person entitled
by transmission to the shares. The transferee shall not be bound to see to
the application of the purchase money, and his title to the shares shall
not be affected by any irregularity in, or invalidity of, the proceedings
in reference to the sale.
Proceeds of sale
271. The net proceeds of sale shall belong to the Company which shall be
obliged to account to the former member or other person previously
entitled for an amount equal to the proceeds. The Company shall enter the
name of such former member or other person in the books of the Company as
a creditor for that amount. In relation to the debt, no trust is created
and no interest is payable. The Company shall not be required to account
for any money earned on the net proceeds of sale, which may be used in the
Company's business or invested in such a way as the Board from time to
time thinks fit.
LIQUIDATION
272. If either or both of the Company and/or Carnival goes into any voluntary
or involuntary Liquidation, the Company and Carnival will, subject to
Article 273 below, make and receive such payments or take such other
actions required to ensure that the holders of Ordinary Shares of each
company would, had each entity gone into Liquidation on the same date, be
entitled to receive a Liquidation Distribution which is equivalent on a
per share basis in accordance with the then existing Equalization Ratio,
having regard to the Liquidation Exchange Rate but ignoring any
shareholder Tax or Tax Benefit.
Liquidation Procedure
273. To establish the amount payable under Article 272, each of the Company and
Carnival will determine the amount of assets (if any) it will have
available for distribution in a
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Liquidation on the date of Liquidation (or notional date of Liquidation)
to holders of its Ordinary Shares after payment of all its debts and other
financial obligations, including any tax costs associated with the
realisation of any assets on a Liquidation and any payments due on any
preference shares (its "Net Assets"). To the extent that the Net Assets of
one company would enable it to make a Liquidation Distribution to the
holders of its Ordinary Shares that is greater than the Liquidation
Distribution that the other company could pay from its Net Assets to the
holders of its Ordinary Shares, adjusting such comparative Liquidation
Distribution in accordance with the then existing Equalization Ratio and
having regard to the Liquidation Exchange Rate, but ignoring any
shareholder Tax (including any withholding Tax required to be deducted by
the company concerned) or Tax Benefit then subject to Article 274 such
company will make a balancing payment (or take any other balancing action
described in Article 275 below) in such amount as will ensure that both
companies can make equivalent Liquidation Distributions to the holders of
their Ordinary Shares in accordance with the then existing Equalization
Ratio and having regard to the Liquidation Exchange Rate, but ignoring any
shareholder Tax (including any withholding Tax required to be deducted by
the company concerned) or Tax Benefit, PROVIDED ALWAYS THAT no company
need make a balancing payment (or take any other action) as described in
this Article 273 if it would result in neither the holders of Carnival
Common Stock nor the holders of P&O Princess Ordinary Shares being
entitled to receive any Liquidation Distribution at all.
274. For purposes of Article 273, the amount a company is required to pay the
other company shall be determined after taking into account all Taxes
payable by, and all Tax credits, losses or deductions of, the parties with
respect to the payment or receipt of such payment and any such payment may
be made on the Equalization Share issued by the paying company if both the
Board and the Board of Carnival deem it appropriate.
Liquidation Actions
275. In giving effect to the principle regarding a Liquidation of the Company
and/or Carnival described above, the Company and/or Carnival shall take
such action as may be required to give effect to that principle, which may
include:
(a) making a payment (of cash or in specie) to the other company;
(b) issuing shares (which may include the Equalization Share) to the
other party or to holders of Ordinary Shares of the other company
and making a distribution or return on such Ordinary Shares; or
(c) taking any other action that the Board and the Board of Carnival
shall both consider appropriate to give effect to that principle,
provided that any action other than a payment of cash by one company to
the other shall require the prior approval of the Board and the Board of
Carnival.
Disposal of assets by liquidator
276. The power of sale of a liquidator shall include a power to sell wholly or
partially for shares or debentures or other obligations of another body
corporate, either then already constituted or about to be constituted for
the purpose of carrying out the sale.
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SHARE CONTROL LIMIT
Trigger of limit
277. Subject to Article 278, if any person (an "Acquiring Person") acquires
additional Ordinary Shares or voting control over additional Ordinary
Shares and, after giving effect to such acquisition (or, if the Company is
subject to the City Code, acquires Ordinary Shares or voting control over
Ordinary Shares) such Acquiring Person, whether solely or together with
any person or persons Acting in Concert with such Acquiring Person, holds
or exercises voting control over Ordinary Shares which equal or are in
excess of the Combined Group City Code Limit (such acquisition of Ordinary
Shares or voting control over Ordinary Shares, a "Triggering
Acquisition"), then all (i) Ordinary Shares held by the Acquiring Person
or over which the Acquiring Person exercises voting control, and (ii)
Ordinary Shares held by any party or parties Acting in Concert with such
Acquiring Person or over which any party or parties Acting in Concert with
such Acquiring Person exercise(s) voting control (the "Acquiring Person
Attributable Shares") shall automatically be designated as "Combined Group
Restricted Shares" for the purposes of Articles 277 to 287. A Triggering
Acquisition can occur more than once and the provisions set forth in
Articles 277 to 287 shall apply to every separate Triggering Acquisition
or series of Triggering Acquisitions.
Qualifying Takeover Offer
278. Notwithstanding the provisions of Article 277, if:
(a) prior to or simultaneously with a Triggering Acquisition, such
Acquiring Person has made a Qualifying Takeover Offer (and, in the
event that the Qualifying Takeover Offer was made prior to the
Triggering Acquisition, such Qualifying Takeover Offer has not been
withdrawn, abandoned or terminated prior to or simultaneously with
the Triggering Acquisition), or
(b) where the circumstances described in Article 278(a) have not
occurred, such Acquiring Person (i) within 10 days after the date on
which the applicable Triggering Action occurs, makes a binding
public announcement to commence a Qualifying Takeover Offer, and
(ii) within 28 days after making the public announcement referred to
in 278(b)(i), commences a Qualifying Takeover Offer,
then the Acquiring Person Attributable Shares shall not be designated
Combined Group Restricted Shares for the purposes of Articles 278 to 287
hereof until the earliest to occur (if at all) of (x) a withdrawal,
abandonment or termination of such Qualifying Takeover Offer other than in
accordance with its terms, or (y) any amendment, modification or
supplement to the terms of either offer constituting the Qualifying
Takeover Offer such that, as amended, modified or supplemented, the offers
would not constitute a Qualifying Takeover Offer; provided that
immediately upon the earliest to occur of the events described in (x) or
(y) above, such Acquiring Person Attributable Shares shall be
automatically designated as Combined Group Restricted Shares.
Determination of Combined Group Excess Shares
279. In the event that any Ordinary Shares are designated Combined Group
Restricted Shares pursuant to Articles 277 or 278:
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(a) If the Combined Group Restricted Shares (i) consist entirely of P&O
Princess Ordinary Shares, and (ii) are held by or subject to the
voting control of a single person, then all P&O Princess Ordinary
Shares held by such person or over which such person exercises
voting control which cause the Combined Group City Code Limit to be
equalled or exceeded shall automatically be designated as Combined
Group Excess Shares for the purposes of Articles 286 and 287;
(b) If the Combined Group Restricted Shares consist of both Carnival
Common Stock and P&O Princess Ordinary Shares, and are held by or
subject to the voting control of a single person, then:
(i) if, after giving effect to the Equalization Ratio, (x) the
number of votes represented by such P&O Princess Ordinary
Shares that could be cast with respect to a Joint Electorate
Action exceeds or is equal to (y) the number of votes
represented by such Carnival Common Stock that could be cast
with respect to a Joint Electorate Action, then all P&O
Princess Ordinary Shares held by such person or over which
such person exercises voting control which cause the Combined
Group City Code Limit to be equalled or exceeded shall
automatically be designated as Combined Group Excess Shares
for the purposes of Articles 286 and 287; and
(ii) if, after giving effect to the Equalization Ratio, (x) the
number of votes represented by such P&O Princess Ordinary
Shares that could be cast with respect to a Joint Electorate
Action is less than (y) the number of votes represented by
such Carnival Common Stock that could be cast with respect to
a Joint Electorate Action, such P&O Princess Ordinary Shares
shall automatically be designated as Combined Group Excess
Shares for the purposes of Articles 286 and 287 only to the
extent that such P&O Princess Ordinary Shares would give such
person ownership or voting control equal to or in excess of
the Combined Group City Code Limit, if such limit was applied
without regard to any Carnival Common Stock held or subject to
the voting control of such person.
(c) If the Combined Group Restricted Shares are held by or subject to
the voting control of two or more persons Acting in Concert, where:
(i) all or a part of such Combined Group Restricted Shares would
all have been designated as Combined Group Excess Shares
pursuant to Article 279(a) had they been held by or subject to
the voting control of a single person; or
(ii) all or a part of such Combined Group Restricted Shares would
have been designated as Combined Group Excess Shares pursuant
to Article 279(b) had they been held by or subject to the
voting control of a single person,
then such automatic designation as Combined Group Excess Shares for
the purposes of Articles 286 and 287 shall be made with respect to
the same number of P&O Princess Ordinary Shares held by or subject
to the voting control of such persons Acting in Concert as if they
had been held by or subject to the voting control of a single
person, such designation to be made on a pro rata basis based on the
number of P&O Princess Ordinary Shares each such person holds or
over which each such person exercises voting control.
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Authority of the Board
280. The Board shall have the authority to exercise all rights and powers
granted to or vested in the Board or the Company under Articles 277 to 287
and to take any action as it deems necessary or advisable to give effect
to the provisions of Articles 277 to 287, including the right and power to
interpret the provisions of Articles 277 to 278 and to make all
determinations deemed necessary or advisable to give effect to the
provisions of Articles 277 to 287. Without limiting the generality of the
foregoing, the Company shall expressly have the right to effect or procure
a transfer of Combined Group Restricted Shares as described in Articles
277 to 287. In the case of ambiguity in the application of any of the
provisions of Articles 277 to 287, the Board shall, in its absolute
discretion, have the power to determine the application of such provisions
with respect to any situation based on the facts known to them. All such
actions, calculation, interpretations and determinations which are done or
made by the Board in good faith shall be final, conclusive and binding on
the Company and all other parties. No Director shall be liable for any act
or omission pursuant to these Articles 277 to 287 if such action was taken
in good faith.
281. Immediately on a trigger of the Combined Group City Code Limit by any
member (or any Acquiring Person), such person(s) shall:
(a) be deemed to irrevocably appoint the Company as his agent for the
sale of the Combined Group Excess Shares, together with all rights
attaching thereto, including, but not limited to, the right to do
all acts and things, receive (on behalf of the Acquiring Person) the
proceeds from the sale of the Combined Group Excess Shares and to
negotiate, sign, execute and deliver all documents on behalf of the
Acquiring Person which it considers necessary and advisable in
connection with the sale of the Combined Group Excess Shares and
such appointment shall endure until the ninetieth day after final
delivery of the proceeds of the sale of all of the relevant Combined
Group Excess Shares to the Company; and
(b) authorise any person to execute an instrument of transfer in respect
of the Combined Group Excess Shares sold to, or in accordance with
the directions of, the Combined Group Excess Share Trustee and/or
any subsequent purchaser. The transferee shall not be bound to see
to the application of any purchase money and his title to the
Combined Group Excess Shares shall not be affected by any
irregularity in or invalidity of the proceedings in relation to the
sale or transfer; and
(c) assist the Company in any and all matters or things relating to the
sale of the Combined Group Excess Shares, including, but not limited
to, procuring the appointment of the Company by his nominee or
trustee, as their agent for the sale of the Combined Group
Restricted Shares together with those rights, permissions and
authorisations granted in (i) and (ii) above.
282. Articles 277 to 287 override any other provision of these Articles.
Notice
283. Any person whose acquisition of Ordinary Shares or voting control over
Ordinary Shares would or does result in any Ordinary Shares being
constituted as Combined Group Restricted Shares pursuant to Articles 277
or 278 shall immediately give written notice to
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the Company of such event and shall provide to the Company such other
information as the Company may request in order to determine (i) whether
any acquisition of Ordinary Shares or voting control over Ordinary Shares
has resulted or could result in any Ordinary Shares being designated as
Combined Group Excess Shares under Article 279, and/or (ii) to what extent
any Combined Group Restricted Shares should be designated as Combined
Group Excess Shares pursuant to Article 278.
284. The Company will, as soon as practicable after the Board has knowledge
thereof, notify in writing any person who holds any Combined Group
Restricted Shares; provided that failure by the Company to give any such
notification shall in no way invalidate any of the provisions of Articles
277 to 287. The Company may, at any time after serving such notice
referred to in this Article 284, require that the holder(s) of Combined
Group Restricted Shares provide the Company with such other information as
the Company may request in order to determine (i) whether any acquisition
of Ordinary Shares or voting control over Ordinary Shares has resulted or
could result in any Ordinary Shares being designated as Combined Group
Excess Shares under Article 279, and/or (ii) to what extent any Combined
Group Restricted Shares should be designated as Combined Group Excess
Shares pursuant to Article 278.
Exclusions
285. The provisions set forth in Articles 277 to 284 and 286 and 287 shall not
apply to:
(a) any Ordinary Shares to the extent that such restrictions are
prohibited pursuant to the Applicable Regulations; or
(b) any acquisition of Ordinary Shares or voting control over Ordinary
Shares by any member of the Arison Group if, as a result, the
aggregate of the voting rights of the P&O Princess Ordinary Shares
and of the Carnival Common Stock held by the Arison Group and of the
P&O Princess Ordinary Shares and of the Carnival Common Stock over
which the Arison Group, after giving effect to the Equalization
Ratio, exercises voting control does not thereby (i) increase by one
per cent or more in any period of twelve consecutive months and (ii)
after giving effect to the Equalization Ratio, equal or exceed forty
per cent of the aggregate voting rights attached to the whole of the
issued P&O Princess Ordinary Shares and the outstanding Carnival
Common Stock. For the avoidance of doubt, (x) a member shall not be
deemed to have acquired Ordinary Shares or voting control over
Ordinary Shares if solely as a result of a share buyback,
cancellation or reduction of share capital, disenfranchisement of
voting rights or any other procedure which has the effect of
reducing the share capital or the voting share capital of the
Company or of Carnival the percentage holding of such person is
increased; (y) the transfer of Ordinary Shares or voting control
over Ordinary Shares among members of the Arison Group shall not be
deemed to be a Triggering Acquisition; or
(c) any acquisition by Carnival or any member of the Carnival Group
pursuant to a Mandatory Exchange; or
(d) any acquisition by any member of the Carnival Group of any Ordinary
Shares; or
(e) any acquisition by the Company or any of its Subsidiaries from time
to time of any Ordinary Shares.
77
COMBINED GROUP EXCESS SHARES
286. The following shall apply to any Combined Group Excess Shares:
Ownership in Trust
(a) Any Combined Group Excess Shares, as soon as possible after trigger
of the Combined Group City Code Limit, shall be transferred by or on
behalf of any Acquiring Person to the Combined Group Excess Share
Trustee, as trustee of the Combined Group Excess Shares Trust, for
the benefit of the Charitable Beneficiary (subject to the provisions
of these Articles). The Acquiring Person shall, immediately after
any trigger of the Combined Group City Code Limit, have no rights
whatsoever in such Combined Group Excess Shares (except as provided
in Articles 286(c), 286(e) and 286(f)), and pending such transfer
the Combined Group Excess Shares shall be held by the Acquiring
Person on trust for the benefit of the Charitable Beneficiary. The
Combined Group Excess Share Trustee may resign at any time so long
as the Company shall have appointed a successor trustee. The
Combined Group Excess Share Trustee shall, from time to time,
designate one or more charitable organisation or organisations as
the Charitable Beneficiary. More than one Combined Group Excess
Share Trustee may be appointed to hold the Combined Group Excess
Shares on trust for one or more Charitable Beneficiaries.
Dividend Rights
(b) Combined Group Excess Shares shall remain entitled to the same
dividends and other distributions as other Ordinary Shares are
entitled to, and any dividend or distribution made or paid on
Combined Group Excess Shares shall, pending transfer of such shares
to the Combined Group Excess Share Trustee, be received by the
relevant Acquiring Person in its capacity as trustee for the
Charitable Beneficiary. Any dividend or distribution declared, paid
or made shall, after the Combined Group Excess Shares have been
transferred to the Combined Group Excess Share Trustee, be made or
paid to the Combined Group Excess Share Trust. All dividends
received or other income earned by the Combined Group Excess Share
Trust shall be paid over to the Charitable Beneficiary.
Rights Upon Liquidation
(c) Upon Liquidation of the Company, an Acquiring Person shall (if it
has not already received consideration for the transfer of the
Combined Group Excess Shares to the Combined Group Excess Share
Trustee) receive, for each Combined Group Excess Share, the amount
per share of any distribution made upon liquidation, dissolution or
winding up less any costs and expenses incurred by the Company, the
Combined Group Excess Share Trustee or the Charitable Beneficiary in
respect of the transfer or holding of such shares.
Voting Rights
(d) Pending a transfer of the Combined Group Excess Shares by an
Acquiring Person, it shall have no rights whatsoever to vote on
those shares and those votes shall not be counted for any purpose
pursuant to these Articles. The Combined Group Excess Share Trustee
shall be entitled (but not required) to vote the Combined Group
Excess Shares on behalf of the Charitable Beneficiary on any
78
matter. The Charitable Beneficiary will be deemed to have given an
irrevocable proxy to the Combined Group Excess Share Trustee to vote
the Combined Group Excess Shares for its benefit.
Restrictions on Transfer; Designation of Combined Group Excess Share Trust
Beneficiary
(e) At the direction of the Board, the Combined Group Excess Share
Trustee shall transfer the Combined Group Excess Shares held in the
Combined Group Excess Share Trust to a person or persons (including,
without limitation, if permitted under Applicable Regulations, to
the Company pursuant to Article 286(f) below) whose ownership of
such shares shall not cause a trigger of the Combined Group City
Code Limit within 180 days after the later of (i) the date of
triggering of the Combined Group City Code Limit, and (ii) the date
the Board determines or is notified that a trigger of the Combined
Group City Code Limit has occurred. If such a transfer is made, the
interest of the Charitable Beneficiary shall terminate, the
designation of such Ordinary Shares as Combined Group Excess Shares
shall thereupon cease and the proceeds of such transfer shall be
paid to the Acquiring Person net of any costs incurred by the
Company, the Combined Group Excess Share Trustee and/or the
Charitable Beneficiary in connection with the transfer of the
Combined Group Excess Shares to the Combined Group Excess Share
Trustee, the holding by the Combined Group Excess Share Trustee of
the Combined Group Excess Shares and the transfer of the Combined
Group Excess Shares by the Combined Group Excess Share Trustee to
such person(s) in accordance with this Article 286(e).
Purchase Rights in relation to Combined Group Excess Shares
(f) Combined Group Excess Shares held by the Combined Group Excess Share
Trustee shall be deemed to have been offered for sale by the
Combined Group Excess Share Trustee to the Company, or its designee,
at a price per Combined Group Excess Share equal to the Market Price
less any costs and expenses incurred by the Company, the Combined
Group Excess Share Trustee and/or the Charitable Beneficiary
relating to the transfer or holding of the Combined Group Excess
Shares and their subsequent purchase by the Company, whereby the
"relevant date" for determining the Market Price shall be the date
of acquisition of the Combined Group Excess Shares by the Company.
The Company shall, to the extent permitted under Applicable
Regulations, have the right to accept such offer for a period of
ninety (90) days after the later of (i) the date of any breach of
Article 277 and (ii) the date the Board determines there has been a
breach of Article 277 if the Company does not receive a notice of
transfer or other event pursuant to Article 286(e).
Underwritten Offerings
(g) Ordinary Shares or rights, options or warrants for, or securities
convertible into, Ordinary Shares acquired by an underwriter in a
public offering or placement agent in a private offering shall not
be treated as Combined Group Excess Shares, provided that the
underwriter makes a timely distribution of such Ordinary Shares or
rights, options or warrants for, or securities convertible into,
Ordinary Shares such that, after the distribution, such underwriter
or placement agent does not
79
hold or exercise voting control over Ordinary Shares equal to or
in excess of the Combined Group City Code Limit.
VOTING CONTROL
287. In Articles 277 to 286: (i) references to holding or acquiring shares will
also be deemed to include holding or acquiring voting control over shares;
(ii) a person will be deemed to have voting control over shares if such
person has the power to direct the voting of such shares; (iii) a person
will be deemed to acquire shares upon the occurrence of any event which
results in such person Acting in Concert with another person with respect
to such other person's shares; and (iv) for the avoidance of doubt, for
purposes of calculating the voting power held by a person, any voting
power represented by the P&O Princess Special Voting Share or the Carnival
Special Voting Share shall be ignored.
INDEMNITY
Indemnity to directors and officers
288. Subject to the provisions of the Companies Acts but without prejudice to
any indemnity to which a director may otherwise be entitled, every
director or other officer of the Company or of Carnival shall be
indemnified out of the assets of the Company against any liability
incurred by him to the fullest extent permitted under law.
MANDATORY EXCHANGE
289. Following the occurrence of an Exchange Event described in clause (a) of
the definition thereof, the Board may call a general meeting (which may be
an annual general meeting or an extraordinary general meeting) of the
members of the Company to consider whether to effect the Mandatory
Exchange. Such action by the members of the Company shall be by
Supermajority Resolution approved by 66 2/3 per cent. of those voting and
shall be a Joint Electorate Action. If the requisite approval is obtained
for an Exchange Event described in clause (a) of the definition thereof
the Board shall, or following the occurrence of an Exchange Event
described in clause (b) of the definition thereof (which, for the
avoidance of doubt shall not require the calling of a general meeting or a
Supermajority Resolution), the Board may, send an Exchange Notice to each
holder of P&O Princess Ordinary Shares (other than non-voting Ordinary
Shares held by Carnival or a wholly-owned Subsidiary of Carnival)
notifying such holder of the Mandatory Exchange (as defined below). On the
date specified in the Exchange Notice, which date shall be not less than
fourteen days and no more than thirty days after the date of the Exchange
Notice, the P&O Princess Ordinary Shares held by each member of the
Company (other than the Non-Voting Ordinary Shares held by Carnival or a
wholly-owned subsidiary of Carnival) shall, subject to the terms and
conditions set forth in this Article, be automatically exchanged for such
number of validly issued, fully paid and non-assessable shares of Carnival
Common Stock as are equal to the number of such P&O Princess Ordinary
Shares held by such member at such time multiplied by the Equalisation
Fraction in effect at such time ("Mandatory Exchange"). Notwithstanding
the foregoing, there shall be no entitlement to receive fractional
interest in shares and in lieu of such fractional interest the member
shall receive from Carnival an amount in cash in U.S. dollars at the
Applicable Exchange Rate equal to either:
(a) the product of multiplying the fractional interest by the closing
price of the Carnival Common Stock on the NYSE (as reported in The
Wall Street Journal or,
80
if not reported therein, such other authoritative source as the
Board may determine) on the date that the Mandatory Exchange is
implemented; or
(b) the pro rata entitlement of such member to the net proceeds of the
sale of the aggregate fractional entitlements to Carnival Common
Stock which shall be sold in the market at the best price
reasonably obtainable by Carnival,
provided always that Carnival shall be able to choose whether to apply the
procedure referred to in (a) or (b) above, shall not be obliged to give
any reasons for such choice and such choice shall be conclusive and
binding on all persons concerned and shall not be open to challenge on any
grounds whatsoever.
290. On the day on which Exchange Notices are served pursuant to Article 289
each member shall:
(a) be deemed to irrevocably appoint the Company as his agent to
effect the Mandatory Exchange, including, but not limited to, the
right to do all acts and things, receive (on behalf of the
relevant member) sign, execute and deliver all documents on behalf
of the relevant member which it considers necessary and advisable
in connection with the Mandatory Exchange and such appointment
shall endure until the Mandatory Exchange is completed; and
(b) authorise any director to execute an instrument of transfer in
respect of the P&O Princess Ordinary Shares which are the subject
of the Mandatory Exchange conditional on the issuance of Carnival
Common Stock to the relevant member in accordance with Articles
289 to 292; and
(a) assist the Company in any and all matters or things relating to
the Mandatory Exchange of the P&O Princess Shares held by such
member, including, but not limited to, procuring the appointment
of the Company as their agent for the exchange together with the
rights, permissions and authorisations granted in (a) and (b)
above.
291. To the extent that any of the procedures relating to the implementation of
the Mandatory Exchange are inconsistent with any Applicable Regulations
governing such Mandatory Exchange, such Applicable Regulations shall apply
to the implementation of the Mandatory Exchange, and not such procedures
or the provisions of this Articles 289 to 292.
292. Any resolution or determination of, or any decision or the exercise of any
discretion or power by, the Board under and in accordance with Articles
289 to 292 shall be final and conclusive and they shall not be obliged to
give any reasons therefor. Any disposal, transfer, exchange, or other
thing done, by or on behalf, or on the authority of the Board pursuant to
this Article shall be conclusive and binding on all persons concerned and
shall not be open to challenge on any grounds whatsoever.
81
Name and address of subscriber Number of shares taken
Michael Gradon One Subscriber Share
The Summer House
18 Granville Road
Limpsfield, Oxted
Surrey RH8 0DA
Nicholas Luff One Subscriber Share
30 Kings Avenue
Carshalton
Surrey SM5 4NX
Date:
Witness to signatures:
82
Annex A-8
CARNIVAL DEED OF GUARANTEE
This Deed of Guarantee ("Guarantee") is made on [.], 2003 between Carnival
Corporation ("Carnival") and P&O Princess and is made for the benefit of each
Creditor.
BACKGROUND
Under the Implementation Agreement referred to below, Carnival has agreed with
P&O Princess to enter into this Guarantee in respect of certain obligations of
P&O Princess (including, without limitation, guarantees by P&O Princess of
certain obligations of Principal Debtors).
THIS DEED WITNESSES as follows:
1. Definitions and Interpretation
1.1 Definitions
In this Guarantee:
"Business Day" shall have the meaning given in the Equalization and
Governance Agreement;
"Creditor" means any Person to whom or to which any Obligation is owed;
"Equalization and Governance Agreement" means the Agreement headed
"Equalization and Governance Agreement" entered into between P&O
Princess and Carnival as of even date with this Guarantee;
"Existing Obligation" means, in relation to:
(a) any agreement or exclusion referred to in Clause 4; or
(b) any termination of this Guarantee; or
(c) any amendment to this Guarantee,
any Obligation incurred before, or arising out of any credit or similar
facility (whether committed or uncommitted) available for use at, the
time at which the relevant agreement, exclusion, termination or
amendment becomes effective;
"Group" means, in relation to Carnival or P&O Princess, such company
and its Subsidiaries from time to time;
"Implementation Agreement" means the Agreement headed "Offer and
Implementation Agreement" entered into between P&O Princess and
Carnival, dated as of 8 January 2003;
"Obligation" means:
(a) any contractual monetary obligation (whether primary or
secondary (and including, for the avoidance of doubt, any
guarantee of the
1
contractual monetary obligations of any Principal
Debtor)) incurred by P&O Princess after the date of this
Guarantee; and
(b) any other obligation of any kind which may be agreed in
writing between Carnival and P&O Princess (in their
absolute discretion) after the date of this Guarantee (in
which case a note of such Obligation will be appended as
an exhibit to this Guarantee),
other than, in each case, any obligation:
(i) to the extent that (without reference to the effect of
this Guarantee) it is covered by the terms of any policy
of insurance (or any indemnity in the nature of
insurance) of which P&O Princess (or, where relevant, the
Principal Debtor) has the benefit and which is in full
force and effect;
(ii) explicitly guaranteed in writing by Carnival (otherwise
than under this Guarantee) or for which Carnival agrees
in writing to act as co-obligor or co-issuer;
(iii) where the arrangement under which the obligation was or
is incurred, or the terms of issue of the obligation,
explicitly provided or provide(s) that the obligation is
not to be an Obligation within the meaning of this
Guarantee, or where the Creditor has explicitly agreed or
explicitly agrees that the obligation is not to be an
Obligation within the meaning of this Guarantee;
(iv) owed to Carnival or to any Subsidiary or Subsidiary
Undertaking of Carnival or to any of the Subsidiaries or
Subsidiary Undertakings of P&O Princess;
(v) of P&O Princess under or in connection with the P&O
Princess Guarantee or any other guarantee by P&O Princess
of any obligation of Carnival or any Subsidiary or
Subsidiary Undertaking of Carnival;
(vi) excluded from the scope of this Guarantee as provided in
Clause 4 (Exclusion Of Certain Obligations) or Clause 5
(Termination);
(vii) of P&O Princess incurred under any instrument or
agreement existing on or prior to the date of this
Guarantee; or
(viii) of P&O Princess under a guarantee to the extent that the
guaranteed obligation of the Principal Debtor is not a
contractual monetary obligation and/or is of a type
referred to in any of paragraphs (i) to (vii) of this
definition;
"Person" includes an individual, company, corporation, firm,
partnership, joint venture, association, trust, state or agency of a
state (in each case, whether or not having a separate legal
personality);
"P&O Princess" means P&O Princess Cruises plc, whose registered office
at the date of this Guarantee is 77 New Oxford Street, London, WC1A
lPP, United Kingdom;
2
"P&O Princess Guarantee" means the deed of guarantee entered into by
P&O Princess on or about the date of this Guarantee pursuant to the
Implementation Agreement;
"Principal Debtor" means, at any time, any Person any of whose
obligations are at that time guaranteed by P&O Princess;
"Relevant Creditor" has the meaning given in Clause 3.1;
"Subsidiary" means, with respect to Carnival or P&O Princess, any
entity, whether incorporated or unincorporated, in which such company
owns, directly or indirectly, a majority of the securities or other
ownership interests having by their terms ordinary voting power to
elect a majority of the directors or other persons performing similar
functions, or the management and policies of which such company
otherwise has the power to direct; and
"Subsidiary Undertaking" has the meaning as defined in section 258 of
the Companies Act 1985 (an Act of Parliament).
1.2 Interpretation
Headings are for convenience only and do not affect interpretation. The
following rules of interpretation apply unless the context requires
otherwise.
(A) The singular includes the plural and conversely.
(B) One gender includes all genders.
(C) Where a word or phrase is defined, its other grammatical forms
have a corresponding meaning.
(D) A reference to a person includes a body corporate, an
unincorporated body or other entity and conversely.
(E) A reference to a Clause is to a Clause of this Guarantee.
(F) A reference to any agreement or document is to that agreement or
document as amended, novated, supplemented, varied or replaced
from time to time, except to the extent prohibited by this
Guarantee.
(G) A reference to any legislation (including any listing rules of a
stock exchange or voluntary codes) or to any provision of any
legislation includes any modification or re-enactment of it, any
legislative provision substituted for it and all regulations and
statutory instruments issued under it.
(H) A reference to writing includes a facsimile transmission and any
means of reproducing words in a tangible and permanently visible
form.
(I) Mentioning anything after include, includes, or including does
not limit what else might be included. Where particular words are
following by general words, the general words are not limited by
the particular.
(J) Reference to a body other than Carnival or P&O Princess
(including any government agency), whether statutory or not:
3
(i) which ceases to exist; or
(ii) whose powers or functions are transferred to another body,
is a reference to the body which replaces it or which substantially
succeeds to its powers or functions.
(K) All references to time are to the local time in the place where the
relevant obligation is to be performed (or right exercised).
2. Effect Of This Guarantee
This Guarantee shall take effect as a deed and it is intended that each
Creditor severally shall be entitled to benefit from the terms of this
Guarantee pursuant to the terms of the Contracts (Rights of Third Parties)
Act 2001 save that the parties hereto shall be entitled to make any
variation or rescission of its terms, in accordance with its terms
(including, without limitation, pursuant to Clause 4), without the consent
of any Creditor or of any third party.
3. Guarantee and Indemnity
3.1 Subject to the terms of this Guarantee, Carnival unconditionally and
irrevocably undertakes and promises to P&O Princess that it shall, as a
continuing obligation, make to the Creditor to whom or to which it is owed
(the "Relevant Creditor") the proper and punctual payment of each
Obligation if for any reason P&O Princess does not make such payment on its
due date. If for any reason P&O Princess does not make such payment on its
due date, Carnival shall pay the amount due and unpaid to the Relevant
Creditor upon written demand upon Carnival by the Relevant Creditor. In
this Clause 3, references to the Obligations include references to any part
of them.
3.2 The obligations of Carnival under this Guarantee shall be continuing
obligations and shall not be satisfied, discharged or affected by any
intermediate payment or settlement of account.
3.3 For the avoidance of doubt, nothing in this Guarantee shall require, bind
or oblige Carnival to fulfil any non-monetary Obligation of P&O Princess of
any kind.
3.4 In the event that Carnival is required to make any payment to any Creditor
pursuant to Clause 3.1 and/or 3.11 and does make such payment, P&O Princess
unconditionally and irrevocably agrees by way of a full indemnity to
reimburse Carnival in respect of such payments.
3.5 A demand may not be made under this Guarantee without:
(A) a demand first having been made by the Relevant Creditor on P&O
Princess; and/or
(B) to the extent, if any, that the terms of the relevant Obligation of
P&O Princess (or the underlying obligation of the relevant Principal
Debtor) require such recourse, recourse first being had to any other
Person or to any security.
3.6 Unless otherwise provided in this Guarantee, the liabilities and
obligations of Carnival under this Guarantee shall remain in force
notwithstanding any act, omission, neglect, event or matter which would
not affect or discharge the liabilities of P&O Princess
4
owed to the Relevant Creditor. Without prejudice to its generality, the
foregoing shall apply in relation to:
(A) anything which would have discharged Carnival (wholly or in part) but
not P&O Princess;
(B) anything which would have offered Carnival (but not P&O Princess) any
legal or equitable defence; and
(C) any winding-up, insolvency, dissolution and/or analogous proceeding
of, or any change in constitution or corporate identity or loss of
corporate identity by, P&O Princess or any other Person.
3.7 Section 3(2) and (4) of the Contracts (Rights of Third Parties) Act 2001
shall not apply to this Guarantee and accordingly:
(A) In respect of any claim against Carnival by a Creditor, Carnival
shall not have available to it by way of defence or set off any
matter that arises from or in connection with this Guarantee, and
which would have been available to Carnival by way of defence or
set-off if the proceedings had been brought against Carnival by
P&O Princess.
(B) Carnival shall not have available to it by way of defence or
set-off any matter that would have been available to it by way of
defence or set-off against the Creditor if the Creditor had been
a party to this Guarantee.
(C) Carnival shall not have available to it by way of counterclaim
any matter not arising from this Guarantee that would have been
available to it by way of counterclaim against the Creditor if
the Creditor had been a party to this Guarantee.
3.8 Any discharge or release of any liabilities and obligations of Carnival
under this Guarantee, and any composition or arrangement which Carnival may
effect with any Creditor in respect of any such liabilities or obligations,
shall be deemed to be made subject to the condition that it will be void to
the extent that any or all of the payment or security which the Creditor
may previously have received or may thereafter receive from any Person in
respect of the relevant Obligations is set aside or reduced under any
applicable law or proves to have been for any reason invalid.
3.9 Without prejudice to the generality of this Clause 3, and to Clause 3.10 in
particular, none of the liabilities or obligations of Carnival under this
Guarantee shall be impaired by any Creditor:
(A) agreeing with P&O Princess any variation of or departure from (however
substantial) the terms of any Obligation and any such variation or
departure shall, whatever its nature, be binding upon Carnival in all
circumstances; or
(B) releasing or granting any time or any indulgence whatsoever to P&O
Princess.
3.10 Despite anything else in this Guarantee (including Clause 3.9), no
variation of or departure from the terms of any Obligation (or any
underlying obligation of any Principal Debtor) agreed with P&O Princess or
any Principal Debtor, as applicable, after termination of this Guarantee or
exclusion of that Obligation shall be binding on
5
Carnival (or extend its liabilities and obligations under this Guarantee)
except to the extent, if any, that:
(A) Carnival explicitly agrees in writing to that variation or departure
at the same time as P&O Princess or that Principal Debtor; or
(B) it reduces Carnival's obligations or liability under this Guarantee.
3.11 As a separate, additional and continuing obligation, Carnival
unconditionally and irrevocably agrees that, should any Obligation not be
recoverable from Carnival under Clause 3.1 as a result of the Obligation
becoming void, voidable or unenforceable against P&O Princess, Carnival
undertakes with P&O Princess that it will, as a sole, original and
independent obligor, make payment of the Obligation to the Relevant
Creditor by way of a full indemnity on the due date provided for payment by
the terms of the Obligation.
3.12 Carnival shall, if requested by P&O Princess, (i) enter into agreements to
act as a co-issuer or co-borrower with respect to any Obligation of P&O
Princess or (ii) execute and deliver a separate guarantee agreement of any
Obligation of P&O Princess, in each case, on terms satisfactory to Carnival
and P&O Princess. If Carnival enters into such agreements with respect to
any Obligation of P&O Princess, Carnival and P&O Princess may agree that
such Obligation shall be excluded from the scope of this Guarantee in
accordance with Clause 4.
4. Exclusion Of Certain Obligations
4.1 Subject to Clauses 4.2 and 4.3, Carnival and P&O Princess may at any time
agree that obligations of a particular type, or a particular obligation or
particular obligations, incurred after the time at which such exclusion
becomes effective shall be excluded from the scope of this Guarantee (and
shall not be "Obligations" for the purpose of this Guarantee) with effect
from such future time (being at least 3 months after the date on which
notice of the relevant exclusion is given in accordance with Clause 8.2 or,
where the Obligation is a particular obligation, at least 5 Business Days,
or such shorter period as the relevant Creditor may agree, after the date
on which notice of the relevant exclusion is given in accordance with
Clause 4.5) as they may agree.
4.2 No such agreement or exclusion shall be effective with respect to any
Existing Obligation.
4.3 No such agreement or exclusion shall be effective unless and until Carnival
and P&O Princess enter into a supplemental deed specifying the relevant
exclusion and the time at which it is to become effective.
4.4 Notice of any such exclusion of obligations of a particular type, of the
time at which such exclusion is to become effective, and of the date of the
related supplemental deed shall be given in accordance with Clause 8.2.
4.5 Notice of any such exclusion of a particular obligation and of the time at
which it is to become effective shall be given to the relevant Creditor in
writing addressed to that Creditor at the last address of that Creditor
known to Carnival and shall be effective when delivered to that address. It
shall not be necessary for the related supplemental deed to have been
entered into before that notice is sent, nor for the notice to state the
date of the related supplemental deed.
6
5. Termination
5.1 Subject to Clause 5.3, this Guarantee shall automatically terminate if, and
with effect from, the same time as:
(A) the Equalization and Governance Agreement terminates or otherwise
ceases to have effect; or
(B) the P&O Princess Guarantee terminates or otherwise ceases to have
effect.
5.2 Subject to Clause 5.3, Carnival may at any time terminate this Guarantee by
giving notice under Clause 8.2 with effect from such future time (being at
least 3 months after the date on which such notice of termination is given)
as it may determine. Subject to the next sentence, no such termination
under this Clause 5.2 shall be effective unless P&O Princess agrees to such
termination before such notice is given. However, such termination shall
not require the agreement of P&O Princess if:
(A) Carnival has given notice of the proposed termination of this
Guarantee in accordance with Clause 8.2; and
(B) prior to the date set out in such notice, a resolution is passed or an
order is made for the liquidation of P&O Princess.
5.3 No such termination shall be effective with respect to any Existing
Obligation.
5.4 Notice of any automatic termination under Clause 5.1, and of the time at
which it became effective, shall be given in accordance with Clause 8.2
within 10 Business Days of such termination.
6. Amendments
6.1 Subject to Clause 6.2, Carnival and P&O Princess may at any time amend this
Guarantee by giving notice under Clause 8.2 with effect from such future
time (being at least 3 months after the date on which notice of such
amendment is given) as they may determine.
6.2 No such amendment shall be effective with respect to any Existing
Obligation.
6.3 No such amendment shall be effective unless and until Carnival and P&O
Princess enter into a supplemental deed specifying the relevant amendment
and the time at which it is to become effective.
6.4 Notice of any such amendment, of the time at which it is to become
effective, and of the date of the related supplemental deed shall be given
in accordance with Clause 8.2.
7. Currency
7.1 All payments to be made under this Guarantee shall be made in the currency
or currencies in which the Obligations are expressed to be payable by P&O
Princess.
7.2 If, under any applicable law, whether as a result of a judgment against
Carnival or P&O Princess or the liquidation of Carnival or P&O Princess or
for any other reason, any payment under or in connection with this
Guarantee is made or is recovered in a
7
currency (the "other currency") other than that in which it is required to
be paid under the terms of the relevant Obligation (the "agreed currency")
then, to the extent that the payment to the Creditor (when converted at the
rate of exchange on the date of payment, or in the case of a liquidation,
the latest date for the determination of liabilities permitted by the
applicable law) falls short of the amount due and unpaid in respect of that
Obligation, Carnival undertakes with P&O Princess that it shall, as a
separate and independent obligation, fully indemnify the Creditor against
the amount of the shortfall, and for the purposes of this Clause 7, "rate
of exchange" means the spot rate at which the Creditor is able on the
relevant date to purchase the agreed currency with the other currency.
8. Notices
8.1 Any notice to or demand upon Carnival under this Guarantee shall be in
writing addressed to it at its principal place of business in the U.S.A.
for the time being (marked for the attention of the Chief Financial
Officer, with a copy sent to the General Counsel and Secretary) and shall
be effective when delivered to that principal place of business.
8.2 Any notice to or demand upon P&O Princess under this Guarantee shall be in
writing addressed to it at its principal place of business in the U.S.A.
for the time being (marked for the attention of the Chief Financial
Officer, with a copy sent to the General Counsel and Secretary) and shall
be effective when delivered to that principal place of business.
8.3 Any notice by Carnival under Clause 4.4, 5.4 or 6.4 shall be given by
advertisements in the Financial Times (London Edition) and the Wall Street
Journal (but, if at any time Carnival determines that advertisement in such
newspaper(s) is not practicable, the relevant advertisement shall instead
be published in such other newspaper(s) circulating generally in the United
Kingdom or the U.S.A., as the case may be, as Carnival shall determine).
Any such notice shall be deemed given on the date of publication in such
newspaper in the United Kingdom or the U.S.A., as the case may be (or,
where such advertisements are published on different dates, on the later of
such dates).
8.4 The original counterparts of this Guarantee and of any related supplemental
deeds shall be kept at, respectively, the principal place of business in
the U.S.A. for the time being of Carnival and the principal place of
business in the U.S.A. for the time being of P&O Princess and shall be
available for inspection there on reasonable notice during the normal
business hours of that office.
9. General
9.1 Prohibition and Enforceability
Any provision of, or the application of any provision of, this Guarantee
which is void, illegal or unenforceable in any jurisdiction does not affect
the validity, legality or enforceability of that provision in any other
jurisdiction or of the remaining provisions in that or any other
jurisdiction.
9.2 Further Assurances
8
Carnival and P&O Princess shall take all steps, execute all documents
and do everything reasonably required to give effect to their rights,
liabilities and obligations contemplated by this Guarantee.
9.3 No Novation
Neither Carnival nor P&O Princess may novate any of their rights,
liabilities or obligations under this Guarantee, in whole or in part.
9.4 Counterparts
This Guarantee may be executed in any number of counterparts. All
counterparts taken together will be taken to constitute one and the
same instrument.
10. Law and Jurisdiction
10.1 This Guarantee shall be governed by and construed in accordance with
the laws of the Isle of Man.
10.2 Any legal action or proceeding arising out of or in connection with
this Guarantee shall be brought exclusively in the courts of England.
10.3 Carnival and P&O Princess irrevocably submit to the jurisdiction of
such courts and waive any objection to proceedings in any such court on
the ground of venue or on the ground that the proceedings have been
brought in an inconvenient forum.
9
IN WITNESS WHEREOF
EXECUTED as a DEED by )
CARNIVAL CORPORATION )
acting by [.] [and [.]] [who, in )
accordance with the laws of the ) ...........................
territory in which Carnival Corporation ) ...........................
is incorporated, is/are] acting under ) (Authorised signatory(ies))
the authority of Carnival Corporation
EXECUTED as a DEED by )
P&O PRINCESS CRUISES PLC )
acting by two of its directors/a director and )
secretary )
Director
Director/Secretary
10
AGREED FORM
DATED 2003
---------------------------------------------
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CARNIVAL CORPORATION DEED OF GUARANTEE
-----------------------------------------------------------------
11
Annex A-9
P&O PRINCESS DEED OF GUARANTEE
This Deed of Guarantee ("Guarantee") is made on ________, 2003 between P&O
Princess Cruises plc ("P&O Princess") and Carnival for the benefit of each
Creditor.
BACKGROUND
Under the Implementation Agreement referred to below, P&O Princess has agreed
with Carnival to enter into this Guarantee in respect of certain obligations of
Carnival (including, without limitation, guarantees by Carnival of certain
obligations of Principal Debtors).
THIS DEED WITNESSES as follows:
1. Definitions and Interpretation
1.1 Definitions
In this Guarantee:
"Business Day" shall have the meaning given in the Equalization and
Governance Agreement;
"Carnival" means Carnival Corporation, a Panamanian company, having its
principal place of business at Carnival Place, 3655, 87 Avenue, Miami,
Florida, 33178-2482;
"Carnival Guarantee" means the deed of guarantee entered into by
Carnival on or about the date of this Guarantee pursuant to the
Implementation Agreement;
"Creditor" means any Person to whom or to which any Obligation is owed;
"Equalization and Governance Agreement" means the Agreement headed
"Equalization and Governance Agreement" entered into between Carnival
and P&O Princess as of even date with this Guarantee;
"Existing Obligation" means, in relation to:
(i) any agreement or exclusion referred to in Clause 4; or
(ii) any termination of this Guarantee; or
(iii) any amendment to this Guarantee,
any Obligation incurred before, or arising out of any credit or similar
facility (whether committed or uncommitted) available for use at, the
time at which the relevant agreement, exclusion, termination or
amendment becomes effective;
"Group" means, in relation to Carnival or P&O Princess, such company
and its Subsidiaries from time to time;
"Implementation Agreement" means the Agreement headed "Offer and
Implementation Agreement" entered into between P&O Princess and
Carnival, dated as of 8 January 2003;
1
"Obligation" means:
(a) any contractual monetary obligation (whether primary or
secondary (and including, for the avoidance of doubt, any
guarantee of the contractual monetary obligations of any
Principal Debtor)) incurred by Carnival after the date of this
Guarantee; and
(b) any other obligation of any kind which may be agreed in writing
between Carnival and P&O Princess (in their absolute discretion)
after the date of this Guarantee (in which case a note of such
Obligation will be appended as an exhibit to this Guarantee),
other than, in each case, any obligation:
(i) to the extent that (without reference to the effect of this
Guarantee) it is covered by the terms of any policy of insurance
(or any indemnity in the nature of insurance) of which Carnival
(or, where relevant, the Principal Debtor) has the benefit and
which is in full force and effect;
(ii) explicitly guaranteed in writing by P&O Princess (otherwise than
under this Guarantee) or for which P&O Princess agrees in
writing to act as co-obligor or co-issuer;
(iii) where the arrangement under which the obligation was or is
incurred, or the terms of issue of the obligation, explicitly
provided or provide(s) that the obligation is not to be an
Obligation within the meaning of this Guarantee, or where the
Creditor has explicitly agreed or explicitly agrees that the
obligation is not to be an Obligation within the meaning of this
Guarantee;
(iv) owed to P&O Princess or to any Subsidiary or Subsidiary
Undertaking of P&O Princess or to any of the Subsidiaries or
Subsidiary Undertakings of Carnival;
(v) of Carnival under or in connection with the Carnival Guarantee
or any other guarantee by Carnival of any obligation of P&O
Princess or any Subsidiary or Subsidiary Undertaking of P&O
Princess;
(vi) excluded from the scope of this Guarantee as provided in Clause
4 (Exclusion Of Certain Obligations) or Clause 5 (Termination);
(vii) of Carnival incurred under any instrument or agreement existing
on or prior to the date of this Guarantee; or
(viii) of Carnival under a guarantee to the extent that the guaranteed
obligation of the Principal Debtor is not a contractual monetary
obligation and/or is of a type referred to in any of paragraphs
(i) to (vii) of this definition;
"Person" includes an individual, company, corporation, firm,
partnership, joint venture, association, trust, state or agency of a
state (in each case, whether or not having a separate legal
personality);
"Principal Debtor" means, at any time, any Person any of whose
obligations are at that time guaranteed by Carnival;
2
"Relevant Creditor" has the meaning given in Clause 3.1;
"Subsidiary" means, with respect to Carnival or P&O Princess, any
entity, whether incorporated or unincorporated, in which such company
owns, directly or indirectly, a majority of the securities or other
ownership interests having by their terms ordinary voting power to
elect a majority of the directors or other persons performing similar
functions, or the management and policies of which such company
otherwise has the power to direct; and
"Subsidiary Undertaking" has the meaning as defined in section 258 of
the Companies Act 1985 (an Act of Parliament).
1.2 Interpretation
Headings are for convenience only and do not affect interpretation. The
following rules of interpretation apply unless the context requires
otherwise.
(A) The singular includes the plural and conversely.
(B) One gender includes all genders.
(C) Where a word or phrase is defined, its other grammatical forms
have a corresponding meaning.
(D) A reference to any person includes a body corporate, an
unincorporated body or other entity and conversely.
(E) A reference to a Clause is to a Clause of this Guarantee.
(F) A reference to any agreement or document is to that agreement or
document as amended, novated, supplemented, varied or replaced
from time to time, except to the extent prohibited by this
Guarantee.
(G) A reference to any legislation (including any listing rules of a
stock exchange or voluntary codes) or to any provision of any
legislation includes any modification or re-enactment of it, any
legislative provision substituted for it and all regulations and
statutory instruments issued under it.
(H) A reference to writing includes a facsimile transmission and any
means of reproducing words in a tangible and permanently visible
form.
(I) Mentioning anything after include, includes, or including does not
limit what else might be included. Where particular words are
following by general words, the general words are not limited by
the particular.
(J) Reference to a body other than P&O Princess or Carnival (including
any government agency), whether statutory or not:
(i) which ceases to exist; or
(ii) whose powers or functions are transferred to another body,
is a reference to the body which replaces it or which
substantially succeeds to its powers or functions.
3
(K) All references to time are to the local time in the place where the
relevant obligation is to be performed (or right exercised).
2. Effect Of This Guarantee
This Guarantee shall take effect as a deed and it is intended that each
Creditor severally shall be entitled to benefit from the terms of this
Guarantee pursuant to the terms of the Contracts (Rights of Third Parties)
Act 2001 save that the parties hereto shall be entitled to make any
variation or rescission of its terms, in accordance with its terms
(including, without limitation, pursuant to Clause 4), without the consent
of any Creditor or of any third party.
3. Guarantee and Indemnity
3.1 Subject to the terms of this Guarantee, P&O Princess unconditionally and
irrevocably undertakes and promises to Carnival that it shall make to the
Creditor to whom or to which it is owed (the "Relevant Creditor") the
proper and punctual payment of each Obligation if for any reason Carnival
does not make such payment on its due date. If for any reason Carnival does
not make such payment on its due date, P&O Princess shall pay the amount
due and unpaid to the Relevant Creditor upon written demand upon P&O
Princess by the Relevant Creditor. In this Clause 3, references to the
Obligations include references to any part of them.
3.2 The obligations of P&O Princess under this Guarantee shall be continuing
obligations and shall not be satisfied, discharged or affected by any
intermediate payment or settlement of account.
3.3 For the avoidance of doubt, nothing in this Guarantee shall require, bind
or oblige P&O Princess to fulfil any non-monetary Obligation of Carnival of
any kind.
3.4 In the event that P&O Princess is required to make any payment to any
Creditor pursuant to Clause 3.1 and/or 3.11 and does make such payment,
Carnival unconditionally and irrevocably agrees by way of a full indemnity
to reimburse P&O Princess in respect of such payments.
3.5 A demand may not be made under this Guarantee without:
(A) a demand first having been made by the Relevant Creditor on Carnival;
and/or
(B) to the extent, if any, that the terms of the relevant Obligation of
Carnival (or the underlying obligation of the relevant Principal
Debtor) require such recourse, recourse first being had to any other
Person or to any security.
3.6 Unless otherwise provided in this Guarantee, the liabilities and
obligations of P&O Princess under this Guarantee shall remain in force
notwithstanding any act, omission, neglect, event or matter which would not
affect or discharge the liabilities of Carnival owed to the Relevant
Creditor. Without prejudice to its generality, the foregoing shall apply in
relation to:
(A) anything which would have discharged P&O Princess (wholly or in part)
but not Carnival;
(B) anything which would have offered P&O Princess (but not Carnival) any
legal or equitable defence; and
4
(C) any winding-up, insolvency, dissolution and/or analogous proceeding
of, or any change in constitution or corporate identity or loss of
corporate identity by, Carnival or any other Person.
3.7 Section 3(2) and (4) of the Contracts (Rights of Third Parties) Act 2001
shall not apply to this Guarantee and accordingly:
(A) In respect of any claim against P&O Princess by a Creditor, P&O
Princess shall not have available to it by way of defence or set
off any matter that arises from or in connection with this
Guarantee, and which would have been available to P&O Princess by
way of defence or set-off if the proceedings had been brought
against P&O Princess by Carnival.
(B) P&O Princess shall not have available to it by way of defence or
set-off any matter that would have been available to it by way of
defence or set-off against the Creditor if the Creditor had been
a party to this Guarantee.
(C) P&O Princess shall not have available to it by way of
counterclaim any matter not arising from this Guarantee that
would have been available to it by way of counterclaim against
the Creditor if the Creditor had been a party to this Guarantee.
3.8 Any discharge or release of any liabilities and obligations of P&O Princess
under this Guarantee, and any composition or arrangement which P&O Princess
may effect with any Creditor in respect of any such liabilities or
obligations, shall be deemed to be made subject to the condition that it
will be void to the extent that any or all of the payment or security which
the Creditor may previously have received or may thereafter receive from
any Person in respect of the relevant Obligations is set aside or reduced
under any applicable law or proves to have been for any reason invalid.
3.9 Without prejudice to the generality of this Clause 3, and to Clause 3.10 in
particular, none of the liabilities or obligations of P&O Princess under
this Guarantee shall be impaired by any Creditor:
(A) agreeing with Carnival any variation of or departure from (however
substantial) the terms of any Obligation and any such variation or
departure shall, whatever its nature, be binding upon P&O Princess in
all circumstances; or
(B) releasing or granting any time or any indulgence whatsoever to
Carnival.
3.10 Despite anything else in this Guarantee (including Clause 3.9), no
variation of or departure from the terms of any Obligation (or any
underlying obligation of any Principal Debtor) agreed with Carnival or any
Principal Debtor, as applicable, after termination of this Guarantee or
exclusion of that Obligation shall be binding on P&O Princess (or extend
its liabilities and obligations under this Guarantee) except to the extent,
if any, that:
(A) P&O Princess explicitly agrees in writing to that variation or
departure at the same time as Carnival or that Principal Debtor; or
5
(B) it reduces P&O Princess' obligations or liability under this
Guarantee.
3.11 As a separate, additional and continuing obligation, P&O Princess
unconditionally and irrevocably agrees that, should any Obligation not be
recoverable from P&O Princess under Clause 3.1 as a result of the
Obligation becoming void, voidable or unenforceable against Carnival, P&O
Princess undertakes with Carnival that it will, as a sole, original and
independent obligor, make payment of the Obligation to the Relevant
Creditor by way of a full indemnity on the due date provided for payment by
the terms of the Obligation.
3.12 P&O Princess shall, if requested by Carnival, (i) enter into agreements to
act as a co-issuer or co-borrower with respect to any Obligation of
Carnival or (ii) execute and deliver a separate guarantee agreement of any
Obligation of Carnival, in each case, on terms satisfactory to P&O Princess
and Carnival. If P&O Princess enters into such agreements with respect to
any Obligation of Carnival, P&O Princess and Carnival may agree that such
Obligation shall be excluded from the scope of this Guarantee in accordance
with Clause 4 hereof.
4. Exclusion Of Certain Obligations
4.1 Subject to Clauses 4.2 and 4.3, P&O Princess and Carnival may at any time
agree that obligations of a particular type, or a particular obligation or
particular obligations, incurred after the time at which such exclusion
becomes effective shall be excluded from the scope of this Guarantee (and
shall not be "Obligations" for the purpose of this Guarantee) with effect
from such future time (being at least 3 months after the date on which
notice of the relevant exclusion is given in accordance with Clause 8.2 or,
where the Obligation is a particular obligation, at least 5 Business Days,
or such shorter period as the relevant Creditor may agree, after the date
on which notice of the relevant exclusion is given in accordance with
Clause 4.5) as they may agree.
4.2 No such agreement or exclusion shall be effective with respect to any
Existing Obligation.
4.3 No such agreement or exclusion shall be effective unless and until P&O
Princess and Carnival enter into a supplemental deed specifying the
relevant exclusion and the time at which it is to become effective.
4.4 Notice of any such exclusion of obligations of a particular type, of the
time at which such exclusion is to become effective, and of the date of the
related supplemental deed, shall be given in accordance with Clause 8.2.
4.5 Notice of any such exclusion of a particular obligation and of the time at
which it is to become effective shall be given to the relevant Creditor in
writing addressed to that Creditor at the last address of that Creditor
known to P&O Princess and shall be effective when delivered to that
address. It shall not be necessary for the related supplemental deed to
have been entered into before that notice is sent, nor for the notice to
state the date of the related supplemental deed.
5. Termination
5.1 Subject to Clause 5.3, this Guarantee shall automatically terminate if, and
with effect from, the same time as:
6
(A) the Equalization and Governance Agreement terminates or otherwise
ceases to have effect; or
(B) the Carnival Guarantee terminates or otherwise ceases to have effect.
5.2 Subject to Clause 5.3, P&O Princess may at any time terminate this
Guarantee by giving notice under Clause 8.2 with effect from such future
time (being at least 3 months after the date on which such notice of
termination is given) as it may determine. Subject to the next sentence, no
such termination under this Clause 5.2 shall be effective unless Carnival
agrees to such termination before such notice is given. However, such
termination shall not require the agreement of Carnival if:
(A) P&O Princess has given notice of the proposed termination of this
Guarantee in accordance with Clause 8.2; and
(B) prior to the date set out in such notice, a resolution is passed or an
order is made for the liquidation of Carnival.
5.3 No such termination shall be effective with respect to any Existing
Obligation.
5.4 Notice of any automatic termination under Clause 5.1, and of the time at
which it became effective, shall be given in accordance with Clause 8.2
within 10 Business Days of such termination.
6. Amendments
6.1 Subject to Clause 6.2, P&O Princess and Carnival may at any time amend this
Guarantee by giving notice under Clause 8.2 with effect from such future
time (being at least 3 months after the date on which notice of such
amendment is given) as they may determine.
6.2 No such amendment shall be effective with respect to any Existing
Obligation.
6.3 No such amendment shall be effective unless and until P&O Princess and
Carnival enter into a supplemental deed specifying the relevant amendment
and the time at which it is to become effective.
6.4 Notice of any such amendment, of the time at which it is to become
effective, and of the date of the related supplemental deed, shall be given
in accordance with Clause 8.2.
7. Currency
7.1 All payments to be made under this Guarantee shall be made in the currency
or currencies in which the Obligations are expressed to be payable by
Carnival.
7.2 If, under any applicable law, whether as a result of a judgment against P&O
Princess or Carnival or the liquidation of P&O Princess or Carnival or for
any other reason, any payment under or in connection with this Guarantee is
made or is recovered in a currency (the "other currency") other than that
in which it is required to be paid under the terms of the relevant
Obligation (the "agreed currency") then, to the extent that the payment to
the Creditor (when converted at the rate of exchange on the date of
payment, or in the case of a liquidation, the latest date for the
determination of
7
liabilities permitted by the applicable law) falls short of the amount
due and unpaid in respect of that Obligation, P&O Princess undertakes
with Carnival that it shall, as a separate and independent obligation,
fully indemnify the Creditor against the amount of the shortfall, and
for the purposes of this Clause 7, "rate of exchange" means the spot
rate at which the Creditor is able on the relevant date to purchase the
agreed currency with the other currency.
8. Notices
8.1 Any notice to or demand upon P&O Princess under this Guarantee shall be
in writing addressed to it at its principal place of business in the
U.S.A. for the time being (marked for the attention of the Chief
Financial Officer, with a copy sent to the General Counsel and
Secretary) and shall be effective when delivered to that principal
place of business.
8.2 Any notice to or demand upon Carnival under this Guarantee shall be in
writing addressed to it at its principal place of business in the
U.S.A. for the time being (marked for the attention of the Chief
Financial Officer, with a copy sent to the General Counsel and
Secretary) and shall be effective when delivered to that principal
place of business.
8.3 Any notice by P&O Princess under Clause 4.4, 5.4 or 6.4 shall be given
by advertisements in the Financial Times (London Edition) and the Wall
Street Journal (but, if at any time P&O Princess determines that
advertisement in such newspaper(s) is not practicable, the relevant
advertisement shall instead be published in such other newspaper(s)
circulating generally in the United Kingdom or the U.S.A., as the case
may be, as P&O Princess shall determine). Any such notice shall be
deemed given on the date of publication in such newspaper in the United
Kingdom or the U.S.A., as the case may be (or, where such
advertisements are published on different dates, on the later of such
dates).
8.4 The original counterparts of this Guarantee and of any related
supplemental deeds shall be kept at, respectively, the principal place
of business in the U.S.A. for the time being of P&O Princess and the
principal place of business in the U.S.A. for the time being of
Carnival and shall be available for inspection there on reasonable
notice during the normal business hours of that office.
9. General
9.1 Prohibition and Enforceability
Any provision of, or the application of any provision of, this
Guarantee which is void, illegal or unenforceable in any jurisdiction
does not affect the validity, legality or enforceability of that
provision in any other jurisdiction or of the remaining provisions in
that or any other jurisdiction.
9.2 Further Assurances
P&O Princess and Carnival shall take all steps, execute all documents
and do everything reasonably required to give effect to their rights,
liabilities and obligations contemplated by this Guarantee.
8
9.3 No Novation
Neither P&O Princess nor Carnival may not novate any of their rights,
liabilities or obligations under this Guarantee, in whole or in part.
9.4 Counterparts
This Guarantee may be executed in any number of counterparts. All
counterparts taken together will be taken to constitute one and the
same instrument.
10. Law and Jurisdiction
10.1 This Guarantee shall be governed by and construed in accordance with
the laws of the Isle of Man.
10.2 Any legal action or proceeding arising out of or in connection with
this Guarantee shall be brought exclusively in the courts of England.
10.3 P&O Princess and Carnival irrevocably submit to the jurisdiction of
such courts and waive any objection to proceedings in any such court on
the ground of venue or on the ground that the proceedings have been
brought in an inconvenient forum.
9
IN WITNESS WHEREOF
EXECUTED as a DEED by )
P&O PRINCESS CRUISES PLC )
acting by two of its directors/a director and )
secretary )
Director
Director/Secretary
EXECUTED as a DEED by )
CARNIVAL CORPORATION )
acting by [.] [and [.]] [who, in )
accordance with the laws of the ) ............................
territory in which Carnival Corporation ) ............................
is incorporated, is/are] acting under ) (Authorised signatory(ies))
the authority of Carnival Corporation
10
AGREED FORM
DATED 2003
--------------------------------------------
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P&O PRINCESS CRUISES PLC DEED OF GUARANTEE
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11
Annex A-10
AGREED FORM
DATED 2003
-----------------------------------------
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CARNIVAL CORPORATION DEED
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Exhibit 99.11
CARNIVAL CORPORATION DEED
THIS DEED is made on [.] 2003 by Carnival Corporation ("Carnival") and P&O
Princess for the benefit of the P&O Princess Shareholders.
BACKGROUND
Carnival has agreed with P&O Princess to enter into this Deed in respect of
certain obligations of Carnival to effect the Mandatory Exchange under the P&O
Princess Articles of Association.
THIS DEED WITNESSES as follows:
1. Definitions and Interpretation
1.1 Definitions
In this Deed:
"Business Day" has the meaning given in the Equalization and Governance
Agreement;
"Carnival Common Stock" means the issued and outstanding common stock, par
value US $0.01 per share, of Carnival from time to time, as the same may be
sub-divided or consolidated from time to time and any capital stock into
which such common stock may be reclassified, converted or otherwise
changed;
"Completion" has the meaning given to it in the Equalization and Governance
Agreement;
"Equalization and Governance Agreement" means the Agreement headed
"Equalization and Governance Agreement" entered into between P&O Princess
and Carnival as of the date of this Deed;
"Exchange Notice" has the meaning given in the P&O Princess Articles of
Association;
"Group" means, in relation to Carnival or P&O Princess, such company and
its Subsidiaries from time to time;
"Implementation Agreement" means the agreement headed "Offer and
Implementation Agreement" entered into between P&O Princess and Carnival as
of 8 January 2003;
"Mandatory Exchange" has the meaning given to it in the P&O Princess
Articles;
"P&O Princess" means P&O Princess Cruises plc, whose registered office at
the date of this Deed is 77 New Oxford Street, London, WC1A lPP, United
Kingdom;
"P&O Princess Articles of Association" means the Articles of Association of
P&O Princess which will be in effect immediately following Completion;
1
"P&O Princess Ordinary Shares" has the meaning given to it in the P&O
Princess Articles;
"P&O Princess Shareholders" means those persons from time to time being
registered as holders of P&O Princess Ordinary Shares;
"Person" includes an individual, company, corporation, firm, partnership,
joint venture, association, trust, state or agency of a state (in each
case, whether or not having a separate legal personality); and
"Subsidiary" means, with respect to Carnival or P&O Princess, any entity,
whether incorporated or unincorporated, in which such company owns,
directly or indirectly, a majority of the securities or other ownership
interests having by their terms ordinary voting power to elect a majority
of the directors or other persons performing similar functions, or the
management and policies of which such company otherwise has the power to
direct.
1.2 Interpretation
Headings are for convenience only and do not affect interpretation. The
following rules of interpretation apply unless the context requires
otherwise.
(A) The singular includes the plural and conversely.
(B) One gender includes all genders.
(C) Where a word or phrase is defined, its other grammatical forms have a
corresponding meaning.
(D) A reference to a Clause is to a Clause of this Deed.
(E) A reference to any agreement or document is to that agreement or
document as amended, novated, supplemented, varied or replaced from
time to time, except to the extent prohibited by this Deed.
(F) A reference to any legislation (including any listing rules of a stock
exchange or voluntary codes) or to any provision of any legislation
includes any modification or re-enactment of it, any legislative
provision substituted for it and all regulations and statutory
instruments issued under it.
(G) Mentioning anything after include, includes, or including does not
limit what else might be included. Where particular words are
following by general words, the general words are not limited by the
particular.
(H) Reference to a body other than Carnival or P&O Princess (including any
government agency), whether statutory or not:
(i) which ceases to exist; or
(ii) whose powers or functions are transferred to another body,
is a reference to the body which replaces it or which substantially
succeeds to its powers or functions.
2
(I) All references to time are to the local time in the place where the
relevant obligation is to be performed (or right exercised).
2. Effect Of This Deed
This Deed shall take effect for the benefit of the P&O Princess
Shareholders, and it is intended that each P&O Princess Shareholder shall
be entitled to benefit from the terms of this Deed pursuant to the terms of
the Contracts (Rights of Third Parties) Act 2001, save that the parties
hereto shall be entitled to make any variation or rescission of its terms,
in accordance with its terms, without the consent of any P&O Princess
Shareholder or of any third party.
3. Agreement and Undertaking
Carnival agrees and irrevocably undertakes, as a continuing obligation, to
P&O Princess, that in the event that an Exchange Notice is issued pursuant
to the P&O Princess Articles of Association, Carnival shall, on the date
specified in the Exchange Notice, issue such number of fully paid and
non-assessable shares of Carnival Common Stock to each P&O Princess
Shareholder as shall be required to effect the Mandatory Exchange in
accordance with the provisions of the P&O Princess Articles of Association.
Carnival further agrees with P&O Princess that there shall be no
entitlement to receive fractional interests in Carnival Common Stock issued
by it and that, in lieu of such fractional interests, P&O Princess
Shareholders shall receive from Carnival an amount in cash in accordance
with the P&O Princess Articles of Association.
4. Termination
4.1 This Deed shall automatically terminate if, and with effect from the same
time as:
(A) the Equalization and Governance Agreement terminates or otherwise
ceases to have effect;
(B) completion of the Mandatory Exchange;
(C) a resolution is passed or an order is made for the liquidation of the
whole or substantially the whole of P&O Princess; or
(D) the Mandatory Exchange provisions set out in the P&O Princess Articles
of Association are properly deleted from the P&O Princess Articles of
Association.
5. Notices
5.1 Any notice to or demand upon Carnival under this Deed shall be in writing
addressed to it at its principal place of business in the U.S.A. for the
time being (marked for the attention of the Chief Financial Officer, with a
copy sent to the General Counsel and Secretary) and shall be effective when
delivered to that principal place of business.
5.2 Any notice to or demand upon P&O Princess under this Deed shall be in
writing addressed to it at its principal place of business in the U.S.A.
for the time being (marked for the attention of the Chief Financial
Officer, with a copy sent to the General Counsel and Secretary) and shall
be effective when delivered to that principal place of business.
3
5.3 The original counterparts of this Deed and of any related supplemental deed
shall be kept at, respectively, the principal place of business in the
U.S.A. for the time being of Carnival and the principal place of business
in the U.S.A. for the time being of P&O Princess and shall be available for
inspection there on reasonable notice during the normal business hours of
that office.
6. General
6.1 Prohibition and enforceability
Any provision of, or the application of any provision of, this Deed which
is void, illegal or unenforceable in any jurisdiction does not affect the
validity, legality or enforceability of that provision in any other
jurisdiction or of the remaining provisions in that or any other
jurisdiction.
6.2 Further assurances
Carnival and P&O Princess shall take all steps, execute all documents and
do everything reasonably required to give effect to its obligations
contemplated by this Deed.
6.3 No assignment
Neither Carnival nor P&O Princess may assign any of their obligations under
this Deed, in whole or in part.
6.4 Counterparts
This Deed may be executed in any number of counterparts. All counterparts
taken together will be taken to constitute one and the same instrument.
7. Law And Jurisdiction
7.1 This Deed shall be governed by and construed in accordance with the laws of
the Isle of Man.
7.2 Any legal action or proceeding arising out of or in connection with this
Deed shall be brought exclusively in the courts of England.
7.3 Carnival and P&O Princess irrevocably submit to the jurisdiction of such
courts and waive any objection to proceedings in any such court on the
ground of venue or on the ground that the proceedings have been brought in
an inconvenient forum.
4
IN WITNESS WHEREOF
Executed as a deed by )
CARNIVAL CORPORATION )
acting by [.] [and [.]] [who, in )
accordance with the laws of the ) _______________________
territory in ) _______________________
which Carnival Corporation ) (Authorised
is incorporated, is/are] acting under ) signatory(ies))
the authority of Carnival Corporation
EXECUTED as a DEED by )
P&O PRINCESS CRUISES PLC )
acting by two of its directors/a director and )
secretary )
Director
Director/Secretary
5
Annex A-11
DIRECTORS OF CARNIVAL AND P&O PRINCESS
Name Function
---- --------
Micky Arison Chairman and Chief Executive Officer
Robert Dickinson Executive Director
Howard S. Frank Vice-Chairman and Chief Operating Officer
Pier Luigi Foschi Executive Director
A. Kirk Lanterman Executive Director
Peter G. Ratcliffe Executive Director
Ambassador Richard G. Capen Jr. Non-Executive Director
Arnold W. Donald Non-Executive Director
Baroness Hogg Non-Executive Director
Modesto A. Maidique Non-Executive Director
Sir John Parker Non-Executive Director
Stuart Subotnick Non-Executive Director
Uzi Zucker Non-Executive Director
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Carnival's second amended and restated articles of incorporation and by-laws
provide, subject to the requirements set forth therein, that with respect to
any person who was or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, Carnival shall indemnify such person by reason
of the fact that he is or was one of Carnival's directors or an officer, and
may indemnify such person by reason of the fact that he is or was one of
Carnival's employees or agents or is or was serving at Carnival's request as a
director, officer, employee or agent in another corporation, partnership, joint
venture, trust or other enterprise, in either case against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to our best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Carnival has entered into indemnity agreements with Shari Arison, Maks L.
Birnbach, Richard G. Capen, Jr., Arnold W. Donald, James M. Dubin, Modesto
Maidique, Stuart Subotnick, Sherwood M. Weiser, Meshulam Zonis and Uzi Zucker
providing essentially the same indemnities as are described in Carnival's
second amended and restated articles of incorporation.
Article 161 of P&O Princess' articles of association provides:
"Subject to the provisions of the Companies Acts but without prejudice to any
indemnity to which a director may otherwise be entitled, every director or
other officer of the Company shall be indemnified out of the assets of the
Company against any liability incurred by him in defending any proceedings,
whether civil or criminal, in which judgment is given in his favour (or the
proceedings are otherwise disposed of without any finding or admission of any
material breach of duty on his part) or in which he is acquitted or in
connection with any application in which relief is granted to him by the court
from liability for negligence, default, breach of duty or breach of trust in
relation to the affairs of the Company."
Under the UK Companies Act 1985, a UK company is not permitted to indemnify a
director or officer of the company against any liability in respect of any
negligence, default, breach of duty or breach of trust of which he may be
guilty in relation to the company. UK companies, however, may:
.. purchase and maintain liability insurance for officers and directors; and
.. indemnify officers and directors against any liability incurred by him
either in defending any proceedings in which judgment is given in his favour
or he is acquitted, or in connection with the court granting him relief from
liability in the case of honest and reasonable conduct.
II-1
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------ --------------------------------------------------------------------------------------------
5.1 Opinion of Tapia Linares y Alfaro*
5.2 Opinion of Freshfields Bruckhaus Deringer*
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of KPMG Audit Plc
23.3 Consent of Tapia Linares y Alfaro (included in Exhibit 5.1).*
23.4 Consent of Freshfields Bruckaus Deringer (included in Exhibit 5.2)*
24.1 Power of Attorney of certain officers and directors of Carnival Corporation (included on the
signature pages hereof)
24.2 Power of Attorney of certain officers and directors of P&O Princess (included on the
signature pages hereof)
--------
* To be filed by amendment.
ITEM 22. UNDERTAKINGS.
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 per cent. change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-2
(4) To file a post-effective amendment to the Registration Statement to
include any financial statements required by Item 8.A. of Form 20-F at the
start of any delayed offering or throughout a continuous offering. Financial
statements and information otherwise required by Section 10(a)(3) of the Act
need not be furnished, provided, that the Registrant includes in the
prospectus, by means of a post-effective amendment, financial statements
required pursuant to this paragraph (a)(4) and other information necessary
to ensure that all other information in the prospectus is at least as
current as the date of those financial statements. Notwithstanding the
foregoing, with respect to Registration Statements on Form F-3, a
post-effective amendment need not be filed to include financial statements
and information required by Section 10(a)(3) of the Act or Rule 3-19 of this
chapter if such financial statements and information are contained in
periodic reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Form F-3.
(5) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(6) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when
it became effective.
(7) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(8) That every prospectus: (i) that is filed pursuant to paragraph (8)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to
the Registration Statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
The undersigned Registrant, Carnival Corporation, hereby undertakes to respond
to requests for information that is incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
The undersigned Registrant, P&O Princess Cruises plc, hereby undertakes: (i) to
respond to requests for information that is incorporated by reference into the
prospectus pursuant to Item 4, 10(b), 11 or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means; and (ii) to arrange or
provide for a facility in the U.S. for the purpose of responding to such
requests. The undertaking in subparagraph (i) above includes information
contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
II-3
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, the Registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the
Registrants in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrants will, unless in the opinion of
their counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-4
SIGNATURES OF CARNIVAL CORPORATION
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Miami, State of Florida,
on the 9th day of January, 2003.
CARNIVAL CORPORATION
By: /s/ Micky Arison
-----------------------------
Micky Arison
Chairman of the Board
and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Howard S. Frank, Gerald R. Cahill or Arnaldo Perez, and each of them, his or
her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her in his or her name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) and supplements to this registration statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitution or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ------------------------------- ----------------
/s/ Micky Arison Director, Chairman of the Board January 9, 2003
-------------------- and Chief Executive Officer
Micky Arison (Principal Executive Officer)
/s/ Howard S. Frank Director, Vice-Chairman of the January 9, 2003
-------------------- Board and Chief Operating
Howard S. Frank Officer
/s/ Gerald R. Cahill Senior Vice President--Finance January 9, 2003
-------------------- and Chief Financial and
Gerald R. Cahill Accounting Officer
-------------------- Director January , 2003
Shari Arison
/s/ Maks L. Birnback Director January 9, 2003
--------------------
Maks L. Birnbach
II-5
SIGNATURE TITLE DATE
--------- -------- ----------------
/s/ Richard G. Capen, Jr. Director January 9, 2003
-------------------------
Richard G. Capen, Jr.
/s/ Robert H. Dickinson Director January 9, 2003
-------------------------
Robert H. Dickinson
------------------------- Director January , 2003
Arnold W. Donald
/s/ James M. Dubin Director January 9, 2003
-----------------------
James M. Dubin
----------------------- Director January 9, 2003
A. Kirk Lanterman
/s/ Modesto A. Maidique Director January 9, 2003
-----------------------
Modesto A. Maidique
/s/ Stuart Subotnick Director January 9, 2003
-----------------------
Stuart Subotnick
/s/ Sherwood M. Weiser Director January 9, 2003
----------------------
Sherwood M. Weiser
/s/ Meshulam Zonis Director January 9, 2003
----------------------
Meshulam Zonis
/s/ Uzi Zucker Director January 9, 2003
----------------------
Uzi Zucker
II-6
SIGNATURES OF P&O PRINCESS PLC
Pursuant to the requirements of the Securities Act, the Registrant, P&O
Princess Cruises plc, has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the city of
London, Country of England, on the 9th day of January, 2003.
P&O PRINCESS CRUISES plc
By: /s/ Peter G. Ratcliffe
-----------------------------
Peter G. Ratcliffe
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Peter
G. Ratcliffe or Nicholas L. Luff, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her in his or her name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective
amendments) and supplements to this registration statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, and hereby grants to such
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, or
their or his substitution or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ------------------------------- ---------------
/s/ The Lord Sterling of Plaistow Director and Chairman of the January 9, 2003
--------------------------------- Board
The Lord Sterling of Plaistow
/s/ Peter G. Ratcliffe Director and Chief Executive January 9, 2003
--------------------------------- Officer
Peter G. Ratcliffe
/s/ Nicholas L. Luff Chief Financial Officer January 9, 2003
---------------------------------
Nicholas L. Luff
/s/ Colin Rumble Group Financial Controller January 9, 2003
---------------------------------
Colin Rumble
/s/ Sir John Parker Director and Deputy Chairman of January 9, 2003
--------------------------------- the Board
Sir John Parker
/s/ Peter Foy Director January 9, 2003
---------------------------------
Peter Foy
/s/ Baroness Hogg Director January 9, 2003
---------------------------------
Baroness Hogg
/s/ Horst Rahe Director January 9, 2003
---------------------------------
Horst Rahe
II-7
AUTHORIZED REPRESENTATIVE IN
THE UNITED STATES
By: /s/ Mona Ehrenreich January 9, 2003
----------------------------------
Name: Mona Ehrenreich
Title: General Counsel,
Princess Cruises
II-8
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
5.1 Opinion of Tapia Linares y Alfaro*
5.2 Opinion of Freshfields Bruckhaus Deringer*
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of KPMG Audit plc
23.3 Consent of Tapia Linares y Alfaro (included in Exhibit 5.1)*
23.4 Consent of Freshfields Bruckaus Deringer (included in Exhibit 5.2)*
24.1 Power of Attorney of certain officers and directors of Carnival Corporation (included on the
signature pages hereof)
24.2 Power of Attorney of certain officers and directors of P&O Princess (included on the
signature pages hereof)
--------
* To be filed by amendment.