As filed with the Securities and Exchange Commission on February 25, 2003
Registration No. 333-102442
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
Amendment No. 1 to
Form S-4/F-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
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)
-----------------
Carnival Corporation P&O Princess Cruises plc
3655 N.W. 87/th/ Avenue 77 New Oxford Street
Miami, Florida 33178-2428 London, England WC1A 1PP
(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, Esq.
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
-----------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
-----------------
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. [_]
-----------------
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 February 24, 2003
[LOGO] CARNIVAL
CORPORATION
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 two
companies will pursue a common set of business objectives established by the
identical boards and single management team, who will evaluate these strategies
and other operational decisions from the perspective of all the shareholders.
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
necessary amendments to Carnival's articles of incorporation and by-laws, and
the additional proposed amendments to Carnival's articles of incorporation, 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
77 New Oxford Street
London WC1A 1PP, 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] CARNIVAL
CORPORATION
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 (other than
amendments covered by Proposals 3 and 4),
including the issuance of a certificate of
amendment as required by Panamanian law, in
connection with the transactions contemplated
by the Offer and Implementation Agreement, as
more fully described in the attached proxy
statement/prospectus;
3. To consider and approve a proposed amendment
to the articles of incorporation of Carnival
Corporation to increase the number of shares
of common stock that Carnival Corporation has
the authority to issue by 999,999,998 shares,
including the issuance of a certificate of
amendment as required by Panamanian law;
4. To consider and approve a proposed amendment
to the articles of incorporation of Carnival
Corporation to reduce the quorum requirement
for meetings of the board of directors of
Carnival Corporation from a majority, to
one-third, of the total number of directors,
including the issuance of a certificate of
amendment as required by Panamanian law; and
5. To transact such other business as may
properly come before the meeting.
The transactions contemplated by the Offer and
Implementation Agreement will not be completed
and the necessary amendments to Carnival's
articles of incorporation and by-laws will not be
effected unless the resolutions in respect of
Items 1 and 2 are approved by our shareholders
and the DLC transaction is approved by the
shareholders of P&O Princess Cruises plc.
The resolutions in respect of Items 3 and 4 are
conditioned upon the resolutions in respect of
Items 1 and 2. If the Offer and Implementation
Agreement and related amendments to Carnival's
articles of incorporation and by-laws are not
approved by Carnival's shareholders, and the DLC
transaction is not approved by the shareholders
of P&O Princess Cruises plc, Carnival's
authorized common stock will not be increased and
the quorum requirement for director meetings will
not be reduced.
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
----
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 13
Carnival 13
P&O Princess 13
Reasons for the DLC Transaction 14
The DLC Structure 14
Highlights of the Combined Group 15
Conditions to the DLC Transaction 16
Termination of the Offer and Implementation Agreement 17
Termination Fee 17
No Consideration Payable 17
Required Vote 17
Changes in Rights of Carnival Shareholders 18
Special Voting Entities; Special Voting Shares 18
Trust Shares of Beneficial Interest 18
Accounting Treatment 19
United States Federal Income Tax Consequences 19
Regulatory Approvals 19
No Appraisal Rights 19
Mandatory Exchange 20
Partial Share Offer 20
Arison Family and Associates 20
Cautionary Note Concerning Factors That May Affect Future Results 21
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA OF CARNIVAL 22
SELECTED HISTORICAL FINANCIAL DATA OF P&O PRINCESS 24
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA 27
COMPARATIVE PER SHARE DATA 29
Statement of Operations Data 29
Balance Sheet Data 29
COMPARATIVE STOCK PRICES 30
RISK FACTORS 31
CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS 39
THE SPECIAL MEETING 41
The Proposals 41
Record Date and Voting 41
Required Vote 41
Proxies; Revocation 41
Confidential Voting 42
Other Matters 42
THE DLC TRANSACTION 43
Background to the DLC Transaction 43
Reasons for the DLC Transaction 47
Other Considerations of Carnival and P&O Princess in respect of the DLC Transaction 48
Recommendation of Carnival and P&O Princess Boards of Directors 49
The DLC Structure 49
Special Voting Entities; Special Voting Shares 51
Trust Shares of Beneficial Interest 52
Generally 52
Pairing Agreement 53
Voting Trust Deed 53
Page
----
No Consideration Payable 54
Required Vote 54
Accounting Treatment 54
United States Federal Income Tax Consequences 54
Regulatory Approvals 54
No Appraisal Rights 54
Takeover Regulation of the Combined Group 54
Existing 4.9% Ownership Limit 56
THE COMPANIES 57
Carnival 57
P&O Princess 58
THE COMBINED GROUP 59
Brands 59
Fleet 60
Lower Berths 60
Strategy 61
Industry Background 63
North America 63
Europe 64
UK 64
Germany 64
Southern Europe 65
South America 65
Australia 65
Characteristics of the Cruise Vacation Industry 65
Competition 66
Employees 66
Board and Management 67
Dividends 67
On-going Reporting 67
Taxation of the Combined Group 68
Taxation of Carnival Shareholders 71
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMBINED GROUP 73
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE COMBINED GROUP 76
CHANGES IN RIGHTS OF CARNIVAL SHAREHOLDERS 85
General 85
Voting Rights 85
Special Voting Shares 87
Reflecting Votes of Carnival Shareholders at P&O Princess Meetings 88
Equalization Share 89
Quorum Requirements 89
Shareholder Action By Written Consent 90
Shareholder Proposals 91
Standard of Conduct for Directors 91
Meetings of the Board of Directors 92
General Meetings of Shareholders 92
Special Meetings of Shareholders 93
Sources and Payment of Dividends 93
Rights of Purchase and Redemption 94
Appraisal Rights 94
Pre-emptive Rights 94
Amendment of Governing Instruments 95
Stock Class Rights 96
Page
----
Rights of Inspection 97
Classification of the Board of Directors 98
Election of Directors 98
Removal of Directors 98
Vacancies on the Board of Directors 99
Indemnification of Directors and Officers 99
Takeover Restrictions 100
Liquidation 101
PROPOSAL 1 APPROVAL OF THE OFFER AND IMPLEMENTATION AGREEMENT 103
The Offer and Implementation Agreement 103
Introduction 103
Generally 104
Conditions to the Offer and Implementation Agreement 104
Other Key Provisions of the Offer and Implementation Agreement 105
Termination of the Offer and Implementation Agreement 107
No Solicitation 108
Mandatory Exchange 109
Governing Law of the Offer and Implementation Agreement 110
The Equalization and Governance Agreement 110
General Principles 110
Restrictions on Buy-Backs and Share Issuances 111
Disenfranchisement 111
Liquidation 111
Termination of the Equalization and Governance Agreement 112
Governing Law of Equalization and Governance Agreement 113
Equalization Ratio 113
SVE Special Voting Deed 114
General Provisions 114
Amendments to SVE Special Voting Deed 115
Termination of SVE Special Voting Deed 115
Governing Law of SVE Special Voting Deed 116
Deeds of Guarantee 116
Carnival Deed of Guarantee 116
P&O Princess Deed of Guarantee 117
PROPOSAL 2 APPROVAL OF AMENDMENTS TO CARNIVAL'S ARTICLES OF
INCORPORATION AND BY-LAWS IN CONNECTION WITH THE DLC TRANSACTION 118
Capitalization 118
Voting Rights 118
Disenfranchisement 118
Special Voting Share 118
Quorum Requirements 119
Shareholder Action By Written Consent 119
Standard of Conduct for Directors 119
Meetings of the Board of Directors 119
General Meetings of Shareholders 120
Special Meetings of Shareholders 120
Sources and Payment of Dividends 120
Pre-emptive Rights 120
Amendment of Governing Instruments 121
Stock Class Rights 121
Rights of Inspection 121
Election of Directors 121
Removal of Directors 122
Vacancies on the Board of Directors 122
Page
----
Indemnification of Directors and Officers 122
Takeover Restrictions 122
Liquidation 123
PROPOSAL 3 APPROVAL OF AMENDMENT TO CARNIVAL'S ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
AUTHORIZED FOR ISSUANCE 124
PROPOSAL 4 APPROVAL OF AMENDMENT TO CARNIVAL'S ARTICLES OF
INCORPORATION TO REDUCE QUORUM REQUIREMENT FOR BOARD MEETINGS 124
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 125
INTERESTS OF CERTAIN PERSONS IN THE PROPOSALS 129
OTHER BUSINESS 129
LEGAL MATTERS 129
EXPERTS 129
WHERE YOU CAN FIND MORE INFORMATION 130
DOCUMENTS INCORPORATED BY REFERENCE 130
LIMITATIONS ON ENFORCEABILITY OF CIVIL LIABILITIES UNDER U.S. FEDERAL
SECURITIES LAWS 131
ANNEXES
-------
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. You are also being asked to approve amendments to
our articles of incorporation which, although consistent with the amendments
relating to the DLC transaction, are not directly related to the DLC
transaction.
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 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, as well as
other amendments to our articles of incorporation which, although consistent
with the amendments relating to the DLC transaction, are not directly
related to the DLC transaction.
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
1
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.
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 that 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 and P&O Princess, together, would have had a
combined fleet of 65 cruise ships offering 99,982 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. 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. The two companies will
pursue a common set of business objectives established by the identical
boards and single management team, who will evaluate these strategies and
other operational decisions from the perspective of all the shareholders.
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
2
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.
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
3
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 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 either group
of shareholders does not approve a class rights action, that action
generally 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, 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 and Gerald R. Cahill, our Chief Financial Officer and Chief
Accounting Officer, will be the Chief Financial Officer and Chief Accounting
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: We and P&O Princess expect to hold our next annual meetings in June 2003 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
4
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.
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;
. and all 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 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. The directors
and executive officers of P&O Princess beneficially own approximately 0.2%
of P&O Princess' outstanding shares. The P&O Princess directors and
executive officers intend to vote their shares in favor of the resolution to
approve, among other matters, 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 the 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 over the Internet at www.carnivalcorp.com, by telephone or
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.
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 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 2) as well as other amendments to our articles of incorporation which,
although consistent with the amendments relating to the DLC transaction are not
directly related to the DLC transaction (Proposals 3 and 4).
Proposals To Be Voted On
Proposal 1--Approval of the Offer and Implementation Agreement (Page 103)
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 2--Approval of Amendments to Carnival's Articles of Incorporation
and By-laws (Page 118)
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 for shareholder meetings
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.
We are proposing to increase 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. In connection with the DLC transaction, 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.
You are being asked to vote separately on the proposal to increase in the
number of shares of common stock that we have the authority to issue (Proposal
3), other than the increase of two shares (the special voting share and the
equalization share), which are covered by Proposal 2 as they are directly
related to the DLC transaction.
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 transactions contemplated by the Offer and Implementation Agreement will
not be completed and the amendments to our articles of incorporation and
by-laws in connection with the DLC transaction will not be effected unless
Proposal 1 and Proposal 2 are approved by our shareholders and the DLC
transaction is approved by the shareholders of P&O Princess.
Proposal 3 - Approval of Amendment to Carnival's Articles of Incorporation to
Increase the Number of Shares of Common Stock Authorized for Issuance (Page 124)
You are also being asked to approve an amendment to our articles of
incorporation to increase the number of shares of common stock that we have the
authority to issue by 999,999,998 shares. The affirmative vote of the holders
of a majority of all outstanding shares of our common stock is required to
approve this amendment to our articles of incorporation.
Our board of directors unanimously recommends a vote FOR the amendment to our
articles of incorporation to increase the number of shares of common stock that
we have the authority to issue by 999,999,998 shares.
Proposal 4 - Approval of Amendment to Carnival's Articles of Incorporation to
Reduce the Quorum Requirement for Board Meetings (Page 124 )
You are also being asked to approve an amendment to our articles of
incorporation to reduce the quorum requirement for meetings of the board of
directors from a majority, to one-third, of the total number of directors. The
affirmative vote of the holders of a majority of all outstanding shares of our
common stock is required to approve this amendment to our articles of
incorporation.
12
Our board of directors unanimously recommends a vote FOR the amendment to our
articles of incorporation to reduce the quorum requirement for meetings of the
board of directors from a majority, to one-third, of the total number of
directors.
Proposals 3 and 4 are conditioned upon the approval of Proposals 1 and 2 by our
shareholders. If the Offer and Implementation Agreement and related amendments
to our articles of incorporation and by-laws are not approved by our
shareholders, and the DLC transaction is not approved by the shareholders of
P&O Princess, our authorized common stock will not be increased and the quorum
requirement for director meetings will not be reduced. If Proposal 3 and/or
Proposal 4 are not approved, such disapproval will have no effect on the DLC
transaction.
Parties to the DLC Transaction
Carnival (Page 57)
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 67,282 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 Canadian Yukon, two luxury
day boats and a fleet of over 300 motorcoaches and 13 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.
P&O Princess (Page 58)
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 has 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.
13
Reasons for the DLC Transaction (Page 47)
We and P&O Princess have agreed to enter into the DLC transaction 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, would have had a combined fleet of 65
cruise ships offering 99,982 lower berths. The Combined Group will be a leading
provider of cruises to all major destinations outside the Far East.
The DLC Structure (Page 49)
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. 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. The two companies will
pursue a common set of business objectives established by the identical boards
and single management team, who will evaluate these strategies and other
operational decisions from the perspective of all the shareholders. 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.
.. 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."
14
.. 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 and include, among others:
. transactions primarily designed to amend or unwind the DLC structure;
. adjustments to the equalization ratio not in accordance with the
Equalization and Governance Agreement; and
. amendments to tax related provisions in Carnival's articles of
incorporation.
No class rights action generally may be implemented unless approved by both
shareholder bodies, which means that each shareholder body generally 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.
Highlights of the Combined Group (Page 59)
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
15
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 Combined Group will generate
significant cost savings, estimated to be at least $100 million on an
annualized basis, commencing in the first full fiscal year following
completion of the DLC transaction. Carnival and P&O Princess expect that
these cost savings will be generated principally through the dissemination
of best practices between the companies, economies of scale and the
rationalization of certain shoreside operations. One-time cash costs of
achieving these cost savings are expected to be approximately $30 million.
Conditions to the DLC Transaction (Page 104)
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.
16
Termination of the Offer and Implementation Agreement (Page 107)
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
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 necessary
amendments to our articles of incorporation and by-laws (Proposal 2) and the
additional proposed amendments to our articles of incorporation (Proposals 3
and 4) requires the affirmative vote of a majority of all outstanding Carnival
shares entitled to vote at the special meeting.
17
Changes in Rights of Carnival Shareholders (Page 85)
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. These new takeover
provisions are in addition to existing provisions in our articles of
incorporation 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 our 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.
Special Voting Entities; Special Voting Shares (Page 51)
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 The Law
Debenture Trust Corporation p.l.c., 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 trust established under Bermuda law.
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 52)
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
18
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.
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 54)
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 54)
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 54)
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 and the European Commission for the DLC transaction, and therefore
no further regulatory approvals are required.
No Appraisal Rights (Page 54)
You have no right to an appraisal of the value of your shares in connection
with the DLC transaction.
19
Mandatory Exchange (Page 109)
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 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 in
accordance with the then prevailing equalization ratio 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 to ensure that all transactions
and relationships between it and its affiliated entities (which would include
the controlling shareholders and entities controlled by them) are on an
arm's-length basis and also on a normal commercial basis (i.e., it may not
engage in business transactions with any affiliate on
20
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 a normal commercial basis.
Cautionary Note Concerning Factors That May Affect Future Results (Page 39)
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.
21
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA OF CARNIVAL
The selected consolidated financial data presented below for fiscal 1998
through 2002 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, 2002. 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 ".
Years Ended November 30,
- ---------------------------------------------------------------
2002 2001 2000 1999 1998
- ---------- ---------- --------- --------- ---------
(U.S. dollars in thousands, except per share and operating
data)
Statement of operations data/(a)/:
Revenues 4,368,269 4,535,751 3,778,542 3,497,470 3,009,306
Operating income 1,042,059 891,731 982,958 1,019,699 896,524
Net income/(b)/ 1,015,941/(c)/ 926,200/(c)/ 965,458 1,027,240 835,885
Earnings per share:
Basic 1.73 1.58 1.61 1.68 1.40/(d)/
Diluted 1.73 1.58 1.60 1.66 1.40/(d)/
Dividends declared per share/(d)/ .420 .420 .420 .375 .315/(d)/
Cash from operations 1,469,032 1,238,936 1,279,535 1,329,724 1,091,840
Capital expenditures 1,986,482 826,568 1,003,348 872,984 1,150,413
Other operating data:
Available lower berth days/(e)/ 21,436 20,685 15,888 14,336 12,237
Passengers carried 3,549 3,385 2,669 2,366 2,045
Occupancy percentage/(f)/ 105.2% 104.7% 105.4% 104.3% 106.3%
As of November 30,
---------------------------------------------------------------
2002/(a)/ 2001/(a)/ 2000/(a)/ 1999 1998
- ---------- ---------- --------- --------- ---------
(U.S. dollars in thousands)
Balance sheet and other data:
Total assets 12,334,848/(g)/ 11,563,552/(g)/ 9,831,320 8,286,355 7,179,323
Long-term debt, excluding current portion 3,011,969 2,954,854 2,099,077 867,515 1,563,014
Total shareholders' equity 7,417,903 6,590,777 5,870,617 5,931,247 4,285,476
Debt to capital/(h)/ 29.9% 31.1% 28.6% 15.3% 27.6%
--------
(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 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 5 and 17 in Carnival's 2002
consolidated financial statements, which are incorporated by reference in
this proxy statement/prospectus.
22
(b)Effective 1 December 2001, Carnival adopted Statement of Financial
Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets", which requires that companies stop amortising goodwill and requires
an annual, or when events or circumstances dictate a more frequent,
impairment review of goodwill. Accordingly, as of 1 December 2001, Carnival
no longer amortises its goodwill. If goodwill had not been recorded for
periods prior to 1 December 2001, Carnival's adjusted net income and
adjusted basic and diluted earnings per share would have been as follows
(U.S. dollars in thousands, except per share data):
Years Ended 30 November
---------------------------------
2001 2000 1999 1998
- ------- ------- --------- -------
Net income 926,200 965,458 1,027,240 835,885
Goodwill amortisation 25,480 23,046 20,666 17,074
------- ------- --------- -------
Adjusted net income 951,680 988,504 1,047,906 852,959
======= ======= ========= =======
Adjusted earnings per share
Basic 1.63 1.65 1.71 1.43
Diluted 1.62 1.64 1.70 1.43
(c)Carnival's net income for fiscal 2001 and 2002 includes an impairment charge
of $140 million and $20 million, respectively, and fiscal 2001 includes a
nonoperating net gain of $101 million from the sale of Carnival's investment
in Airtours. In addition, fiscal 2002 included a $51 million income tax
benefit as a result of a new Italian investment incentive, which allows
Costa to receive an income tax benefit based on contractual expenditures
during 2002 on construction of new ships. See Notes 4, 5 and 9 in Carnival's
2002 consolidated financial statements, which are incorporated by reference
in this document.
(d)The 1998 per share amounts have been adjusted to reflect a two-for-one stock
split effective June 12, 1998.
(e)Represents the total annual passenger capacity, assuming two passengers per
cabin, that Carnival's ships offered for sale, which is computed by
multiplying passenger capacity by ship operating days.
(f)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.
(g)Effective December 1, 2000, Carnival adopted SFAS No. 133, which requires
that all derivative instruments be recorded on Carnival's balance sheet.
Total assets at November 30, 2001 and 2002 included $567 million and $178
million, respectively, which represents the fair value of hedged firm
commitments. See Note 2 in Carnival's 2002 consolidated financial
statements, which are incorporated by reference in this document.
(h)Represents the percentage of total debt to the sum of total debt and
shareholders' equity.
23
SELECTED HISTORICAL FINANCIAL DATA OF P&O PRINCESS
The selected financial data of P&O Princess presented below for fiscal 1998
through 2002 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.
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, for the year ended December 31, 2002, which 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.
Years ended December 31, (restated)/(c)/
- ---------------------------------------------------------
2002 2001 2000 1999/(a)/ 1998/(a)/
-------- -------- -------- -------- --------
(U.S. dollars in millions, except per share and per ADS
information)
Selected profit and loss information:
UK GAAP
Turnover 2,526.8 2,451.0 2,423.9 2,111.6 1,852.4
Net operating costs (2,228.1)/(b)/ (2,089.7) (2,050.8) (1,723.3) (1,509.2)
-------- -------- -------- -------- --------
Group operating profit 298.7 361.3 373.1 388.3 343.2
Share of operating results of joint ventures -- 0.1 0.5 -- 0.3
- -------- -------- -------- --------
Total operating profit 298.7 361.4 373.6 388.3 343.5
Non-operating profit/(loss) 1.2 (1.9) (6.5) (4.8) --
- -------- -------- -------- --------
Profit on ordinary activities before interest 299.9 359.5 367.1 383.5 343.5
Net interest and similar items (74.0) (58.0) (49.1) (25.7) (31.4)
----- -------- -------- -------- --------
Profit on ordinary activities before taxation 225.9 301.5 318.0 357.8 312.1
Taxation/(c)/ (17.1) 81.7/(f)/ (57.2) (73.6) (88.8)
----- -------- -------- -------- --------
Profit on ordinary activities after taxation 208.8 383.2 260.8 284.2 223.3
Equity minority interests -- (0.1) (2.6) (0.5) --
- -------- -------- -------- --------
Profit for the financial year attributable to shareholders 208.8 383.1 258.2 283.7 223.3
--- -------- -------- -------- --------
24
Years ended December 31, (restated)/(c)/
- -------------------------------------------
2002 2001 2000 1999/(a)/ 1998/(a)/
----- ----- ----- -------- --------
30.2 55.4/(f)/ 38.1 41.7 32.8
Diluted earnings per share (cents)/(g)/ 30.0 55.2/(f)/ 38.1 41.7 32.8
Basic earnings per ADS (cents)/(g)/ 120.8 221.6 152.4 166.8 131.2
Diluted earnings per ADS (cents) 120.0 220.8 152.4 166.8 131.2
Fixed charge cover/(d)/ 2.9 3.8 4.8 8.7 6.6
Dividend per share (cents) 12.0 12.0 12.0 -- --
Dividend per ADS (cents) 48.0 48.0 48.0 -- --
U.S. GAAP
Net income 212.9 425.2/(e)(f)/ 253.7 267.7 222.4
Basic earnings per share (cents)(g) 30.7 61.5 37.1 39.3 32.6
Diluted earnings per share (cents)(g) 30.6 61.2 37.1 39.3 32.6
Basic earnings per ADS (cents) 122.8 246.0 148.4 157.1 130.5
Diluted earnings per ADS (cents) 122.4 244.8 148.4 157.1 130.5
--------
(a)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 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.
(b)In fiscal 2002, net operating costs under UK GAAP included U.S.$117.0
million of transaction costs.
(c)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 year to December
31, 2001 has been increased to reflect the elimination of the majority of
future potential tax liabilities, upon P&O Princess' election to enter the
UK tonnage tax regime by $96.8 million. The profit and loss account and
balance sheet information for each of the three years ended December 31,
2000 have also been restated for the adoption of Financial Reporting
Standard 19: Deferred Tax.
(d)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.
(e)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.
(f)Under UK GAAP the year ended December 31, 2001 includes a tax credit of
$97.5 million, comprising a credit from the release of deferred tax on entry
into the tonnage tax regime of $192.5 million and tax charges arising from
internal corporate restructuring of $95.0 million. The U.S. GAAP tax credit
for the year ended December 31, 2001 is for the release of deferred taxes.
(g) EffectiveJanuary 1, 2002 P&O Princess 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 January 1, 2002 P&O Princess no
longer amortizes its goodwill. If goodwill had not been recorded
for periods prior to January 1, 2002 P&O Princess' adjusted net
income and adjusted basic and diluted earnings per share would
have been as follows:
Year Ended December 31,
---------------------------
2001 2000 1999 1998
----- ----- ----- -----
(U.S. dollars in thousands,
except per share data)
Net income 425.2 253.7 267.7 222.4
Goodwill amortization 2.9 2.0 1.0 0.8
----- ----- ----- -----
Adjusted net income 428.1 255.7 268.7 223.2
----- ----- ----- -----
Adjusted earnings per share
Basic 61.9 37.4 39.4 32.7
Diluted 61.6 37.4 39.4 32.7
25
At December 31, (restated)/(c)/
------------------------------------------------
2002 2001 2000 1999 1998
-------- -------- -------- -------- --------
(U.S. dollars in millions)
Selected balance sheet information:
UK GAAP
Fixed assets 5,772.8 4,418.3 3,959.5 3,258.3 2,949.7
Current assets 558.9 451.4 649.3 406.7 382.4
-------- -------- -------- -------- --------
Total assets 6,331.7 4,869.7 4,608.8 3,665.0 3,332.1
-------- -------- -------- -------- --------
Other creditors and provisions (1,000.9) (847.0) (1,190.4) (1,343.8) (1,494.4)
Creditors: amounts falling due after one year (2,516.8) (1,393.1) (1,062.7) (216.7) (139.7)
-------- -------- -------- -------- --------
Total liabilities (3,517.7) (2,240.1) (2,253.1) (1,560.5) (1,634.1)
Equity minority interests (0.2) (0.2) (0.2) (7.7) --
-------- -------- -------- -------- --------
Consolidated shareholders' funds 2,813.8 2,629.4 2,355.5 2,096.8 1,698.0
-------- -------- -------- -------- --------
U.S. GAAP
Total assets 6,368.9 4,996.3 4,460.7 3,571.3 3,252.1
Long-term obligations (2,623.6) (1,641.8) (1,275.5) (416.1) (296.8)
Consolidated shareholders' funds 2,725.1 2,551.8 2,296.3 2,006.8 1,622.0
26
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 for the year ended December
31, 2002, which are 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.
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 Year
Ended
November 30,
2002
------------
Revenues 6,891.2
Costs and expenses
Operating (3,892.7)
Selling and administrative (972.8)
Depreciation and amortization (551.5)
Impairment charge (20.0)
--------
(5,437.0)
--------
Operating income 1,454.2
Nonoperating (expense) income
Net interest expense (157.4)
Other expense (3.0)
Income tax benefit 39.5
--------
(120.9)
--------
Net income 1,333.3
========
Earnings per share
Basic (U.S.$) 1.67
Diluted (U.S.$) 1.67
27
Pro Forma Combined Balance Sheet Data:
November 30,
2002
------------
Assets
Current assets
Cash and cash equivalents 828.8
Short-term investments 39.0
Accounts receivable, net 237.6
Inventories 178.7
Prepaid expenses and other 320.1
Fair value of derivative contracts 7.3
Fair value of hedged firm commitments 78.4
---------
Total current assets 1,689.9
Property and Equipment, Net 15,733.9
Goodwill and Intangible Assets, Net 3,605.5
Other Assets 294.3
Fair Value of Hedged Firm Commitments 109.1
Fair value of derivative contracts 54.6
---------
21,487.3
=========
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt 275.6
Accounts payable 452.9
Accrued liabilities 543.8
Customer deposits 1,253.3
Dividends payable 61.6
Fair value of derivative contracts 125.4
---------
Total current liabilities 2,712.6
Long-Term Debt 5,576.7
Deferred Income and Other Long-Term Liabilities 283.9
Fair Value of Derivative Contracts 115.4
Shareholders' Equity 12,798.7
---------
21,487.3
=========
28
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 November 30, 2002 for balance sheet purposes and December 1, 2001
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 Year For the Year
Ended Ended
November 30, December 31,
2002 2002
-------------- --------------
(U.S. dollars) (U.S. dollars)
CARNIVAL--HISTORICAL P&O PRINCESS--HISTORICAL
Net income per share Net income per share/(1)/
Basic 1.73 Basic 0.307
Diluted 1.73 Diluted 0.306
Cash dividends per share 0.42 Cash dividends per share 0.12
CARNIVAL--PRO FORMA P&O PRINCESS--PRO FORMA EQUIVALENT
Net income per share Net income per share
Basic 1.67 Basic 0.50
Diluted 1.67 Diluted 0.50
Cash dividends per share 0.42 Cash dividends per share 0.126
Balance Sheet Data:
At November 30, 2002
--------------------
Pro Forma
Equivalent at
Pro December 31, November
Historical Forma 2002 30, 2002
---------- ----- ------------ -------------
(U.S. dollars)
CARNIVAL P&O PRINCESS
Book value per share 12.64 16.01 Book value per share 3.93 4.81
--------
(1)The historical net income per share includes $0.15 per share under U.S. GAAP
related to $105.1 million of P&O Princess transaction costs and break-up
fees related to the Royal Caribbean terminated transaction and the Carnival
DLC transaction.
29
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 . . . . .
30
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, 2002 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. Courts may interpret or enforce these contracts in a manner
inconsistent with the express provisions and intentions of Carnival and P&O
Princess expressed in such contracts. For instance, a bankruptcy court may not
choose to follow our contractual way of allocating liabilities and assets. 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.
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
31
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.
Economic returns on shares of Carnival and P&O Princess will be dependent upon
the economic performance of the Combined Group and the inability of one company
to pay dividends may limit or prevent the payment of dividends by the other.
Upon implementation of the DLC structure, the dividends paid on shares of
Carnival and P&O Princess will depend primarily on the economic performance of
the assets of both companies of the Combined Group. Therefore, the past
performance of P&O Princess shares and Carnival shares may not reflect the
future performance of these shares. Additionally, if one company is unable to
pay dividends on its shares, the other company must make such payments to the
other and/or scale back its dividend in order to equalize the distributions in
accordance with the equalization ratio. After taking into consideration the
actions necessary to equalize such distributions, both companies may be limited
in their ability, or unable, to pay dividends.
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'
interpretation. 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 trading 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 the
Section 883 exemption. Accordingly, it is possible that Carnival and its
ship-owning or operating subsidiaries and/or certain members of the P&O
Princess Group whose tax exemption is based on Section 883 may lose this
exemption. 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.
32
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 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 of incorporation 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.
33
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 additional shares or voting control
over shares in either company, if such person would then be able to cast 30% or
more of the votes which could be cast on a joint electorate action, 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 Cruises Ltd., which owns Royal Caribbean International and
Celebrity Cruises;
.. Norwegian Cruise Line and Orient Lines;
.. 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;
.. Festival Crusies, Mediterranean Shipping Cruises, Royal Olympia Cruises 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.
34
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's results of operations and financial condition could be
adversely affected, including the impairment of the value of its ship assets.
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, the outbreak of hostilities or war
or concerns that hostilities or war might break out, including the possibility
of military action against Iraq, and national government travel advisories,
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 debt rating of the Combined Group may be downgraded from our current
rating, and for this or other reasons 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 although it is expected to remain a strong investment grade
rating.
We believe our current external sources of liquidity, including committed
financings, 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 and working capital needs of the
Combined Group.
The forecasted cash flow from future 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, overcapacity, the deterioration in
35
general economic and business conditions, terrorist attacks, ship incidents,
adverse publicity and increases 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 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. If P&O Princess loses
eligibility for inclusion in the FTSE 100 or Carnival is removed from the S&P
500, it may be more difficult for either company to access the equity capital
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, 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, security and vacation satisfaction 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 publicity concerning the vacation industry
in general or the cruise industry or the Combined Group in particular could
impact demand and, consequently, have an adverse impact on the Combined Group's
profitability.
Operating, financing and tax 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, food, 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, financing and tax 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.
36
Environmental legislation and regulations 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.
In addition, 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 in fiscal 2002 totalling $18
million to the U.S. government and other parties. We accrued for these fines in
fiscal 2001. 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 approximately $10 million
in additional annual environmental compliance costs in 2003 and yearly
thereafter as a result of the program. If the DLC transaction is approved, the
terms of the environmental compliance program will become applicable to P&O
Princess, resulting in higher environmental compliance costs for P&O Princess.
The Combined Group's costs of complying with current and future environmental
laws and regulations, or liabilities arising from past or future releases of,
or exposure to, hazardous substances or to vessel discharges, could increase
the cost of compliance or otherwise materially adversely affect the Combined
Group's business, results of operations or financial condition.
New regulation of health, safety and security issues could increase operating
costs and adversely affect net income.
The Combined Group is subject to various international, national, state and
local health, safety and security laws, regulations and treaties. The
International Maritime Organization, sometimes referred to as the IMO, which
operates under the United Nations, has adopted safety standards as part of the
Safety of Life at Sea, sometimes referred to as SOLAS, which is applicable to
all of our ships. Generally SOLAS establishes vessel design, structural
features, materials, construction and life saving equipment requirements to
improve passenger safety and security.
In addition, ships that call on U.S. ports are subject to inspection by the
U.S. Coast Guard for compliance with the SOLAS Convention and by the U.S.
Public Health Service for sanitary standards. Carnival's and P&O Princess'
ships are also subject to similar inspections pursuant to the laws and
regulations of various other countries such ships visit. Finally, the U.S.
Congress recently enacted the Maritime Transportation Security Act of 2002
which implements a number of security measures at U.S. ports, including
measures that relate to foreign flagged vessels calling at U.S. ports.
Carnival and P&O Princess believe that health, safety and security issues will
continue to be areas of focus by relevant government authorities both in the
U.S. and abroad. Resulting legislation or regulations, or changes in existing
legislation or regulations, could impact the operations of the Combined Group
and would likely subject the Combined Group to increasing compliance costs in
the future.
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 other 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
37
ships could also delay or prevent the delivery of its ships under construction.
These events could adversely affect the Combined Group's profitability.
However, the impact from a delay in delivery could be mitigated by contractual
provisions and refund guarantees obtained by the Combined Group.
In addition, we and P&O Princess have entered into forward foreign currency
contracts to fix the cost in U.S. dollars of certain of our and P&O Princess'
foreign currency denominated shipbuilding contracts. If any of the shipyards
are unable to perform under the related contract, the foreign currency forward
contracts related to that shipyard's shipbuilding contracts would still have to
be honored. This might require us or P&O Princess to realize a loss on an
existing contract without having the ability to have an offsetting gain on its
foreign currency denominated shipbuilding contract, thus adversely affecting
the financial results of the Combined Group.
38
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:
.. 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 providers of 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 publicity and their impact on
the demand for cruises;
.. accidents and other incidents at sea affecting the health, safety, security
and vacation satisfaction 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.
39
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.
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.
40
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;
.. our Third Amended and Restated Articles of Incorporation and Amended and
Restated By-laws;
.. an amendment to our articles of incorporation to increase the number of
shares of common stock that we have the authority to issue by 999,999,998
shares; and
.. an amendment to our articles of incorporation to reduce the quorum
requirement for meetings of our board of directors from a majority, to
one-third, of the total number of directors.
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 two 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 the first two proposals at the special
meeting by the affirmative vote of the holders of a majority of the outstanding
shares of Carnival common stock. Proposals 3 and 4 will not be given effect if
the proposals relating to the DLC transaction are not approved.
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 and the other
amendments to our articles of incorporation. 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.
41
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;
.. 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 and
the amendments to our articles of incorporation. 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.
42
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 third parties except in specified circumstances
involving a third party's offer determined by the relevant board to be a
Superior Proposal as explained below. The dual listed company transaction
provided for a combination of equals in which P&O Princess shareholders would
have held approximately 50.7% of the equity in a dual listed company structure
that was substantially similar to the DLC transaction.
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. Based on the prior
business day's closing price for Carnival shares of $26.55 per share and an
exchange rate of $1.00=(Pounds)0.692, the Carnival shares were valued at 250
pence, valuing the offer at 450 pence per P&O Princess share. 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 Sullivan & Cromwell LLP and Freshfields
Bruckhaus Deringer, its legal advisors, and Schroder Salomon Smith Barney, its
financial advisor, 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). In particular, the P&O Princess board believed that
Carnival's proposal would result in P&O Princess shareholders receiving shares
that would not be included in the FTSE indices, and consequently a significant
portion of P&O Princess shareholders, particularly UK institutional
shareholders, would be unable or unwilling to hold such shares. As a result of
this, the board believed that the proposed Carnival transaction would deprive
such P&O Princess shareholders of the ability to retain an investment in the
cruise industry and to share in the potential benefits of combining with
Carnival, making it less financially favorable than the Royal Caribbean
transaction in which all P&O Princess shareholders were expected to be
43
able to share in the upside potential expected to be generated by that
transaction. Further, the board believed that Carnival's proposal did not
represent an irrevocable commitment to make and maintain an offer because it
was subject to a number of pre-conditions, including financing and regulatory
approvals. The board also believed that Carnival's proposal faced greater
regulatory risk in the U.S. and Europe.
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 pre-conditional cash
and share 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.
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. Based on the prior business day's closing price for
Carnival shares of $26.06 per share and an exchange rate of
$1.00=(Pounds)0.695, the Carnival shares were valued at 250 pence, valuing the
offer at 500 pence per P&O Princess share. 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 pre-conditional offer of
0.2684 Carnival shares for each P&O Princess share, valuing each P&O Princess
share at 515 pence (based on the prior business day's closing price for
Carnival shares of $27.05 per share and an exchange rate of
$1.00=(Pounds)0.709). 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.
44
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 (based on the prior business day's closing price
for Carnival shares of $25.86 per share and an exchange rate of
$1.00=(Pounds)0.708), and again raised the possibility of alternative
structures, including a dual listed company 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 European Commission cleared the proposed
combination on July 24, 2002.
On September 24, 2002, prior to the U.S. Federal Trade Commission closing its
investigation into both transactions, the P&O Princess board met to consider
the relative merits of the Royal Caribbean transaction and Carnival's proposal
in light of currently available information. At that meeting, representatives
of Schroder Salomon Smith Barney, P&O Princess' financial advisor, advised the
board that it believed that, based on the valuation and share price analyses
discussed with the board at that meeting, Carnival's prior proposal to enter
into a dual listed company transaction with P&O Princess on the same financial
terms as Carnival's latest share exchange proposal was more favorable to P&O
Princess' shareholders from a financial point of view than the transaction with
Royal Caribbean.
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
and considering the analyses discussed with its financial advisor on September
24, 2002 at its
45
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
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. The making of the
Partial Share Offer, including the establishment of the 20% limit, was the
subject of negotiation between the parties, and was designed to allow those P&O
Princess shareholders who would prefer to participate in the Combined Group
through holding Carnival shares an opportunity to do so, while at the same time
maintaining the liquidity and market value of the P&O Princess shares.
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
46
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.
Reasons for the DLC Transaction
We and P&O Princess have agreed to enter into the DLC transaction in order to
create the Combined Group. We and P&O Princess believe the principal benefits
of the creation of the Combined Group by means of the DLC structure are as set
forth below and that the DLC structure is the optimal structure to seek to
achieve all of these benefits:
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. In addition, the combination is expected to enhance the
Combined Group's ability to attract more passengers from land-based vacations,
based on its ability to provide vacations in most of the largest vacation
markets in the world, and its strategy of entering new and developing markets
by building on its brand strength, global presence and ability to strategically
deploy its brands and diversified fleet.
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.
47
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.
We and P&O Princess expect that the Combined Group will generate significant
cost savings, estimated to be at least $100 million on an annualized basis,
commencing in the first full fiscal year following completion of the DLC
transaction. We and P&O Princess expect that these cost savings will be
generated principally through the dissemination of best practices between the
companies, economies of scale and the rationalization of certain shoreside
operations. One-time cash costs of achieving these cost savings are expected to
be approximately $30 million.
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 99,982 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 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.
The DLC structure allows continued participation in the global cruise industry
for P&O Princess shareholders who wish to continue to hold shares in a
UK-listed company
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 for at least
some of their holdings.
Other Considerations of Carnival and P&O Princess in respect of the DLC
Transaction
In addition to the factors described above that supported our and P&O Princess'
decisions to approve the Offer and Implementation Agreement and to recommend
that shareholders vote to approve the
48
DLC transaction, our board and the P&O Princess board each also considered
potential factors that weighed against proceeding with the transaction, in
general, and against using a DLC structure, in particular. These included:
.. the risk that the benefits and synergies anticipated from the DLC
transaction might not be achieved to the extent or within the time period
expected;
.. risks associated with the structure of the DLC transaction that are not
associated with the more common ways of combining operations of two
companies;
.. the risk that the London-listed shares of P&O Princess may trade at a
discount to the New York-listed shares of Carnival;
.. the possibility that each company's shareholders might achieve more value
over the long-term from continued operation of such company as an
independent company or by combining with a different company;
.. risks concerning the uncertainty of the DLC structure under the Internal
Revenue Code; and
.. the fact that a small group of shareholders would collectively own
approximately 35% of the total combined voting power of the Combined Group
and may be able to effectively control the outcome of shareholder voting.
A number of these factors are described in more detail under the caption "Risk
Factors--Risks relating to the DLC transaction".
Our board and the P&O Princess board did not assign particular weight or
ranking to any of the factors that they considered. Also, in making their
determination, individual directors may have assigned a different level of
importance to each factor.
Recommendation of Carnival and P&O Princess Boards of Directors
Our board and P&O Princess' board each weighed both the potential advantages of
the DLC transaction and the potential factors against the DLC transaction and
determined that the potential advantages of the DLC transaction outweighed the
potential factors against the DLC transaction. Consequently, it was the
judgment of our board and the P&O Princess board that the DLC transaction is in
the best interests of Carnival and its shareholders and P&O Princess and its
shareholders. Both our board and the P&O Princess board recommend that our
respective shareholders vote in favor of the DLC transaction.
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. 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. The two companies will pursue a common
set of business objectives established by the identical boards and single
management team, who will evaluate these strategies and other operational
decisions from the perspective of all the shareholders. 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
49
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".
.. 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 and include, among others:
. transactions primarily designed to amend or unwind the DLC structure;
. adjustments to the equalization ratio not in accordance with the
Equalization and Governance Agreement; and
. amendments to tax related provisions in Carnival's articles of
incorporation.
No class rights action generally may be implemented unless approved by both
shareholder bodies, which means that each shareholder body generally 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.
50
.. 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 The Law Debenture Trust
Corporation p.l.c., 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 trust established under Bermuda law.
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 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% (for a majority vote, 49% is
the largest whole percentage that is less than the 50% needed to defeat the
resolution). 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
51
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 will be prohibited from dealing with the Carnival special
voting share, or with any interest in or right attaching to the Carnival
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
trustee of the P&O Princess Special Voting Trust will be prohibited from
dealing with the P&O Princess special voting share, or with any interest or
right attaching to the P&O Princess special voting share, except for a sale of
the special voting share approved by each of the Carnival board and the P&O
Princess board in its sole and absolute discretion. 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.
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.
52
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 issuance of additional 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.
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.
53
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 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 necessary
amendments to the articles of incorporation and by-laws of Carnival (Proposal
2) and the additional proposed amendments to our articles of incorporation
(Proposals 3 and 4), 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."
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 and the European Commission for the DLC transaction, and therefore
no further regulatory approvals are required.
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
54
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;
.. 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.
55
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.
56
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 67,282 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
------------ --------- ------------ ------------------------------
Carnival Cruise Lines 18 38,348 North America
Holland America 11 14,494 North America
Costa 8 10,754 Europe
Cunard 2 2,458 Europe
Seabourn 3 624 North America
Windstar 3 604 North America
--------- ------------
45 67,282
--------
(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 OCCUPANCY/(3)/
----------- ------------------------- ------------------------- -------------------------
2002 3,549,000 67,282/(2)/ 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 only included in
2001 and 2002.
(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.
57
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 has 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 of 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 1,178,000 10,670 100.0%
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.
58
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
99,982 lower berths, with 18 additional cruise ships having 42,260 lower berths
scheduled to be added over the next three and a half years. In addition, the
Combined Group 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 and most modern fleets in the cruise industry, with an average vessel
age (weighted by lower berths) 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 in
Germany, 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 $6.9 billion and net income of $1.3 billion for the
fiscal year ended November 30, 2002. On the same basis, the Combined Group
would have reported shareholders' equity of $12.8 billion as at November 30,
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.
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
59
Costa Cruises --primarily marketed in southern Europe and Germany
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 99,982 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)
would have had 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 of 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.
Lower Berths
Capacity 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 14,494 7,392 -- -- 21,886
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)/ -- 160 -- 1,450 1,610
Costa Cruises 10,754 7,554 -- -- 18,308
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 100,382 43,496 (360) -- 143,518
--------
(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 160 lower berths.
60
(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 major
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 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 underdeveloped 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,
61
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.
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 enabled underlying
costs to be reduced by 13% per available berth day over two years.
Carnival and P&O Princess expect that the Combined Group will generate
significant cost savings, estimated to be at least $100 million on an
annualized basis, commencing in the first full fiscal year following completion
of the DLC transaction. Carnival and P&O Princess expect that these cost
savings will be generated principally through the dissemination of best
practices between the companies, economies of scale and the rationalization of
certain shoreside operations. Carnival and P&O Princess expect that the
majority of cost savings will come from the following areas:
.. rationalizing each of sourcing and logistics, tour operations, certain back
office functions and other offices and activities, such as sales and
support offices globally;
.. reducing selling, general and administrative costs from areas such as
insurance, rent and other administrative costs;
.. rationalizing port activities;
.. rationalizing information technology across the group; and
.. disseminating best practices across shipboard and shoreside operations.
One-time cash costs of achieving these cost savings are expected to be
approximately $30 million.
62
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, a 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, South America 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 most 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 as follows:
North America
The largest vacation 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.
Estimates of North American-sourced cruise passengers and the number of lower
berths marketed in North America compiled by CLIA from 1997 to 2002 are as
follows:
Cruise
Passengers
sourced in Lower Berths
North Marketed in North
Calendar Year America/(1)/ America/(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 estimates are preliminary).
(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.
63
Based on the number of ships that are currently on order worldwide and
scheduled for delivery between 2003 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 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. CLIA's estimates of capacity do not include assumptions related
to unannounced ship withdrawals due to factors such as the age of ships or
changes in the location from where ships' passengers are predominantly sourced
and, accordingly, could indicate a higher percentage growth in North American
capacity than will actually occur. Nonetheless, we expect that net capacity
serving North American-sourced cruise passengers will increase over the next
several years.
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 Europeans
took a cruise grew at a compound annual growth rate of 12% compared to an 8%
growth rate with respect to North Americans. 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 11% 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 G.P.Wild (International) Limited, approximately 0.8 million UK
passengers took cruises in 2001. Cruising was relatively underdeveloped as a
vacation option for UK consumers until the mid-1990s, but since then there has
been strong growth in the number of cruise passengers sourced from the UK. The
number of UK cruise passengers 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 (UK) 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. Germany
exhibited a compound annual growth rate in the number of cruise passengers
carried of approximately 8% between 1997 and 2001. We believe that German
cruising is an underdeveloped region 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 four brands
marketed in Germany: AIDA, A'ROSA, Costa and Cunard.
64
Southern Europe
The main regions in southern Europe for sourcing cruise passengers are Italy,
France and Spain. Together, these countries generated approximately 0.7 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 15% between 1997 and 2001. We believe that these regions are also
relatively underdeveloped 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. 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 Cunard and Holland
America, which market their world and other 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 increase in supply. Given the historical growth rate of
cruising and the relative low penetration levels in major vacation markets, the
Combined Group believes that there are significant areas for growth. However,
in order for demand to meet available capacity, for the past few years there
has been pressure on cruise pricing. See "Risk Factors--Risks relating to the
Combined Group's businesses."
Wide appeal of cruising
Cruising appeals to a broad demographic range of passengers. 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.
65
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, Mexican, 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, Trafalgar and companies in the
TUI Group, 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 Cruises Ltd., which owns Royal Caribbean International and Celebrity
Cruises, Star Cruises plc, which owns Norwegian Cruise Line and Orient Lines,
and Disney Cruise Line.
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 Reisen in Germany; and
Mediterranean Shipping Cruises, Royal Olympia Cruises, Louis Cruise Line and
Festival Cruises in southern Europe. The Combined Group will also compete for
passengers throughout Europe with Norwegian Cruise Line, Orient Lines, 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 11,400 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 45,800 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.
66
The Combined Group is expected to source its shipboard officers primarily 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.
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 and Chief Accounting Officer of Carnival, will be the
Chief Financial Officer and Chief Accounting 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 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
67
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.
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 U.S.
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 U.S.
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 U.S. 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.
68
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 one or more
established securities markets 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.
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.
69
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 by, for example, moving the affected operations into a UK entity
or one formed in another equivalent exemption jurisdiction, 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 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").
70
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 the gross 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 discussion of the material 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 discussion 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 discussion 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 discussion 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 discussion does not address state, local or foreign
tax consequences to U.S. holders, nor does this discussion address 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 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 discussion 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.
71
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.
72
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. We and P&O Princess expect to
hold our next annual meetings in June 2003 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
73
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 ("CCL") of Carnival from 1979 through May 1993. Since May
1993, Mr. Dickinson has served as President and Chief Operating Officer of CCL.
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 Crociere,
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, a Governor of
the British Broadcasting Corporation and a member of the House of Lords
Economic Affairs Committee. Sarah 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. Sarah Hogg has
been a non-executive director of P&O Princess since the demerger in October
2000.
A. Kirk Lanterman, age 71, 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 Inc., formerly known as Holland America Line-Westours
Inc., ("HAL"), a subsidiary of Carnival, since August 1999. From March 1997 to
August 1999, he was Chairman of the Board and Chief Executive Officer of HAL.
From December 1989 to March 1997, he was President and Chief Executive Officer
of HAL. From 1983 to 1989, he was President and Chief Operating Officer of HAL.
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, 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
74
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 from 1993 until 2002. 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.
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 and Conair Corporation.
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 and Chief Accounting Officer of Carnival, will be the Chief Financial
Officer and Chief Accounting Officer of both Carnival and P&O Princess.
75
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE COMBINED GROUP
The following unaudited pro forma financial information gives pro forma effect
to the proposed 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 for the year ended December
31, 2002, which are 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 statement of operations for the year ended November 30,
2002 has been prepared as if the DLC transaction had occurred on December 1,
2001. The unaudited pro forma balance sheet as of November 30, 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 year ended
December 31, 2002.
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,
2001 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
November 30, 2002 for Carnival and December 31, 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.
76
Unaudited Pro Forma Statement of Operations
For the Year Ended November 30, 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 4,368.3 2,526.8 (3.9)/(a)/ 6,891.2
Costs and expenses
Operating (2,311.9) (1,576.6) (5.2)/(b)/ (3,892.7)
1.0/(a)/
Selling and administrative (612.0) (472.1) 4.3/(c)/ 105.1/(k)/ (972.8)
1.9/(i)/
Depreciation and amortization (382.3) (169.2) (551.5)
Impairment charge (20.0) -- (20.0)
-------- -------- ---- ----- --------
(3,326.2) (2,217.9) 0.1 107.0 (5,437.0)
-------- -------- ---- ----- --------
Operating income 1,042.1 308.9 (3.8) 107.0 1,454.2
Nonoperating (expense) income
Net interest expense (78.6) (77.3) (1.5)/(f)/ (157.4)
Other (expense) income, net (4.2) 1.2 (3.0)
Income tax benefit (expense) 56.6 (19.9) 2.8/(g)/ 39.5
-------- -------- ---- ----- --------
(26.2) (96.0) 1.3 (120.9)
-------- -------- ---- ----- --------
Net income 1,015.9 212.9 (3.8) 108.3 1,333.3
======== ======== ==== ===== ========
Earnings per share/(n)/
Basic (U.S.$) 1.73 1.67
Diluted (U.S.$) 1.73 1.67
--------
(1)P&O Princess information is for the year ended December 31, 2002.
See accompanying notes to unaudited pro forma financial information of the
Combined Group in accordance with U.S. GAAP.
77
Unaudited Pro Forma Balance Sheet As of November 30, 2002 (U.S. dollars and
shares 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 666.7 162.1 828.8
Short-term investments 39.0 -- 39.0
Accounts receivable, net 108.3 125.9 3.4/(a)/ 237.6
Inventories 91.3 87.4 178.7
Prepaid expenses and other 148.3 165.3 18.9/(c)/ (66.0)/(g)/ 320.1
(16.5)/(b)/ 70.1/(l)/
Fair value of derivative contracts -- 7.3 7.3
Fair value of hedged firm commitments 78.4 41.4 (41.4)/(e)/ 78.4
-------- ------- ----- ------- --------
Total current assets 1,132.0 589.4 5.8 (37.3) 1,689.9
Property and Equipment, Net 10,115.4 5,618.5 15,733.9
Goodwill and Intangible Assets, 2,924.4/(d)/ 3,605.5
Net 681.1 75.4 (75.4)/(j)/
Other Assets 297.2 31.0 (17.6)/(f)/ 294.3
13.9/(l)/
(30.2)/(d-ii)/
Fair Value of Hedged Firm
Commitments 109.1 -- 109.1
Fair Value of Derivative Contracts -- 54.6 54.6
-------- ------- ----- ------- --------
12,334.8 6,368.9 5.8 2,777.8 21,487.3
======== ======= ===== ======= ========
Liabilities and Shareholders'
Equity
Current liabilities
Current portion of long-term debt 148.6 127.0 275.6
Accounts payable 268.7 184.2 452.9
Accrued liabilities 290.4 194.7 (0.1)/(a)/ 29.0/(k)/ 543.8
29.8/(d-ii)/
Customer deposits 770.6 467.2 15.5/(a)/ 1,253.3
Dividends payable 61.6 -- 61.6
Fair value of derivative contracts 79.8 45.6 125.4
Fair value of hedged firm commitments -- 1.5 (1.5)/(e)/ --
-------- ------- ----- ------- --------
Total current liabilities 1,619.7 1,020.2 15.4 57.3 2,712.6
Long-Term Debt 3,012.0 2,569.7 (5.0)/(f)/ 5,576.7
Deferred Income and Other Long-
Term Liabilities 170.8 28.1 85.0/(h)/ 283.9
Fair Value of Derivative Contracts 114.4 1.0 115.4
Fair Value of Hedged Firm
Commitments -- 24.8 (24.8)/(e)/ --
Shareholders' Equity 7,417.9 2,725.1 (9.6) /(d-iii)/ 2,665.3/(m)/ 12,798.7
Common Stock; 960 shares, 750
shares and 1,185 shares
authorized; 586.8 shares, 693.5
shares and 799.4 shares issued
and outstanding for Carnival, P&O
Princess and Pro Forma Combined
Group, respectively
-------- ------- ----- ------- --------
12,334.8 6,368.9 5.8 2,777.8 21,487.3
======== ======= ===== ======= ========
--------
(1)P&O Princess information is as of December 31, 2002.
See accompanying notes to unaudited pro forma financial information of the
Combined Group in accordance with U.S. GAAP.
78
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
year ended November 30, 2002 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 year ended December 31, 2002 has been derived from the financial
information on P&O Princess that is 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 year ended December
31, 2002 that was prepared in accordance with P&O Princess' accounting policies
under UK GAAP to information in accordance with U.S. GAAP. Further details of
the adjustments are set out in P&O Princess' financial statements for the year
ended December 31, 2002, which are incorporated by reference in this proxy
statement/prospectus.
(i) Profit and loss accounts
For the year ended December 31, 2002
P&O Princess U.S. GAAP P&O Princess
UK GAAP adjustments U.S. GAAP
------------ ----------- ------------
(U.S. dollars in millions)
Revenues 2,526.8 -- 2,526.8
Costs and expenses
Operating (1,576.6) -- (1,576.6)
Selling and administrative (477.6) 5.5 (472.1)
Depreciation and amortization (173.9) 4.7 (169.2)
-------- ---- --------
(2,228.1) 10.2 (2,217.9)
-------- ---- --------
Operating income 298.7 10.2 308.9
Nonoperating (expense) income
Net interest expense (74.0) (3.3) (77.3)
Other income 1.2 -- 1.2
Income tax expense (17.1) (2.8) (19.9)
-------- ---- --------
(89.9) (6.1) (96.0)
-------- ---- --------
Net income 208.8 4.1 212.9
======== ==== ========
79
Notes to the unaudited pro forma financial information of the Combined
Group in accordance with U.S. GAAP--(Continued)
(ii) Net assets
As of December 31, 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 162.1 -- 162.1
Accounts receivable, net 125.9 -- 125.9
Inventories 87.4 -- 87.4
Prepaid expenses and other 183.5 (18.2) 165.3
Fair value of derivative contracts -- 7.3 7.3
Fair value of hedged firm commitments -- 41.4 41.4
------- ----- -------
Total current assets 558.9 30.5 589.4
Property and Equipment, Net 5,629.4 (10.9) 5,618.5
Goodwill and Intangible Assets, Net 127.1 (51.7) 75.4
Other Assets 16.3 14.7 31.0
Fair value of derivative contracts -- 54.6 54.6
------- ----- -------
6,331.7 37.2 6,368.9
======= ===== =======
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt 120.3 6.7 127.0
Accounts payable 184.2 -- 184.2
Accrued liabilities 215.5 (20.8) 194.7
Customer deposits 467.2 -- 467.2
Fair value of derivative contracts -- 45.6 45.6
Fair value of hedged firm commitments -- 1.5 1.5
------- ----- -------
Total current liabilities 987.2 33.0 1,020.2
Long-Term Debt 2,516.8 52.9 2,569.7
Deferred Income and Other Long-Term Liabilities 13.7 14.4 28.1
Fair Value of Derivative Contracts -- 1.0 1.0
Fair Value of Hedged Firm Commitments -- 24.8 24.8
Shareholders' Equity 2,814.0 (88.9) 2,725.1
------- ----- -------
6,331.7 37.2 6,368.9
======= ===== =======
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
80
Notes to the unaudited pro forma financial information of the Combined
Group in accordance with U.S. GAAP--(Continued)
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. For the year ended and as of
30 November 2002 adjustments of $(2.9) million and $(12.0) million (the
latter affecting accounts receivable, accrued liabilities and customer
deposits) have been made to conform P&O Princess' policy to Carnival's
policy.
(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 year ended and as of November 30,
2002 adjustments of $(5.2) million and $(16.5) million 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 year ended and as of November 30, 2002 adjustments of $4.3 million and
$18.9 million have been made to conform P&O Princess' policy to Carnival's
policy.
4. Business combination adjustments
(d) Purchase consideration and related goodwill and intangible assets are as
follows:
(U.S.$m) Notes
Purchase consideration 5,380.8 (i)
Costs of acquisition 60.0 (ii)
--------
Total purchase consideration 5,440.8
Less fair value of net assets acquired (2,516.4) (iii)
--------
Excess of purchase consideration over net assets acquired 2,924.4 (iv)
========
--------
(i)The purchase consideration is expected to be based upon the average of the
quoted closing market price of Carnival's shares beginning two days before
and ending two days after January 8, 2003, the date its DLC transaction
offer announcement was agreed to by the P&O Princess board. In addition, the
number of P&O Princess shares is adjusted for the proposed share
reorganization of 3.3289 existing P&O Princess shares for one new P&O
Princess share, including P&O Princess stock options which will vest in full
on completion of the DLC transaction. A Carnival share price of $25.31 has
been used for purposes of this pro forma presentation and an estimated
number of P&O Princess shares in issue of 212.6 million after adjusting for
the share reorganization.
(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 $30.2 million has been
incurred by Carnival and is included in other assets. An adjustment has
been made to remove this $30.2 million from other assets as it will be
included in the purchase consideration upon completion of the DLC
transaction. Of the total $60.0 million of acquisition costs, $29.8 million
had not been incurred as of November 30, 2002 and, accordingly, an
adjustment has been made to increase accrued liabilities for this amount.
81
Notes to the unaudited pro forma financial information of the Combined
Group in accordance with U.S. GAAP--(Continued)
(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 to assist us in
establishing the fair value of P&O Princess' ships and amortizable and
non-amortizable intangible assets. However, based on the information
currently available, it is not expected that the amount of separately
identifiable amortizable intangible assets will be material to the
Combined Group's financial statements. 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 are detailed in the notes and the table
below.
Accounting
policy
P&O Princess adjustments Fair value Pro Forma
(U.S. GAAP) (Note 3) adjustments fair value
P&O Princess fair value of net assets acquired ------------ ----------- ----------- ----------
Assets
Current assets
Cash and cash equivalents 162.1 162.1
Accounts receivable, net 125.9 3.4/(a)/ 129.3
Inventories 87.4 87.4
Prepaid expenses and other 165.3 18.9/(c)/ 70.1/(l)/ 171.8
(16.5)/(b)/ (66.0)/(g)/
Fair value of derivative contracts 7.3 7.3
Fair value of hedged firm commitments 41.4 (41.4)/(e)/ --
------- ----- ------ -------
Total current assets 589.4 5.8 (37.3) 557.9
------- ----- ------ -------
Property and Equipment, Net 5,618.5 5,618.5
Goodwill and Intangible Assets,
Net 75.4 (75.4)/(j)/ --
Other Assets 31.0 (17.6)/(f)/ 27.3
13.9/(l)/
Fair value of derivative contracts 54.6 54.6
------- ----- ------ -------
6,368.9 5.8 (116.4) 6,258.3
======= ===== ====== =======
Liabilities and Shareholders'
Equity
Current liabilities
Current portion of long-term debt 127.0 127.0
Accounts payable 184.2 184.2
Accrued liabilities 194.7 (0.1)/(a)/ 29.0/(k)/ 223.6
Customer deposits 467.2 15.5/(a)/ 482.7
Fair value of derivative contracts 45.6 45.6
Fair value of hedged firm commitments 1.5 (1.5)/(e)/ --
------- ----- ------ -------
Total current liabilities 1,020.2 15.4 27.5 1,063.1
------- ----- ------ -------
Long-Term Debt 2,569.7 (5.0)/(f)/ 2,564.7
Other Long-Term Liabilities 28.1 85.0/(h)/ 113.1
Fair Value of Derivative Contracts 1.0 1.0
Fair Value of Hedged Firm Commitments 24.8 (24.8)/(e)/ --
Shareholders' Equity 2,725.1 (9.6)/(*)/ (199.1)/(**)/ 2,516.4
------- ----- ------ -------
6,368.9 5.8 (116.4) 6,258.3
======= ===== ====== =======
-----
(*) Represents the net shareholders' equity decrease due to accounting
policy adjustments.
(**) Represents the net shareholders' equity decrease due to fair value
adjustments.
(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 not possible at this time to reasonably
estimate the separate amounts attributable to identifiable intangible
assets or goodwill since the measurement of these assets requires the
expertise of an independent appraiser who will not be engaged until after
the completion of the DLC transaction. Accordingly, the entire amount of
the excess of the purchase consideration has currently been allocated to
goodwill, but is expected to be allocated between goodwill and other
identifiable intangible assets such as brand names and trademarks,
subsequent to the completion of the DLC transaction based primarily on the
appraiser's valuation. However, since it is expected that the material
intangibles that
82
Notes to the unaudited pro forma financial information of the Combined
Group in accordance with U.S. GAAP--(Continued)
will be identified and valued will have indefinite lives, no material impact
on the pro forma statement of operations is expected as a result of this
presentation on the Combined Group's balance sheet, as neither goodwill nor
these indefinite lived intangibles are allowed to be amortized.
(e)A net adjustment of $15.1 million has been made against the fair value of
hedged firm commitments. These adjustments relate to contractural
commitments for ships which were ordered, and hedged, at a time when the
euro exchange rate was different, and hence, these contracts could be
replaced today at a euro price that would convert to a different U.S. dollar
cost at current exchange rates.
Otherwise, 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. However, we intend to have an appraisal of
all the P&O Princess ships, so it is possible that the fair value of some of
P&O Princess' ships could be less than or greater than their carrying value.
(f)An adjustment of $5.0 million 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 increase of $1.5 million in interest expense
for 2002. In addition, an adjustment has been made to write-off the book
value of P&O Princess' historical deferred financing costs of $17.6 million
related to its existing borrowings as such costs have been considered in
determining the fair value of P&O Princess' debt.
(g)An adjustment of $66.0 million has been made to the book value of other tax
assets to reflect recoverable value to the Combined Group and to reverse
$2.8 million of P&O Princess' tax expense.
(h)An adjustment of $85.0 million has been made to record the fair value of P&O
Princess' pension plan liabilities. This relates to the Merchant Navy
Officers Pension Fund and is calculated based upon, among other things, P&O
Princess' current share of total employer contributions.
(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 and matching award charge of $1.9 million for the year ended
November 30, 2002.
(j)An adjustment has been made to eliminate $75.4 million of P&O Princess'
historical goodwill related to prior business acquisitions.
(k)P&O Princess expects to incur and expense approximately $146.0 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 U.S. Securities and Exchange
Commission. Under U.S. GAAP, $11.9 million was expensed in the year ended
December 31, 2001, and $105.1 million was expensed in 2002. An adjustment
has been made to reverse this $105.1 million in the pro forma statement of
operations for 2002 since Carnival and P&O Princess believe that the Royal
Caribbean and Carnival costs are non-recurring charges directly attributable
in all material respects to the DLC transaction. Of the total $146.0 million
of P&O Princess' costs, $29.0 million has not been incurred as at December
31, 2002 and an adjustment has been made to increase accrued liabilities for
this amount.
(l)An adjustment of $84.0 million ($70.1 million current and $13.9 million long
term) has been made to record the fair value of P&O Princess' contractual
commitments to receive probable and estimable liquidated damages and
business interruption insurance proceeds related to the delayed delivery of
the Diamond Princess. This ship was initially scheduled for delivery in May
2003, but has been delayed as a result of a fire in October 2002.
83
Notes to the unaudited pro forma financial information of the Combined
Group in accordance with U.S. GAAP--(Continued)
(m)The shareholders' equity adjustment of $2,665.3 million represents the net
equity increase due to the application of business combination adjustments,
as detailed below:
US$m Notes
Excess of purchase consideration over net assets acquired 2,924.4 4/(d)/
Reduction in P&O Princess shareholders' funds for fair value adjustments (199.1) 4/(d-iii)/
Costs of acquisition (60.0) 4/(d-ii)/
-------
Shareholders' equity adjustment 2,665.3
=======
(n)The pro forma weighted average number of shares has been calculated as if
the DLC transaction had occurred on December 1, 2001 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 706.6
million, including 14.2 million of share options which all vest upon
completion of the DLC transaction (706.6 million diluted), or 212.3 million
(212.3 million diluted) after the proposed P&O Princess share
reorganization, for P&O Princess and 586.6 million (588.1 million diluted)
for Carnival for the years ended December 31, 2002 and November 30, 2002,
respectively, the pro forma weighted average number of shares for the
Combined Group is calculated as 798.9 million (800.4 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.
(o)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.
84
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 (and assuming approval of Proposals 3 and
4, as well) 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. We are proposing to increase our authorized capital stock to
2,000,000,000 shares, of which 1,959,999,998 are shares of common stock (see
Proposal 3), and 40,000,000 are shares of preferred stock. In connection with
the DLC transaction, 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.
85
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 following table illustrates how these voting arrangements would affect
joint electorate actions needing to be passed by a majority vote, assuming 100%
of each company's shareholders vote and the Partial Share Offer is taken up in
full:
Carnival P&O Princess Outcome
-------- ---------------------- ----------------
64% or more approve 100% disapprove Action taken
63% or less disapprove 100% approve Action taken
51% or less approve 55% or more disapprove Action not taken
51% or less disapprove 54% or more approve Action taken
A change in the equalization ratio resulting from a share reorganization or
otherwise would only affect voting rights on a per share basis. In the
aggregate, such a change would not affect the relative weighting between the
current shareholders of Carnival and P&O Princess. Assuming the Partial Share
Offer is taken up in full, approximately 79% of the equity (and hence of the
vote in a joint electorate action) would remain with the holders of Carnival
shares, while approximately 21% of the equity and the vote in a joint
electorate action would remain with the holders of P&O Princess shares.
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 generally 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;
86
.. 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.
The following table illustrates how these voting arrangements would affect
class right actions:
Carnival P&O Princess
shareholders shareholders Outcome
------------ ------------ ----------------
Approve /(1)/ Disapprove Action not taken
Disapprove Disapprove Action not taken
Disapprove Approve/(2)/ Action not taken
Approve Approve Action taken
--------
(1)Assumes that holders of at least approximately 1% or more of the outstanding
Carnival shares do not cast votes on the action. In contrast, if all
Carnival shareholders voted in favor of the action, it would be taken.
(2)Assumes that holders of at least approximately 1% or more of the outstanding
P&O Princess shares do not cast votes on the action, or in the case of a
special resolution that at least one vote is cast against the action. In
contrast, if all P&O Princess shareholders voted in favor of the action, it
would be taken.
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.
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,
87
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 able to vote were cast
in favor of the resolution. In most cases, this will be 49% (for a majority
vote, 49% is the largest whole percentage that is less than the 50% needed to
defeat the resolution). Generally, assuming holders of approximately 1% or more
of the Carnival shares do not cast votes on 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;
.. 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
88
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% (for a majority vote, 49% is the largest whole percentage that is
less than the 50% needed to defeat the resolution). Generally, assuming holders
of approximately 1% or more of P&O Princess shares do not cast votes on 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, as provided
in the pairing agreement. The provisions of the pairing agreement described
under ''Special Voting Entities; Special Voting Shares -- Pairing Agreement''
will also be reflected in the Carnival articles.
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.
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.
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.
89
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.
Shareholder Action By Written Consent
Before DLC transaction
Panamanian law provides that shareholders may act by written consent and
Carnival's current by-laws allow action to be taken 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.
90
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 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.
91
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 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.
92
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 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.
93
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.
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
94
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;
.. 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
95
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 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 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;
96
.. 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.
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
97
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 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.
98
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 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.
99
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 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.
100
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 disenfranchised (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 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
101
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.
102
PROPOSAL 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.
103
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;
104
.. 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,
105
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
106
.. 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.
107
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
108
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
109
.. 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.
110
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
111
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.
112
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.
Any adjustments to the equalization ratio will be communicated to shareholders
through a press release.
113
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 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 Carnival special voting share or
interests in or rights attaching to such share unless approved by Carnival and
P&O Princess and restrictions on the ability of 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 P&O Princess Special Voting share or
interests in or rights attaching to such share except that the trustee may sell
such share in accordance with the voting trust deed if approved by Carnival and
P&O Princess;
114
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
115
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.
116
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.
117
PROPOSAL 2
APPROVAL OF AMENDMENTS TO CARNIVAL'S ARTICLES OF INCORPORATION AND BY-LAWS IN
CONNECTION WITH THE DLC TRANSACTION
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.
You are being asked to vote separately on increasing the number of shares of
common stock that we have the authority to issue by 999,999,998 shares
(Proposal 3). 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
118
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".
In connection with the DLC transaction, the articles of P&O Princess will also
be amended to authorize a special voting share. 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. 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, as provided in the
pairing agreement. The provisions of the pairing agreement described under
"Special Voting Entities; Special Voting Shares--Pairing Agreement" will be
reflected in the Carnival articles.
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.
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
119
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. You are
being asked to vote separately on the reduction in the quorum requirement for
board meetings (Proposal 4). 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,
and 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, 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
120
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.
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
121
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.
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".
122
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".
123
PROPOSAL 3
APPROVAL OF AMENDMENT TO CARNIVAL'S ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE
You are being asked to approve an amendment to our articles of incorporation to
increase the number of shares of common stock that we have the authority to
issue by 999,999,998 shares. The affirmative vote of the holders of a majority
of all outstanding shares of our common stock is required to approve this
amendment to our articles of incorporation. The increase in respect of the
special voting share and the equalization share are integral to the DLC
transaction and are covered by Proposal 2.
We propose to increase our authorized common stock in order to give us greater
flexibility to respond to our future business needs as they may arise including
capital raising, future capital requirements and acquisitions. We do not have
at this time any plans, commitments or understandings with respect to any
acquisitions.
Disadvantages may result from an increase in the number of authorized but
unissued shares of common stock. Our articles of incorporation do not provide
for preemptive rights. If the increase in authorized common stock is approved
by our shareholders, a significant number of additional shares would be
available for issuance without further action by our shareholders, unless such
action is required by law or NYSE listing requirements. The issuance of
additional shares of common stock could have a dilutive effect on the voting
power of existing shareholders and on earnings per share.
PROPOSAL 4
APPROVAL OF AMENDMENT TO CARNIVAL'S ARTICLES OF INCORPORATION TO REDUCE THE
QUORUM REQUIREMENT FOR BOARD MEETINGS
You are being asked to approve an amendment to our articles of incorporation to
reduce the quorum requirement for meetings of the board of directors from a
majority, to one-third, of the total number of directors. The affirmative vote
of the holders of a majority of all outstanding shares of our common stock is
required to approve this amendment to our articles of incorporation.
The change in the quorum requirement reflects a desire to have a consistent
quorum at board meetings of both our board and the P&O Princess board. Our
current quorum requirement is a majority of the directors and P&O Princess'
current quorum requirement is two directors, and the one-third threshold is a
compromise between the two. As this change is not technically necessary for the
DLC transaction and as the one-third threshold is in neither our current
articles nor P&O Princess' current articles, we are submitting this change for
separate approval by our shareholders.
124
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) the
Chief Executive Officer and the four most highly compensated executive officers
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 LLP
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
125
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
126
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
127
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).
128
(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, 2002 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 December 31, 2002
and 2001 and for each of the years in the three year period ended December 31,
2002 have been incorporated by reference herein in reliance upon the report of
KPMG Audit Plc, chartered accountants and registered auditors incorporated by
reference herein and upon the authority of said firm as experts in auditing and
accounting. The audit report covering the December 31, 2002 consolidated
financial statements refers to the adoption of FRS 19 Deferred Tax.
129
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, 2002;
.. our current reports on Form 8-K dated 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' reports of foreign issuer on Form 6-K dated January 9, 2003
and February 25, 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
130
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
77 New Oxford Street
London WC1A 1PP, 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.
LIMITATIONS ON ENFORCEABILITY OF CIVIL LIABILITIES UNDER
U.S. FEDERAL SECURITIES LAWS
P&O Princess is a company organized under the laws of England and Wales with
headquarters in London, England. Most of P&O Princess' directors and many of
its officers and certain of the experts named in this document are residents of
the UK and not the U.S. In addition, a number of the directors of P&O Princess
after completion of the DLC transaction will be residents of the UK and not the
U.S. A large portion of the assets of P&O Princess and of such other persons
are located outside of the U.S. As a result, U.S. investors may find it
difficult in a lawsuit based on the civil liability provisions of the U.S
federal securities laws to:
.. effect service within the U.S. upon P&O Princess, the directors and
officers of P&O Princess and certain experts located outside the U.S.;
.. enforce in U.S. courts or outside the U.S. judgments obtained against those
persons in U.S. courts;
131
.. enforce in U.S. courts judgments obtained against those persons in courts
in jurisdictions outside the U.S.; and
.. enforce against those persons in the UK, whether in original actions or in
actions for the enforcement of judgments of U.S. courts, civil liabilities
predicated solely upon the U.S. federal securities laws.
Individual shareholders of an English company (including U.S. persons and
depositary shareholders) have the right under English law to bring lawsuits on
behalf of the company in which they are a shareholder, and on their own behalf
against the company, in certain limited circumstances. Except in limited
circumstances, English law does not permit class action lawsuits by
shareholders.
132
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........................................ 8
2.1 Closing..................................................................... 8
2.2 Transactions to be Effected and Documents to be Exchanged................... 8
2.2.1 Equalization and Governance Agreement.............................. 8
2.2.2 SVE Special Voting Deed............................................ 8
2.2.3 Carnival Amendments................................................ 8
2.2.4 P&O Princess Amendments............................................ 8
2.2.5 P&O Princess Special Share......................................... 8
2.2.6 Issuance and Dividend of SVT Shares................................ 8
2.2.7 Carnival Special Share............................................. 8
2.2.8 Mutual Directors................................................... 9
2.2.9 Officers........................................................... 9
2.2.10 Deeds of Guarantee................................................. 9
2.2.11 Carnival Deed...................................................... 9
2.2.12 Pairing Agreement.................................................. 9
2.2.13 Other Documents.................................................... 9
2.3 Equalization Ratio.......................................................... 9
ARTICLE III Representations and Warranties..................................... 9
3.1 Representations and Warranties of Carnival and P&O Princess................. 9
3.1.1 Organization, Good Standing and Qualification...................... 9
3.1.2 Capital Structure.................................................. 10
3.1.3 Corporate Authority; Approval and Fairness......................... 11
3.1.4 Governmental Filings; No Violations................................ 12
3.1.5 Reports; Financial Statements...................................... 12
3.1.6 Absence of Certain Changes......................................... 14
3.1.7 Litigation and Liabilities......................................... 15
3.1.8 Brokers and Finders................................................ 15
3.1.9 Ownership of Other Party's Common Stock............................ 16
3.1.10 Taxes.............................................................. 16
3.1.11 Carnival Common Stock to be Issued in the Offer.................... 16
ARTICLE IV Covenants.......................................................... 16
4.1 Interim Operations.......................................................... 16
4.1.1 Ordinary Course.................................................... 16
4.1.2 Governing Documents; Share Capital; Dividends...................... 17
4.1.3 Issuance of Securities; Indebtedness; Acquisitions and Dispositions 17
4.1.4 Employee Benefits.................................................. 18
4.1.5 Representations and Warranties..................................... 18
4.1.6 Non-Competition Agreements......................................... 18
4.1.7 Satisfaction of Closing Conditions................................. 18
4.1.8 No Related Actions................................................. 18
4.2 Acquisition Proposals....................................................... 18
4.2.1 No Shop............................................................ 18
4.2.2 Notifications...................................................... 19
4.2.3 Compliance with Exchange Act, Exchange Regulations and City Code... 19
4.3 Information Supplied........................................................ 20
4.3.1 Shareholder Documents.............................................. 20
4.4 Shareholders Meetings....................................................... 20
4.5 Filings; Other Actions; Notification........................................ 21
Page
- ----
4.5.1 Filings................................................ 21
4.5.2 Mailing of Documents................................... 21
4.5.3 Cooperation............................................ 21
4.5.4 Furnishing Information................................. 22
4.5.5 Status................................................. 22
4.5.6 Consultation; Participation............................ 22
4.5.7 Cooperation in Defense of Claim........................ 22
4.6 Access.......................................................... 22
4.7 Publicity....................................................... 23
4.8 Benefits and Other Matters...................................... 23
4.8.1 Director and Officer Liability......................... 23
4.8.2 Directors of Carnival and P&O Princess................. 24
4.8.3 Executive Officers..................................... 24
4.9 Expenses........................................................ 24
4.10 Other Actions by Carnival and P&O Princess...................... 24
4.10.1 Dividends.............................................. 24
4.10.2 Integration Planning................................... 24
4.11 Carnival Offer to Exchange...................................... 25
4.11.1 Offer to Exchange...................................... 25
4.11.2 Modification of the Offer, Fractional Shares........... 25
4.11.3 Expiration and Extension of the Offer Acceptance Period 25
4.11.4 Acceptances by Carnival................................ 25
4.11.5 Schedule TO............................................ 25
4.11.6 P&O Princess Shareholder Information................... 26
4.11.7 Schedule 14D-9......................................... 26
4.11.8 Termination of the Offer............................... 26
4.11.9 Adjustment of the Offer Exchange Ratio................. 26
ARTICLE V Conditions to the Closing.............................. 26
5.1 Conditions to Each Party's Obligation to Effect the Closing..... 26
5.1.1 Shareholder Approvals.................................. 26
5.1.2 Regulatory Consents.................................... 27
5.1.3 Laws and Orders........................................ 27
5.1.4 Carnival Amendments and P&O Princess Amendments........ 27
5.1.5 Approval of P&O Princess EGM Circular.................. 27
5.1.6 Offer.................................................. 27
5.1.7 Registration Statements................................ 27
5.1.8 European Commission.................................... 27
5.1.9 NYSE Listing........................................... 28
5.2 Conditions to Obligations of P&O Princess to Effect the Closing. 28
5.2.1 Representations and Warranties of Carnival............. 28
5.2.2 Performance of Obligations of Carnival................. 28
5.2.3 Consents Under Agreements.............................. 28
5.2.4 Carnival Special Share................................. 28
5.2.5 Other DLC Documents.................................... 28
5.3 Conditions to Obligations of Carnival........................... 29
5.3.1 Representations and Warranties of P&O Princess......... 29
5.3.2 Performance of Obligations of P&O Princess............. 29
5.3.3 Consents Under Agreements.............................. 29
5.3.4 P&O Princess Special Share............................. 29
5.3.5 Other DLC Documents.................................... 29
5.3.6 Termination of Joint Venture Agreement................. 29
ii
Page
- ----
ARTICLE VI Termination..................... 29
6.1 Termination by Mutual Consent........................ 29
6.2 Termination by Either P&O Princess or Carnival....... 29
6.3 Termination by Carnival.............................. 30
6.4 Termination by P&O Princess.......................... 30
6.5 Effect of Termination and Abandonment................ 30
6.5.1 Effect of Termination........... 30
6.5.2 Carnival Break Fee.............. 31
6.5.3 P&O Princess Break Fee.......... 31
ARTICLE VII Miscellaneous and General....... 32
7.1 Survival............................................. 32
7.2 Modification or Amendment............................ 32
7.3 Waiver of Conditions................................. 32
7.4 Failure or Indulgence Not Waiver; Remedies Cumulative 32
7.5 Counterparts......................................... 32
7.6 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL........ 32
7.6.1 Governing Law And Venue......... 32
7.6.2 WAIVER OF JURY TRIAL............ 33
7.7 Notices.............................................. 33
7.8 Entire Agreement..................................... 34
7.9 Severability......................................... 35
7.10 Interpretation....................................... 35
7.11 Assignment........................................... 35
7.12 No Partnership....................................... 35
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
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
iii
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,
(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
1
2
(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.
"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
3
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.
"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.
4
"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.
"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.
"Offer Exchange Ratio" means 0.3004 shares of Carnival Common Stock for each
P&O Princess Ordinary Share.
5
"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 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.
6
"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:
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
7
SCHEDULE OF DEFINED TERMS
Defined Term Section
------------ -------
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
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
8
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 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;
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;
9
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 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
10
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.
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
11
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, 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.
12
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 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.
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,
13
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.
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
14
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 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)
15
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, 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.
16
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.
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 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
17
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 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
18
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
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
19
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 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
20
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.
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 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.
21
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 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,
22
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.
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
23
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 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.
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
24
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 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.
25
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) 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.
26
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.
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
27
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, 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 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
28
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 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.
29
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.
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
30
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.
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
31
(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 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 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.
32
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 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
33
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 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
34
and
Anthony Macaulay
Herbert Smith
Exchange Square
Primrose Street
London EC2A 2HS
Facsimile: (44) 20-7374 0888
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 REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS
AGREEMENT OR ANY OTHER AGREEMENT CONTEMPLATED HEREBY, NEITHER CARNIVAL NOR P&O
PRINCESS MAKES
35
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 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.
36
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.
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
Annex A-2
AGREED FORM
DATED 2003
----- - ----
CARNIVAL CORPORATION
and
P&O PRINCESS CRUISES PLC
------------------------------------------
EQUALIZATION AND GOVERNANCE AGREEMENT
------------------------------------------
CONTENTS
Page
----
1. Definitions and Interpretation...................... 1
2. Boards of P&O Princess and Carnival................. 9
3. Equalization of Distributions....................... 9
4. Capital Actions..................................... 10
5. Joint Electorate Actions............................ 14
6. Separate Approvals of Class Rights Actions.......... 15
7. Meetings and Voting................................. 17
8. Change of Control of either P&O Princess or Carnival 18
9. Stock Exchanges..................................... 18
10. Liquidation......................................... 18
11. Termination......................................... 19
12. Consequences of Termination......................... 20
13. Personal Rights Only................................ 20
14. Issue of Equalization Shares........................ 21
15. Relationship with other Documents................... 21
16. Miscellaneous....................................... 21
17. Notices............................................. 22
18. Counterparts........................................ 22
19. Governing Law....................................... 22
20. Arbitration......................................... 22
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
1.1Definitions
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;
"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
1
(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;
"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
2
3
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;
"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;
"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,
4
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 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;
5
"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)1 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;
"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;
6
"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;
"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;
7
"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.
1.2Interpretation
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.
(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.
8
9
(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
2.1Board 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 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.
2.2Board 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.
2.3Indemnification 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
3.1Equalization 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
10
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 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.
3.2Timing 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
4.1Equalization 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
11
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.
4.2Automatic 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:
(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.
4.3Other 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.
4.4No 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
12
(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;
(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.
4.5Matching 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.
4.6Boards' 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.
4.7Repurchase 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.
4.8Issuance of Shares
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
14
(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.
5. Joint Electorate Actions
5.1Joint 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;
15
(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.
5.2Joint 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).
5.3Disenfranchised 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 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.
5.4Disenfranchised 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
6.1Class 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
16
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;
(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.
6.2Approvals 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").
6.3Class 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
17
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
7.1Obligations 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;
(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.
7.2Poll
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.
7.3Timing 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.
7.4Discretionary 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;
18
(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.
7.5Procedural 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 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
10.1Liquidation 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.
19
10.2Liquidation 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 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.
10.3Liquidation 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);
20
(B)if either party becomes a wholly-owned Subsidiary of the other; or
(C)after all Liquidation obligations under Clause 10 have been satisfied.
12.Consequences of Termination
12.1Non 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.
12.2Other 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
13.1Contracts (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.
13.2Personal 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
21
Agreement. It is fundamental to the agreement of each of P&O 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
16.1Regulatory
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.
16.2No 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.
16.3No 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.
16.4No 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.
22
16.5Applicable 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.
16.6Severance
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.
16.7Amendment
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.
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.
23
(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 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.
24
Schedule
Automatic Adjustments to the Carnival Equivalent Number
1. Automatic Adjustments
1.1Rights 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 where L = Q 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.
1.2Rights 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
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.
25
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.
1.3Non 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.
1.4Consolidation 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:
(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.
26
1.5Bonus 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 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.
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............. 6
4. ATTENDANCE AT MEETINGS AND VOTING................................... 7
5. DEALINGS............................................................ 10
6. OBLIGATIONS SUBJECT TO APPLICABLE REGULATIONS....................... 10
7. DEFAULT BY CARNIVAL OR P&O PRINCESS................................. 10
8. SUPPLY OF INFORMATION; CONFIDENTIALITY.............................. 10
9. REMUNERATION AND EXPENSES OF SVES................................... 11
10. POWER OF SVES....................................................... 12
11. INDEMNITIES......................................................... 13
12. ACTIVITIES.......................................................... 14
13. GOVERNANCE MATTERS.................................................. 14
14. AMENDMENTS TO THIS DEED............................................. 15
15. DAMAGES NOT ADEQUATE REMEDY......................................... 15
16. TERMINATION......................................................... 15
17. GENERAL............................................................. 16
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
1.1Definitions
The following definitions apply unless otherwise specified in this Deed:
"Applicable Regulations" has the same meaning as in the Equalization
Agreement;
"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;
1
"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;
"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;
2
"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;
"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
3
(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 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
4
"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.
1.2Interpretation
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.
(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 (Pounds) 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).
5
1.3Business 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
2.1Notification 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 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.
2.2Notification 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
3.1Notification 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
6
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 Resolution or resolutions was approved by the requisite
majority pursuant to the Carnival Constitution and/or Applicable
Regulations.
3.2Notification 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
4.1Attendance 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.
7
4.2Vote 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.
4.3Vote 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.
4.4Vote 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.
(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
8
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.
4.5Amendments 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.
4.6No 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.
4.7Procedural 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
9
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
5.1P&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.
5.2Carnival 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.
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
8.1Supply 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
10
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.
8.2Confidentiality
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.
9. REMUNERATION AND EXPENSES OF CARNIVAL SVC AND P&O PRINCESS TRUSTEE
9.1Fees 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.
9.2Period 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.
9.3Exceptional 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.
9.4VAT 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.
11
9.5Expenses
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.
10.POWER OF CARNIVAL SVC AND P&O PRINCESS TRUSTEE
10.1Act 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.
10.2Powers 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.
10.3Act 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
12
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.
10.4Validity 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 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.
10.5Assumption 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.
10.6Discretions
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
11.1Indemnity 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.
13
11.2Limitation 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
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
13.1Members 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.
13.2Directors 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.
13.3The 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 thereunder, and all references to the P&O
Princess Trustee in this Deed shall be deemed to be reference to such
successor trustee.
14
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
16.1Automatic 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.
16.2Transfer 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.
15
16.3Transfer 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.
16.4Replacement 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
17.1No 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.
17.2No 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 the assets or income of the other parties, and they shall
not be construed as having that effect.
17.3Regulatory
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.
17.4Notices
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
16
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
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
17.5Severability
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.
17.6Waivers
(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
(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.
17.7Variation
A variation of any term of this Deed must be in writing and signed by
all parties to this Deed.
17.8Further 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.
17.9Counterparts
This Deed may be executed in any number of counterparts. All
counterparts taken together will be taken to constitute one and the
same instrument.
17.10Third 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.
18
17.11Governing 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.
(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.
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 )
19
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 )
20
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 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
2
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.
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
3
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
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.
4
(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 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 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
5
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.
(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.
6
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 Common
Name Post Office Address Stock Subscribed
------------------------- ------------------------- -------------------------
Mariano J. Oteiza No. 8 Aquilino de la
Guardia Street
Panama, R. of P. 1
Domingo Diaz A. No. 8 Aquilino de la
Guardia Street
Panama, R. of P. 1
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.
7
(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 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; 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.
8
(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 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
9
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.
(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
10
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 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 from taxation on gross income
from the international operation of a ship or ships within the meaning of
Section 883 of the Code.
11
(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
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.
12
(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. 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.
13
(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.
(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.
14
(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 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 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,
15
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 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.
16
(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 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
17
Princess Ordinary Shares which is equal to or in excess of such number of
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 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.
18
(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.
(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
19
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 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.
20
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").
(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
(5) generally coordinate with the P&O Princess Board the timing of all
other aspects of the payment or making of Equivalent Distributions.
21
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 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.
22
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:
(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
23
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
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 Chief
Miami, Florida 33178 Executive Officer
Richard G. Capen, Jr. 6077 San Elijo Director
Rancho Santa Fe,
California 92067
Robert H. Dickinson 3655 N.W. 87 Avenue Director, President and Chief Operating
Miami, Florida 33178 Officer--Carnival Cruise Lines
Arnold W. Donald 3655 N.W. 87 Avenue Director
Miami, Florida 33178
Pier L. Foschi 3655 N.W. 87 Avenue Director, Chairman and Chief Executive
Miami, Florida 33178 Officer--Costa Crociere S.p.A
24
Name Address Office
---- ------- ------
Howard S. Frank 3655 N.W. 87 Avenue Director, Vice Chairman of the Board and
Miami, Florida 33178 Chief Operating Officer
Baroness Hogg [ ] Director
A. Kirk Lanterman 300 Elliott Avenue West Director, Chairman of the Board and Chief
Seattle, Washington 98119 Executive Officer--Holland America
Line--Westours Inc.
Sir John Parker [ ] Director
Peter G. Ratcliffe [ ] Director
Modesto A. Maidique Florida International University Director
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 Senior Vice President--Audit Services
Miami, Florida 33178
Gerald R. Cahill 3655 N.W. 87 Avenue Senior Vice President Finance and Chief
Miami, Florida 33178 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 Vice President--Corporate Development
Miami, Florida 33178
Ian Gaunt 3655 N.W. 87 Avenue Senior Vice President--International
Miami, Florida 33178
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.
25
(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 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.
26
"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.
"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.
27
"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 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);
28
(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 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.
29
"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;
"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.
30
"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 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.
"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.
31
"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.
"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."
32
33
"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.
"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.
"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.
34
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
35
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 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.
(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
2
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.
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.
3
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 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 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.
4
(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
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;
5
(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 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.
6
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 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 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.
7
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.
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.
8
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.
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.
(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'
9
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.
(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;
10
(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 meetings of the Shareholders and of the Board. The
Chairman of the Board and the Vice-Chairman of the Board may 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.
11
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 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.
12
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 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.
13
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.
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
14
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 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.
15
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
(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.
16
"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.
"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.
17
"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."
"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.
18
"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.
"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.
19
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:
4.1To 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 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.
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.
2
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
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.
3
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.
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:
4
Annex A-7
AGREED FORM
-----------------
A PUBLIC COMPANY LIMITED BY SHARES
-----------------
ARTICLES OF ASSOCIATION
of
P&O PRINCESS CRUISES PLC
(the Company)
([ ])
-----------------
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;
"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
3
(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;
"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;
4
"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);
"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
5
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;
"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;
6
"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)1 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 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
7
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;
"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;
8
"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
(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;
9
"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
(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;
10
"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 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.
11
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 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)1 and US$375 million divided into 750,000,000 ordinary shares of
US$0.50 each.
12
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 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.
13
Equalization Share
22.The Equalization Share shall:
(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.
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.
14
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.
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
15
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:
(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.
16
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.
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.
17
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.
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).
18
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 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.
19
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.
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
20
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.
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.
21
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 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.
22
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.
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.
23
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.
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.
24
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.
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.
25
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 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.
26
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.
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.
27
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 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.
28
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 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".
29
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
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).
30
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
(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;
31
(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
(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
32
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 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
33
(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, 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
34
(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.
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.
35
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.
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.
36
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.
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
37
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
(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.
38
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.
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.
39
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, 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
40
(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
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
41
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.
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
42
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.
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.
43
No share qualification
181.A director shall not be required to hold any shares in the capital of the
Company by way of qualification.
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.
44
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 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.
45
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.
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
46
(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.
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
47
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 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
48
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.
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.
49
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 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.
50
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 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.
51
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.
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
52
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.
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.
53
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:
(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
54
(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;
(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;
55
(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 day on which such shares are first quoted ex
the relevant ividend 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.
56
(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.
(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
57
(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:
(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
58
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 (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.
59
RECORD DATES
Record dates for dividends, etc.
249.Notwithstanding any other provision of these Articles, the Company or the
Board may:
(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.
60
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.
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;
61
(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.
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
62
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.
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
63
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.
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;
64
(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 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.
65
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 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.
66
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.
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,
67
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:
(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
68
(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.
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.
69
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 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.
70
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 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
71
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 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.
72
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, 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
73
(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.
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:
74
Annex A-8
AGREED FORM
DATED 2003
----- - ----
------------------------------------------
CARNIVAL CORPORATION DEED OF GUARANTEE
------------------------------------------
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
1.1Definitions
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
contractual monetary obligations of any Principal Debtor))
incurred by P&O Princess after the date of this Guarantee; and
1
(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;
"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
2
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).
1.2Interpretation
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:
(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
3. Guarantee and Indemnity
3.1Subject 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.
3.2The 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.
3.3For 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.
3.4In 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.
3.5A 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.
3.6Unless 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 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.
4
(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.
3.10Despite 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
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.
3.11As 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.
3.12Carnival 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
5
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.
5. Termination
5.1Subject 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.
5.2Subject 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.
5.3No such termination shall be effective with respect to any Existing
Obligation.
5.4Notice 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
6. Amendments
6.1Subject 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.
6.2No such amendment shall be effective with respect to any Existing
Obligation.
6.3No 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.
6.4Notice 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
7.1All 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.
7.2If, 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 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
8.1Any 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.
8.2Any 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.
8.3Any 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).
7
8.4The 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
9.1Prohibition 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.
9.2Further Assurances
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.
9.3No Novation
Neither Carnival nor P&O Princess may novate any of their rights,
liabilities or obligations under this Guarantee, in whole or in part.
9.4Counterparts
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
10.1This Guarantee shall be governed by and construed in accordance with the
laws of the Isle of Man.
10.2Any legal action or proceeding arising out of or in connection with this
Guarantee shall be brought exclusively in the courts of England.
10.3Carnival 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.
8
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
9
Annex A-9
AGREED FORM
DATED 2003
----- - ----
----------------------------------------------
P&O PRINCESS CRUISES PLC DEED OF GUARANTEE
----------------------------------------------
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
1.1Definitions
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;
"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
2
"Subsidiary Undertaking" has the meaning as defined in section 258 of
the Companies Act 1985 (an Act of Parliament).
1.2Interpretation
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.
(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
3.1Subject 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
3
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.
3.2The 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.
3.3For 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.
3.4In 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.
3.5A 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.
3.6Unless 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
(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.
4
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.
3.10Despite 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
(B) it reduces P&O Princess' obligations or liability under this
Guarantee.
3.11As 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.
3.12P&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
4.1Subject 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.
5
4.2No such agreement or exclusion shall be effective with respect to any
Existing Obligation.
4.3No 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.
4.4Notice 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.
4.5Notice 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
5.1Subject 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 Carnival Guarantee terminates or otherwise ceases to have effect.
5.2Subject 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.
5.3No such termination shall be effective with respect to any Existing
Obligation.
5.4Notice 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
6.1Subject 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.
6.2No such amendment shall be effective with respect to any Existing
Obligation.
6.3No 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
6.4Notice 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
7.1All 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.
7.2If, 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 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
8.1Any 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.
8.2Any 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.
8.3Any 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).
8.4The 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
9.1Prohibition 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.
7
9.2Further 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.
9.3No 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.
9.4Counterparts
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
10.1This Guarantee shall be governed by and construed in accordance with
the laws of the Isle of Man.
10.2Any legal action or proceeding arising out of or in connection with
this Guarantee shall be brought exclusively in the courts of England.
10.3P&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.
8
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
9
Annex A-10
AGREED FORM
DATED 2003
----- - ----
-----------------------------
CARNIVAL CORPORATION DEED
-----------------------------
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
1.1Definitions
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;
"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;
1
"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.
1.2Interpretation
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.
(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.
2
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
4.1This 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
5.1Any 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.
5.2Any 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.
5.3The 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
6.1Prohibition 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.
6.2Further 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.
3
6.3No assignment
Neither Carnival nor P&O Princess may assign any of their obligations
under this Deed, in whole or in part.
6.4Counterparts
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
7.1This Deed shall be governed by and construed in accordance with the laws
of the Isle of Man.
7.2Any legal action or proceeding arising out of or in connection with this
Deed shall be brought exclusively in the courts of England.
7.3Carnival 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
Annex B
PAIRING AGREEMENT
PAIRING AGREEMENT (hereinafter called this "Agreement") dated as of
[ ], 2003, among Carnival Corporation, a corporation organized under the
laws of the Republic of Panama ("Carnival"), [ ] (the "Trustee"), as
trustee of the P&O Princess Special Voting Trust, a trust formed under the laws
of Bermuda (the "P&O Princess Trust") and [ ] (the "Transfer Agent").
WHEREAS, Carnival and P&O Princess Cruises plc, a public limited company
incorporated under the laws of England and Wales ("P&O Princess"), on the date
hereof, pursuant to an Offer and Implementation Agreement dated as of January
8, 2003, between Carnival and P&O Princess (the "Offer and Implementation
Agreement"), are establishing a dual listed company structure for the purposes
of (i) conducting their business together, (ii) treating their shareholders as
if they owned an interest in a combined enterprise and (iii) creating certain
rights for their respective shareholders in respect of their indirect interests
in the combined voting enterprise;
WHEREAS, in connection with the closing (the "Closing") of the transactions
contemplated by the Offer and Implementation Agreement, (i) concurrently with
the Closing, P&O Princess is issuing to Carnival, pursuant to the Offer and
Implementation Agreement, one Special Voting Share (the "Special Voting
Share"); (ii) immediately after such issuance, Carnival is transferring the
Special Voting Share to the Trustee (the "Deposit"); (iii) immediately after
the Deposit, the Trustee is entering into a SVE Special Voting Deed (the "SVE
Special Voting Deed") among the Trustee, [name of Carnival SVC], Carnival, P&O
Princess and, [third party owner of the Carnival SVC], which will, among other
things, set forth the obligations of the Trustee with respect to the Special
Voting Share; (iv) in respect of the Deposit, the Trustee is issuing to
Carnival one share of beneficial interest (a "Trust Share") in P&O Princess
Trust for each outstanding share of common stock, par value $0.01 per share, of
Carnival (including any security into which such common stock is reclassified
or converted, the "Carnival Common Stock"); and (v) immediately after receiving
the Trust Shares, Carnival is distributing (the "Distribution") a dividend to
the holders of Carnival Common Stock of one Trust Share for each share of
Carnival Common Stock held as of the record date (the "Record Date") for such
dividend;
WHEREAS, Carnival and the Trustee intend that (i) the Special Voting Share
be listed on the New York Stock Exchange or another national stock exchange or
automated quotation system (the "Applicable Exchange") and be publicly traded;
(ii) each Trust Share is paired with and is transferable only with one share of
Carnival Common Stock, subject to equitable adjustment in accordance with
Section 6 hereof; and (iii) one Trust Share be issued to Carnival by P&O
Princess Trust for each share of Carnival Common Stock subsequently issued by
Carnival, to be represented by the certificates representing such Carnival
Common Stock and to be paired with and transferable only with such Carnival
Common Stock; and
WHEREAS, the Transfer Agent is the transfer agent and registrar for the
Carnival Common Stock and has agreed to be transfer agent and registrar for the
Trust Shares, which are to be represented by the certificates representing
shares of Carnival Common Stock in accordance with the terms hereof and of the
Special Voting Trust Deed, of even date herewith, between the Trustee and
Carnival (the "Trust Deed").
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties agree:
1. On and after the date hereof (the "Effective Date") and for so long as
the Trust Shares and shares of Carnival Common Stock remain outstanding:
(a) if a share of Carnival Common Stock is transferred, one Trust Share
shall be transferred along with such share of Carnival Common Stock, and the
Transfer Agent shall cause such transfer of each security to be recorded in
Carnival's share register;
1
(b) each share of Carnival Common Stock shall not be transferred without
the corresponding Trust Share;
(c) the Trust 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 Trust Shares, including existing certificates of Carnival
Common Stock;
(d) the Trustee and the Transfer Agent shall not transfer, agree to
transfer or recognize the transfer of Trust Shares unless such transfer
occurs together with a transfer of an equivalent number of shares of
Carnival Common Stock;
(e) upon each issuance of additional shares of Carnival Common Stock by
Carnival, the Trustee shall authorize and issue to Carnival a number of
additional Trust Shares equal to the number of shares of Carnival Common
Stock issued by Carnival (to reflect the increase in the voting rights
attaching to the Special Voting Share held by P&O Princess Trust resulting
from the issuance of additional shares of Carnival Common Stock), which
Trust Shares shall, once transferred by Carnival in connection with the
issuance of such shares of Carnival Common Stock, be represented by the
certificates representing such shares of Carnival Common Stock in accordance
with the terms hereof and the Trust Deed;
(f) the Trustee shall not issue any Trust Shares except as required
under this Agreement, the Offer and Implementation Agreement and the Trust
Deed; and
(g) the Trustee shall not declare or pay any distribution consisting in
whole or in part of Trust Shares, or retire, cancel, subdivide or combine
such Trust Shares, except in accordance with Section 6 hereof.
2. Each certificate representing shares of Carnival Common Stock issued
after the Effective Date shall:
(a) subject to the other provisions of this Section 2, take the form of
the certificate representing shares of Carnival Common Stock as of
immediately prior to the Effective Date;
(b) 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 BERMUDA TRUST
("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 BY [ ], AS TRUSTEE OF THE P&O PRINCESS TRUST
(THE "P&O PRINCESS TRUSTEE"). THE TRUST SHARES ARE REPRESENTED BY THIS
CERTIFICATE PURSUANT TO THE TERMS OF A SPECIAL VOTING TRUST DEED ESTABLISHING
THE P&O PRINCESS TRUST, DATED AS OF [ ], 2003 BETWEEN CARNIVAL CORPORATION
AND THE P&O PRINCESS TRUSTEE (THE "SPECIAL VOTING TRUST DEED") AND A PAIRING
AGREEMENT AMONG CARNIVAL CORPORATION, THE P&O PRINCESS TRUSTEE 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 P&O PRINCESS
TRUST AND THE TRUST SHARES ARE SUBJECT TO AND THE TRUST SHARES ARE ISSUED
PURSUANT TO, THE SPECIAL VOTING TRUST DEED. 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
2
DEED. COPIES OF THE PAIRING AGREEMENT AND THE SPECIAL VOTING TRUST DEED MAY BE
OBTAINED FROM CARNIVAL CORPORATION BY CONTACTING [APPROPRIATE CARNIVAL CONTACT
PERSON]."; and
(c) be in a form that is in compliance with all applicable rules and
regulations of the Applicable Exchange.
3. On the Effective Date, immediately after the Deposit, the Trustee shall
issue to Carnival one Trust Share for each issued and outstanding share of
Carnival Common Stock. Carnival shall, immediately thereafter, declare a
dividend of the Trust Shares to the holders of the Carnival Common Stock (at a
rate of one Trust Share for each share of Carnival Common Stock held on the
relevant record date) and promptly thereafter, make the Distribution. With
respect to certificates for shares of Carnival Common Stock outstanding as of
the Record Date, the Trust Shares shall be evidenced by such certificates
registered in the names of the holders thereof together with a copy of a
summary of the terms of this Pairing Agreement substantially in the form
attached hereto as Exhibit A (the "Summary of Terms") (provided that the
certificates alone shall represent such Trust Shares if the Summary of Terms is
not attached thereto). The surrender for transfer of any certificate
representing shares of Carnival Common Stock outstanding on the Record Date,
with or without a copy of the Summary of Terms attached thereto, shall also
constitute the surrender for transfer of the Trust Shares represented thereby.
4. 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, "Carnival Derivative
Securities"), which were issued by Carnival prior to the Effective Date, the
Trustee shall simultaneously authorize and issue to Carnival to reflect the
increase in the voting rights attaching to the Special Voting Share held by the
Trustee resulting from the issuance of additional shares of Carnival Common
Stock) a number of Trust Shares equal to the number of shares of Carnival
Common Stock the exercising or converting holder of such Carnival Derivative
Securities is entitled to receive upon such exercise or conversion. Carnival
shall transfer the Trust Shares to the holders of the Carnival Common Stock
arising from the conversion or exercise of the Carnival Derivative Securities
(at a rate of one Trust Share for each share of Carnival Common Stock held on
the relevant record date) and shall issue to the exercising or converting
holder of such Carnival 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 Trust Shares in
accordance with the terms hereof and of the Trust Deed.
5. After the Effective Date, if Carnival notifies the Trustee that it
intends to issue Carnival Derivative Securities, the Trustee shall take such
action (including, without limitation, the authorization of the issuance of
additional Trust Shares to Carnival to reflect the increase in the voting
rights attaching to the Special Voting Share held by the Trustee resulting from
the issuance of additional shares of Carnival Common Stock) as is required to
be taken by it to effect the issuance of Trust Shares as contemplated herein,
represented by the certificates representing the shares of Carnival Common
Stock issuable upon conversion or exercise of such Carnival Derivative
Securities, and Carnival shall (i) take all actions as may be necessary to
permit the Trustee to effect such action, (ii) transfer the Trust Shares to the
holders of the Carnival Common Stock arising from the conversion or exercise of
the Carnival Derivative Securities (at a rate of one Trust Share for each share
of Carnival Common Stock held on the relevant record date), and (iii) issue to
the exercising or converting holder of such Carnival 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 Trust Shares in accordance with the terms hereof and of
the Trust Deed.
3
6. After the Effective Date:
(a) if Carnival declares or pays any distribution consisting in whole or
in part of shares of Carnival Common Stock, or subdivides or combines such
shares of Carnival Common Stock (each, an "Adjustment"), then the Trustee
shall effect such corresponding Adjustments as are necessary to maintain the
pairing relationship of one share of Carnival Common Stock to each Trust
Share, and Carnival shall take all actions as may be necessary to permit the
Trustee to effect such corresponding Adjustment;
(b) if Carnival otherwise reclassifies the shares of Carnival Common
Stock, then the Trustee shall effect such transactions as are necessary to
maintain the pairing relationship of the securities into which one share of
Carnival Common Stock was so reclassified to each Trust Share, and Carnival
shall take all actions as may be necessary to permit the Trustee to effect
such transactions; and
(c) if Carnival cancels or retires any shares of Carnival Common Stock,
then the Trustee shall cancel or retire the Trust Shares that correspond to
such canceled or retired shares of Carnival Common Stock.
7. Immediately following the Distribution, the Transfer Agent shall be the
transfer agent and registrar for shares of Carnival Common Stock and the Trust
Shares. Carnival may, by written notice to the Transfer Agent, replace the
Transfer Agent, and upon such written notice, the Transfer Agent shall assign
its rights and obligations under this Agreement to the successor Transfer
Agent, and all references to "Transfer Agent" in this Agreement shall refer to
such successor Transfer Agent. The Trustee shall appoint, from time to time,
with respect to the Trust Shares, the same banks or trust companies as transfer
agents and the same banks or trust companies as registrars as Carnival may
appoint, from time to time, for the shares of Carnival Common Stock.
8. This Agreement may be amended only by written consent of Carnival and
the Trustee. This Agreement shall only terminate upon the termination of the
Equalization and Governance Agreement, dated as of [ ] 2003, between
Carnival and P&O Princess or the SVE Special Voting Deed, under the relevant
agreement.
9. This Agreement is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
10. This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof, and supersedes all other
prior agreements or undertakings with respect thereto, both written and oral.
11. All notices, requests, claims, demands or other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, upon receipt of a transmission confirmation if sent by telecopy or
like transmission and on the next business day when sent by Federal Express,
Express Mail or other reputable overnight courier service to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
4
If to the Trustee of the P&O Princess Trust:
[ ]
Attention:
Facsimile:
If to Carnival:
Carnival Corporation
3655 N.W. 87/th/ Avenue
Miami, Florida 33178-2428
Attention: General Counsel
Facsimile: (305) [ ]
With a copy, which shall not constitute notice, to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: James M. Dubin
Facsimile: (212) 757-3990
If to the Transfer Agent:
[ ]
Attention: [ ]
Facsimile: ( ) [ ]
or to such other Persons on addresses as may be designated in writing by the
party to receive such notice as provided above.
12. 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
Panama.
13. Any legal action or proceeding arising out of or in connection with
this Agreement shall be brought exclusively in the courts of England. Carnival
and the Trustee 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. 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 Agreement 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.
14. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the
5
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be effected, impaired or invalidated
so long as the legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
15. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, with the same effect as if the
signature, thereto and hereto were upon the same instrument.
16. Each party hereto shall execute and deliver such further instruments
and do such further acts and things as may be required to carry out the intent
and purpose of this Agreement.
17. This Agreement shall not be assignable by operation of law or
otherwise, and any purported assignment in violation of this provision shall be
void.
[Remainder of Page Intentionally Left Blank]
6
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
The Corporate Seal of
CARNIVAL CORPORATION, as
Depositor, was hereunto affixed
in the presence of
---------------------
Name:
Title:
The Common Seal of
[ ], as Trustee,
was hereunto affixed in the presence of
---------------------
Name:
Title:
The Corporate Seal of
[TRANSFER AGENT], was hereunto
affixed in the presence of
By: ________________
Name:
Title:
7
Exhibit A
[Letterhead of Carnival Corporation]
Re: Summary of terms of Pairing Agreement and Special Voting Trust Deed
Dear Carnival Stockholder:
On [ ], 2003, Carnival Corporation ("Carnival") and P&O Princess
Cruises plc ("P&O Princess") established a dual listed company structure (the
"DLC Structure") under an Offer and Implementation Agreement (the "Offer and
Implementation Agreement") between Carnival and P&O Princess, dated as of
January 8, 2003. In connection with the establishment of the DLC Structure, P&O
Princess issued a Special Voting Share to Carnival. Carnival then transferred
the Special Voting Share to [ ] (the "Trustee") as trustee of the P&O
Princess Special Voting Trust, a newly-formed Bermuda trust (the "Trust"), and
the Trust issued to Carnival one share of beneficial interest (each, a "Trust
Share" and together the "Trust Shares") for each outstanding share of common
stock, par value $0.01 per share, of Carnival (the "Carnival Common Stock").
The Trust Shares represent a fractional, undivided interest in the property of
the Trust, including the Special Voting Share.
The Trust Shares have been distributed by Carnival as a dividend to holders
of record of the Carnival Common Stock as of [ ], 2003, in accordance with
the Offer and Implementation Agreement and the Pairing Agreement (the "Pairing
Agreement") between Carnival and the Trustee, dated as of [ ], 2003, at a
rate of one Trust Share for each share of Carnival Common Stock.
Under the Pairing Agreement:
. each Trust Share is represented by and is attached permanently to a
share of Carnival Common Stock;
. the Carnival Common Stock and the Trust Shares will trade together as a
unit on the New York Stock Exchange under Carnival's existing symbol,
"CCL";
. the certificates representing shares of Carnival Common Stock will also
represent an equivalent number of Trust Shares; and
. the transfer agent for both the Carnival Common Stock and the Trust
Shares will be [ ] and will be required to register transfers in
accordance with the Pairing Agreement.
Therefore, do not send in any certificates representing shares of Common
Stock. You do not need to send in stock certificates in order to receive the
Trust Shares. All certificates representing shares of Carnival Common Stock
issued after [ ], 2003 will bear a legend stating that those certificates
also represent Trust Shares.
The issuance of the Trust Shares will have no effect on reported earnings
per share or any other per share operating measures of Carnival. Although there
is no U.S. federal income tax authority addressing the tax consequences of a
dual listed company transaction, Carnival believes that the distribution of the
Trust Shares should not give rise to taxable income or gain for U.S. federal
income tax purposes for U.S. holders of Carnival Common Stock. However, the
Internal Revenue Service may assert that U.S. holders of Carnival Common Stock
received taxable income as a result of the various voting and equalisation
provisions necessary to implement the DLC structure. Carnival believes that
such voting and other rights, if any, received by shareholders are expected to
have only nominal value
8
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
Internal Revenue Service may disagree with this conclusion. The distribution of
the Trust Shares will not change the way in which you can presently trade the
shares of Carnival Common Stock.
For more information regarding the Trust Shares, the deed governing the
Trust and the Trust Shares, the Pairing Agreement, the Special Voting Share and
the DLC Structure, you are encouraged to read "The DLC Transaction - Trust
Shares of Beneficial Interest" and "The DLC Transaction - The DLC Structure,"
which contain a summary of such matters.
Very truly yours,
[ ]
9
Annex C
P&O PRINCESS SPECIAL VOTING TRUST
VOTING TRUST DEED
Between
Carnival Corporation
as Depositor,
and
[ ],
as Trustee,
Dated as of , 2003
TABLE OF CONTENTS
Page
- ----
ARTICLE I Definitions; Construction.............................................. 4
Section 1.01 Definitions............................................................ 4
Section 1.02 Rules of Construction.................................................. 7
Section 1.03 Article and Section References......................................... 8
ARTICLE II Declaration Of Trust; Issuance Of Shares............................... 8
Section 2.01 Creation and Declaration of Trust; Acceptance by Trustee............... 8
Section 2.02 The Deposit and Execution of Agreements................................ 8
Section 2.03 Agreement to Issue and Deliver Shares.................................. 8
ARTICLE III Trust Powers; Administration Of The Trust Property..................... 8
Section 3.01 Administration of the Trust............................................ 8
Section 3.02 P&O Princess Special Voting Share...................................... 9
Section 3.03 Required Compliance with Securities Laws and Stock Exchange Regulations 10
Section 3.04 Tax Status of the Trust................................................ 10
ARTICLE IV Distributions And Reports.............................................. 10
Section 4.01 Distributions.......................................................... 10
Section 4.02 Compliance with Information Reporting and Withholding Requirements..... 11
ARTICLE V The Shares............................................................. 11
Section 5.01 The Shares............................................................. 11
Section 5.02 No Voting Rights....................................................... 11
Section 5.03 Issuance of the Shares................................................. 11
Section 5.04 Form of the Shares..................................................... 12
Section 5.05 Transfer and Exchange.................................................. 13
Section 5.06 Adjustments to Shares.................................................. 13
Section 5.07 Mutilated, Destroyed, Lost and Stolen Certificates..................... 13
Section 5.08 Distributions in Respect of Shares..................................... 13
Section 5.09 Persons Deemed Owners.................................................. 14
ARTICLE VI The Depositor.......................................................... 14
Section 6.01 Limitation on Liability of the Depositor............................... 14
Section 6.02 Depositor May Purchase Shares.......................................... 14
ARTICLE VII Concerning The Trustee................................................. 14
Section 7.01 Duties of Trustee...................................................... 14
Section 7.02 Certain Matters Affecting the Trustee.................................. 15
Section 7.03 Limitation on Liability of Trustee..................................... 16
Section 7.04 Trustee Fees and Expenses; Indemnification............................. 16
Section 7.05 Limitation of Powers and Duties........................................ 17
Section 7.06 Resignation or Removal of the Trustee.................................. 17
Section 7.07 Successor Trustee...................................................... 18
Section 7.08 Merger or Consolidation of Trustee..................................... 18
Section 7.09 Representations and Warranties of Trustee.............................. 18
ARTICLE VIII Term And Termination................................................... 19
Section 8.01 Term................................................................... 19
Section 8.02 Termination............................................................ 19
ARTICLE IX Miscellaneous Terms.................................................... 20
Section 9.01 Amendment.............................................................. 20
Section 9.02 Counterparts........................................................... 20
2
Page
- ----
Section 9.03 Limitation on Rights of Shareholders..... 20
Section 9.04 Governing Law............................ 20
Section 9.05 Notices.................................. 21
Section 9.06 Severability of Terms.................... 21
Section 9.07 No Recourse.............................. 21
Section 9.08 Intent of the Parties.................... 22
Section 9.09 Voting Trust Deed Binding on Shareholders 22
3
VOTING TRUST DEED
This Voting Trust Deed (this "Voting Trust Deed") is dated [ ], 2003,
and is made by and between [ ] (the "Trust Company," and in its capacity
as Trustee hereunder and any successor thereto appointed hereunder, the
"Trustee"), as Trustee, and Carnival Corporation, a Panamanian corporation
("Carnival," and, in its capacity as depositor hereunder, the "Depositor"), as
Depositor, and is being entered into for the purpose of forming the P&O
Princess Special Voting Trust, a trust established under the laws of Bermuda
(the "Trust"), and providing for the issuance of shares of beneficial interest
in the Trust (each a "Share" and together the "Shares").
PRELIMINARY STATEMENT
P&O Princess Cruises plc ("P&O Princess") and Carnival are parties to an
Offer and Implementation Agreement, dated as of January 8, 2003 (the "Offer and
Implementation Agreement") pursuant to which, among other things, P&O Princess
and Carnival are establishing a dual listed company structure (the "DLC
Transaction") and creating certain rights for the holders (the "Carnival
Stockholders") of Carnival's common stock, par value $0.01 per share (including
any security into which such common stock is reclassified or converted, the
"Carnival Common Stock") and the holders of P&O Princess ordinary shares.
Pursuant to the Offer and Implementation Agreement and immediately prior to
the execution and delivery of this Voting Trust Deed, P&O Princess has issued
the Initial Property to the Depositor, and the Depositor is now transferring to
the Trustee, on behalf of and for the benefit of the Shareholders and without
recourse, all the right, title and interest of the Depositor, in, to and under
the Initial Property (the "Deposit") to be held by the Trustee on the terms and
conditions set out herein. The Deposit is occurring concurrently with the
closing of the DLC Transaction.
Pursuant hereto, Carnival and the Trust Company are forming this Trust in
accordance with the laws of Bermuda.
Pursuant to the Offer and Implementation Agreement, and promptly after
receiving the Shares, the Depositor shall convey any and all of its interest in
the Shares to the Carnival Stockholders.
The Trust Company is willing to act as Trustee hereunder and to hold the
Trust Property upon and subject to the trusts, powers and provisions of this
Voting Trust Deed.
The parties hereto intend that the Trust be classified for United States
federal income tax purposes as an "investment trust" under the Code and United
States Treasury Regulation 301.7701-4(c) and, without limitation, a "grantor
trust" under Subpart E, Part I of Subchapter J of the Code pursuant to which
the Shareholders will be considered to own the Trust Property for U.S. federal,
state and local income tax purposes, and not as a trust or association taxable
as a corporation or as a partnership.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree and declare as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
Section 1.01 Definitions. Except as otherwise specified herein or as the
context may otherwise require, the following terms have the respective meanings
set forth below for all purposes of this Voting Trust Deed:
4
"Affiliate": With respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicable Regulations": As defined in the SVE Special Voting Deed.
"Business Day": 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 Constitution": The articles of incorporation and by-laws of
Carnival in effect immediately following the closing of the DLC Transaction.
"Certificate": A certificate representing shares of Carnival Common Stock
and Shares pursuant to the Pairing Agreement, which may include a copy of the
"Summary of Terms" attached thereto pursuant to Section 3 of the Pairing
Agreement (provided that such certificate alone shall represent the Carnival
Common Stock and the Shares even if the "Summary of Terms" is not attached
thereto).
"Class Rights Action": As defined in the P&O Princess Articles.
"Closing Date": As defined in the Offer and Implementation Agreement.
"Code": The United States Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"Commission": The United States Securities and Exchange Commission or any
successor agency.
"Corporate Trust Office": The office of the Trustee as the Trustee may
designate from time to time by written notice to the Depositor. Initially, the
Corporate Trust Office shall be [ ].
"Deal": In relation to Trust Property or an interest in Trust Property or
the rights attaching to Trust Property, to 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 Trust Property or interest or rights
in any way whatsoever and "Dealing" shall be construed accordingly.
"Encumbrance": An interest or power (i) reserved in or over any interest in
any asset (including shares) including any retention of title or (ii) 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": The Equalization and Governance Agreement, of
even date herewith, between Carnival and P&O Princess.
"Exchange Act": The United States Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder.
5
"Final Distribution": Either (i) a distribution by the Trustee of all
remaining Trust Property (if any), together with all income thereof accrued but
not yet collected and collected but still on hand, to the Shareholders pro rata
in respect of their Shares or (ii) the setting aside in trust of all remaining
Trust Property (if any) for distribution to the Shareholders pro rata in
respect of their Shares, in each case, in connection with the termination of
this Voting Trust Deed.
"Incorporated Powers": The powers and provisions of the Schedule to Section
17 of the Trusts (Special Provisions) Act 1989 of Bermuda, as amended to the
date hereof, except that the following paragraphs of such Schedule shall not be
Incorporated Powers: Paragraphs 1(2), 2, 4(1), 4(2), 4(3), 4(4)(b), 4(6), 4(7),
4(8), 4(9), 4(12), 4(15), 4(17)(a), 4(18)(b), 4(19) and 4(21).
"Initial Property": The P&O Princess Special Voting Share and any
associated rights.
"Investment Company Act": The United States Investment Company Act of 1940
and the rules and regulations promulgated thereunder.
"Joint Electorate Action": As defined in the P&O Princess Articles.
"Opinion of Counsel": A written opinion of counsel, who may, except as
otherwise expressly provided in this Voting Trust Deed, be counsel for the
Depositor, reasonably acceptable to the Trustee.
"P&O Princess Articles": The Articles of Association of P&O Princess.
"P&O Princess Special Voting Share": The Special Voting Share, nominal
value of (Pounds)1 in the capital of P&O Princess.
"Pairing Agreement": The Pairing Agreement among the Trustee, Carnival and
[Transfer Agent], of even date herewith, which will, among other things,
provide for the pairing of the Shares with the shares of Carnival Common Stock.
"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency
or political subdivision thereof.
"Permitted Activities of the Trustee": To accept delivery of the P&O
Princess Special Voting Share; to perform its obligations under this Voting
Trust Deed, the SVE Special Voting Deed and the Pairing Agreement; to cause the
issuance of the Shares; to vote the P&O Princess Special Voting Share in
accordance with the SVE Special Voting Deed and the P&O Princess Articles; to
make distributions pursuant to Article IV; and to engage in such other
activities as are necessary or expedient in order for the Trustee to perform
its obligations and exercise its powers, authorities and discretions pursuant
to the SVE Special Voting Deed, Pairing Agreement and the P&O Princess Articles
and to take all reasonable steps to enforce the performance by each of Carnival
and P&O Princess of its obligations under them.
"Perpetuities Period": (i) If this Voting Trust Deed is governed by the
laws of Bermuda, the 100th anniversary of the date hereof; and (ii) if the
situs of the Trust is changed under Section 9.04(b), the perpetuities period
(if any) of the governing law of the situs of the Trust (provided that such
perpetuities period is equal to or less than the period set out in (i) above,
otherwise the period in (i) above shall continue to apply).
"Proceeding": Any suit in equity, action at law or other judicial or
administrative action or proceeding.
6
"Responsible Officer": With respect to the Trustee, as the context
requires, any Vice President, Assistant Vice President, Secretary, Assistant
Secretary or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Securities Act": The United States Securities Act of 1933 and the rules
and regulations promulgated thereunder.
"Share Register": The register for the Shares, which shall be the share
register of Carnival relating to the holders of Carnival Common Stock.
"Shareholder":
(a) As and from the time of the Deposit until the Shares are transferred to
the Carnival Stockholders, and at any time thereafter that the Trustee issues
additional Shares in accordance with Section 5.03 hereof until such additional
Shares are transferred to the Carnival Stockholders with respect to whom such
additional Shares are issued, the Depositor; and
(b) thereafter, any and all Persons in whose name a Share is registered in
the Share Register as of any relevant date, and for this purpose, any Person in
whose name a share of Carnival Common Stock is registered shall be the Person
in whose name a Share is registered.
"SVE Special Voting Deed": The SVE Special Voting Deed among [Carnival SVC
Limited], Carnival, P&O Princess, [third party owner of the Carnival SVC] and
the Trustee, of even date herewith, which will, among other things, set forth
the obligations of the Trustee with respect to the P&O Princess Special Voting
Share.
"State": Any one of the 50 states of the United States or the District of
Columbia.
"Termination Date": The earlier of (i) the Business Day immediately
preceding the end of the Perpetuities Period (if any) and (ii) the date on
which either the SVE Special Voting Deed or the Equalization Agreement
terminates in accordance with their respective terms.
"Treasury Regulations": The final, temporary or proposed regulations that
have been issued by the U.S. Department of Treasury pursuant to its authority
under the Code, and any successor regulations.
"Trust Property": The Initial Property, any assets added to the Trust
Property and the assets from time to time representing the same, respectively.
"U.S." or "United States": The United States of America (including the
States), its territories, its possessions and other areas subject to its
jurisdiction.
Section 1.02 Rules of Construction. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles as in effect
in the United States from time to time;
(c) "or" is not exclusive;
7
(d) the words "herein", "hereof", "hereunder" and other words of similar
import refer to this Voting Trust Deed as a whole and not to any particular
Article, Section or other subdivision;
(e) any reference to an agreement or other instrument shall be to such
agreement or other instrument, as amended from time to time, unless
otherwise specified;
(f) "including" means including without limitation; and
(g) words in the singular include the plural and words in the plural
include the singular.
Section 1.03 Article and Section References. All Article and Section
references used in this Voting Trust Deed, unless otherwise provided, are to
Articles and Sections in this Voting Trust Deed. Any reference to "this
Section" appearing within a particular paragraph of a Section is a reference to
such Section as a whole.
ARTICLE II
DECLARATION OF TRUST; ISSUANCE OF SHARES
Section 2.01 Creation and Declaration of Trust; Acceptance by Trustee. The
Trustee hereby acknowledges receipt of the Initial Property and declares that
subject to the provisions of this Voting Trust Deed, it will hold the Trust
Property in trust for the exclusive benefit of the Shareholders from time to
time in accordance with the trusts, powers and provisions of this Voting Trust
Deed, including, without limitation, the Trustee's obligations to make
distributions to the Shareholders in accordance with section 4.01.
Section 2.02 The Deposit and Execution of Agreements.
(a) The Depositor shall deliver the P&O Princess Special Voting Share,
duly endorsed and accompanied by all necessary transfer documents, to the
Trustee.
(b) Immediately after the Deposit and the execution of this Voting Trust
Deed, the Trustee shall enter into the Pairing Agreement and the SVE Special
Voting Deed.
Section 2.03 Agreement to Issue and Deliver Shares. The Trustee agrees and
acknowledges that it will, immediately after the Deposit and the execution of
this Voting Trust Deed, cause to be issued and delivered to or upon the order
of the Depositor Shares in accordance with Section 5.03(a).
ARTICLE III
TRUST POWERS; ADMINISTRATION OF THE TRUST PROPERTY
Section 3.01 Administration of the Trust
(a) Except as otherwise specified herein, the Trustee shall administer
the Trust Property for the benefit of the Shareholders. In administering the
Trust Property, the Trustee shall perform all its duties set forth herein.
The duties of the Trustee shall be performed in accordance with applicable
Bermuda (or if the situs of the Trust is changed under Section 9.04(b), the
situs of the Trust), U.S. Federal, State and local law.
(b) Subject to Article VII, the Trustee is hereby authorized to perform,
and from time to time hereafter, shall perform only those acts which are
described in this Voting Trust Deed as obligations of the Trustee.
Notwithstanding the generality of the foregoing, the Trustee is hereby
specifically authorized to perform the Permitted Activities of the Trustee.
8
(c) In furtherance of its performance of the Permitted Activities of the
Trustee, the Trustee may exercise the Incorporated Powers, which shall be
incorporated herein by reference; provided that the Trustee shall not
exercise any of its powers contrary to the express provisions of this Trust.
Notwithstanding anything to the contrary herein, the Trustee shall not
engage in any business or activities other than the Permitted Activities of
the Trustee. The Trustee shall not vary the investment of the Trust or
engage in any business or activity which will cause the Trust to be required
to be registered under the Investment Company Act or which would cause the
Trust to be taxed as an association or publicly traded partnership taxable
as a corporation or otherwise alter the classification of the Trust for U.S.
Federal income tax purposes.
(d) The Trustee shall not engage in any activity other than as required
or authorized by this Voting Trust Deed. In particular, the Trustee shall
not and shall not cause the Trust to (i) invest any proceeds received by the
Trustee from holding the Trust Property, but shall promptly distribute all
such proceeds to the Shareholders pursuant to the terms of this Voting Trust
Deed, except as allowed pursuant to the principles set forth in Rev. Rul.
75-192 1975-1 C.B. 384, as amended or modified by subsequent changes in
applicable law; (ii) subject to Sections 3.01(e), 4.01(c) and 5.03, Deal in
the P&O Princess Special Voting Share or other Trust Property, any interest
of the Trustee therein or any right of the Trustee thereto, to any Person or
Persons; (iii) acquire any assets other than as expressly provided herein;
(iv) possess any power or otherwise act in such a way as to vary the Trust
Property; (v) incur any indebtedness for borrowed money or issue any other
debt; or (vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the Shares.
(e) The Trustee may sell at any time, all or any part of the Trust
Property if it has obtained the consent of both the Depositor and P&O
Princess, such consent to be in the absolute discretion of the Depositor and
P&O Princess; provided, however, that any such sale must be carried out in
accordance with the principles set forth in Rev. Rul. 78-149, 1978-1 C.B.
448, as amended or modified by subsequent changes in applicable law, and the
Trustee must act, or if appropriate, not fail to act in a manner that
permits the Trust to continue to qualify as an investment trust under the
Code and Treasury Regulation 301.7701-4(c) and, without limitation, as a
grantor trust under Subpart E, Part I of Subchapter J of the Code pursuant
to which the Shareholders will be considered to own the Trust Property for
U.S. federal, state and local income tax purposes. No sale of Trust Property
pursuant to this Section 3.01(e) shall be effective unless and until the
transferee of such property, as consented to by the Depositor and P&O
Princess, has agreed to be bound by the terms of this Voting Trust Deed. Any
sale of Trust Property in violation of this Section 3.01(e) shall be null
and void. For the avoidance of doubt, in no event shall (i) any of the
proceeds of a sale of the Trust Property be distributable to anyone other
than the Shareholders or (ii) the Trustee have any power to reinvest any
proceeds of a sale of Trust Property, it being understood that the Trustee
must distribute such proceeds to the Shareholders.
(f) The Trustee shall not take any action that is reasonably likely to
(i) impair the interests of the Trustee in the P&O Princess Special Voting
Share or any other Trust Property, (ii) impair the value of any P&O Princess
Special Voting Share or any other Trust Property or (iii) require the
Trustee or the Trust to be registered under the Investment Company Act, and
the Trustee shall not fail to take any action that is reasonably likely to
avoid any of the matters referred to in clause (i), (ii) or (iii) above.
Section 3.02 P&O Princess Special Voting Share.
(a) At every meeting of P&O Princess shareholders at which any
resolution relating to a Joint Electorate Action or a Class Rights Action is
to be considered, the Trustee shall be present by its duly appointed
corporate representative or by proxy or proxies.
9
(b) Neither the Trustee nor its duly appointed corporate representative,
proxy or proxies shall have any discretion as to how the P&O Princess
Special Voting Share is to be voted. The Trustee shall vote the P&O Princess
Special Voting Share in accordance with the requirements of the P&O Princess
Articles and the SVE Special Voting Deed.
(c) On any resolution that relates to a Joint Electorate Action, the
Trustee shall 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 of the SVE Special Voting Deed. The Trustee shall
be entitled to rely in good faith on such reports and statement.
(d) If the Trustee has been notified by Carnival in accordance with
clause 3.1 of the SVE Special Voting Deed that a Class Rights Action
(pursuant to the Carnival Constitution and/or Applicable Regulations) has
not been approved by the requisite majority of votes at a Carnival meeting
of shareholders, then the Trustee shall vote the P&O Princess Special Voting
Share in accordance with clause 4.4(b) of the SVE Special Voting Deed. The
Trustee shall be entitled to rely in good faith on such notification.
(e) The Trustee shall be entitled to rely on a certificate given to it
in writing (in accordance with clause 17.4 of the SVE Special Voting Deed)
by the Chairman of the P&O Princess shareholder meeting that a resolution is
a procedural or technical resolution (in accordance with the P&O Princess
Articles). If a resolution is proposed for the first time during a meeting
of shareholders of P&O Princess (whereby "proposed for the first time" means
it was not set out in the notice of such shareholders' meeting) and is
determined by the Chairman of the relevant shareholder meeting (in
accordance with the P&O Princess Articles) 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) in accordance with
the SVE Special Voting Deed.
Section 3.03 Required Compliance with Securities Laws and Stock Exchange
Regulations. The Trustee shall make any filings that are necessary or
appropriate under the Securities Act relating to the issuance of Shares under
this Voting Trust Deed or any deemed issuance of the P&O Princess Special
Voting Share by P&O Princess under the Securities Act. The Trustee shall also
make any filings that are necessary or appropriate under the Exchange Act or
the rules of any national securities exchange or automated quotation system on
which the Shares, the P&O Princess Special Voting Share or the shares of
Carnival Common Stock are listed.
Section 3.04 Tax Status of the Trust. Notwithstanding any other provision
of this Voting Trust Deed or the SVE Special Voting Deed, the Trustee must
always act, or if appropriate, not fail to act, in a manner that permits the
Trust (i) to continue to qualify as an investment trust under the Code and
Treasury Regulation 301.7701-4(c) including, without limitation, by acting in
accordance with the principles set forth in Rev. Rul. 75-192 1975-1 C.B. 384,
as amended or modified by subsequent changes in applicable law, and (ii) to
continue to qualify as a grantor trust under Subpart E, Part I of Subchapter J
of the Code pursuant to which the Shareholders will be considered to own the
Trust Property for U.S. federal, state and local income tax purposes.
ARTICLE IV
DISTRIBUTIONS AND REPORTS
Section 4.01 Distributions.
(a) Subject to Article III, the Trustee shall, from time to time and at
any time prior to the Termination Date, distribute to or pay or apply to or
for the use or benefit of the Shareholders, pro rata, according to their
holdings of Shares, the net income of the Trust, as soon as practicable
after the receipt of such income.
10
(b) Subject to Article III, the Trustee shall have the power from time
to time and at any time prior to the Termination Date to distribute to or
pay or apply to or for the use or benefit of the Shareholders, pro rata,
according to their holdings of Shares, such part, parts or all of the Trust
Property, and at such time or times as the Trustee, in its discretion,
determines.
(c) The Trustee shall make the Final Distribution to the Shareholders
against presentation and surrender of the Certificates representing their
Shares on the date scheduled for the Final Distribution pursuant to Section
8.02(a).
Section 4.02 Compliance with Information Reporting and Withholding
Requirements. The Trustee shall comply with United States federal withholding
and backup withholding tax laws and information reporting requirements with
respect to any payments to Shareholders in respect of the Shares.
ARTICLE V
THE SHARES
Section 5.01 The Shares. The Trust shall have a single class of shares of
beneficial interest. The Trustee may issue an unlimited number of Shares. Each
Share represents an identical fractional, undivided interest in the Trust
Property.
Section 5.02 No Voting Rights. The Shares shall have no voting rights. For
the avoidance of doubt, the Shareholders shall not have the right to direct the
vote or decide any other matters with respect to the P&O Princess Special
Voting Share by virtue of their ownership of Shares.
Section 5.03 Issuance of the Shares.
(a) In accordance with Section 3 of the Pairing Agreement and Section
2.2.6 of the Offer and Implementation Agreement, on the date hereof, the
Trustee shall issue a number of Shares equal to the number of shares of
Carnival Common Stock outstanding on the date hereof, each evidencing a
fractional, undivided interest in the entire Trust Property, to the
Depositor, which shall distribute such Shares to the Carnival Stockholders
in accordance with Section 3 of the Pairing Agreement and Section 2.2.6 of
the Offer and Implementation Agreement.
(b) Upon each issuance of additional shares of Carnival Common Stock by
Carnival, the Trustee shall authorize and issue to the Depositor a number of
additional Shares equal to the number of additional shares of Carnival
Common Stock issued by Carnival (to reflect the increase in the voting
rights attaching to the P&O Princess Special Voting Share held by the
Trustee resulting from the issuance of additional shares of Carnival Common
Stock), which Shares shall be paired with shares of Carnival Common Stock on
the basis described in the Pairing Agreement and represented by the
Certificates representing such shares of Carnival Common Stock in accordance
with the terms hereof and of the Pairing Agreement.
(c) Upon the conversion or exercise of any securities convertible into
or exercisable for shares of Carnival Common Stock or any rights, options or
warrants to purchase shares of Carnival Common Stock (collectively,
"Carnival Derivative Securities"), which were issued by Carnival prior to
the date hereof, the Trustee shall simultaneously authorize and issue to
Carnival (to reflect the increase in the voting rights attaching to the P&O
Princess Special Voting Share held by the Trustee resulting from the
issuance of additional shares of Carnival Common Stock) a number of Shares
equal to the number of shares of Carnival Common Stock the exercising or
converting holder of such Carnival Derivative Securities is entitled to
receive upon such exercise or conversion, which Shares shall be paired with
shares of Carnival Common Stock on the basis
11
described in the Pairing Agreement and represented by the Certificate
representing the shares of Carnival Common Stock in accordance with the
terms hereof and of the Pairing Agreement.
(d) After the date hereof, if Carnival notifies the Trustee that it
intends to issue Carnival Derivative Securities, the Trustee shall take such
action (including, without limitation, the authorization and issuance of
additional Shares to Carnival to reflect the increase in the voting rights
attaching to the P&O Princess Special Voting Share held by the Trustee
resulting from the issuance of additional shares of Carnival Common Stock)
as is required to be taken by it to effect the issuance of Shares as
contemplated herein and in the Pairing Agreement, which Shares shall be
paired with shares of Carnival Common Stock on the basis described in the
Pairing Agreement on the and represented by the Certificates representing
the shares of Carnival Common Stock issuable upon conversion or exercise of
such Carnival Derivative Securities, in accordance with the terms hereof and
of the Pairing Agreement.
(e) Except as provided above, in Section 5.05, in the Pairing Agreement
and in the Offer and Implementation Agreement, the Trustee shall not issue
any Shares.
Section 5.04 Form of the Shares.
(a) The Shares issued to and distributed by the Depositor on the date
hereof in accordance with Section 5.03(a), shall be evidenced by
Certificates representing Carnival Common Stock registered in the names of
the holders thereof. The surrender for transfer of any Certificate
representing shares of Carnival Common Stock outstanding on or prior to the
date hereof, with or without a copy of the Summary of Terms attached
thereto, shall also constitute the surrender for transfer of the Shares
represented thereby.
(b) The Shares and the Carnival Common Stock shall together be evidenced
by Certificates, not by separate certificates or other instruments. The
Shares shall only be transferable as provided in Section 5.05.
(c) Each Certificate issued after the date hereof shall 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 BERMUDA TRUST
("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 BY [ ], AS TRUSTEE OF THE P&O PRINCESS TRUST
(THE "P&O PRINCESS TRUSTEE"). THE TRUST SHARES ARE REPRESENTED BY THIS
CERTIFICATE PURSUANT TO THE TERMS OF A SPECIAL VOTING TRUST DEED ESTABLISHING
THE P&O PRINCESS TRUST, DATED AS OF [ ], 2003 BETWEEN CARNIVAL CORPORATION
AND THE P&O PRINCESS TRUSTEE (THE "SPECIAL VOTING TRUST DEED") AND A PAIRING
AGREEMENT AMONG CARNIVAL CORPORATION, THE P&O PRINCESS TRUSTEE 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 DEED. 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 DEED. COPIES OF THE PAIRING AGREEMENT
AND THE SPECIAL VOTING TRUST DEED MAY BE OBTAINED FROM CARNIVAL CORPORATION BY
CONTACTING [APPROPRIATE CARNIVAL CONTACT PERSON]."
12
(d) The Certificates shall be in a form that is in compliance with all
applicable rules and regulations of the relevant securities exchange or
automated quotation system on which the Shares and the Common Stock are
listed.
Section 5.05 Transfer and Exchange. So long as shares of Carnival Common
Stock and Shares are outstanding:
(a) if a share of Carnival Common Stock is transferred, one Share shall
be transferred along with such share of Carnival Common Stock;
(b) each Share shall not be transferred without the corresponding share
of Carnival Common Stock;
(c) the Shares and the shares of Carnival Common Stock shall not be
represented by separate instruments but shall be represented by Certificates;
(d) the Trustee shall not transfer, agree to transfer or recognize the
transfer of Shares unless such transfer occurs together with a transfer of
an equivalent number of shares of Carnival Common Stock; and
(e) the Trustee shall appoint, from time to time, with respect to the
Shares, the same banks or trust companies as transfer agents and the same
banks or trust companies as registrars as Carnival may appoint, from time to
time, for the shares of Carnival Common Stock.
Section 5.06 Adjustments to Shares.
(a) The Trustee shall not declare, make or pay any distribution
consisting in whole or in part of Shares, or subdivide or combine such
Shares, except as required by Section 5.06(b).
(b) After the date hereof:
(i) if Carnival declares or pays any distribution consisting in
whole or in part of shares of Carnival Common Stock, or subdivides or
combines such shares of Carnival Common Stock (each, an "Adjustment"),
then the Trustee shall effect such corresponding Adjustments as are
necessary to maintain the pairing relationship of one share of Carnival
Common Stock to each Share;
(ii) if Carnival otherwise reclassifies the shares of Carnival Common
Stock, then the Trustee shall effect such transactions as are necessary
to maintain the pairing relationship of the securities into which one
share of Carnival Common Stock was so reclassified to each Share, and
Carnival shall take all actions as may be necessary to permit the
Trustee to effect such transactions; and
(iii) if Carnival cancels or retires any shares of Carnival Common
Stock, then the Trustee shall cancel or retire the Shares that
correspond to such canceled or retired shares of Carnival Common Stock.
Section 5.07 Mutilated, Destroyed, Lost and Stolen
Certificates. Mutilated, destroyed, lost or stolen Certificates shall be dealt
with pursuant to Section 5.5 of the Bylaws of Carnival.
Section 5.08 Distributions in Respect of Shares.
(a) Distributions with respect to a Share shall be made to the Person in
whose name such Share is registered at the close of business on the record
date for such distribution. Distributions in respect of Shares (other than
the Final Distribution) shall be made either (i) by check mailed to the
address of the Shareholder entitled thereto as such address shall appear in
the Share Register or (ii) in same-day funds against presentation of the
Certificates representing such Shares to the Trustee at its Corporate Trust
Office.
13
(b) Subject to the terms of this Voting Trust Deed to the contrary, each
Certificate delivered under this Voting Trust Deed upon transfer of or in
exchange for or in lieu of any other Certificate shall carry the rights to
amounts to be distributed by the Trust that are accrued and undistributed,
and to accrue, that were carried by such other Certificate.
Section 5.09 Persons Deemed Owners. Subject to Section 5.08, the
Depositor, the Trustee and any agent of the Depositor or the Trustee may treat
the Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions in respect of Shares
represented by such Certificate and for all other purposes whatsoever, and none
of the Depositor, the Trustee or any agent of the Depositor or the Trustee
shall be affected by notice to the contrary.
ARTICLE VI
THE DEPOSITOR
Section 6.01 Limitation on Liability of the Depositor.
(a) Unless otherwise expressly specified in this Voting Trust Deed, the
Depositor shall not be under any obligation to expend or risk its own funds,
except to the extent of its obligation to pay any amount payable under
Section 7.04(b) hereof, or otherwise incur financial liability in the
performance of its duties thereunder or in the exercise of any of its rights
or powers if reasonable grounds exist for believing that the repayment of
such funds or adequate indemnity against such risk or liability is not
assured to it.
(b) Neither the Depositor nor any of its directors, officers, employees
or agents shall be liable, for any losses, costs or damages or otherwise, to
the Trustee or the Shareholders for any act or omission except for its
willful misconduct, bad faith or gross negligence in the performance of
duties specifically set forth in this Voting Trust Deed.
(c) The Depositor shall not be under any obligation to appear in,
prosecute or defend any Proceeding; provided, however, that the Depositor
may in its discretion undertake any such Proceeding which it may deem
necessary or desirable with respect to this Voting Trust Deed.
Section 6.02 Depositor May Purchase Shares. The Depositor or its
Affiliates may at any time purchase Certificates and thus Shares in the open
market or otherwise. Certificates so purchased by the Depositor may, at the
discretion of the Depositor, be held or resold.
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.01 Duties of Trustee.
(a) The Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Voting Trust Deed. Any permissive
right of the Trustee enumerated in this Voting Trust Deed shall not be
construed as a duty.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be furnished
pursuant to any provision of this Voting Trust Deed, shall examine them to
determine whether they conform to the requirements of this Voting Trust
Deed. If any such instrument is found not to conform to the requirements of
this Voting Trust Deed, the Trustee shall take such action as it deems
appropriate to have the instrument corrected, and if the instrument is not
corrected to the Trustee's satisfaction, the Trustee will provide notice
thereof to the Depositor.
14
(c) No provision of this Voting Trust Deed shall be construed to relieve
the Trustee from liability for its fraud or negligence in the performance of
any of its duties under this Voting Trust Deed or the willful default or
breach of its obligations under this Voting Trust Deed; provided, however,
that:
(i) the duties and obligations of the Trustee shall be determined
solely by the express terms of this Voting Trust Deed, the Trustee shall
not be liable except for the performance of such duties and obligations
as are specifically set forth in this Voting Trust Deed, no implied
covenants or obligations (except for a fiduciary duty to the
beneficiaries of the Trust) shall be read into this Voting Trust Deed
against the Trustee and, in the absence of negligence, bad faith or
willful misconduct on the part of the Trustee, the Trustee may
conclusively rely upon any certificates or opinions furnished to the
Trustee as to the truth and correctness of any statements contained
therein;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) except with respect to actions or duties required to be taken
or performed, as applicable, by the Trustee under the express terms of
this Voting Trust Deed, the Trustee shall not be required to expend or
risk its own funds or otherwise incur financial liability in the
performance of any of its duties or in the exercise of any of its rights
or powers under this Voting Trust Deed if there is reasonable ground for
believing that the repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it; provided,
however, that the Trustee agrees that the indemnification under Section
7.04(b) will provide reasonable assurance against such risk or liability.
Section 7.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 7.01:
(i) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, officers'
certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document reasonably believed by it to
be genuine and to have been signed by the proper party or parties;
(ii) the Trustee may consult with counsel and any advice or Opinion
of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it under this
Voting Trust Deed in good faith and in accordance with such advice or
Opinion of Counsel;
(iii) except for the duties and obligations of the Trustee expressly
created by this Voting Trust Deed, the Trustee shall be under no
obligation to exercise any of the trusts or powers vested in it by this
Voting Trust Deed or to institute, conduct or defend any Proceeding
hereunder or in relation thereto, at the request, order or direction of
any of the Shareholders, pursuant to the terms of this Voting Trust
Deed, unless such Shareholders or the Depositor shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Voting Trust Deed; provided that any such action taken, suffered or
omitted is not attributable to fraud or negligence on the part of the
Trustee in the performance of its duties under this Voting Trust Deed or
the willful default or breach of its obligations under this Voting Trust
Deed;
15
(v) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
approval, bond or other paper or document believed by it to be genuine;
(vi) the Trustee may execute any of the trusts or powers or perform
any duties under this Voting Trust Deed either directly or by or through
agents, attorneys or custodians; and
(vii) the Trustee shall not be deemed to have notice or actual
knowledge of any matter unless (1) a Responsible Officer assigned to and
working in the Corporate Trust Office has actual knowledge thereof or
(2) written notice thereof is received by the Trustee at the Corporate
Trust Office.
(b) All rights of action under this Voting Trust Deed or under any of
the Shares, enforceable by the Trustee, may be enforced by it without the
possession of any of the Shares, or the production thereof at the trial or
other Proceeding relating thereto, and any Proceeding instituted by the
Trustee shall be brought in its name for the benefit of all the
Shareholders, subject to the terms of this Voting Trust Deed.
Section 7.03 Limitation on Liability of Trustee. The Trustee assumes no
responsibility for the correctness of the recitals contained in this Voting
Trust Deed, the Shares, the Certificates or any document issued in connection
with the issuance of the Shares. Except as set forth in Section 7.09, the
Trustee makes no representations or warranties as to the validity or
sufficiency of this Voting Trust Deed, the Shares, the Certificates, the P&O
Princess Special Voting Share or any related document. The Shares and the
Certificates do not represent interests in or obligations of the Trustee
personally, and the Trustee shall not be responsible or accountable for any
tax, accounting or other treatment proposed to be applied to the Shares, the
Certificates or any interest therein.
Section 7.04 Trustee Fees and Expenses; Indemnification.
(a) The Depositor shall pay to the Trustee from time to time reasonable
compensation for its acceptance of the Trust created under this Voting Trust
Deed and services rendered hereunder in accordance with its fee schedule
previously delivered to the Depositor. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Depositor shall reimburse the Trustee promptly upon request for all
reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include
the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
(b) The Trustee and any director, officer, employee or agent of the
Trustee shall be indemnified by the Depositor and held harmless against any
loss, liability or expense incurred in connection with any Proceeding
relating to this Voting Trust Deed, the Shares or the Certificates or the
performance of any of the Trustee's duties under this Voting Trust Deed,
other than any loss, liability or expense (i) that constitutes a specific
liability of the Trustee under this Voting Trust Deed or (ii) incurred by
reason of fraud or negligence on the part of the Trustee in the performance
of its duties under this Voting Trust Deed or the willful default or breach
of its obligations under this Voting Trust Deed. With respect to any such
Proceeding, the Trustee shall notify the Depositor promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the
Depositor shall not relieve the Depositor of its obligations hereunder. The
Depositor may, by written notice to the Trustee, assume the defense of the
Proceeding, and, if the Depositor does so, the Trustee shall cooperate in
such defense. If the Trustee maintains control of the defense of the
Proceeding, it shall consult in good faith with the Depositor in preparing
its defense. The Depositor need not pay for any settlement made without its
consent, which consent shall not be
16
unreasonably withheld. In the event the Trustee is not indemnified by the
Depositor in accordance with this Section 7.04(b), the Trustee shall
nevertheless remain obligated to perform its duties under this Voting Trust
Deed.
Section 7.05 Limitation of Powers and Duties. The Trust is established
solely for the purposes of acquiring and holding the Trust Property, entering
into and performing its obligations under the SVE Special Voting Deed and the
Pairing Agreement, issuing the Shares and engaging in activities incidental to
the foregoing. The Trustee is not permitted to incur any debt except as is
necessary to achieve the foregoing. The Trustee is not authorized to acquire
any other investments or engage in any activities not authorized in this Voting
Trust Deed and, in particular, the Trustee is not authorized (i) to Deal in the
P&O Princess Special Voting Share or interests therein or rights thereto except
as contemplated in Section 3.01(d) or (ii) to do anything that would cause the
Trust to (1) be required to be registered under the Investment Company Act or
(2) cause the Trust to be taxed as an entity other than investment trust under
the Code and United States Treasury Regulation 301.7701-4(c) and, without
limitation, a grantor trust under Subpart E, Part I of Subchapter J of the Code
pursuant to which the Shareholders will be considered to own the Trust Property
for U.S. federal, state and local income tax purposes, or otherwise alter the
classification of the Trust for U.S. federal, state and local income tax
purposes.
Section 7.06 Resignation or Removal of the Trustee.
(a) Subject to Section 7.06(c), the Trustee may at any time resign and
be discharged from its obligations and duties hereunder by giving written
notice thereof to the Depositor. Upon receiving such notice of resignation,
the Depositor shall as promptly as possible (and in any event within 45
calendar days after the date of such notice of resignation) appoint a
successor Trustee by written instrument, in duplicate, which instrument
shall be delivered to the resigning Trustee and to the successor Trustee. If
no successor Trustee that has been so appointed shall have accepted
appointment within 90 calendar days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee. Upon any
appointment of a successor Trustee pursuant to this Section 7.06(a), the
Depositor shall be solely liable for (i) the payment of such successor
Trustee's fees and expenses and (ii) provision of adequate indemnities
satisfactory to such successor Trustee (it being understood that the
indemnification obligations of the Depositor pursuant to Section 7.04(b)
shall inure to the benefit of such successor Trustee).
(b) At any time, the Depositor or its designee may make a written
request that the Trustee resign. Upon the agreement of the Trustee to so
resign or if the Trustee fails to resign within a reasonable time after
written request therefor by the Depositor or such designee (and in no event
later than 10 days after the Trustee shall have received such written
request), or if at any time the Trustee shall become incapable of acting, or
shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Depositor or such
designee may remove the Trustee and appoint a successor Trustee by written
instrument, in duplicate, which instrument shall be delivered to the Trustee
so removed and to the successor Trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the terms of this Section 7.06 shall
not become effective until acceptance of appointment by the successor
Trustee as provided in Section 7.07.
(d) Notwithstanding any other provision of this Section 7.06, any
appointment of a successor Trustee pursuant to any of the terms of this
Section 7.06 shall be effective if, and only if, the Depositor appoints a
successor Trustee (other than the Depositor) that is not related or
17
subordinate to the Depositor or P&O Princess, within the meaning of Section
672(c) of the Code, and such designated successor so qualifies as Trustee.
The Depositor may at any time release the powers granted under this
paragraph.
Section 7.07 Successor Trustee.
(a) Any successor Trustee appointed as provided in Section 7.06 shall
execute, acknowledge and deliver to the Depositor and its predecessor
Trustee an instrument accepting such appointment under this Voting Trust
Deed, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor Trustee, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of the predecessor Trustee under this Voting Trust
Deed, with the like effect as if originally named as Trustee in this Voting
Trust Deed. The predecessor Trustee shall deliver to the successor Trustee
all documents and statements held by it under this Voting Trust Deed, and
the Depositor and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor Trustee all such
rights, powers, duties and obligations.
(b) Upon acceptance of appointment by a successor Trustee as provided in
this Section 7.07, the predecessor Trustee shall novate its rights and
obligations under the SVE Special Voting Deed to such successor Trustee.
Section 7.08 Merger or Consolidation of Trustee. Any corporation or
association into or with which the Trustee may be merged, amalgamated or
converted or with which it may be consolidated or any corporation or
association resulting from any merger, amalgamation, conversion or
consolidation to which the Trustee shall be a party, or any corporation or
association succeeding to the business of the Trustee, shall be the successor
of the Trustee under this Voting Trust Deed, without the execution or filing of
any paper or any further act on the part of any of the parties to this Voting
Trust Deed, anything in this Voting Trust Deed to the contrary notwithstanding.
Section 7.09 Representations and Warranties of Trustee.
(a) The Trustee represents and warrants, as of the date hereof (or, in
the case of a successor Trustee appointed pursuant to Section 7.07, as of
the date of such appointment), that:
(i) the Trustee is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated
or organized;
(ii) the Trustee has full power, authority and right to execute,
deliver and perform its duties and obligations under this Voting Trust
Deed, the SVE Special Voting Deed and the Pairing Agreement and has
taken all necessary action to authorize the execution, delivery and
performance by it of this Voting Trust Deed, the SVE Special Voting Deed
and the Pairing Agreement;
(iii) the execution and delivery of this Voting Trust Deed, the SVE
Special Voting Deed and the Pairing Agreement by the Trustee and its
performance of and compliance with the terms of this Voting Trust Deed,
the SVE Special Voting Deed, the Pairing Agreement and the Shares will
not violate the Trustee's charter or by-laws or constitute a default
under, or result in the breach or acceleration of, any contract,
agreement or other instrument to which the Trustee is a party or which
may be applicable to the Trustee or any of its assets;
(iv) each of this Voting Trust Deed, the SVE Special Voting Deed and
the Pairing Agreement has been or will be duly executed and delivered by
the Trustee, and each of this Voting Trust Deed, the SVE Special Voting
Deed and the Pairing Agreement constitutes or
18
will constitute, upon execution, the valid and legally binding
obligation of the Trustee, enforceable in accordance with its terms,
except as enforcement may be limited by the applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally or by general principles of equity;
(v) the Trustee is not in violation, and the execution,
authentication and delivery of this Voting Trust Deed, the SVE Special
Voting Deed and the Pairing Agreement by the Trustee and its performance
of the respective terms of this Voting Trust Deed, the SVE Special
Voting Deed and the Pairing Agreement will not constitute a violation of
any order or decree of any court or any order or regulation of any U.S.
Federal, State, municipal or other governmental agency having
jurisdiction over the Trustee or any of its assets, which violation
would reasonably be expected to have a material adverse effect on the
business, prospects, condition (financial or otherwise) or operations of
the Trustee or on the performance of its duties thereunder;
(vi) there are no Proceedings against, or investigations of, the
Trustee pending, or, to the knowledge of the Trustee, threatened, before
any court, administrative agency or other tribunal (a) that could
reasonably be expected to prohibit its entering into this Voting Trust
Deed, the SVE Special Voting Deed and the Pairing Agreement, (b) seeking
to prevent the issuance of the Shares or the Certificates representing
the Shares or the consummation of any of the transactions contemplated
by this Voting Trust Deed, the SVE Special Voting Deed and the Pairing
Agreement or (c) that could reasonably be expected to prohibit or
materially and adversely affect the performance by the Trustee of its
obligations under, or the validity or enforceability of, this Voting
Trust Deed, the SVE Special Voting Deed and the Pairing Agreement; and
(vii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution,
authentication, delivery and performance by the Trustee of, or
compliance by the Trustee with, this Voting Trust Deed, the SVE Special
Voting Deed and the Pairing Agreement or for the consummation of the
transactions contemplated by this Voting Trust Deed, the SVE Special
Voting Deed and the Pairing Agreement, except for such consents,
approvals, authorizations and orders, if any, that have already been
obtained.
(b) Within 30 calendar days of the discovery by the Trustee of a breach
of any of its representations or warranties set forth in this Section 7.09,
the Trustee shall promptly cure such breach.
ARTICLE VIII
TERM AND TERMINATION
Section 8.01 Term. Subject to the terms of the Voting Trust Deed and to
the powers conferred by law, the Trust Property and the income of the Trust
Property shall be held on the Termination Date for the Shareholders absolutely
pro rata in accordance with Shares held.
Section 8.02 Termination.
(a) On the Termination Date, the Trustee shall fix the date of the Final
Distribution, which shall be as soon as reasonably possible thereafter, and
shall on that date make the Final Distribution, after which the Trust shall
be dissolved.
(b) The respective obligations and responsibilities under this Voting
Trust Deed of the Depositor and the Trustee (other than the obligations of
the Trustee to provide reports and other information under this Voting Trust
Deed and to make distributions to Shareholders as herein set forth) shall
terminate upon the effectuation of the Final Distribution.
19
ARTICLE IX
MISCELLANEOUS TERMS
Section 9.01 Amendment.
(a) This Voting Trust Deed may be amended from time to time by the
Depositor and the Trustee without the consent of any of the Shareholders:
(i) if such amendment does not materially and adversely affect the rights of
any Shareholder; (ii) to cure any ambiguity or to correct or supplement any
provision in this Voting Trust Deed which may be defective or inconsistent
with any other provision in this Voting Trust Deed; (iii) to add to the
covenants, restrictions or obligations of the Depositor for the benefit of
the Shareholders; (iv) to comply with the requirements of the law governing
this Voting Trust Deed if such governing law is changed under Section
9.04(b); (v) to comply with any requirements imposed by the Commission or
the Code or to qualify the Trust as a "grantor trust" under Subpart E, Part
I of Subchapter J of the Code; (vi) to amend or waive the terms of Section
7.04(b) in any manner which shall not adversely affect the Shareholders in
any material respect; or (vii) to evidence and provide for the acceptance of
appointment under this Voting Trust Deed by a successor Trustee.
(b) Notwithstanding the foregoing, this Voting Trust Deed may also be
amended from time to time by the Depositor and the Trustee with the consent
of Shareholders holding a majority of the outstanding Shares.
(c) Notwithstanding the foregoing, no amendment to this Voting Trust
Deed shall be effective if it causes the Trust not to be classified for U.S.
federal, state and local income tax purposes as an "investment trust" under
the Code and Treasury Regulation 301.7701-4(c) and, without limitation, as a
grantor trust under Subpart E, Part I of Subchapter J of the Code pursuant
to which the Shareholders will be considered to own the Trust Property for
U.S. federal, state and local income tax purposes, and not as a trust or
association taxable as a corporation or as a partnership.
Section 9.02 Counterparts. This Voting Trust Deed may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 9.03 Limitation on Rights of Shareholders.
(a) The death or incapacity of any Shareholder shall not (1) operate to
terminate this Voting Trust Deed or the Trust Property, (2) entitle such
Shareholder's legal representatives or heirs to claim an accounting or to
take any Proceeding in any court for a partition or winding up of the Trust
Property or (3) otherwise affect the rights, obligations and liabilities of
the parties thereto or any of them.
(b) No Shareholder shall have any right to control the operation and
management of any Trust Property, or the obligations of the parties thereto,
nor shall anything in this Voting Trust Deed set forth, or contained in the
terms of the Shares or the Certificates, be construed so as to constitute
the Shareholders from time to time as partners or members of an association.
In addition, no Shareholder shall be under any liability to any third person
by reason of any action taken by the parties to this Voting Trust Deed
pursuant to any provision thereof.
Section 9.04 Governing Law.
(a) This Voting Trust Deed and each Share shall initially be governed by
and construed in accordance with the laws of Bermuda. The Trustee, however,
is prohibited from exercising any
20
power or discretion granted under said laws that would be inconsistent with
the qualification of the trust as an investment trust under the Code and
Treasury Regulation 301.7701-4(c) and, without limitation, as a grantor
trust under Subpart E, Part I of Subchapter J of the Code pursuant to which
the Shareholders will be considered to own the Trust Property for U.S.
federal, state and local income tax purposes. Notwithstanding the foregoing,
the Trustee may upon obtaining the consent of the Depositor, at any time and
from time to time, by written instrument, declare that the Trust hereunder
shall from the date of such declaration, or from a date stated in such
declaration, take effect in accordance with the law of such other
jurisdiction as it and the Depositor, in their sole and absolute discretion,
determine, and thereafter the law of such other jurisdiction shall govern
the validity and construction of the Trust hereunder; provided, however,
that if the Trustee exercises the discretionary power under this Section
9.04(a) to change the situs and governing jurisdiction of the Trust under
this Voting Trust Deed, it may initiate such judicial proceedings (if any)
as it deems necessary or desirable to accomplish such change, whether or not
such proceeding is required by the law of the new governing jurisdiction.
However, nothing in this section 9.04(a) shall be construed as allowing the
Trustee to exercise this power in a manner that will result in the trust
failing to qualify as an investment trust under the Code and Treasury
Regulation 301.7701-4(c) and, without limitation, as a grantor trust under
Subpart E, Part I of Subchapter J of the Code pursuant to which the
Shareholders will be considered to own the Trust Property for U.S. federal,
state and local income tax purposes.
(b) At any time or times, without prior court approval but subject to
applicable legal limitations, upon the written request of the Depositor, the
Trustee shall move (or decline to move) all or part of the assets or the
situs of administration of the trust from one jurisdiction to another
jurisdiction and, in connection with such move, this Voting Trust Deed and
each Share shall be governed by and construed in accordance with the laws of
such other jurisdiction. The determination of the Depositor as to any such
removal or change of situs may be made by them for any reason, including,
without limitation, the convenience of the Depositor, P&O Princess, the
Trustee or of the Shareholders; provided, however, that nothing in this
Section 9.04(b) shall be construed as allowing the Depositor to exercise
this power in a manner that will result in the trust failing to qualify at
all times for U.S. federal, state and local income tax purposes as an
"investment trust" under the Code and Treasury Regulation 301.7701-4(c) and,
without limitation, as a grantor trust under Subpart E, Part I of Subchapter
J of the Code pursuant to which the Shareholders will be considered to own
the Trust Property for U.S. federal, state and local income tax purposes.
Section 9.05 Notices. All directions, demands and notices under this
Voting Trust Deed shall be in writing and shall be delivered to the Trustee at
the Corporate Trust Office. Any notice required to be given to a Shareholder
shall be sent by first class mail, postage prepaid, to the last address of such
Shareholder set forth in the Share Register or may be given by facsimile to
such number as may be provided to the Trustee. Any notice so mailed within the
time prescribed in this Voting Trust Deed shall be conclusively presumed to
have been duly given when mailed, whether or not the Shareholder receives such
notice. Notices given by facsimile will be effective upon confirmation
(including electronic confirmation) of effective transmission.
Section 9.06 Severability of Terms. If any one or more of the covenants,
agreements or terms of this Voting Trust Deed shall be for any reason
whatsoever held invalid, then such covenants, agreements or terms shall be
deemed severable from the remaining covenants, agreements or terms of this
Voting Trust Deed and shall in no way affect the validity or enforceability of
the other terms of this Voting Trust Deed or of the Shares or the rights of the
Shareholders.
Section 9.07 No Recourse. Each Shareholder, by its acceptance of a Share,
acknowledges that such Share represents an identical fractional, undivided
interest in the Trust Property only and
21
does not represent an interest in or obligation of the Depositor, the Trustee
or any Affiliate of the Depositor (other than the Trust, if the Trust is deemed
to be an Affiliate of the Depositor) or the Trustee and no recourse may be had
against such Persons or their respective assets.
Section 9.08 Intent of the Parties. The parties intend that the Trust
shall at all time be classified for U.S. federal, state and local income tax
purposes as an "investment trust" under the Code and Treasury Regulation
301.7701-4(c) and, without limitation, as a grantor trust under Subpart E, Part
I of Subchapter J of the Code pursuant to which the Shareholders will be
considered to own the Trust Property for U.S. federal, state and local income
tax purposes, and not as a trust or association taxable as a corporation or as
a partnership. Each Shareholder, by its acceptance of its Shares, agrees to
treat the Trust as a grantor trust for all U.S. federal, state and local income
tax purposes. Notwithstanding any other provision of this Voting Trust Deed or
the SVE Special Voting Deed, the provisions of this Voting Trust Deed shall be
interpreted to further this intention and powers granted as well as obligations
undertaken pursuant to this Voting Trust Deed shall be construed so as to
further such intent. No provision of this Voting Trust Deed shall be of any
force or effect if such provision would result in the Trust being treated in a
manner inconsistent with the intention of the parties as set forth in this
Section 9.08.
Section 9.09 Voting Trust Deed Binding on Shareholders. Each Person
becoming a Shareholder in accordance with the terms hereof and knowingly
accepting a Share shall be bound by this Voting Trust Deed.
22
IN WITNESS WHEREOF, the Depositor and the Trustee have caused this
instrument to be duly executed as a deed as of the date first above written.
The Corporate Seal of
CARNIVAL CORPORATION, as
Depositor, was hereunto affixed
in the presence of
----------------------------------
Name:
Title:
The Common Seal of
[ ], as Trustee,
was hereunto affixed in the
presence of
----------------------------------
Name:
Title:
23
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*
8.1 Opinion of Paul, Weiss, Rifkind, Wharton and Garrison LLP*
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)*
23.5 Consent of Paul, Weiss, Rifkind, Wharton & Garrison LLP (included in Exhibit 8.1)*
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)
99.1 Form of Proxy Card*
--------
* Filed as part of Amendment No. 1.
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.
II-2
(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.
(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 24th day of February, 2003.
CARNIVAL CORPORATION
By: /s/ GERALD R. CAHILL
-----------------------------
Gerald R. Cahill Chief
Financial and Accounting
Officer
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
- ------------------------------- -----------------
By: * Director, Chairman of the Board February 24, 2003
--------------------- and Chief Executive Officer
Micky Arison (Principal Executive Officer)
By: * Director, Vice-Chairman of the February 24, 2003
--------------------- Board and Chief Operating
Howard S. Frank Officer
By: * Senior Vice President--Finance February 24, 2003
--------------------- and Chief Financial and
Gerald R. Cahill Accounting Officer
By: Director
---------------------
Shari Arison
By: * Director February 24, 2003
---------------------
Maks L. Birnbach
By: * Director February 24, 2003
---------------------
Richard G. Capen, Jr.
By: * Director February 24, 2003
---------------------
Robert H. Dickinson
--------------------- Director
Arnold W. Donald
II-5
SIGNATURE TITLE DATE
--------- ----- ----
By: * Director February 24, 2003
--------------------
James M. Dubin
-------------------- Director
A. Kirk Lanterman
By: * Director February 24, 2003
--------------------
Modesto A. Maidique
By: * Director February 24, 2003
--------------------
Stuart Subotnick
By: * Director February 24, 2003
--------------------
Sherwood M. Weiser
By: * Director February 24, 2003
--------------------
Meshulam Zonis
By: * Director February 24, 2003
--------------------
Uzi Zucker
* By: /s/ ARNALDO PEREZ
-------------------------------
Arnaldo Perez
Attorney-in-Fact
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 24th day of February, 2003.
P&O PRINCESS CRUISES plc
By: /s/ NICHOLAS L. LUFF
-----------------------------
Nicholas L. Luff
Chief Financial Officer
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
--------- ------------------------------- -----------------
By: * Director and Chairman of the February 24, 2003
----------------------------- Board
The Lord Sterling of Plaistow
By: * Director and Chief Executive February 24, 2003
----------------------------- Officer
Peter G. Ratcliffe
By: * Chief Financial Officer February 24, 2003
-----------------------------
Nicholas L. Luff
By: * Group Financial Controller February 24, 2003
-----------------------------
Colin Rumble
By: * Director and Deputy Chairman of February 24, 2003
----------------------------- the Board
Sir John Parker
By: * Director February 24, 2003
-----------------------------
Peter Foy
By: * Director February 24, 2003
-----------------------------
Baroness Hogg
By: * Director February 24, 2003
-----------------------------
Horst Rahe
AUTHORIZED REPRESENTATIVE IN
THE UNITED STATES
By: * February 24, 2003
-------------------------------
Name: Mona Ehrenreich
Title: General Counsel,
Princess Cruises
* By: /s/ NICHOLAS L. LUFF
-------------------------------
Nicholas L. Luff
Attorney-in-Fact
II-7
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
5.1 Opinion of Tapia Linares y Alfaro*
5.2 Opinion of Freshfields Bruckhaus Deringer*
8.1 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP*
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)*
23.5 Consent of Paul, Weiss, Rifkind, Wharton & Garrison LLP (included in Exhibit 8.1)*
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)
99.1 Form of Proxy Card*
--------
* Filed as part of Amendment No. 1.