AGREED FORM
DATED 2002
ROYAL CARIBBEAN CRUISES LTD.
AND
P&O PRINCESS CRUISES PLC
------------------------------------------------
EQUALISATION AND GOVERNANCE AGREEMENT
------------------------------------------------
XXXXXXXXX AND MAY
00 XXXXXXXXXX XXXXXX
XXXXXX XX0X 0XX
REF: KMH
CONTENTS
PAGE
1. Definitions and Interpretation 1
2. Boards of P&O Princess and Royal Caribbean 10
3. Equalisation of Distributions 10
4. Capital Actions 12
5. Joint Electorate Actions 15
6. Separate Approvals of Class Rights Actions 16
7. Meetings and Voting 17
8. Change of Control of either P&O Princess or Royal Caribbean 19
9. Stock Exchange Compliance 19
10. Liquidation 19
11. Termination 20
12. Consequences of Termination 20
13. Personal rights only 21
14. Issue of Equalisation Shares 22
15. Relationship with other documents 22
16. Miscellaneous 22
17. Notices 23
18. Counterparts 24
19. Governing Law 24
20. Arbitration 24
AGREED FORM
EQUALISATION AND GOVERNANCE AGREEMENT
THIS AGREEMENT is made on - 2002 between:
(1) ROYAL CARIBBEAN CRUISES LTD., a Liberian corporation having its principal
place of business at 0000 Xxxxxxxxx Xxx, Xxxxx, Xxxxxxx 00000 ("ROYAL
CARIBBEAN"); and
(2) P&O PRINCESS CRUISES PLC, a public limited company incorporated in England
and Wales (Registered No. 4039524) having its registered office at 00 Xxx
Xxxxxx Xxxxxx, Xxxxxx XX0X 0XX ("P&O PRINCESS").
WHEREAS:
(A) P&O Princess and Royal Caribbean entered into an Implementation Agreement
as of 19 November 2001 pursuant to which P&O Princess and Royal Caribbean
have agreed to do certain acts and things to implement the DLC
Combination.
(B) P&O Princess and Royal Caribbean 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 Equalisation Ratio shall govern the proportion in which
distributions of income and capital are made to, and the relative
voting rights of, the holders of Royal Caribbean Common Stock
relative to the holders of P&O Princess Ordinary Shares.
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires:
"ACTION" means, in relation to Royal Caribbean 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 Royal Caribbean 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 Royal Caribbean 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 Royal Caribbean; 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 Royal Caribbean
are listed, traded or quoted; and
(ii) any other body with which entities with securities listed or
quoted on such exchanges customarily comply,
(but, if not having the force of law, only if compliance with such
directives, requirements, rules, regulations or guidelines is in
accordance with the general practice of persons to whom they are intended
to apply) in each case for the time being in force and taking account all
exemptions, waivers or variations from time to time applicable (in
particular situations or generally) to P&O Princess or, as the case may
be, Royal Caribbean;
"ASSOCIATED TAX CREDIT" means, in relation to any Distribution proposed to
be made by either P&O Princess or Royal Caribbean, 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 Royal Caribbean as
the context may require;
"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;
"BOARD OF ROYAL CARIBBEAN" means the board of directors of Royal Caribbean
(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 cities of both 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);
"CLASS RIGHTS ACTION" means any of the actions listed in Clause 6.1;
"COMBINED GROUP" means the P&O Princess Group and the Royal Caribbean
Group;
"COMBINED SHAREHOLDERS" means the holders of Royal Caribbean 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 of
the Implementation Agreement have been completed;
"CURRENT MARKET PRICE" has the meaning given to it in Clause 3 of the
Schedule;
"DEALING DAY" has the meaning given to it in Paragraph 3 of the Schedule
"DISPUTE" has the meaning given to it in Clause 20(A);
"DISTRIBUTABLE RESERVES" means, with respect to any Distribution by Royal
Caribbean 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 Royal Caribbean or P&O Princess, as the
case may be;
"DISTRIBUTION" means, in relation to Royal Caribbean 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 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 Royal Caribbean and P&O Princess, the date on
which the Board of P&O Princess and the Board of Royal Caribbean 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 Royal Caribbean and P&O
Princess by means of a dual listed company structure effected pursuant to
this Agreement and the transactions contemplated hereby, including the SVC
Voting Deed, the Royal Caribbean Articles and By-laws, the P&O Princess
Memorandum and Articles, the Royal Caribbean Guarantee and the P&O
Princess Guarantee.
"DLC STRUCTURE" means the structure created by the DLC Combination;
"EQUALISATION DISTRIBUTION AMOUNT" means, in relation to either P&O
Princess or Royal Caribbean, 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;
"EQUALISATION FRACTION" means, as of any date, the Equalisation Ratio as
of such date expressed as a fraction where the numerator is one and the
denominator is the P&O Princess Equivalent Number comprising the second
element of such Equalisation Ratio.
"EQUALISATION RATIO" means the ratio of (i) one share of Royal Caribbean
Common Stock to (ii) that number of P&O Princess Ordinary Shares that have
the same rights to distributions of income and capital and voting rights
as one share of Royal Caribbean Common Stock (the "P&O PRINCESS EQUIVALENT
NUMBER"). The Equalisation Ratio shall initially be 1:1 immediately after
Completion and shall be subject to adjustment in the future as provided in
Clause 4 and the Schedule. In all cases, the P&O Princess Equivalent
Number shall be rounded to five decimal places;
"EQUALISATION SHARE" means, in relation to P&O Princess, the P&O Princess
Equalisation Share and, in relation to Royal Caribbean, the Royal
Caribbean Equalisation Share;
"EQUITY EQUIVALENTS" has the meaning given in Clause 4.4(A);
"EQUIVALENT DISTRIBUTION" has the meaning given in Clause 3.1;
"EQUIVALENT LIQUIDATION PAYMENTS" has the meaning given in Clause 10.2;
"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 Royal
Caribbean or any other period for which both of their accounts may by
mutual agreement be made up;
"GOVERNMENTAL AGENCY" means a court of competent jurisdiction or any
government or any governmental, regulatory, self-regulatory or
administrative authority, agency, commission, body or other governmental
entity and shall include any relevant competition authorities, the UK
Panel on Takeovers and Mergers, the London Stock Exchange, the UK Listing
Authority, the Oslo Stock Exchange, the U.S. Securities and Exchange
Commission and the New York Stock Exchange;
"GROUP" means, in relation to P&O Princess, the P&O Princess Group and, in
relation to Royal Caribbean, the Royal Caribbean Group as the context
requires;
"GUARANTEE" means each of the P&O Princess Guarantee and the Royal
Caribbean Guarantee;
"IMPLEMENTATION AGREEMENT" means the agreement headed "Implementation
Agreement" entered into between P&O Princess and Royal Caribbean as of 19
November 2001;
"JOINT ELECTORATE ACTION" means any of the resolutions referred to in
Clause 5.1;
"JOINT ELECTORATE PROCEDURE" means the procedures referred to in Clause
5.2;
"LIQUIDATION" means, with respect to either Royal Caribbean 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" means, in relation to Royal Caribbean 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 Royal Caribbean or the
Board of P&O Princess and liquidators of Royal Caribbean or the Board of
Royal Caribbean and the liquidators of P&O Princess or the liquidators of
both P&O Princess and Royal Caribbean, as the case may be, may determine,
in each case rounded to five decimal places;
"LONDON STOCK EXCHANGE" means London Stock Exchange plc;
"MAJORITY RESOLUTION" means, with respect to Royal Caribbean 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 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;
"NEW YORK STOCK EXCHANGE" means the New York Stock Exchange, Inc.;
"OSLO STOCK EXCHANGE" means the Oslo Bors;
"P&O PRINCESS GUARANTEE" means the agreement of even date herewith whereby
P&O Princess agrees to guarantee certain obligations of Royal Caribbean
for the benefit of certain future creditors of Royal Caribbean, as amended
from time to time;
"P&O PRINCESS ENTRENCHED PROVISION" has the meaning given to it in the P&O
Princess Memorandum and Articles;
"P&O PRINCESS EQUALISATION SHARE" means the equalisation share of
[L50,000] in P&O Princess;
"P&O PRINCESS EQUIVALENT NUMBER" has the meaning given in the definition
of "EQUALISATION RATIO";
"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$1.732 each in P&O Princess from time to time (including the underlying
ordinary shares to each P&O Princess American Depositary Receipt), 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 SVC" means P&O Princess SVC Limited, a company incorporated
in England and Wales with registered number - or such other company as
replaces P&O Princess SVC Limited pursuant to the terms of the SVC Voting
Deed;
"P&O PRINCESS SPECIAL VOTING SHARE" means the special voting share of L1
in P&O Princess;
"PRIMARY ACTION" has the meaning given in Clause 4.5;
"RELEVANT COMPANY" has the meaning given in paragraph 1.1 of the Schedule;
"REQUIRED MAJORITY" has the meaning given in Clause 6.2;
"ROYAL CARIBBEAN ARTICLES AND BY-LAWS" means the Amended Articles of
Incorporation and the By-laws of Royal Caribbean which will be in effect
immediately following Completion, as amended from time to time;
"ROYAL CARIBBEAN COMMON STOCK" means the issued and outstanding common
stock, par value US$0.01 per share, of Royal Caribbean 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;
"ROYAL CARIBBEAN GUARANTEE" means the agreement of even date herewith
whereby Royal Caribbean 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;
"ROYAL CARIBBEAN ENTRENCHED PROVISION" has the meaning given to it in the
Royal Caribbean Articles and By-laws;
"ROYAL CARIBBEAN EQUALISATION SHARE" means any share designated as an
equalisation share in Royal Caribbean from time to time by the Board of
Royal Caribbean;
"ROYAL CARIBBEAN GROUP" means Royal Caribbean and its Subsidiaries from
time to time and a member of the Royal Caribbean Group means any one of
them;
"ROYAL CARIBBEAN SVC" means Royal Caribbean SVC Limited, a company
incorporated in England and Wales with registered number - or such other
company as replaces Royal Caribbean SVC Limited pursuant to the terms of
the SVC Voting Deed;
"ROYAL CARIBBEAN SPECIAL VOTING SHARE" means the special voting share of
US$0.01 in Royal Caribbean;
"SHARES" means, in relation to P&O Princess, the P&O Princess Ordinary
Shares and, in relation to Royal Caribbean, the Royal Caribbean Common
Stock;
"SPECIAL VOTING SHARE" means, in relation to Royal Caribbean, the Royal
Caribbean 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 Royal Caribbean 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;
"SUPER-MAJORITY RESOLUTION" means, with respect to Royal Caribbean or P&O
Princess, a resolution required by Applicable Regulations and/or the Royal
Caribbean 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 in favour and against the resolution is required to be calculated
by a different mechanism to that required by a Majority Resolution;
"SVC VOTING DEED" means the agreement of even date herewith entered into
between Royal Caribbean SVC, P&O Princess SVC, the Trustee, P&O Princess
and Royal Caribbean relating, inter alia,
to how each Special Voting Share is to be voted, as amended from time to
time;
"TAX" means any taxes, levies, imposts, deductions, charges, withholdings
or duties levied by any authority (including stamp and transaction duties)
(together with any related interest, penalties, fines and expenses in
connection with them);
"TAX BENEFIT" means any credit, rebate, exemption or benefit in respect of
Tax available to any person;
"TRIBUNAL" has the meaning given to it in Clause 20(B);
"TRUSTEE" means The Law Debenture Trust Corporation plc or such other
trust company as shall be agreed between P&O Princess and Royal Caribbean;
"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 Xxx 0000;
"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
Royal Caribbean 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 Royal Caribbean
Common Stock or P&O Princess Ordinary Shares (or any other class of shares
entitled to vote) shall not be counted as having been Voted for these
purposes.
1.2 INTERPRETATION
Headings are for convenience only and do not affect interpretation. The
following rules of interpretation apply unless the context requires
otherwise.
(A) The singular includes the plural and conversely.
(B) One gender includes all genders.
(C) Where a word or phrase is defined, its other grammatical forms have
a corresponding meaning.
(D) A reference to a person includes a body corporate, an unincorporated
body or other entity and conversely.
(E) A reference to a Clause or a Schedule is to a Clause of or a
Schedule to this Agreement, and the Schedule forms part of this
Agreement.
(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, include, or including does not
limit what else might be included. Where particular words are
following by general words, the general words are not limited by the
particular.
(J) Reference to a body, other than a party to this Agreement (including
any Governmental Agency), whether statutory or not:
(i) which ceases to exist; or
(ii) whose powers or functions are transferred to another body,
is a reference to the body which replaces it or which substantially
succeeds to its powers or functions.
(K) All references to time are to the local time in the place where the
relevant obligation is to be performed (or right exercised).
(L) References in this Agreement to US$ and cents are to United States
dollars and cents and to L and p are to pounds sterling and to xxxxx
xxxxxxxx.
(M) References to an offer by way of rights by Royal Caribbean 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 ROYAL CARIBBEAN
2.1 BOARD PRINCIPLES
P&O Princess and Royal Caribbean agree that the following principles are
essential to the implementation, management and operation of the DLC
Structure:
(A) P&O Princess and Royal Caribbean 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 Royal Caribbean 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 holdings of Royal Caribbean Common Stock as
if the two companies were a single unified legal entity.
2.2 BOARD COMPOSITION
Each of Royal Caribbean 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 Royal
Caribbean comprise exactly the same individuals.
2.3 INDEMNIFICATION OF DIRECTORS
Each of Royal Caribbean 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 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 of the Implementation
Agreement.
3. EQUALISATION OF DISTRIBUTIONS
3.1 EQUALISATION PRINCIPLE
3.1.1 Subject to the other provisions of this Agreement, neither Royal
Caribbean 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 Equalisation Distribution Amount
so paid or made by Royal Caribbean to the Equalisation 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 Equalisation 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 Royal Caribbean 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 Royal Caribbean 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 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 credits of, the
parties with respect to the payment or receipt of such payment and any
such payment may be made on the Equalisation Share issued by the paying
party if both Boards deem it appropriate.
3.2 TIMING OF EQUALISED DISTRIBUTIONS
The parties agree that, insofar as is practical, the Boards of P&O
Princess and Royal Caribbean shall:
(A) in relation to any proposed cash Distribution, agree the amount of
the Equivalent Distribution to be made by each company;
(B) determine to pay or recommend to pay Equivalent Distributions at
Board meetings convened as close in time to each other as is
practicable;
(C) announce and pay their Equivalent Distributions simultaneously or as
close in time as is practicable;
(D) ensure that the record dates for receipt of the Equivalent
Distributions are on the same date; and
(E) generally co-ordinate the timing of all other aspects of the payment
or making of Equivalent Distributions.
4. CAPITAL ACTIONS
4.1 EQUALISATION PRINCIPLE
The capital of the DLC Structure is to be deployed and managed in the most
effective way for the benefit of the Combined Shareholders. Solely for
purposes of construing the provisions of this Clause 4 and the Schedule,
and without providing an independent basis for requiring any adjustment to
the Equalisation Ratio or other action hereunder, Royal Caribbean 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 Royal Caribbean Common Stock and the interests
of the holders of P&O Princess Ordinary Shares, unless approved as a Class
Rights Action.
4.2 AUTOMATIC ADJUSTMENT
If any Action by Royal Caribbean or P&O Princess is covered by the
Schedule, then an automatic adjustment to the Equalisation
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.
4.3 OTHER ACTIONS
If any Action by Royal Caribbean or P&O Princess is not covered by the
Schedule, then no automatic adjustment to the Equalisation 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 Equalisation
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 Royal Caribbean Common Stock and the
interests of holders of P&O Princess Ordinary Shares. In all cases, the
Boards of P&O Princess and Royal Caribbean will co-operate in deciding
what (if any) Actions or Matching Actions to undertake.
4.4 NO ADJUSTMENT REQUIRED
Notwithstanding any other provision of this Clause 4 or the Schedule, no
adjustment to the Equalisation Ratio will be required on the following
Actions:
(A) grants or issuances by Royal Caribbean 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 Royal Caribbean pursuant to a share or stock option or
purchase or other benefit plan to or on behalf of any one or more of
the directors, officers, employees or consultants (in their capacity
as such) of
such company or any of its Subsidiaries, which plans are either:
(i) in existence prior to the date of this Agreement; or
(ii) approved by the relevant Board and as otherwise required by
Applicable Regulations;
(C) any issuances of Royal Caribbean Common Stock under Royal
Caribbean's Liquid Yield Option Notes due 2 February 2021 and Royal
Caribbean's Zero Coupon Convertible Notes due 18 May 2021;
(D) other issuances by Royal Caribbean or P&O Princess of its equity
securities or equity equivalents to any person, other than by way of
rights to the holders of its Shares as a class, including for
acquisitions;
(E) repurchases or buy-backs by Royal Caribbean 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 Royal Caribbean of Excess Shares (as defined
in the Royal Caribbean Articles and By-laws) under articles
tenth and eleventh of the Royal Caribbean Articles and By-laws
(or any equivalent amended articles of Royal Caribbean's
Articles and By-laws);
(iv) any purchase pursuant to the provisions of the Royal Caribbean
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 Equalisation Ratio);
(F) Matching Actions;
(G) the issue of an Equalisation Share in accordance with Clause 14 by
either party; and
(H) any issue of preferred stock in accordance with the Joint Venture
Agreement among Joex Limited, P&O Princess and Royal Caribbean,
dated as of 19 November 2001.
4.5 MATCHING ACTION
For the purposes of this Agreement, a "MATCHING ACTION" means, in relation
to an Action in respect of the holders of Shares of Royal Caribbean 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
Equalisation Ratio, the timing of the Primary Action and any
proposed Matching Action, and any other relevant circumstances;
(B) in relation to any Action, when calculating any economic return to
the holders of P&O Princess Ordinary Shares or Royal Caribbean
Common Stock, any Tax or Tax Benefit shall be disregarded; and
(C) the Boards of Royal Caribbean 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 Royal
Caribbean and P&O Princess, as the case may be, decide to undertake
a particular Matching Action.
4.6 BOARDS' DECISIONS FINAL
The decision as to whether an Action is a Matching Action shall be a
decision solely for the Boards of P&O Princess and Royal Caribbean, 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 Royal Caribbean in accordance with
this Clause 4 shall be final and binding.
5. JOINT ELECTORATE ACTIONS
5.1 JOINT ELECTORATE ACTIONS
5.1.1 All actions put to shareholders of either P&O Princess or Royal
Caribbean, 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 Royal Caribbean
Common Stock, will be put to the Combined Shareholders as Joint Electorate
Actions:
(A) the appointment, removal or re-election of any director of Royal
Caribbean or P&O Princess, or both of them;
(B) the receipt or adoption of the annual accounts of P&O Princess or
Royal Caribbean, or both of them, or accounts prepared on a combined
basis, other than any accounts in respect of the period(s) ended
prior to the date of Completion;
(C) a change of name by P&O Princess or Royal Caribbean, or both of
them; or
(D) the appointment or removal of the auditors of P&O Princess or Royal
Caribbean, or both of them.
5.2 JOINT ELECTORATE PROCEDURE
A Joint Electorate Action shall be approved under the Joint Electorate
Procedure if, and only if, such action shall have been approved by:
(A) a Majority Resolution of P&O Princess (or, if the P&O Princess
Memorandum and Articles or Applicable Regulations require the action
to be approved by Super-majority Resolution of the holders of the
P&O Princess Ordinary Shares, by a Super-majority Resolution); and
(B) a Majority Resolution of Royal Caribbean (or, if the Royal Caribbean
Articles and By-laws or Applicable Regulations require the action to
be approved by Super-majority Resolution of the holders of the Royal
Caribbean Common Stock, by a Super-majority Resolution).
6. SEPARATE APPROVALS OF CLASS RIGHTS ACTIONS
6.1 CLASS RIGHTS ACTION
Notwithstanding anything to the contrary contained in this Agreement, if
either P&O Princess or Royal Caribbean 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 proposed;
(B) the sale, lease, exchange or other disposition of all or
substantially all of the assets of such company;
(C) any adjustment to the Equalization Ratio otherwise than in
accordance with the provisions of this Agreement;
(D) (save where specifically provided for in the relevant agreements)
any amendment to the terms of, or any termination of, this
Agreement, the SVC Voting Deed, the P&O Princess Guarantee or the
Royal Caribbean Guarantee (and, for the avoidance of doubt, the
voluntary termination of either Guarantee will always need to be
approved as a Class Rights Action);
(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 Royal Caribbean Entrenched Provision;
and
(F) the doing of anything which the Boards of Royal Caribbean and P&O
Princess agree (either in a particular case or generally) 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 in accordance with this Clause 6.
6.2 APPROVALS OF CLASS RIGHTS ACTION
A Class Rights Action shall be determined by a Majority Resolution of each
company, unless Applicable Regulations and/or the Royal Caribbean Articles
and By-laws and the P&O Princess Memorandum and Articles (as relevant)
require such Class Rights Action to be approved as a Super-majority
Resolution by either or both companies, in which case it shall be approved
as a Special Resolution by the relevant company or companies to which such
requirement applies (the "REQUIRED MAJORITY").
6.3 CLASS RIGHTS PROCEDURE
A Class Rights Action must be approved separately by the Required Majority
of (i) the holders of the Royal Caribbean Common Stock and the holders of
any other class of shares of Royal Caribbean that are entitled to vote
pursuant to Applicable Regulations and/or the Royal Caribbean 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 Application Regulations and/or the P&O Princess
Memorandum and Articles. Each of Royal Caribbean and P&O Princess will
convene a shareholders meeting at which the holders of its Shares and the
holder of its Special Voting Share (and the holders of any other relevant
class of shares) may vote upon the Class Rights Action together as a
single class on a poll; PROVIDED THAT the holder of the relevant Special
Voting Share shall not vote on such resolution unless the Class Rights
Action is not approved by the Required Majority of the holders of Shares
(and any other relevant class of shares) of the other company, in which
case the holder of the Special Voting Share shall vote so as to defeat the
resolution (and will have sufficient votes to effect such defeat).
7. MEETINGS AND VOTING
7.1 OBLIGATIONS TO CONVENE MEETINGS
In relation to both Joint Electorate Actions and Class Rights
Actions:
(A) each party shall, as soon as practicable, convene a meeting of its
shareholders for the purpose of considering a resolution to approve
the Joint Electorate Action or Class Rights Action;
(B) each party shall endeavour to ensure such meetings are held on dates
as close together as is practicable; and
(C) the parties shall co-operate fully with each other in preparing
resolutions, explanatory memoranda or any other information or
material required in connection with the proposed Joint Electorate
Action or Class Rights Action.
7.2 POLL
Each of P&O Princess and Royal Caribbean 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
Royal Caribbean Special Voting Share, is or may be entitled to vote shall
be decided on by a
poll (i.e. by tabulation of individual votes) and not, for the avoidance
of doubt, on a show of hands.
7.3 TIMING OF POLL
7.3.1 P&O Princess agrees with Royal Caribbean that any poll on 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 Royal
Caribbean 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 Royal Caribbean agrees with P&O Princess that any poll on which the
holder of the Royal Caribbean Special Voting Share is or may be entitled
to vote shall (as regards the Royal Caribbean 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 Royal Caribbean
Special Voting Share to be calculated and cast on such poll, although such
poll may be closed earlier in respect of shares of other classes.
7.4 DISCRETIONARY MATTERS.
The Boards of P&O Princess and Royal Caribbean 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 Royal Caribbean
for any matter that would not otherwise require such approval;
(B) require any Joint Electorate Action to be approved as a Class Rights
Action; or
(C) specify a higher majority vote than the majority that would
otherwise be required for any shareholder vote provided for in this
Clause 7.
7.5 PROCEDURAL RESOLUTIONS
Notwithstanding anything to the contrary contained in this Agreement,
resolutions of Royal Caribbean 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 (where a
member 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);
(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 meeting.
8. CHANGE OF CONTROL OF EITHER P&O PRINCESS OR ROYAL CARIBBEAN
Royal Caribbean and P&O Princess shall co-operate with each other in the
prompt enforcement of the provisions of Article - of the Royal Caribbean
Articles and By-laws and Article - of the P&O Princess Memorandum and
Articles to the full extent possible under law.
9. STOCK EXCHANGES
Each of P&O Princess and Royal Caribbean will, and so far as it is able
will ensure that each of its Subsidiaries will, ensure that it is in a
position to comply with obligations imposed on it by all stock exchanges
on which either or both of the parties' shares (or other securities or
depository receipts representing such shares or securities) are from time
to time listed, quoted or traded.
10. LIQUIDATION
10.1 LIQUIDATION PRINCIPLE
If either or both of Royal Caribbean and/or P&O Princess goes into any
voluntary or involuntary Liquidation, Royal Caribbean 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 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 Equalisation Ratio, having
regard to the Liquidation Exchange Rate but ignoring any shareholder Tax
or Tax Benefit.
10.2 LIQUIDATION PROCEDURE
10.2.1 To establish the amount payable under Clause 10.1, each of Royal
Caribbean 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 (taking into account the then existing Equalisation Ratio) than
the equivalent 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
Equalisation 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 ("EQUIVALENT LIQUIDATION
PAYMENTS"), 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 Payments, 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 Royal Caribbean 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 Equalisation Share issued by the paying
party if both Boards deem it appropriate.
10.3 LIQUIDATION ACTIONS
In giving effect to the principle regarding a Liquidation of Royal
Caribbean and/or P&O Princess described above, Royal Caribbean 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 Equalisation 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 Royal Caribbean 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 Royal Caribbean or P&O Princess may terminate this Agreement:
(A) on the mutual agreement of both parties (upon approval as a Class
Rights Action);
(B) if either party becomes a wholly-owned Subsidiary of the other; or
(C) after all Liquidation obligations under Clause 10 have been
satisfied.
12. CONSEQUENCES OF TERMINATION
12.1 NON DUAL-LISTED GROUP
In any combination of Royal Caribbean 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 Equalisation Ratio.
12.2 OTHER CIRCUMSTANCES
12.2.1 In any other circumstances of termination of the DLC Structure, the
Boards of Royal Caribbean 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 Royal
Caribbean Common Stock and the holders of P&O Princess Ordinary Shares, at
the applicable Equalisation 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 Equalisation 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 Equalisation 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 Equalisation Share issued by the paying
party if both Boards deem it appropriate.
13. PERSONAL RIGHTS ONLY
13.1 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
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) Xxx 0000, by any person who is not a party to this
Agreement.
13.2 PERSONAL RIGHTS
For the avoidance of doubt, the provisions of this Agreement are personal
rights only. They do not, and are not intended to, create any proprietary
right (including any proprietary right in any member, shareholder or
creditor of P&O Princess or Royal Caribbean). These undertakings are not
assignable, and cannot be subject to a mortgage, charge, pledge,
encumbrance or other security interest. These undertakings do not survive
any termination of this Agreement. It is fundamental to the agreement of
each of P&O Princess and Royal Caribbean 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 Royal Caribbean to accept these
undertakings that they should be performed solely by the other.
14. ISSUE OF EQUALISATION SHARES
The parties agree that the Board of P&O Princess and the Board of Royal
Caribbean may agree to the issue of the P&O Princess Equalisation Share to
a member of the Royal Caribbean Group (against the nominal value of that
share) and of the Royal Caribbean Equalisation Share to a member of the
P&O Princess Group (against the nominal value of that share), but that
neither Royal Caribbean or P&O Princess shall issue its Equalisation Share
unless the Board of Royal Caribbean 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
Royal Caribbean 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
Royal Caribbean Articles and By-laws, as is appropriate, is proposed at
meetings of P&O Princess and/or as the case may be Royal Caribbean in
order to conform it or them with the provisions of this Agreement.
16. MISCELLANEOUS
16.1 REGULATORY
The parties will co-operate with each other from time to time to ensure
that all information necessary or desirable for the making of (or
responding to any requests for further information consequent upon) any
notifications or filings made in respect of this Agreement, or the
transactions contemplated hereunder, is supplied to the party dealing with
such notification and filings and that they are properly, accurately and
promptly made.
16.2 NO ASSIGNMENT
Neither of the parties may assign any of its rights or obligations under
this Agreement in whole or in part without the approval of the other
party.
16.3 NO WAIVER
No waiver by a party of a failure or failures by the other party to
perform any provision of this Agreement shall operate or be construed as a
waiver in respect of any other or further failure whether of a like or
different character.
16.4 NO PARTNERSHIP OR AGENCY
Nothing in this Agreement (or in any of the arrangements contemplated
hereby) shall be deemed to constitute a partnership between P&O Princess
and Royal Caribbean, nor constitute either party as agent of the other
party for any purpose.
16.5 APPLICABLE REGULATIONS
Each of the obligations of the parties hereto shall be subject to any
Applicable Regulations as in force from time to time. To the extent not
prohibited by law, the parties will do all things necessary to remedy any
situation where Applicable Regulations prevent any party from performing
its obligations hereunder.
16.6 SEVERANCE
If any of the provisions of this Agreement is or becomes invalid, illegal
or unenforceable under any relevant law, the validity, legality or
enforceability of the remaining provisions shall not in any way be
affected or impaired. Notwithstanding the foregoing, the parties shall
thereupon negotiate in good faith in order to agree the terms of a
mutually satisfactory provision, achieving as nearly as possible the same
commercial effect, to be substituted for the provision found to be
invalid, illegal or unenforceable.
16.7 AMENDMENT
Any amendment to or termination of this Agreement shall be made in writing
signed by duly authorised representatives of P&O Princess and Royal
Caribbean. 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 Royal Caribbean. 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
English law.
20. ARBITRATION
(A) Any and all disputes, controversies or claims arising out of or in
connection with this Agreement, any provision hereof, or any alleged
breach hereof, and any and all disputes, controversies or claims
relating to the validity of this Agreement (all of which are
referred to herein as "DISPUTES"), even though some or all of such
Disputes are alleged to be extra-contractual in nature, whether such
Disputes sound in contract, tort or otherwise, at law or in equity,
whether for damages, specific performance or other relief, shall be
finally and exclusively determined by final and binding arbitration
in accordance with this Clause 20.
(B) The arbitral tribunal (the "TRIBUNAL") shall be composed of three
arbitrators, which shall be appointed as follows: each party shall
have the right to appoint one arbitrator; the two arbitrators so
appointed shall then appoint a third arbitrator who shall serve as
the Chairman of the Tribunal. A person or persons, entitled to
appoint an arbitrator, shall appoint such arbitrator within ten (10)
days of receiving notice from a party of the commencement of an
arbitration, failing which such arbitrator shall, at the written
request of either party, be appointed by the International Chamber
of Commerce. At the initiation of a proceeding and upon the
convening of the Tribunal, the arbitrators shall take an oath of
neutrality and shall decide the matters presented to them based upon
the evidence submitted in the proceeding and without regard to the
origin or circumstances of their appointment or selection for
service on the Tribunal.
(C) The construction and interpretation of this Clause 20, and all rules
of conduct of any arbitration conducted pursuant to this Clause 20
(including procedural and evidentiary matters), shall be determined
by the Tribunal. Unless otherwise unanimously agreed by the
arbitrators, the venue of the arbitration shall be Miami, Florida,
USA.
(D) The Tribunal shall conduct a hearing as soon as reasonably
practicable after a matter has been submitted for arbitration by a
party and the members of the Tribunal have been selected. As the
Tribunal may direct and without the necessity of subpoenas or other
court orders, the parties shall make their agents, employees and
witnesses available upon reasonable notice at reasonable times for
deposition or for testimony at the hearing and shall respond to
requests for documents. An award completely disposing of all
Disputes (a "FINAL AWARD") shall be rendered by the Tribunal as soon
as reasonably practicable after the hearing. The Tribunal shall not
be required to submit a detailed statement of its reasons, but shall
set forth concisely in the Final Award the amounts, actions,
contractual responsibilities or other remedial conclusions that the
Tribunal determines to be appropriate.
(E) Each party acknowledges and agrees that in the event either party
breaches any of its obligations under this Agreement, the other
party would be irreparably harmed and could not be made whole by
monetary damages alone. Both parties accordingly agree that the
Tribunal shall have the authority to grant any party all appropriate
non-monetary relief, including ordering a breaching party to comply
fully with its obligations under the Agreement, ordering specific
performance or granting temporary or permanent injunctive relief;
PROVIDED, HOWEVER, that nothing in this Clause 20 shall be construed
to limit the Tribunal in awarding 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.
SCHEDULE
AUTOMATIC ADJUSTMENTS TO THE EQUALISATION RATIO
1. AUTOMATIC ADJUSTMENTS
1.1 RIGHTS ISSUE OF SHARES
If either Royal Caribbean 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 Equalisation Ratio shall be
adjusted by:
(i) multiplying the Equalisation Ratio by the following fraction where
Royal Caribbean is the Relevant Company; and
(ii) dividing the Equalisation Ratio by the following fraction where P&O
Princess is the Relevant Company:
K + L Q
----- where L = --- M
K + M P
where:
K is the number of Shares of the Relevant Company which rank for the relevant
offer;
M is the aggregate number of Shares being offered to the holders of Shares of
the Relevant Company;
P is the Current Market Price of one Share of the Relevant Company; and
Q is the price per Share being offered to the holders of Shares of the Relevant
Company.
The adjustment to the Equalisation Ratio shall become effective from the later
of the time at which the Shares of the Relevant Company are first traded
ex-rights and the time at which the issue of the Shares becomes wholly
unconditional.
1.2 RIGHTS ISSUE OF OTHER SECURITIES
If the Relevant Company shall offer any securities (other than a rights issue of
Shares described in paragraph 1.1 of this Schedule) to holders of its Shares as
a class by way of rights, or grant to such shareholders as a class by way of
rights, any options, warrants or other rights to subscribe for, purchase or sell
any securities, the Equalisation Ratio shall be adjusted by:
(i) multiplying the Equalisation Ratio by the following fraction where
Royal Caribbean is the Relevant Company; and
(ii) dividing the Equalisation Ratio 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.
The adjustment to the Equalisation Ratio shall become effective from the later
of the time at which the Shares of the Relevant Company are first traded
ex-rights and the time at which the issue of the Shares becomes wholly
unconditional.
1.3 NON CASH DISTRIBUTIONS AND SHARE REPURCHASES
If the Relevant Company shall implement (i) any distribution of any non-cash
assets; or (ii) any repurchase of its Shares involving an offer made to all or
substantially all of its holders of Shares to repurchase their Shares at a
premium to the Current Market Price of such shares, the Equalisation Ratio shall
be adjusted by:
(i) multiplying the Equalisation Ratio by the following fraction where
Royal Caribbean is the Relevant Company; and
(ii) dividing the Equalisation Ratio 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 Equalisation Ratio shall become effective immediately
following implementation of the non-cash Distribution or repurchase.
1.4 CONSOLIDATION OR SUBDIVISION OF SHARES
If there shall be a change to the number of Shares of the Relevant Company as a
result of a consolidation or subdivision of shares, the Equalisation Ratio shall
be adjusted by:
(i) multiplying the Equalisation Ratio by the following fraction where
Royal Caribbean is the Relevant Company; and
(ii) dividing the Equalisation Ratio 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 Equalisation Ratio shall become effective immediately
after the alteration takes effect.
1.5 BONUS ISSUE OR STOCK DIVIDEND
If the Relevant Company issues any Shares to holders of Shares for no
consideration or solely by way of capitalisation of profits or reserves, the
Equalisation Ratio shall be adjusted by:
(i) multiplying the Equalisation Ratio by the following fraction where
Royal Caribbean is the Relevant Company; and
(ii) dividing the Equalisation Ratio 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 Equalisation Ratio 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 Royal Caribbean shall
jointly certify the arithmetical adjustment to be made to the Equalisation Ratio
in the circumstances set out in this Schedule where an adjustment is made to
such Equalisation Ratio 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 Royal Caribbean 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 Royal
Caribbean 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.
