Sarbanes-Oxley Act of 2002.
32.1-Certification of Chief Executive Officer of Carnival Corporation pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2-Certification of Chief Operating Officer of Carnival Corporation pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.3-Certification of Executive Vice President and Chief Financial and
Accounting Officer of Carnival Corporation pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.4-Certification of Chief Executive Officer of Carnival plc pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
32.5-Certification of Chief Operating Officer of Carnival plc pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
32.6-Certification of Executive Vice President and Chief Financial and
Accounting Officer of Carnival plc pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
42
Exhibit 4.1
February 19, 2004
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, DC 20549
RE: Carnival Corporation,
Commission File No. 1-9610, and Carnival plc, Commission File No. 1-15136
Gentlemen:
Pursuant to Item 601(b)(4)(iii) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended, Carnival Corporation and Carnival
plc (the "Companies") hereby agree to furnish copies of certain long-term debt
instruments to the Securities and Exchange Commission upon the request of the
Commission, and, in accordance with such regulation, such instruments are not
being filed as part of the joint Annual Report on Form 10-K of the Companies for
their year ended November 30, 2003.
Very truly yours,
CARNIVAL CORPORATION AND CARNIVAL PLC
/s/ Arnaldo Perez
Senior Vice President, General Counsel
and Secretary
43
Exhibit 4.14
CARNIVAL PLC
(formerly known as P&O PRINCESS CRUISES PLC)
CARNIVAL CORPORATION
P&O PRINCESS CRUISES INTERNATIONAL LIMITED
TO
THE BANK OF NEW YORK
Trustee
7.30% NOTES DUE 2007
7.875% DEBENTURES DUE 2027
----------------------------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of December 1, 2003
----------------------------------------------
SECOND SUPPLEMENTAL INDENTURE (this "Second Supplemental
Indenture"), dated as of December 1, 2003, among CARNIVAL PLC (formerly known as
P&O Princess Cruises plc), a public limited company existing under the laws of
England and Wales ("Carnival plc"), CARNIVAL CORPORATION, a corporation
organized under the laws of the Republic of Panama ("Carnival Corporation"), P&O
PRINCESS CRUISES INTERNATIONAL LIMITED (formerly known as P&O Cruises Limited),
a limited liability company existing under the laws of England and Wales (the
"Guarantor"), and THE BANK OF NEW YORK, as trustee under the Indenture referred
to below (the "Trustee").
W I T N E S S E T H:
WHEREAS, Carnival plc, the Guarantor and the Trustee are parties to
that certain Indenture, dated as of October 23, 2000, and amended by a First
Supplemental Indenture, dated as of July 15, 2003 (as amended, the "Original
Indenture" and, together with this Second Supplemental Indenture, the
"Indenture," capitalized terms used but not otherwise defined in this Second
Supplemental Indenture having the meanings ascribed to them in the Original
Indenture), pursuant to which Carnival plc duly issued its 7.30% Notes due 2007
(the "Notes") and the 7.875% Debentures due 2027 (the "Debentures"), both of
which are unconditionally guaranteed by the Guarantor pursuant to the Original
Indenture and guaranteed by Carnival Corporation pursuant to a Deed of
Guarantee, dated as of April 17, 2003, between Carnival Corporation and Carnival
plc and an Agreement relating to the Deed of Guarantee, dated as of July 15,
2003, between such parties (the "Carnival Corporation Guarantee");
WHEREAS, Carnival plc, the Guarantor and Carnival Corporation have
entered into a series of related transactions (the "Transfer") in which (i)
Carnival plc has transferred all or substantially all of its assets to Carnival
Corporation and (ii) the Guarantor has transferred all or substantially all of
its assets to Carnival Corporation;
WHEREAS, as required by Section 5.01 of the Original Indenture,
Carnival Corporation wishes to expressly assume, by this Second Supplemental
Indenture, the due and punctual performance and observance of all of the
covenants and conditions to be performed and observed by Carnival plc and the
Guarantor under the Original Indenture, the Securities and the Guarantee, as the
case may be;
WHEREAS, Carnival plc wishes to guarantee Carnival Corporation's
obligations under the Indenture and the Securities;
WHEREAS, POPCIL will be guaranteeing Carnival Corporation's and
Carnival plc's obligations as "Obligations" pursuant to the Deed of Guarantee,
dated as of June 19, 2003, among POPCIL, Carnival Corporation and Carnival plc
(the "POPCIL Deed of Guarantee");
WHEREAS, Carnival Corporation wishes to cause Carnival plc and its
Subsidiaries to comply with certain of the covenants in the Indenture and to
provide for certain additional Events of Default;
WHEREAS, Section 9.01 of the Original Indenture provides that
Carnival plc, the Guarantor and the Trustee may amend or supplement the Original
Indenture with respect to the Securities without the consent of any Holder of
any Security (i) to provide for the assumption of Carnival plc's and/or the
Guarantor's obligations to Holders of Securities in the case of a merger or
consolidation or sale of all or substantially all of Carnival plc's assets or
(ii) to make any change that would provide any additional rights or benefits to
the Holders of Securities or that does not adversely affect the legal rights
under the Original Indenture of any such Holder; and
WHEREAS, (i) the execution of this Second Supplemental Indenture by
the parties hereto is in all respects authorized by the provisions of the
Original Indenture and Carnival plc has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel with respect to such authorization, (ii)
Carnival plc, Carnival Corporation and the Guarantor have each delivered to the
Trustee a resolution of its Board of Directors authorizing the execution of this
Second Supplemental Indenture, and (iii) all things necessary to make this
Second Supplemental Indenture a valid agreement of Carnival plc, Carnival
Corporation, the Guarantor and the Trustee in accordance with its terms have
been done;
NOW, THEREFORE, for and in consideration of the premises contained
herein, it is mutually covenanted and agreed for the benefit of all Holders of
the Securities as follows:
Section 1. As required by Section 5.01(b) of the Original Indenture,
Carnival Corporation hereby assumes, by this Second Supplemental Indenture, the
due and punctual performance and observance of all of the covenants and
conditions to be performed and observed by Carnival plc and the Guarantor under
the Original Indenture, the Securities and the Guarantee, as the case may be. As
required by Section 5.01(c) of the Original Indenture, Carnival Corporation
hereby assumes Carnival plc's and the Guarantor's obligations under Section 4.09
of the Original Indenture to pay Additional Amounts, substituting "The Republic
of Panama" for "the United Kingdom" in each place that it appears in Section
4.09 of the Original Indenture.
Section 2. Pursuant to Section 5.02(a) of the Original Indenture,
Carnival Corporation shall succeed to, and be substituted for (so that from and
after the date hereof, the provisions of the Indenture referring to the
"Company" shall refer instead to Carnival Corporation and not to Carnival plc
and to the "Guarantor" shall refer instead to Carnival Corporation and not to
the Guarantor), and may exercise every right and power of Carnival plc or the
Guarantor, as the case may, under the Indenture with the same effect as if
Carnival Corporation had been named as the Company or the Guarantor in the
Original Indenture. As a result of the succession and substitution pursuant to
the preceding sentence, Carnival plc and the Guarantor are hereby released from
their obligations under the Original Indenture.
Section 3. The following definition shall be added to Section 1.01
of the Original Indenture:
"Carnival plc" means Carnival plc, a public limited company existing
under the laws of England and Wales, and any successor thereto.
Section 4. The Original Indenture is hereby amended by adding a new
Section 2.19 to read in its entirety as follows:
"Section 2.19. Carnival plc Guarantee.
(a) Carnival plc, for value received, hereby unconditionally
guarantees (the "Carnival plc Guarantee") to the Holders of the Securities
and to the Trustee on behalf of each such Holder the due and punctual
payment of the principal of, premium, if any, and interest on such
Securities, when and as the same shall become due and payable (subject to
any period of grace provided with respect thereto), whether at the Stated
Maturity, by declaration of acceleration, call for redemption or
otherwise, according to the terms thereof and of the Indenture referred to
therein. In the case of the failure of the Company punctually to make any
such payment of principal, premium, if any, or interest, Carnival plc
hereby agrees to cause any such payment to be made punctually when and as
the same shall become due and payable, whether at the Stated Maturity or
by declaration of acceleration, call for redemption or otherwise, and as
if such payment were made by the Company.
(b) All payments by Carnival plc in respect of the Carnival plc
Guarantee and the Securities shall be made free and clear of and without
withholding or deduction for or on account of any present or future taxes,
duties, assessments or governmental charges of whatever nature imposed or
levied by or on behalf of the United Kingdom or any political subdivision
or authority thereof or therein having power to tax ("UK Taxes"), unless
the withholding or deduction is then required by law. If any deduction or
withholding for any present or future taxes, duties, assessments or other
governmental charges of the United Kingdom (or any political subdivision
or taxing authority within the United Kingdom) will at any time be
required by the United Kingdom (or any political subdivision or taxing
authority within the United Kingdom) in respect of the payment of any
amounts by Carnival plc on the Securities, Carnival plc will pay to a
Holder of a Security who is not a resident in the United Kingdom for U.K.
tax purposes such additional amounts ("Carnival plc Additional Amounts")
as may be necessary in order that the net amounts paid to such Holder,
after such deduction or withholding, will be not less than the amounts
specified in new security affected to which its holder is entitled;
provided that the foregoing obligation to pay Carnival plc Additional
Amounts does not apply to (i) any tax, duty, assessment or other
governmental charge which would not have been imposed, withheld or
deducted but for (1) the existence of any present or former connection
between the Holder or beneficial owner of a Security (or between a
fiduciary, settler, beneficiary, member or shareholder or possessor of a
power over, such holder or
beneficial owner, if such Holder or beneficial owner is an estate, trust,
partnership or corporation) and the United Kingdom (or any political
subdivision or territory or possession within the United Kingdom or area
subject to its jurisdiction), including, without limitation, the holder or
beneficial owner (or the fiduciary, settler, beneficiary, member,
shareholder or possessor) being or having been domiciliary, national or
resident thereof or being or having been present or engaged in trade or
business therein or having or having had a permanent establishment,
office, branch or fixed base therein or otherwise having or having had
some connection with the United Kingdom (or such political subdivision,
territory or possession of the United Kingdom or area subject to its
jurisdiction) other than the holding or ownership of a Security or the
collection of principal of and interest, if any, on, or the enforcement
of, a Security or (2) the presentation of a Security (where presentation
is required) for payment (x) in the United Kingdom or (y) on a date more
than 30 days after the date on which such payment became due and payable
or the date on which payment thereof is duly provided for, whichever
occurs later, except to the extent that the Holder would have been
entitled to the Additional Amounts if it had presented its Security for
payment on any day within the 30 day period; (ii) any estate, inheritance,
gift, sale, transfer, personal property or similar tax, assessment or
other governmental charge; (iii) any tax, duty, assessment or other
governmental charge which is payable otherwise than by withholding or
deduction from payment of (or in respect of) principal of, or any interest
on, the Securities; (iv) any tax, duty, assessment or other governmental
charge that is imposed, deducted or withheld by reason of the failure to
comply by the Holder or the beneficial owner of a Security or the
beneficial owner of any payment on the Security with a request of Carnival
plc addressed to the Holder to provide information concerning the
nationality, residence, identity or connection with the United Kingdom or
any political subdivision or taxing authority thereof of the Holder or
such beneficial owner or to make any declaration or other similar claim to
satisfy any information or reporting requirement, which in either case, is
required or imposed by a statute, treaty, regulation, ruling or
administrative practice of the taxing jurisdiction as a precondition to
exemption from withholding or deduction of all or part of such tax, duty,
assessment or other governmental charge; (v) any tax, duty, assessment or
other governmental charge which is payable in respect of any payments on a
certificated Security issued at the request of the Holder on or after the
occurrence of an Event of Default; or (vi) any combination of the above
items; nor will Carnival plc Additional Amounts be paid with respect to
any payment of the principal of, or any interest on, any Security to any
Holder who is a fiduciary or partnership or other than the sole beneficial
owner of such payment to the extent the payment would be required by the
laws of the United Kingdom (or any political subdivision or taxing
authority within the United Kingdom) to be included in the income for tax
purposes of a beneficiary or settler with respect to such fiduciary or a
member of such partnership or to a beneficial owner who would not have
been entitled to such Carnival plc Additional Amounts had it been the
Holder of the Security.
Carnival plc shall use commercially reasonable efforts to
facilitate administrative actions necessary to assist Holders to obtain
any refund of or credit against UK Taxes for which Carnival plc Additional
Amounts are not paid as a result of the conditions in the second preceding
sentence.
(c) Carnival plc agrees that its obligations under the Carnival plc
Guarantee shall be absolute and unconditional, irrespective of, and shall
be unaffected by, any invalidity, irregularity or unenforceability of any
Security or this Indenture, any failure to enforce the provisions of any
Security or this Indenture, or any waiver, modification or indulgence
granted to the Company with respect thereto, by the Holder of any Security
or the Trustee or any other circumstance which may otherwise constitute a
legal or equitable discharge of a surety or guarantor; provided, however,
that, notwithstanding the foregoing, no such waiver, modification or
indulgence shall, without the consent of Carnival plc, increase the
principal amount of any Security, or increase the interest rate thereon,
or increase any premium payable upon redemption thereof, or alter the
Stated Maturity thereof. Carnival plc hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event
of a merger or bankruptcy of the Company, any right to require a
proceeding first against the Company, protect or notice with respect to
any Security or the indebtedness evidenced thereby and all demands
whatsoever, and covenants that the Carnival plc Guarantee will not be
discharged except by payment in full of the principal of, premium, if any,
and interest on such Security.
(d) The Carnival plc Guarantee is limited to the maximum amount that
will result in the obligations of Carnival plc not constituting a
fraudulent conveyance or fraudulent transfer under applicable law.
(e) Carnival plc shall not consolidate or merge with or into
(whether or not the Carnival plc is the surviving corporation), or sell,
convey or transfer or otherwise dispose of all or substantially all of its
assets in one or more related transactions to another Person, and shall
not permit any of its Restricted Subsidiaries to enter into any such
transaction or transactions if such transaction or transactions, in the
aggregate, would result in a sale, assignment, transfer, lease or disposal
of all or substantially all of the assets of Carnival plc, as the case may
be, and its respective Subsidiaries to another Person, unless the
purchasing or transferee corporation or the successor, continuing or
resulting corporation in the case of a merger or consolidation (if the
Carnival plc is not the surviving corporation), as the case may be: (i) is
an entity in an EU member state, an Organization for Economic Co-operation
and Development member nation, or a European Free Trade Association member
nation, in each case other than Greece, Liechtenstein, Mexico or Turkey;
and (ii) expressly assumes, by an amendment to this Indenture and the
Securities, pursuant to this Indenture, the obligations of Carnival plc
under the Carnival plc Guarantee It will be a condition to any
consolidation, merger, sale of assets or assumption under this section
that immediately after giving effect to such consolidation, merger, sale
of assets or assumption no Event of Default (and no event which, after
notice or lapse of time
or both, would become an Event of Default) will have occurred and be
continuing. Notwithstanding the foregoing, in the case of (1) any merger
or consolidation by (x) Carnival plc or any of its Restricted Subsidiaries
with (y) Carnival Corporation or any of its Subsidiaries, (2) any sale,
conveyance, transfer or other disposition of assets by (x) Carnival plc or
any of its Restricted Subsidiaries to (y) Carnival Corporation or any of
its Subsidiaries, clause (i) of the first sentence of this Section 2.19(e)
shall be deemed to have been satisfied.
(f) Upon any consolidation or merger or any transfer of all or
substantially all of the assets of Carnival plc in accordance with Section
2.19(e) hereof, the successor corporation formed by such consolidation or
into or with which Carnival plc, is merged or to which such transfer is
made shall succeed to, and be substituted for (so that from and after the
date of such consolidation merger, or transfer, the provisions of this
Indenture referring to "Carnival plc" shall refer instead to the successor
corporation and not to Carnival plc), and may exercise every right and
power of Carnival plc under this Indenture with the same effect as if such
successor Person had been named as Carnival plc herein. Notwithstanding
the foregoing or any provision of Section 2.19(e), upon any consolidation
or merger or any transfer of all or substantially all of the assets of
Carnival plc to the primary obligor under this Indenture or the
Securities, the Carnival plc Guarantee shall terminate automatically, and
this Section 2.19 shall be of no further force or effect.
(g) Carnival plc shall be subrogated to all rights of the Holder of
each Security and the Trustee against the Company in respect of any
amounts paid to such Holder by Carnival plc pursuant to the provisions of
the Carnival plc Guarantee, provided, however, that Carnival plc shall not
be entitled to enforce, or to receive any payments arising out of or based
upon, such right of subrogation until the principal of, premium, if any,
and interest on all Securities of the same series issued under such
Indenture shall have been paid in full."
Section 5. The Original Indenture is hereby amended by adding a new
Section 4.11 to read in its entirety as follows:
"Section 4.11 Carnival Corporation & plc Limitation on Liens.
(a) This Section 4.11 shall be effective only so long as Carnival
Corporation is a primary obligor under this Indenture. At any time that
Carnival Corporation is not a primary obligor under this Indenture, this
Section 4.11 shall be of no force or effect. All definitions used in this
Section 4.11 shall be read for purposes of this Section 4.11 as if the
term, "Carnival plc", were substituted in such definitions for the term,
"Carnival Corporation".
(b) The Company shall not, and shall not permit Carnival plc or any
Subsidiary of which the Company and/or Carnival plc owns, directly or
indirectly, at least 80% of such Subsidiary's voting shares to, create,
incur, guarantee or assume any Debt secured by a Mortgage on any Principal
Property or on any
shares of stock or indebtedness of any Restricted Subsidiary, without
effectively providing concurrently with the creation, incurrence,
guarantee or assumption of such Debt that the Securities (together with,
if the relevant obligor so determines, any other Debt of any Carnival
Corporation & plc Company, then existing or thereafter created ranking
equally with the Securities) will be secured equally and ratably with (or
prior to) that Debt, so long as that Debt will be so secured, except that
this restriction will not apply to: (i) Mortgages on property, shares of
stock or indebtedness of any Person existing at the time such Person
becomes a Subsidiary of the Company or Carnival plc, provided that any
such Mortgage was not created in contemplation of such Person becoming a
Subsidiary of the Company or Carnival plc; (ii) Mortgages on property or
shares of stock existing at the time of acquisition thereof or to secure
the payment of all or any part of the purchase price thereof or all or
part of the cost of the improvement, construction, alteration or repair of
any property, ship, building, equipment or facilities or of any other
improvements on all or any part of such property or to secure any Debt
incurred prior to, at the time of, or within twelve months after, in the
case of shares of stock, the acquisition of such shares and, in the case
of property, the later of the acquisition, the completion of construction
(including any improvements, alterations or repairs on an existing
property) or the commencement of commercial operation of such property,
which Debt is incurred for the purpose of financing all or any part of the
purchase price thereof or all or part of the cost of improvement,
construction, alteration or repair thereon; (iii) Mortgages of Carnival
plc or any Subsidiary of Carnival plc existing on October 23, 2000; (iv)
Mortgages of the Company or any Subsidiary of the Company existing at the
date of the First Supplemental Indenture; (v) Mortgages on property owned
or held by any Person or on shares of stock, other equity interests or
indebtedness of any Person, in either case existing at the time such
Person is merged into or consolidated or amalgamated with a Carnival
Corporation & plc Company or at the time of a sale, lease or other
disposition of property of a Person or a sale or other disposition of
stock of a Person as an entirety or substantially as an entirety to a
Carnival Corporation & plc Company, provided that any such Mortgage was
not created in contemplation of such Person becoming a Subsidiary of the
Company or Carnival plc; (vi) Mortgages arising by operation of law (other
than by reason of default); (vii) Mortgages arising through litigation,
legal proceeding or judgment and not giving rise to an Event of Default;
(viii) Mortgages to secure Debt incurred in the ordinary course of
business, including, but not limited to, (1) any mechanic's,
materialmen's, carrier's, workmen's, vendor's or other like Mortgages, (2)
any Mortgages securing amounts in connection with workers' compensation,
unemployment insurance and other types of social security, (3) any
easements, rights-of-way, restrictions and other similar charges, (4) any
Mortgages arising out of consignment or similar arrangements for the sale
of goods entered into by a Carnival Corporation & plc Company, and (5) any
Mortgages to secure Debt maturing not more than 12 months from the date
incurred; (ix) Mortgages to secure indebtedness for borrowed money
incurred in connection with a specifically identifiable project where the
Mortgage relates to a Principal Property to which such project has been
undertaken and recourse of the
creditors in respect of such Mortgage is substantially limited to such
project and Principal Property; (x) Mortgages created to secure Debt of a
Carnival Corporation & plc Company under any options, futures, swaps,
short sale contracts or similar or related instruments which relate to the
purchase or sale of securities, commodities or currencies; (xi) Mortgages
in favor of customs and revenues authorities to secure payment of customs
duties in connection with the importation of goods; (xii) leases or
subleases granted to others not interfering in any material respect with
the business of a Carnival Corporation & plc Company; (xiii) Mortgages
encumbering property or assets under construction arising from progress or
partial payments by a customer of a Carnival Corporation & plc Company
relating to such property or assets; (xiv) rights of financial
institutions to offset credit balances in connection with the operation of
cash management programs established for the benefit of a Carnival
Corporation & plc Company; (xv) Mortgages encumbering deposits made to
secure obligations arising from statutory, regulatory, contractual or
warranty requirements of a Carnival Corporation & plc Company; (xvi)
Mortgages on any property of the Company, Carnival plc or a Restricted
Subsidiary in favor of the federal government of the United States or the
government of any state thereof or the government of the United Kingdom,
or the European Union, or any instrumentality of any of them, securing the
obligations of a Carnival Corporation & plc Company pursuant to any
contract or payments owed to such entity pursuant to applicable laws,
rules, regulations or statutes; (xvii) Mortgages securing taxes or
assessments or other applicable charges or levies; (xviii) Mortgages
securing industrial revenue, development or similar bonds issued by or for
the benefit of a Carnival Corporation & plc Company, provided that such
industrial revenue, development or similar bonds are nonrecourse to such
Carnival Corporation & plc Company; and (xix) any extension, renewal or
replacement (or successive extensions, renewals or replacements), as a
whole or in part, of any Mortgage referred to in the foregoing clauses, or
of any Debt secured thereby; provided that the principal amount of Debt
secured thereby will not exceed the principal amount of Debt so secured at
the time of such extension, renewal, or replacement, and that such
extension, renewal or replacement Mortgage will be limited to all or any
part of the same property or shares of stock that secured the Mortgage
extended, renewed or replaced (plus improvements on such property), or
property received or shares of stock issued in substitution or exchange
therefor.
(c) Notwithstanding Clause (b) of this Section 4.11, the Company,
Carnival plc or any Subsidiary of which the Company and/or Carnival plc
owns, directly or indirectly, at least 80% of such Subsidiary's voting
shares may create, incur, guarantee or assume Debt secured by a Mortgage
or Mortgages which would otherwise be subject to the foregoing
restrictions in an aggregate amount which, together with all other such
Debt of Carnival Corporation & plc secured by a Mortgage or Mortgages and
Carnival Corporation & plc's Attributable Debt in respect of Carnival
Corporation & plc Sale and Leaseback Transactions (as defined in Section
4.12) (other than Attributable Debt in respect of Carnival Corporation &
plc Sale and Leaseback Transactions permitted because the relevant
Carnival Corporation & plc Company would be entitled to create, incur,
guarantee or assume such Debt secured by a Mortgage on the property to be
leased without equally and ratably securing the Securities pursuant to the
preceding paragraph and other than a Carnival Corporation & plc Sale and
Leaseback Transaction the proceeds of which have been applied within
twelve months after its consummation to the Net Proceeds to the retirement
or repayment of Funded Debt (as described in Section 4.12)), does not at
the time such Debt is incurred exceed 20% of Consolidated Net Tangible
Assets."
Section 6. The Original Indenture is hereby amended by adding a new
Section 4.12 to read in its entirety as follows:
"Section 4.12 Limitation on Sale and Leaseback Transactions for
Carnival Corporation & plc.
(a) This Section 4.12 shall be effective so long as Carnival
Corporation is a primary obligor under this Indenture. At any time that
Carnival Corporation is not a primary obligor under this Indenture, this
Section 4.12 shall be of no force or effect. All definitions used in this
Section 4.12 shall be read for purposes of this Section 4.12 as if the
term, "Carnival plc", were substituted in such definitions for the term,
"Carnival Corporation".
(b) The Company shall not, and shall not permit Carnival plc or any
Subsidiary of which the Company and/or Carnival plc owns, directly or
indirectly, at least 80% of such Subsidiary's voting shares to, enter into
any arrangement with a third party (not including any Carnival Corporation
& plc Company) providing for the leasing by such Carnival Corporation &
plc Company for a period, including renewals, in excess of three years, of
any Principal Property which has been owned by such Carnival Corporation &
plc Company for more than 270 days and which has been or is to be sold or
transferred by such Carnival Corporation & plc Company to the third party
(a "Carnival Corporation & plc Sale and Leaseback Transaction") unless,
after giving effect thereto, the aggregate amount of all Attributable Debt
with respect to all of these Carnival Corporation & plc Sale and Leaseback
Transactions plus all the Debt of Carnival Corporation & plc incurred,
issued, assumed or guaranteed and secured by a Mortgage or Mortgages (with
the exception of debt secured by a Mortgage or Mortgages on property that
any Carnival Corporation & plc Company would be entitled to create, incur,
issue, guarantee or assume without equally and ratably securing the
Securities pursuant to the provisions of the Securities pursuant to
Section 4.11) does not exceed 20% of Consolidated Net Tangible Assets.
This restriction will not apply to any Carnival Corporation & plc Sale and
Leaseback Transaction if (i) such Carnival Corporation & plc Company would
be entitled to create, incur, issue, guarantee or assume Debt secured by a
Mortgage or Mortgages on the Principal Property to be leased without
equally and ratably securing the Securities pursuant to the provisions of
the Securities pursuant to Section 4.11, (ii) within a period commencing
twelve months prior to the consummation of the Carnival Corporation & plc
Sale and Leaseback Transaction and ending twelve months after the
consummation of such Carnival Corporation & plc Sale and Leaseback
Transaction, such Carnival Corporation & plc Company has expended or will
expend for any Principal Property (including capital improvements thereon)
an amount equal to (x) the Net Proceeds or (y) the part of the Net
Proceeds which such Carnival Corporation & plc Company has elected not to
apply in the manner described in the following clause (iii); or (iii) such
Carnival Corporation & plc Company, within twelve months after the
consummation of any Carnival Corporation & plc Sale and Leaseback
Transaction, applies an amount equal to the Net Proceeds (less any amount
expended for Principal Property under the preceding clause (ii)(y)) to the
retirement or repayment of Funded Debt of a Carnival Corporation & plc
Company ranking equally in right of payment with the Securities or Funded
Debt of a Subsidiary of the Company or Carnival plc. No retirement
referred to in the preceding clause (iii) may be effected by payment at
maturity or pursuant to any mandatory sinking fund or prepayment provision
(unless such repayment is required due to the receipt of the Net
Proceeds)."
Section 7. Section 6.01 of the Original Indenture is hereby amended
by deleting the "and" after subclause (v) of Clause (e) thereof, adding the word
"and" after the final semicolon in Clause (f) thereof and adding a new Clause
(g) following such Clause (f), but prior to the proviso to such Section 6.01, to
read in its entirety as follows:
"(g) if Carnival Corporation is a primary obligor under this
Indenture, the occurrence of any of the following events (all defined terms used
in this Clause (g) being read as if the term, "Carnival plc", were substituted
in such definitions for the term, "Carnival Corporation"):
(i) default under any bond, debenture, note or other evidence
of indebtedness for money borrowed by Carnival plc or any Principal
Subsidiary of it having an aggregate principal amount outstanding of
the greater of (pound)25,000,000 or 0.5% of Consolidated Net
Tangible Assets (or their respective equivalents in any other
currency) or under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced
any indebtedness for money borrowed by Carnival plc or any Principal
Subsidiary of it, whether such indebtedness now exists or will
hereafter be created which default will have resulted in such
indebtedness of the greater of (pound)25,000,000 or 0.5% (or their
respective equivalents in any other currency) of Consolidated Net
Tangible Assets becoming or being declared due and payable prior to
the date on which it would otherwise have become due and payable,
without such indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within a period of
30 days after written notice is provided to the Company;
(ii) Carnival plc or any Principal Subsidiary of it pursuant
to or within the meaning of Bankruptcy Law: (1) commences a
voluntary case, (2) consents to the entry of an order for relief
against it in an involuntary case, (3) consents to the appointment
of a Custodian of it or for all or substantially all of its
property, (4) makes a general assignment for the
benefit of its creditors, or (5) generally is not paying its debts
as they become due;
(iii) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (1) is for relief against
Carnival plc in an involuntary case, (2) appoints a Custodian of
Carnival plc or any Principal Subsidiary of it or for all or
substantially all of the property of Carnival plc or any Principal
Subsidiary of it; or (3) orders the liquidation of Carnival plc or
any Principal Subsidiary of it; and, in any such case, the order or
decree remains unstayed and in effect for 90 consecutive days;"
Section 8. Section 6.01 of the Original Indenture is hereby amended
by adding the following prior to the final period in such Section:
"; provided, further, that there will not be an Event of Default
under Clause (g)(i) if the bond, debenture, note or other evidence of
indebtedness in question is the subject of non-recourse financing arrangement
under which the lender's right of recourse is limited to a specific asset and
there is no further recourse by the relevant creditor against the general assets
of Carnival plc or any Principal Subsidiary of it; and provided further, that it
will not be an Event of Default under Clause (g)(ii) or (g)(iii) if the event in
question relates solely to property of Carnival plc or a Principal Subsidiary of
it that is the subject of a non-recourse financing arrangement described in the
previous proviso, and if such event does not, directly or indirectly, give
further recourse by the relevant creditor to the general assets (or any other
property) of Carnival plc or a Principal Subsidiary of it."
Section 9. Section 6.02 of the Original Indenture is hereby amended
by adding the following after the final sentence thereof: "If Carnival
Corporation is a primary obligor under this Indenture and if an Event of Default
specified in subclauses (ii) or (iii) of Clause (g) of Section 6.01 hereof
occurs with respect to Carnival plc, the Securities then outstanding shall ipso
facto become and be immediately due and payable at 100% of the outstanding
principal amount thereof plus premium and accrued and unpaid interest, to the
date of such Event of Default, without any declaration or other act on the part
of the Trustee or any Holder."
Section 10. Notices to the Company under the Indenture shall be sent
to: Carnival Corporation, 3655 N.W. 87th Avenue, Miami, Florida, 33178,
Attention: General Counsel (Facsimile: 305-406-4758), with a copy to Paul,
Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York,
New York, 10019, Attention: John C. Kennedy, Esq. (Facsimile: 212-757-3990).
Section 11. Carnival Corporation, Carnival plc and POPCIL
acknowledge that the Securities, the Indenture and the "Carnival plc Guarantee"
(as defined in the Indenture) shall be deemed to be "Obligations" for purposes
of the POPCIL Deed of Guarantee.
Section 12. Each of Carnival Corporation and Carnival plc (i)
acknowledges that it has, by separate written instrument, designated and
appointed National Registered Agents as its authorized agent upon which process
may be served in any suit or proceeding arising out of or relating to the
Indenture, the Securities or the Carnival plc Guarantee that may be instituted
in any federal or state court in the Borough of Manhattan, The City of New York
or brought under federal or state securities laws or brought by the Trustee in
its capacity as a trustee under the Indenture, and acknowledges that National
Registered Agents has accepted such designation, (ii) submits to the
jurisdiction of any such court in any such suit or proceeding and waives any
objection which it may now or hereafter have to the laying of venue of any such
proceeding or any claim of inconvenient forum, and (iii) agrees that service of
process upon National Registered Agents and written notice of said service to it
(mailed or delivered to its secretary at its registered office at 875 Avenue of
the Americas, Suite 501, New York, New York, 10001 or at any other address
previously furnished in writing to the Trustee) shall be deemed in every respect
effective service of process upon it in any such suit or proceeding. Each of
Carnival Corporation and Carnival plc further agrees to take any and all action,
including the execution and filing of any and all such documents and
instruments, as may be necessary to continue such designation and appointment of
National Registered Agents with respect to it in full force and effect so long
as the Indenture shall be in full force and effect and so long as any of the
Securities shall be outstanding, subject to the appointment of a successor
pursuant to the following sentence. Carnival Corporation or Carnival plc may
appoint a successor to National Registered Agents, provided that such successor
shall be located in the Borough of Manhattan, The City of New York and
designated and appointed as above, that such successor accepts such designation
in writing prior to or simultaneously with its succession and that written
notice of designation has been given prior to such successor to the remaining
party or parties hereto; thereafter, the relevant company shall take any and all
action as may be necessary to continue such designation and appointment of such
successor in full force and effect so long as the Indenture is in full force and
effect. To the extent that Carnival Corporation or Carnival plc has or hereafter
may acquire any immunity from jurisdiction of any court or from any legal
process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution or otherwise) with respect to itself or its
property, it hereby irrevocably waives such immunity in respect of its
respective obligations under the Indenture and the Securities to the fullest
extent permitted by law.
Section 13. This Second Supplemental Indenture shall become
effective immediately following completion of the Transfer.
Section 14. Carnival Corporation and Carnival plc agree that the
Trustee is permitted to place a notation about this Second Supplemental
Indenture on the Securities in accordance with the provisions of Section 9.05 of
the Indenture.
Section 15. The Trustee accepts this Second Supplemental Indenture
and agrees to execute the trust created by the Indenture as hereby supplemented,
but only upon the terms and conditions set forth in the Indenture, including the
terms and provisions defining and limiting the liabilities and responsibilities
of the Trustee, which
terms and provisions shall in like manner define and limit its liabilities and
responsibilities in the performance of the trust created by the Indenture.
Section 16. The Indenture, as hereby amended, is in all respects
ratified and confirmed, and the terms and conditions thereof shall be and remain
in full force and effect.
Section 17. The recitals contained in this Second Supplemental
Indenture shall be taken as the statements made solely by Carnival plc, Carnival
Corporation and the Guarantor, and the Trustee shall have no liability or
responsibility for their correctness and, without limiting the generality of the
foregoing, the Trustee shall not be responsible in any manner whatsoever for or
with respect to (i) the validity or sufficiency of this Second Supplemental
Indenture or any of the terms or provisions hereof, (ii) the proper
authorization hereof by Carnival plc, Carnival Corporation and the Guarantor by
corporate action or otherwise, (iii) the due execution hereof by Carnival plc,
Carnival Corporation and the Guarantor or (iv) the consequences (direct or
indirect and whether deliberate or inadvertent) of any amendment herein provided
for, and the Trustee makes no representation with respect to any such matters.
Section 18. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PROVISIONS THEREOF THAT WOULD REQUIRE
APPLICATION OF THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 19. In case any provision in this Second Supplemental
Indenture is invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 20. If any provision of this Second Supplemental Indenture
limits, qualifies or conflicts with any provision of the TIA that is required
under the TIA to be part of and govern the Indenture, such provision of the TIA
shall control. If any provision of this Second Supplemental Indenture modifies
or excludes any provision of the TIA that may be so modified or excluded, the
provision of the TIA shall be deemed to apply to the Indenture as so modified or
to be excluded by this Second Supplemental Indenture, as the case may be.
Section 21. This Second Supplemental Indenture may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
[The remainder of this page is intentionally blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
CARNIVAL PLC
By:
-----------------------------------
Name: David Bernstein
Title: Vice President and Treasurer
CARNIVAL CORPORATION
By: /s/ David Bernstein
-----------------------------------
Name: David Bernstein
Title: Vice President and Treasurer
P&O PRINCESS CRUISES
INTERNATIONAL LIMITED
By: /s/ David Bernstein
-----------------------------------
Name: David Bernstein
Title: Attorney-in-fact
THE BANK OF NEW YORK,
as Trustee
By: /s/ Alison Mitchell
-----------------------------------
Name: Alison Mitchell
Title: Assistant Treasurer
Exhibit 10.1
RETIREMENT AND CONSULTING AGREEMENT
AGREEMENT made this 28th day of November, 2003 between CARNIVAL CORPORATION,
having its principal place of business at 3655 Northwest 87th Avenue, Miami,
Florida 33178, and its wholly owned subsidiaries, Holland America Line Inc.,
Holland America Line N.V., HAL Cruises Limited, Windstar Sail Cruises Limited,
Wind Star Limited, Wind Spirit Limited, Westmark Hotels, Inc., Westmark Hotels
of Canada, Ltd., Westours Motorcoaches, Inc., Evergreen Trails, Inc., Trailway
Tours, Inc., Worldwide Shore Services, Inc., and HAL Properties Limited, having
their principal places of business at 300 Elliott Avenue West, Seattle,
Washington 98119 (collectively, the "Companies") and Alton Kirk Lanterman
("Lanterman"), residing at 714 West Galer Street, Seattle, Washington 98119.
RECITALS:
A. Lanterman has served as Chairman and Chief Executive Officer of Holland
America Line Inc., ("HAL", formerly Holland America Line-Westours, Inc.)
since January 1989 and has performed exemplary service during said years.
B. The Companies desire to compensate Lanterman for such exemplary service by
way of retirement pay.
C. The Companies desire to retain Lanterman's consulting services following
such retirement on the terms set forth in this Agreement.
IN CONSIDERATION of past services as related above and the consulting services
related below, it is agreed as follows:
1. Compensation for Past Services and Consulting Services
1.1 For a period of fifteen (15) years following the date of retirement
by Lanterman from active services with the Companies (the
"Retirement Date"), the Companies shall pay to Lanterman, in monthly
installments of $166,577, an annual compensation of $1,998,924.
1.2 In the event of Lanterman's death prior to the Retirement Date, or
prior to the fifteenth anniversary of the Retirement Date, the
unpaid balance of this total compensation ($29,983,860) shall be
paid in full to Lanterman's estate within 30 days of his death. The
unpaid balance shall be its then present value calculated by
utilization of an interest rate of 8.5% per year.
2. Consulting Services
Commencing on the Retirement Date and for a period of fifteen (15) years,
Lanterman agrees to perform consulting services for the Companies in
regard to the business operations of HAL upon the specific written request
of the Companies. Such services shall be provided during normal business
hours, on such dates, for such time and at such locations as shall be
agreeable to Lanterman. Such services shall not require more than five (5)
hours in any calendar month, unless expressly consented to by Lanterman,
whose consent may be withheld for any reason whatsoever. The Companies
will reimburse Lanterman for any out-of-pocket expenses incurred by him in
the performance of said services.
3. Independent Contractor
Lanterman acknowledges that commencing on the Retirement Date, he will be
solely an independent contractor and consultant. He further acknowledges
that he will not consider himself to be an employee of the Companies and
will not be entitled to any employment rights or benefits of the
Companies.
4. Confidentiality
Lanterman will keep in strictest confidence, both during the term of this
Agreement and subsequent to
termination of this Agreement, and will not during the term of this
Agreement or thereafter disclose or divulge to any person, firm or
corporation, or use directly or indirectly, for his own benefit or the
benefit of others, any confidential information of the Companies,
including, without limitation, any trade secrets respecting the business
or affairs of the Companies which he may acquire or develop in connection
with or as a result of the performance of his services hereunder. In the
event of an actual or threatened breach by Lanterman of the provisions of
this paragraph, the Companies shall be entitled to injunctive relief
restraining Lanterman from the breach or threatened breach as its sole
remedy. The Companies hereby waive their rights for damages, whether
consequential or otherwise.
5. Enforceable
The provisions of this Agreement shall be enforceable notwithstanding the
existence of any claim or cause of action of Lanterman against the
Companies, or the Companies against Lanterman, whether predicated on this
Agreement or otherwise.
6. Applicable Law
This Agreement shall be construed in accordance with the laws of the State
of Washington, and venue for any litigation concerning an alleged breach
of this Agreement shall be in King County, Washington, and the prevailing
party shall be entitled to reasonable attorney's fees and costs incurred.
7. Entire Agreement
This Agreement contains the entire agreement of the parties relating to
the subject matter hereof. A similar agreement of November 2002 shall
become null and void upon the execution of this Agreement. Any notice to
be given under this Agreement shall be sufficient if it is in writing and
is sent by certified or registered mail to Lanterman or to the Companies
to the attention of the President, or otherwise as directed by the
Companies, from time to time, at the addresses as they appear in the
opening paragraph of this Agreement.
8. Waiver
The waiver by either party of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach.
IN WITNESS WHEREOF, the Companies and Lanterman have duly executed this
agreement as of the day and year first above written.
CARNIVAL CORPORATION
By: Vice Chairman
-----------------------
Its: /s/ Howard S. Frank
----------------------
/s/ Alton Kirk Lanterman
------------------------
Signature
Alton Kirk Lanterman
---------------------------
Print Full Name
HOLLAND AMERICA LINE INC. HOLLAND AMERICA LINE N.V.
By: Larry D. Calkins By: Larry D. Calkins
------------------------------- ----------------------------
Its: Vice President-Finance and CFO Its: Authorized Signatory
------------------------------- ----------------------------
HAL PROPERTIES LIMITED HAL CRUISES LIMITED
By: Larry D. Calkins By: Larry D. Calkins
------------------------------- ----------------------------
Its: Authorized Signatory Its: Authorized Signatory
------------------------------- ----------------------------
WINDSTAR SAIL CRUISES LIMITED WIND STAR LIMITED
By: Larry D. Calkins By: Larry D. Calkins
------------------------------- ----------------------------
Its: Authorized Signatory Its: Authorized Signatory
------------------------------- ----------------------------
WIND SPIRIT LIMITED WESTMARK HOTELS, INC.
By: Larry D. Calkins By: Larry D. Calkins
------------------------------- ----------------------------
Its: Authorized Signatory Its: Authorized Signatory
------------------------------- ----------------------------
WESTMARK HOTELS OF CANADA LTD. WESTOURS MOTOR COACHES INC.
By: Larry D. Calkins By: Larry D. Calkins
------------------------------- ----------------------------
Its: Authorized Signatory Its: Authorized Signatory
------------------------------- ----------------------------
EVERGREEN TRAILS, INC. TRAILWAYS TOURS INC.
By: Larry D. Calkins By: Larry D. Calkins
------------------------------- ----------------------------
Its: Authorized Signatory Its: Authorized Signatory
------------------------------- ----------------------------
WORLDWIDE SHORE SERVICES INC.
By: Larry D. Calkins
-------------------------------
Its: Authorized Signatory
-------------------------------
Exhibit 10.2
AMENDMENT
TO THE
AMENDED AND RESTATED
CARNIVAL CORPORATION
1992 STOCK OPTION PLAN
WHEREAS, Carnival Corporation (the "Company") sponsors the Amended and
Restated Carnival Corporation 1992 Stock Option Plan (the "Plan"); and
WHEREAS, Section 16 of the Plan provides that the Board of Directors of
the Company (the "Board") may amend the Plan at any time; provided, that such
amendment complies with all applicable laws, applicable stock exchange listing
requirements and certain other requirements not relevant here, which rights have
been delegated to the Compensation Committee of the Board; and
WHEREAS, on April 17, 2003, Carnival and Carnival plc completed a dual
listed company ("DLC") transaction, which implemented Carnival Corporation's and
Carnival plc's DLC structure; and
WHEREAS, effective in late 2003 and/or early 2004, the Company will
transfer ownership of certain of its subsidiaries (the "Relevant Subsidiaries")
so that they will become direct or indirect subsidiaries of Carnival plc (the
"Flip Transaction"), and the Company and Carnival plc may engage in similar
transactions in the future involving the transfer of direct or indirect
subsidiaries of one to become direct or indirect subsidiaries of the other; and
WHEREAS, Section 7 of the Plan provides, in part, that if an optionee's
employment with the Company or any its "Subsidiaries" (as defined in the Plan)
is terminated, then such optionee will have a specified limited period of time
(depending on the reason for such termination) in which to exercise his or her
vested options; and
WHEREAS, under the terms of the Plan as currently in effect, the transfer
of ownership of the Relevant Subsidiaries to Carnival plc in the Flip
Transaction will result in a termination of the employment with the Company and
its Subsidiaries for employees of the Relevant Subsidiaries for purposes of the
Plan; and
WHEREAS, the Board has determined that it is in the best interests of the
Company and the shareholders of the Company and Carnival plc to amend the Plan
to provide that a termination of employment or service for purposes of the Plan
means a termination of employment or service with the Company, Carnival plc and
each their respective affiliates, with the result that the employees of the
Relevant Subsidiaries will not be deemed to have terminated employment for
purposes of the Plan on account of the Flip Transaction, and employees of direct
or indirect subsidiaries of the Company and Carnival plc which are involved in
similar transactions in the future similarly will not be deemed to have
terminated employment for purposes of the Plan on account of such transaction;
and
WHEREAS, the Company has determined that such an amendment to the Plan
complies with all applicable laws and applicable stock exchange listing
requirements.
NOW, THEREFORE, the Compensation Committee of the Board hereby amends the
Plan, effective as of November 30, 2003, as follows:
I.
Section 7 of the Plan Shall be amended in its entirety to read as follows:
7. Duration of Options. Each option granted hereunder shall become
exercisable, in whole or in part, at the time or times provided by
the Committee, provided, however, that if an Optionee's employment
with or services to the Company, Carnival plc and their respective
"Affiliates" (as defined below) shall terminate by reason of death
or "permanent and total disability," within the meaning of section
22(e)(3) of the Code ("Disability"), each outstanding option granted
to such Optionee shall become exercisable in full in respect of the
aggregate number of shares covered thereby. The Company and Carnival
plc are hereinafter referred to as the "Combined Group."
Notwithstanding any provision of the Plan to the contrary, unless
otherwise provided by the Committee, the unexercised portion of any
option granted under the Plan shall automatically and without notice
terminate and become null and void at the time of the earliest to
occur of the following:
(a) the expiration of 10 years from the date on which such
option was granted;
(b) the expiration of one year from the date the Optionee's
employment with or services to each member of the Combined Group and
all Affiliates shall terminate by reason of Disability; provided,
however, that if the Optionee shall die during such one-year period,
the provisions of subparagraph (c) below shall apply;
(c) the expiration of one year from the date of the Optionee's
death, if such death occurs either (i) during employment or
retention by a member of the Combined Group or an Affiliate or (ii)
during the one-year period described in subparagraph (b) above;
(d) the date the Optionee's employment with or services to
each member of the Combined Group and all Affiliates shall terminate
by reason of "cause" (as hereinafter defined). Termination by reason
of "cause" shall mean termination by reason of participation and
conduct during employment consisting of fraud, felony, willful
misconduct or commission of any act which causes or may reasonably
be expected to cause substantial damage to a member of the Combined
Group or an Affiliate;
(e) (i) the expiration of three months from the date the
Optionee's employment with or services to each member of the
Combined Group and all Affiliates shall terminate other than by
reason of death, Disability or termination for cause for options
which are exercisable on or before the date of termination, and (ii)
the date the Optionee's employment with or services to each member
of the Combined Group and all Affiliates shall terminate other than
by reason of death, Disability or termination for cause for options
which are not exercisable on the date of termination; and
(f) in whole or in part, at such earlier time or upon the
occurrence of such earlier event as the Committee in its discretion
may provide upon the granting of such option.
The Committee may determine whether any given leave of absence
constitutes a termination of employment. The options granted under
the Plan shall not be affected by any change of employment so long
as the Optionee continues to be an employee of the a member of the
Combined Group or any of its Affiliates.
The Term "Affiliate" means (i) any entity that directly or
indirectly is controlled by, controls or is under common control
with the Company or Carnival plc, and (ii) to the extent provided by
the Committee, any entity in which the Company or Carnival plc has a
significant equity interest.
II.
Section 11 of the Plan shall be amended in its entirety to read as
follows:
11. Right to Terminate Employment or Service. Nothing in the Plan or
in any option shall confer upon any Optionee the right to continue
in the employment or service of a member of the Combined Group or an
Affiliate or affect the right of a member of the Combined Group or
an Affiliate to terminate the Optionee's employment or service at
any time, subject, however, to the provisions of any agreement of
employment or consultancy between a member of the Combined Group or
an Affiliate and the Optionee.
III.
Section 22 of the Plan shall be amended in its entirety to read as
follows:
22. Exclusion from Pension and Profit-Sharing Computation. By
acceptance of an option, each Optionee shall be deemed to have
agreed that such grant is special incentive compensation that will
not be taken into account in any manner as salary, compensation or
bonus in determining the amount of any payment under any pension,
retirement or other employee benefit plan of a member of the
Combined Group or an Affiliate. In addition, such option will not
affect the amount of any life insurance coverage, if any, provided
by a member of the Combined Group or an Affiliate on the life of the
Optionee which is payable to such beneficiary under any life
insurance plan covering employees of a member of the Combined Group
or an Affiliate.
IV.
Except as set forth herein, the Plan shall remain in full force and
effect.
Approved by the Compensation Committee in November 2003.
Exhibit 10.3
AMENDMENT AND RESTATEMENT AGREEMENT dated as of
November 17, 2003, among CARNIVAL CORPORATION (the
"Company"), the other borrowers party hereto (the
"Borrowing Subsidiaries"), CARNIVAL PLC (the
"Guarantor"), the Lenders party hereto and JPMORGAN
CHASE BANK, as successor to The Chase Manhattan Bank, as
Agent, under the Credit Agreement dated as of June 26,
2001, among the Company, the other Borrowers referred to
therein, the lenders referred to therein and the Agent,
as in effect on the date hereof (the "Existing Credit
Agreement").
WHEREAS the Company has requested, and the Lenders party hereto and
the Agent have agreed, upon the terms and subject to the conditions set forth
herein, that the Existing Credit Agreement be amended and restated as provided
herein;
NOW, THEREFORE, the Borrowers, the Guarantor, the Required Lenders
and the Agent hereby agree as follows:
SECTION 1. Defined Terms. Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Restated Credit
Agreement referred to below.
SECTION 2. Restatement Effective Date. (a) The transactions provided
for in Section 3 hereof shall be consummated at a closing to be held on the
Restatement Effective Date at the offices of Cravath, Swaine & Moore LLP, or at
such other time and place as the Company and the Agent shall agree upon.
(b) The "Restatement Effective Date" shall be a date specified by
the Company (not later than December 1, 2003) as of which all the conditions set
forth or referred to in Section 4 hereof shall have been satisfied. The Company
shall give not less than one Business Day's written notice to the Agent
proposing a date as the Restatement Effective Date, and the Agent shall notify
the Lenders of the date so proposed. This Agreement shall terminate at 5:00
p.m., New York City time, on December 1, 2003, if the Restatement Effective Date
shall not have occurred at or prior to such time.
SECTION 3. Amendment and Restatement of the Existing Credit
Agreement; Loans. (a) Effective upon the Restatement Effective Date, the
Existing Credit Agreement is hereby amended and restated to read in its entirety
as set forth in Exhibit A hereto (the "Restated Credit Agreement"), the
Guarantor shall be a party thereto, and the Agent is hereby directed by the
Lenders party hereto to enter into such documents and to take such other actions
as may be required to give effect to the transactions contemplated hereby. From
and after the effectiveness of such amendment and restatement, the terms
"Agreement", "this Agreement", "herein", "hereinafter", "hereto", "hereof" and
words of similar import, as used in the Restated Credit Agreement, shall, unless
the context otherwise requires, refer to the Existing Credit Agreement as
amended and restated in the form of the Restated Credit Agreement, and
the term "Credit Agreement", as used in the other Loan Documents, shall mean the
Restated Credit Agreement.
(b) All Loans outstanding under the Existing Credit Agreement on the
Restatement Effective Date shall continue to be outstanding under the Restated
Credit Agreement, and on and after the Restatement Effective Date, the terms of
the Restated Credit Agreement will govern the rights and obligations of the
Company, the other Borrowers, the Lenders and the Agent with respect thereto.
SECTION 4. Conditions. The consummation of the transactions set
forth in Section 3 of this Agreement shall be subject to the satisfaction (or
waiver in accordance with Section 5 below) of the following conditions
precedent:
(a) The Agent (or its counsel) shall have received from the
Borrowers, the Guarantor and the Required Lenders either (i) a counterpart of
this Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Agent (which may include telecopy or other electronic
transmission of a signed signature page of this Agreement) that such party has
signed a counterpart of this Agreement.
(b) The Agent (or its counsel) shall have received from the Company
and the Guarantor either (i) a counterpart of the agreement described in clause
(b) of the definition of the term "Guarantee Agreement" in the Restated Credit
Agreement signed on behalf of such party or (ii) written evidence satisfactory
to the Agent (which may include telecopy or other electronic transmission of a
signed signature page of such agreement) that such party has signed a
counterpart of such agreement.
(c) The Agent shall have received favorable written opinions
(addressed to the Agent and the Lenders and dated the Restatement Effective
Date) of (i) counsel to the Guarantor, substantially in the form of Exhibit A
hereto, and covering such other matters relating to the Guarantor, the Loan
Documents or the Restatement Transactions as the Agent shall reasonably request.
The Company and the Guarantor hereby request such counsel to deliver such
opinions.
(d) The Agent shall have received such documents and certificates as
the Agent or its counsel may reasonably request relating to the organization,
existence and good standing of the Guarantor, the authorization of the
Restatement Transactions and any other legal matters relating to the Borrowers
and the Guarantor, the Loan Documents or the Restatement Transactions, all in
form and substance satisfactory to the Agent and its counsel.
(e) The Agent shall have received all fees and other amounts due and
payable on or prior to the Restatement Effective Date including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses (including
reasonable fees, charges and disbursements of counsel) required to be reimbursed
or paid by any Borrower or the Guarantor hereunder or under any other Loan
Document.
The Agent shall notify the Company and the Lenders of the Restatement Effective
Date, and such notice shall be conclusive and binding. Notwithstanding the
foregoing, the
consummation of the transactions set forth in Section 3 of this Agreement shall
not become effective unless each of the foregoing conditions is satisfied (or
waived pursuant to Section 5 below) at or prior to 5:00 p.m., New York City
time, on December 1, 2003 (and, in the event such conditions are not so
satisfied or waived, the Existing Credit Agreement shall remain in effect
without giving effect to any provisions of this Agreement).
SECTION 5. Effectiveness; Counterparts; Amendments. Except as
provided in Section 4 above, this Agreement shall become effective when copies
hereof which, when taken together, bear the signatures of the Borrowers, the
Guarantor, the Agent and the Required Lenders shall have been received by the
Agent. This Agreement may not be amended nor may any provision hereof be waived
except pursuant to a writing signed by the Company, the Guarantor, the Agent and
the Required Lenders. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute a single contract. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy or other
electronic transmission shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 6. No Novation. This Agreement shall not extinguish the
Indebtedness outstanding under the Existing Credit Agreement. Nothing herein
contained shall be construed as a substitution or novation of the Indebtedness
outstanding under the Existing Credit Agreement, which shall remain outstanding
after the Restatement Effective Date as modified hereby.
SECTION 7. Notices. All notices hereunder shall be given in
accordance with the provisions of Section 9.02 of the Restated Credit Agreement.
SECTION 8. Applicable Law; Waiver of Jury Trial. (A) THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.
(B) EACH PARTY HERETO HEREBY AGREES AS SET FORTH IN SECTION 9.10 OF
THE RESTATED CREDIT AGREEMENT AS IF SUCH SECTION WERE SET FORTH IN FULL HEREIN
EXCEPT THAT THE TERM "AGREEMENT" THEREIN SHALL BE DEEMED TO REFER TO THIS
AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first written above.
CARNIVAL CORPORATION,
by
/s/ Gerald R. Cahill
--------------------------
Name: Gerald R. Cahill
Title: Sr. VP & CFO
GIBS, INC.,
by
/s/ Arnaldo Perez
--------------------------
Name: Arnaldo Perez
Title:
HOLLAND AMERICA LINE INC.,
by
/s/ Larry D. Calkins
--------------------------
Name: Larry D. Calkins
Title: V.P Finance/CFO
CARNIVAL PLC,
by
/s/ Gerald R. Cahill
--------------------------
Name: Gerald R. Cahill
Title: Sr. VP & CFO
JPMORGAN CHASE BANK, formerly
known as The Chase Manhattan Bank,
individually and as Agent,
by
/s/ Donald Shokrian
--------------------------
Name: Donald S. Shokrian
Title: Managing Director
SIGNATURE PAGE TO AMENDMENT AND
RESTATEMENT AGREEMENT DATED AS OF
NOVEMBER 17, 2003, AMONG CARNIVAL
CORPORATION, CARNIVAL PLC, THE LENDERS
PARTY HERETO AND JPMORGAN CHASE BANK, AS
AGENT, UNDER THE CREDIT AGREEMENT DATED
AS OF JUNE 26, 2001, AS AMENDED, AMONG
CARNIVAL CORPORATION, THE OTHER
BORROWERS REFERRED TO THEREIN, THE
LENDERS REFERRED TO THEREIN AND JPMORGAN
CHASE BANK, AS AGENT, AS IN EFFECT ON
THE DATE HEREOF.
To Approve Amendment
and Restatement Agreement:
Institution BANCA DI ROMA - NEW YORK BRANCH
by
/s/ Guido Lanzoni
----------------------------
Name: Guido Lanzoni
Title: Assistant Treasurer
/s/ Steven Paley
----------------------------
Name: Steven Paley
Title: First Vice President
SIGNATURE PAGE TO AMENDMENT AND
RESTATEMENT AGREEMENT DATED AS OF
NOVEMBER 17, 2003, AMONG CARNIVAL
CORPORATION, CARNIVAL PLC, THE LENDERS
PARTY HERETO AND JPMORGAN CHASE BANK, AS
AGENT, UNDER THE CREDIT AGREEMENT DATED
AS OF JUNE 26, 2001, AS AMENDED, AMONG
CARNIVAL CORPORATION, THE OTHER
BORROWERS REFERRED TO THEREIN, THE
LENDERS REFERRED TO THEREIN AND JPMORGAN
CHASE BANK, AS AGENT, AS IN EFFECT ON
THE DATE HEREOF.
To Approve Amendment
and Restatement Agreement:
Institution BANCA INTESA - NEW YORK BRANCH
by
/s/ Frank Maffei
-----------------------
Name: Frank Maffei
Title: Vice President
/s/ Mark Mooney
-----------------------
Name: Mark Mooney
Title: Vice President
SIGNATURE PAGE TO AMENDMENT AND
RESTATEMENT AGREEMENT DATED AS OF
NOVEMBER 17, 2003, AMONG CARNIVAL
CORPORATION, CARNIVAL PLC, THE LENDERS
PARTY HERETO AND JPMORGAN CHASE BANK, AS
AGENT, UNDER THE CREDIT AGREEMENT DATED
AS OF JUNE 26, 2001, AS AMENDED, AMONG
CARNIVAL CORPORATION, THE OTHER
BORROWERS REFERRED TO THEREIN, THE
LENDERS REFERRED TO THEREIN AND JPMORGAN
CHASE BANK, AS AGENT, AS IN EFFECT ON
THE DATE HEREOF.
To Approve Amendment
and Restatement Agreement:
Institution BANKL OF AMERICA N.A.
by
/s/ Matthew Koenig
-------------------------
Name: Matthew Koenig
Title: Managing Director
SIGNATURE PAGE TO AMENDMENT AND
RESTATEMENT AGREEMENT DATED AS OF
NOVEMBER 17, 2003, AMONG CARNIVAL
CORPORATION, CARNIVAL PLC, THE LENDERS
PARTY HERETO AND JPMORGAN CHASE BANK, AS
AGENT, UNDER THE CREDIT AGREEMENT DATED
AS OF JUNE 26, 2001, AS AMENDED, AMONG
CARNIVAL CORPORATION, THE OTHER
BORROWERS REFERRED TO THEREIN, THE
LENDERS REFERRED TO THEREIN AND JPMORGAN
CHASE BANK, AS AGENT, AS IN EFFECT ON
THE DATE HEREOF.
To Approve Amendment
and Restatement Agreement:
Institution BNP PARIBAS
by
/s/ Angela Arnold
--------------------------
Name: Angela Arnold
Title: Vice President
/s/ Mike Shryock
--------------------------
Name: Mike Shryock
Title: Director
SIGNATURE PAGE TO AMENDMENT AND
RESTATEMENT AGREEMENT DATED AS OF
NOVEMBER 17, 2003, AMONG CARNIVAL
CORPORATION, CARNIVAL PLC, THE LENDERS
PARTY HERETO AND JPMORGAN CHASE BANK, AS
AGENT, UNDER THE CREDIT AGREEMENT DATED
AS OF JUNE 26, 2001, AS AMENDED, AMONG
CARNIVAL CORPORATION, THE OTHER
BORROWERS REFERRED TO THEREIN, THE
LENDERS REFERRED TO THEREIN AND JPMORGAN
CHASE BANK, AS AGENT, AS IN EFFECT ON
THE DATE HEREOF.
To Approve Amendment
and Restatement Agreement:
Institution CITIBANK, N.A.
by
/s/ Chrles R. Delamater
-----------------------------------
Name: Charles R. Delamater
Title: Managing Director
Senior Credit Officer
SIGNATURE PAGE TO AMENDMENT AND
RESTATEMENT AGREEMENT DATED AS OF
NOVEMBER 17, 2003, AMONG CARNIVAL
CORPORATION, CARNIVAL PLC, THE LENDERS
PARTY HERETO AND JPMORGAN CHASE BANK, AS
AGENT, UNDER THE CREDIT AGREEMENT DATED
AS OF JUNE 26, 2001, AS AMENDED, AMONG
CARNIVAL CORPORATION, THE OTHER
BORROWERS REFERRED TO THEREIN, THE
LENDERS REFERRED TO THEREIN AND JPMORGAN
CHASE BANK, AS AGENT, AS IN EFFECT ON
THE DATE HEREOF.
To Approve Amendment
and Restatement Agreement:
Institution CREDIT SUISSE FIRST BOSTON acting through its Cayman Islands Branch
by
/s/ Bill O'
-----------------------
Name: Bill O'
Title: Director
/s/ Cassandra Droogan
-----------------------
Name: Steven Paley
Title: Associate
SIGNATURE PAGE TO AMENDMENT AND
RESTATEMENT AGREEMENT DATED AS OF
NOVEMBER 17, 2003, AMONG CARNIVAL
CORPORATION, CARNIVAL PLC, THE LENDERS
PARTY HERETO AND JPMORGAN CHASE BANK, AS
AGENT, UNDER THE CREDIT AGREEMENT DATED
AS OF JUNE 26, 2001, AS AMENDED, AMONG
CARNIVAL CORPORATION, THE OTHER
BORROWERS REFERRED TO THEREIN, THE
LENDERS REFERRED TO THEREIN AND JPMORGAN
CHASE BANK, AS AGENT, AS IN EFFECT ON
THE DATE HEREOF.
To Approve Amendment
and Restatement Agreement:
Institution DEN NORSKE BANK ASA
by
/s/ Sanjiv Nayar
---------------------------
Name: Sanjiv Nayar
Title: First Vice President
/s/ B. Henricksen
---------------------------
Name: Berit L. Henriksen
Title: Executive Vice President and General Manager
SIGNATURE PAGE TO AMENDMENT AND
RESTATEMENT AGREEMENT DATED AS OF
NOVEMBER 17, 2003, AMONG CARNIVAL
CORPORATION, CARNIVAL PLC, THE LENDERS
PARTY HERETO AND JPMORGAN CHASE BANK, AS
AGENT, UNDER THE CREDIT AGREEMENT DATED
AS OF JUNE 26, 2001, AS AMENDED, AMONG
CARNIVAL CORPORATION, THE OTHER
BORROWERS REFERRED TO THEREIN, THE
LENDERS REFERRED TO THEREIN AND JPMORGAN
CHASE BANK, AS AGENT, AS IN EFFECT ON
THE DATE HEREOF.
To Approve Amendment
and Restatement Agreement:
Institution MERRILL LYNCH BANK USA
by
/s/ Louis Alder
------------------------
Name: Louis Alder
Title: Vice President
SIGNATURE PAGE TO AMENDMENT AND
RESTATEMENT AGREEMENT DATED AS OF
NOVEMBER 17, 2003, AMONG CARNIVAL
CORPORATION, CARNIVAL PLC, THE LENDERS
PARTY HERETO AND JPMORGAN CHASE BANK, AS
AGENT, UNDER THE CREDIT AGREEMENT DATED
AS OF JUNE 26, 2001, AS AMENDED, AMONG
CARNIVAL CORPORATION, THE OTHER
BORROWERS REFERRED TO THEREIN, THE
LENDERS REFERRED TO THEREIN AND JPMORGAN
CHASE BANK, AS AGENT, AS IN EFFECT ON
THE DATE HEREOF.
To Approve Amendment
and Restatement Agreement:
Institution SUNTRUST BANK
by
/s/ Donald J. Campisano
-----------------------------
Name: Donald J. Campisano
Title: Managing Director
SIGNATURE PAGE TO AMENDMENT AND
RESTATEMENT AGREEMENT DATED AS OF
NOVEMBER 17, 2003, AMONG CARNIVAL
CORPORATION, CARNIVAL PLC, THE LENDERS
PARTY HERETO AND JPMORGAN CHASE BANK, AS
AGENT, UNDER THE CREDIT AGREEMENT DATED
AS OF JUNE 26, 2001, AS AMENDED, AMONG
CARNIVAL CORPORATION, THE OTHER
BORROWERS REFERRED TO THEREIN, THE
LENDERS REFERRED TO THEREIN AND JPMORGAN
CHASE BANK, AS AGENT, AS IN EFFECT ON
THE DATE HEREOF.
To Approve Amendment
and Restatement Agreement:
Institution THE NORTHERN TRUST COMPANY
by
/s/ Chris McKean
------------------------
Name: Chris McKean
Title: Vice President
SIGNATURE PAGE TO AMENDMENT AND
RESTATEMENT AGREEMENT DATED AS OF
NOVEMBER 17, 2003, AMONG CARNIVAL
CORPORATION, CARNIVAL PLC, THE LENDERS
PARTY HERETO AND JPMORGAN CHASE BANK, AS
AGENT, UNDER THE CREDIT AGREEMENT DATED
AS OF JUNE 26, 2001, AS AMENDED, AMONG
CARNIVAL CORPORATION, THE OTHER
BORROWERS REFERRED TO THEREIN, THE
LENDERS REFERRED TO THEREIN AND JPMORGAN
CHASE BANK, AS AGENT, AS IN EFFECT ON
THE DATE HEREOF.
To Approve Amendment
and Restatement Agreement:
Institution WESTLB AG (f/n/a Westdeutche Landesbank Girozentrale),
NEW YORK BRANCH
by
/s/ Richard J. Pearse
-----------------------------
Name: Richard J. Pearse
Title: Executive Director
/s/ Lucie L. Guernsey
-----------------------------
Name: Lucie L. Guernsey
Title: Executive Director
EXHIBIT A
U.S. $1,400,000,000
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
Dated as of June 26, 2001,
Amended and Restated as of November 17, 2003
Among
CARNIVAL CORPORATION,
as a Borrower and Guarantor,
Any Additional Borrowers Party Hereto,
CARNIVAL PLC,
as Guarantor,
The Lenders Party Hereto,
JPMORGAN CHASE BANK,
as Agent,
BANK OF AMERICA, N.A.,
as Syndication Agent,
J.P. MORGAN SECURITIES INC.,
as Joint Lead Arranger,
BANC OF AMERICA SECURITIES LLC,
as Joint Lead Arranger
and
BNP PARIBAS,
CITIBANK N.A.,
and
UNICREDITO ITALIANO - New York Branch,
as Co-Documentation Agents
Table of Contents
Page
ARTICLE I
Definitions
SECTION 1.01. Definitions......................................................4
SECTION 1.02. Governing Language..............................................23
SECTION 1.03. Computation of Time Periods.....................................23
SECTION 1.04. Classification of Loans and Borrowings..........................23
SECTION 1.05. Terms Generally.................................................23
SECTION 1.06. Accounting Terms; GAAP..........................................23
ARTICLE II
The Credits
SECTION 2.01. Commitments.....................................................24
SECTION 2.02. Loans and Borrowings............................................24
SECTION 2.03. Requests for Revolving Borrowings...............................25
SECTION 2.04. Competitive Bid Procedure.......................................26
SECTION 2.05. Funding of Borrowings...........................................28
SECTION 2.06. Interest Elections..............................................29
SECTION 2.07. Termination and Reduction of Commitments........................30
SECTION 2.08. Repayment of Loans; Evidence of Debt............................31
SECTION 2.09. Prepayment of Loans.............................................31
SECTION 2.10. Fees............................................................32
SECTION 2.11. Interest........................................................33
SECTION 2.12. Alternate Rate of Interest......................................34
SECTION 2.13. Increased Costs.................................................35
SECTION 2.14. Break Funding Payments..........................................36
SECTION 2.15. Taxes.......................................................... 37
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.....39
SECTION 2.17. Mitigation Obligations; Replacement of Lenders..................40
SECTION 2.18. Borrowing Subsidiaries..........................................41
SECTION 2.19. Additional Reserve Costs........................................41
SECTION 2.20. Redenomination of Certain Designated Foreign Currencies.........42
SECTION 2.21. Assigned Dollar Value...........................................43
SECTION 2.22. Borrowers' Increase of Commitments..............................43
ARTICLE III
Conditions of Lending
SECTION 3.01. [Intentionally Omitted.]........................................46
SECTION 3.02. Conditions Precedent to Each Revolving Borrowing................46
SECTION 3.03. Conditions Precedent to Each Competitive Loan Borrowing.........46
SECTION 3.04. Initial Borrowing by Each Borrowing Subsidiary..................47
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of the Borrowers.................47
ARTICLE V
Covenants of the Borrowers and Guarantor
SECTION 5.01. Affirmative Covenants...........................................52
SECTION 5.02. Negative Covenants..............................................56
ARTICLE VI
Default
SECTION 6.01. Events of Default...............................................58
ARTICLE VII
Relation of Lenders; Assignments, Designations And Participations
SECTION 7.01. Lenders and Agent...............................................61
SECTION 7.02. Setoff..........................................................61
SECTION 7.03. Approvals.......................................................62
SECTION 7.04. Exculpation.....................................................62
SECTION 7.05. Indemnification.................................................63
SECTION 7.06. Agent as Lender.................................................63
SECTION 7.07. Notice of Transfer; Resignation; Successor Agent................63
SECTION 7.08. Credit Decision; Not Trustee....................................64
SECTION 7.09. Assignments, Designations and Participation.....................64
SECTION 7.10. Syndication Agent and Co-Documentation Agents...................68
ARTICLE VIII
Company Guarantee
ARTICLE IX
Miscellaneous
SECTION 9.01. Amendments......................................................70
SECTION 9.02. Notices.........................................................71
SECTION 9.03. No Waiver; Remedies.............................................71
SECTION 9.04. Costs, Expenses, Fees and Indemnities...........................71
SECTION 9.05. Judgment........................................................72
SECTION 9.06. Consent to Jurisdiction; Waiver of Immunities...................72
SECTION 9.07. Binding Effect; Merger; Severability; GOVERNING LAW.............73
SECTION 9.08. Counterparts....................................................74
SECTION 9.09. Existing Credit Agreement; Effectiveness of Amendment
and Restatement...........................................74
SECTION 9.10. WAIVER OF JURY TRIAL............................................74
Schedule I - List of Applicable Lending Offices
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Designation Agreement
Exhibit C-1 - Form of Opinion of General Counsel of the Borrower
Exhibit C-2 - Form of Opinion of Special Panamanian Counsel to the Company
Exhibit D - Form of Assumption Agreement
Exhibit E-1 - Form of Borrowing Subsidiary Agreement
Exhibit E-2 - Form of Borrowing Subsidiary Termination
Exhibit F - Reserve Costs
Exhibit G-1 - Form of Competitive Bid Request
Exhibit G-2 - Form of Competitive Bid
Exhibit H-1 - Form of Deed of Guarantee
Exhibit H-2 - Form of Agreement Relating to Deed of Guarantee
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This Amended and Restated Revolving Credit
Agreement, dated as of June 26, 2001, as amended and
restated as of November 17, 2003, is made and entered
into by and among CARNIVAL CORPORATION (the "Company"),
a corporation organized and existing under the laws of
The Republic of Panama ("Panama"), any additional
Borrowers party hereto, CARNIVAL PLC, a corporation
organized and existing under the laws of England and
Wales (the "Guarantor"), JPMORGAN CHASE BANK, as
successor to The Chase Manhattan Bank, a New York
banking corporation ("Chase"), and each of the other
banks or other institutions whose names may appear on
the signature pages of this Agreement (each a "Bank"
and, collectively, the "Banks") or, if applicable, in
the Register for whom Chase, subject to Article VII of
this Agreement, acts as Agent, and subject to Section
7.10 of this Credit Agreement, BANK OF AMERICA, N.A.
("Bank of America") acts as Syndication Agent and BNP
Paribas, Citibank, N.A. and UBM-Unicredit Banca
Mobiliare act as Co-Documentation Agents. Capitalized
terms not otherwise herein defined shall have the
respective meanings set forth below in Section 1.01.
PRELIMINARY STATEMENTS
1. The Borrowers, the Lenders and the Agent are parties to a Credit Agreement
dated as of June 26, 2001, as in effect immediately prior to the Restatement
Effective Date (the "Existing Credit Agreement").
2. Pursuant to the Existing Credit Agreement, the Lenders have agreed severally,
but not jointly, each for the aggregate amount and in the percentage interest
(as to each Lender, the "Percentage Interest") set forth opposite each Lender's
name and signature to the Existing Credit Agreement, or if applicable, in any
relevant amendment thereto, or, if applicable, in the Register, to provide
credits upon the terms and conditions set forth therein.
3. The Borrowers, the Guarantor, the Required Lenders and the Agent are parties
to an Amendment and Restatement Agreement dated as of November 17, 2003 (the
"Amendment and Restatement Agreement").
4. Subject to the satisfaction of the conditions set forth in the Amendment and
Restatement Agreement, the Existing Credit Agreement shall be amended and
restated in the form hereof.
Now, therefore, the Borrowers, the Guarantor, the Lenders and the
Agent hereby agree among themselves as follows:
ARTICLE II.
Definitions
SECTION 1. Definitions. As used in this Agreement, each of the
following terms shall have the respective meaning set forth below (such
meanings, unless otherwise indicated, to apply to both the singular and plural
forms of the terms defined):
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Adjusted LIBO Rate" means, with respect to any Eurocurrency
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Questionnaire" means an Administrative Questionnaire
in a form supplied by the Agent.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with, such Person. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling", "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to vote ten percent (10%) or more of the securities having voting power
for the election of directors of such Person, or otherwise to direct or cause
the direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise. With respect to any
Lender, the term "Affiliate" shall be deemed to include (a) any entity (whether
a corporation, partnership, trust or otherwise) that is engaged in making,
purchasing, holding or otherwise investing in bank loans and similar extensions
of credit in the ordinary course of its business and is administered or managed
by such Lender or an Affiliate of such Lender and (b) in the case of any Lender
that is a fund that invests in bank loans and similar extensions of credit, any
other fund that invests in bank loans and similar extensions of credit and is
managed by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
"Agent" shall mean JPMorgan Chase Bank, and any successor agent
under this Agreement.
"Agreement" means this Agreement, as it may be amended, supplemented
or otherwise modified from time to time.
"Alternate Base Rate" means, for any day, an interest rate per annum
equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base
CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due
to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate shall be effective from and including the effective date of such change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"Alternative Committed Currency" means British Pounds Sterling or
Euro.
"Alternative Currency" means (a) any Alternative Committed Currency
or Yen or (b) any other currency specified by the Company in a Competitive Bid
Request
relating to a proposed Competitive Borrowing if such currency is freely
transferable and convertible into Dollars in the London market at the time and
for which LIBO Rates may be determined at such time by reference to the Telerate
screen as provided in the definition of "LIBO Rate".
"Alternative Currency Borrowing" means a Borrowing comprised of
Alternative Currency Loans.
"Alternative Currency Equivalent" means, with respect to an amount
in Dollars on any date in relation to a specified Alternative Currency, the
amount of such specified Alternative Currency that may be purchased with such
amount of Dollars at the Spot Exchange Rate with respect to such Alternative
Currency on such date.
"Alternative Currency Loan" means any Loan denominated in an
Alternative Currency.
"Amendment and Restatement Agreement" shall have the meaning set
forth in Preliminary Statement (3) of this Agreement.
"Applicable Currency" has the meaning assigned to such term in
Section 2.12.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
"Applicable Rate" means, for any day, with respect to any
Eurocurrency Revolving Loan, or with respect to the facility fees payable
hereunder, as the case may be, the applicable rate per annum set forth below
under the caption "Eurocurrency Spread" or "Facility Fee Rate", as the case may
be, based upon the ratings by Moody's and S&P, respectively, applicable on such
date to the Index Debt:
Facility
Index Debt Ratings: Ratings Eurocurrency Spread Fee Rate
------------------- ------- ------------------- --------
Category 1 >=AA-/Aa3 0.140% 0.060%
Category 2 A+/A1 0.155% 0.070%
Category 3 A/A2 0.170% 0.080%
Category 4 A-/A3 0.200% 0.100%
Category 5 BBB+/Baa1 0.375% 0.125%
Category 6 BBB/Baa2 0.600% 0.150%
Category 7 <=BBB-/Baa3 0.750% 0.250%
For purposes of the foregoing, (a) if either Moody's or S&P shall
not have in effect a rating for the Index Debt (other than by reason of the
circumstances referred to in the last sentence of this definition), then (i)
Fitch, Inc. shall be substituted for such rating agency and (ii) if Fitch, Inc.
shall not have in effect a rating for the Index Debt (other than by reason of
the circumstances referred to in the last sentence of this definition), then
such rating agency shall be deemed to have established a rating in Category 7;
(b) if the ratings established or deemed to have been established by Moody's and
S&P for the Index Debt shall fall within different Categories, the Applicable
Rate shall be based on the higher of the two ratings unless one of the two
ratings is two or more Categories lower than the other, in which case the
Applicable Rate shall be determined by reference to the Category next below that
of the higher of the two ratings; and (c) if the ratings established or deemed
to have been established by Moody's and S&P (or, if applicable, Fitch, Inc.) for
the Index Debt shall be changed (other than as a result of a change in the
rating system of Moody's or S&P (or, if applicable, Fitch, Inc.)), such change
shall be effective as of the date on which it is first announced by the
applicable rating agency. Each change in the Applicable Rate shall apply during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change. If the
rating system of Moody's, S&P (or, if applicable, Fitch, Inc.) shall change, or
if any such applicable rating agency shall cease to be in the business of rating
corporate debt obligations, the Borrowers and the Lenders shall negotiate in
good faith to amend this definition to reflect such changed rating system or the
unavailability of ratings from such rating agency and, pending the effectiveness
of any such amendment, the Applicable Rate shall be determined by reference to
the rating most recently in effect prior to such change or cessation.
"Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Agent to be representative of the cost of
such insurance to the Lenders.
"Assigned Dollar Value" has the meaning assigned to such term in
Section 2.21.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit A hereto.
"Assuming Bank" means, at any time, an Eligible Assignee not at such
time a Lender hereunder pursuant to Section 2.22.
"Assumption Agreement" means an agreement in substantially the form
of Exhibit D hereto by which an institution agrees to become a Lender party to
this Agreement pursuant to Section 2.22 by agreeing to be bound by all
obligations of a Lender hereunder.
"Availability Period" means the period from and including the
Closing Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD
Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrowers" means, at any time, the Company and any Borrowing
Subsidiaries.
"Borrowing" means (a) Revolving Loans to the same Borrower of the
same Type and in the same currency, made, converted or continued on the same
date and, in the case of Eurocurrency Loans, as to which a single Interest
Period is in effect and (b) a Competitive Loan or group of Competitive Loans to
the same Borrower of the same Type and in the same currency made on the same
date and as to which a single Interest Period is in effect.
"Borrowing Date" means any Business Day specified in a notice
pursuant to Section 2.02 or 2.04 as a date on which the relevant Borrower
requests Loans to be made hereunder.
"Borrowing Request" means a request by any Borrower for a Revolving
Borrowing in accordance with Section 2.03.
"Borrowing Subsidiaries" means any Subsidiaries that become
Borrowers pursuant to Section 2.18, other than any such Borrowing Subsidiaries
that have ceased to be Borrowers pursuant to Section 2.18.
"Borrowing Subsidiary Agreement" means a Borrowing Subsidiary
Agreement substantially in the form of Exhibit E-1.
"Borrowing Subsidiary Termination" means a Borrowing Subsidiary
Termination substantially in the form of Exhibit E-2.
"British Pounds Sterling" means lawful money of the United Kingdom.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed, except that when used in connection with a Eurocurrency Loan
or an Alternative Currency Loan, "Business Day" also shall exclude any day on
which
commercial banks in London, England are authorized or required by law to remain
closed and if such reference relates to the date for payment or purchase of any
sum denominated in (i) any Alternative Currency other than Euro, the principal
financial center of the country of such Alternative Currency and (ii) Euro a day
on which the Trans-European Automated Real-Time Gross Settlement Express
Transfer System (TARGET) is open for settlement of payment in Euro.
"Capital Lease" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet, other than, in the case of
the Company, the Guarantor or any of their respective Subsidiaries, any such
lease under which the Company, the Guarantor or such Subsidiary is the lessor.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender (or,
for purposes of Section 2.13(b) or 2.19, by any lending office of such Lender or
by such Lender's holding company, if any) with any request, guideline or
directive (whether or not having the force of law) of any Governmental Authority
made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Competitive Loans.
"Closing Date" means June 26, 2001, which is the date on which the
Existing Credit Agreement was executed and delivered.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Commitment" means, with respect to each Lender, the commitment of
such Lender to make Revolving Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Credit
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.07, (b) increased from time to time pursuant to Section
2.22 and (c) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 7.09. The initial amount of each Lender's
Commitment as of the Closing Date is set forth on the signature pages hereof, or
in the Assignment and Acceptance pursuant to which such Lender shall have
assumed its Commitment, as applicable. The initial aggregate amount of the
Lenders' Commitments as of the Closing Date was $1,400,000,000.
"Commitment Date" has the meaning specified in Section 2.22.
"Commitment Increase" has the meaning specified in Section 2.22.
"Competitive Bid" means an offer by a Lender to make a Competitive
Loan, substantially in the form of Exhibit G-2 or other form agreed to by the
Agent and the applicable Borrower, in accordance with Section 2.04.
"Competitive Bid Rate" means, with respect to any Competitive Bid,
the Margin or the Fixed Rate, as applicable, offered by the Lender making such
Competitive Bid.
"Competitive Bid Request" means a request by any Borrower for
Competitive Bids, substantially in the form of Exhibit G-1 or other form agreed
to by the Agent and the applicable Borrower, in accordance with Section 2.04.
"Competitive Loan" means a Loan made pursuant to Section 2.04.
"Consolidated Cash Flow" means, in conformity with GAAP, net cash
from operations, as shown in the consolidated statements of cash flows of the
Company, the Guarantor and their respective Subsidiaries.
"Currency Equivalent" means the Dollar Equivalent or the Alternative
Currency Equivalent, as the case may be, of the Applicable Currency.
"Default" means any event or condition that, with the giving of
notice, the lapse of time or both, would become an Event of Default.
"Denomination Date" means, in relation to any Alternative Currency
Borrowing, the date that is three Business Days before the date such Borrowing
is made.
"Designated Bidder" means (i) an Eligible Assignee or (ii) a special
purpose corporation which is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and that
issues (or the parent of which issues) commercial paper rated at least "Prime-1"
by Moody's Investors Services, Inc. or "A-1" by Standard & Poor's Ratings
Services or a comparable rating from the successor of either of them, that, in
either case, (x) is organized under the laws of the United States or any State
thereof, (y) shall have become a party hereto pursuant to Section 7.09(d), (e),
(f) and (z) is not otherwise a Lender.
"Designation Agreement" means a designation agreement entered into
by a Lender (other than a Designated Bidder) and a Designated Bidder, and
accepted by the Agent, in substantially the form of Exhibit B hereto.
"Dollar Equivalent" means, with respect to an amount of any
Alternative Currency on any date, the amount of Dollars that may be purchased
with such amount of the Alternative Currency at the Spot Exchange Rate with
respect to the Alternative Currency on such date.
"Dollars" or "$" refers to lawful money of the United States of
America.
"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender, or such other office of such Lender as such Lender may from
time to time specify to the Company and the Agent.
"Eligible Assignee" means (i) a commercial bank, savings and loan
institution, insurance company or financial institution organized under the laws
of the United States, or any State thereof, which bank, insurance company or
financial institution has both assets in excess of One Billion Dollars
($1,000,000,000) and combined capital and surplus in excess of One Hundred
Million Dollars ($100,000,000), (ii) a commercial bank organized under the laws
of any other country which is a member of the OECD or has concluded special
lending arrangements with the International Monetary Fund associated with its
General Arrangements to Borrow, or a political subdivision of any such country,
which bank has a combined capital and surplus (or the equivalent thereof under
the accounting principles applicable thereto) in excess of One Hundred Million
Dollars ($100,000,000), provided that such bank is acting through a branch or
agency located in the United States, the Cayman Islands or the country in which
it is organized or another country which is also a member of the OECD or has
concluded special lending arrangements with the International Monetary Fund
associated with its General Arrangements to Borrow, (iii) the central bank of
any country which is a member of the OECD or (iv) a finance company, insurance
company or other financial institution or a fund which is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary course of
its business, has both total assets in excess of One Billion Dollars
($1,000,000,000) and combined capital and surplus in excess of $100,000,000, is
doing business in the United States and is organized under the laws of the
United States, or any State thereof, or under the laws of any member country of
the OECD.
"EMU Legislation" means the legislative measures of the European
Union for the introduction of, changeover to or operation of the Euro in one or
more member states.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of any of the Company, the
Guarantor or their Subsidiaries directly or indirectly resulting from or based
upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means with respect to any Person, any trade or
business (whether or not incorporated) which is a member of a group of which
such Person is a member and which is under common control with such Person
within the meaning of Section 414 of the Code, as amended from time to time, and
the regulations promulgated and rulings issued thereunder.
"Euro" or "(euro)" means the single currency of the European Union
as constituted by the Treaty on European Union and as referred to in the EMU
Legislation.
"Eurocurrency", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate (or, in the
case of a Competitive Loan, the LIBO Rate).
"Eurocurrency Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurocurrency Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant to
which it became a Lender (or, if no such office is specified, its Domestic
Lending Office), or such other office of such Lender as such Lender may from
time to time specify to the Company and the Agent.
"Event of Default" means any of the events specified as such in
Section 6.01 of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Assets" means any assets sold or otherwise disposed of by
a Person, provided such Person, directly or indirectly, has the right to
possession or use of such assets notwithstanding such transfer or other
disposition.
"Excluded Indebtedness" means any Indebtedness, including
Indebtedness pursuant to a U.S. leveraged lease financing including a U.S. lease
to service contract under Section 7701(e) of the Code, the payment of which is
provided for by the deposit of cash, cash equivalents or letters of credit with
one or more investment-grade banks or other financial institutions acting as
payment undertaker, irrespective whether any such arrangement constitutes a
defeasance under GAAP.
"Excluded Taxes" means, with respect to the Agent, any Lender or any
other recipient of any payment to be made by or on account of any obligation of
any Borrower hereunder, (a) income, franchise or other similar taxes imposed on,
based on or measured by or with respect to its net income by the United States
of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction described in clause (a) above, (c) in the case of a Foreign Lender
(other than an assignee pursuant to a request by any Borrower under Section
2.17(b)), any withholding tax that (i) is in effect and would apply to amounts
payable to such Foreign Lender, at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office), by a Borrower previously
designated hereunder, except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of such designation of a new lending
office (or such assignment), to receive additional amounts from the Borrowers
with respect to any withholding tax pursuant to Section 2.15(a), or (ii) is
attributable to such Foreign Lender's failure to comply with Section 2.15(e),
(d) any withholding tax that is attributable to such Lender's failure to comply
with Section 2.15(e), except, in the case of clause (c) above, to the extent
that (i) such Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from any Borrower with respect to any withholding tax pursuant to
Section 2.15, or (ii) such withholding tax shall have resulted from the making
of any payment to a location other than the office designated by the Agent or
such Lender for the receipt of payments of the applicable type and (e) any tax
imposed by a jurisdiction to the extent such tax is attributable to a connection
between such jurisdiction and the Agent, such Lender or such other recipient, as
the case may be, other than a connection arising from the transactions
contemplated by this Agreement.
"Existing Credit Agreement" shall have the meaning set forth in
Preliminary Statement (1) of this Agreement.
"Existing Credit Agreement Effective Date" means the date the
Existing Credit Agreement became effective in accordance with its terms.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fixed Rate" means, with respect to any Competitive Loan (other than
a Eurocurrency Competitive Loan), the fixed rate of interest per annum specified
by the Lender making such Competitive Loan in its related Competitive Bid.
"Fixed Rate Loan" means a Competitive Loan bearing interest at a
Fixed Rate.
"Foreign Lender" means, with respect to any Borrower, any Lender
that is organized under the laws of a jurisdiction other than that in which such
Borrower is located. For purposes of this definition, the United States of
America, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.
"GAAP" means at any time generally accepted accounting principles in
the United States of America.
"Governmental Authority" means the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee Agreement" means, collectively, (a) the P&O Princess
Cruises plc (now known as Carnival plc) Deed of Guarantee dated as of April 17,
2003, between the Guarantor and the Company for the benefit of each Creditor (as
defined therein) and (b) the Agreement relating to the P&O Princess Cruises plc
(now known as Carnival plc) Deed of Guarantee dated as of November 17, 2003,
between the Guarantor and the Company for the benefit of the Lenders, in the
forms attached hereto as Exhibits H-1 and H-2, respectively.
"Hazardous Materials" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Incorporation Jurisdictions" mean the respective jurisdictions of
incorporation or legal organization of the Company and each of its Subsidiaries.
"Increase Date" has the meaning specified in Section 2.22.
"Increasing Lender" has the meaning specified in Section 2.22.
"Indebtedness" means (a) any liability of any Person (i) for
borrowed money, or under any reimbursement obligation related to a letter of
credit or bid or performance bond facility, or (ii) evidenced by a bond, note,
debenture or other evidence of indebtedness (including a purchase money
obligation) representing extensions of credit or given in connection with the
acquisition of any business, property, service or asset of any kind, including
without limitation, any liability under any commodity, interest rate or currency
exchange hedge or swap agreement (other than a trade payable, other current
liability arising in the ordinary course of business or commodity, interest rate
or currency exchange hedge or swap agreement arising in the ordinary course of
business) or (iii) for obligations with respect to (A) an operating lease, or
(B) a lease of real or personal property that is or would be classified and
accounted for as a Capital Lease; (b) any liability of others either for any
lease, dividend or letter of credit, or for any obligation described in the
preceding clause (a) that (i) the Person has guaranteed or that is
otherwise its legal liability (whether contingent or otherwise or direct or
indirect, but excluding endorsements of negotiable instruments for deposit or
collection in the ordinary course of business) or (ii) is secured by any Lien on
any property or asset owned or held by that Person, regardless whether the
obligation secured thereby shall have been assumed by or is a personal liability
of that Person; and (c) any amendment, supplement, modification, deferral,
renewal, extension or refunding of any liability of the types referred to in
clauses (a) and (b), above; provided, however, that "Indebtedness" shall not
include Excluded Indebtedness.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Index Debt" means senior, unsecured, long-term indebtedness for
borrowed money of the Company that is not guaranteed by any other Person (other
than the Guarantor or, so long as the Obligations are guaranteed by POPCIL
pursuant to the P&O Princess Cruises International Limited Deed of Guarantee
among POPCIL, the Guarantor and the Company dated June 19, 2003, as in effect on
the Restatement Effective Date, POPCIL) or subject to any other credit
enhancement.
"Insufficiency" means, with respect to any Plan, the amount, if any,
by which the present value of the vested benefits under such Plan exceeds the
fair market value of the assets of such Plan allocable to such benefits.
"Interest Election Request" means a request by any Borrower to
convert or continue a Revolving Borrowing in accordance with Section 2.06.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December, (b) with respect to any
Eurocurrency Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurocurrency
Borrowing with an Interest Period of more than three months' duration, each day
that occurs at intervals of three months' duration after the first day of such
Interest Period and (c) with respect to any Fixed Rate Loan, the last day of the
Interest Period applicable to the Borrowing of which such Loan is a part and, in
the case of a Fixed Rate Borrowing with an Interest Period of more than 90 days'
duration (unless otherwise specified in the applicable Competitive Bid Request),
each day prior to the last day of such Interest Period that occurs at intervals
of 90 days' duration after the first day of such Interest Period, and any other
dates that are specified in the applicable Competitive Bid Request as Interest
Payment Dates with respect to such Borrowing.
"Interest Period" means (a) with respect to any Eurocurrency
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the applicable Borrower may elect, and (b) with
respect to any Fixed Rate Borrowing, the period (which shall not be less than
seven days or more than 180 days) commencing on the date of such Borrowing and
ending on the date specified in the applicable Competitive Bid Request;
provided, that (i) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a Eurocurrency Borrowing only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period pertaining to a Eurocurrency Borrowing that commences on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and, in the case of a Revolving
Borrowing, thereafter shall be the effective date of the most recent conversion
or continuation of such Borrowing.
"Lenders" means the Banks listed on the signature pages hereof, each
Eligible Assignee that shall become a party hereto pursuant to Section 7.09(a),
(b) and (c) or Section 2.22 and, except when used in reference to a Revolving
Loan, a Borrowing with respect to a Revolving Loan, a Commitment, the Maturity
Date or a related term, each Designated Bidder.
"Lending Office" means the International Banking Facility of the
Agent in New York City, or any other office or affiliate of the Agent hereafter
selected and notified to the Borrower from time to time by the Agent.
"LIBO Rate" means, with respect to any Eurocurrency Borrowing for
any Interest Period, the rate per annum determined by reference to the British
Bankers' Association Interest Settlement Rates for deposits with a maturity
comparable to such Interest Period denominated in the currency in which such
Eurocurrency Borrowing is denominated as reflected on the applicable Telerate
Screen (or on any successor or substitute page of the Telerate Service, or any
successor to or substitute for the Telerate Service, providing rate quotations
comparable to those currently provided on such Service, as determined by the
Agent from time to time or purposes of providing quotations of interest rates
applicable to deposits in the currency in which such Borrowing is denominated)
at approximately 11:00 a.m., London time, on the Quotation Day for the currency
in which such Borrowing is denominated. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurocurrency Borrowing for such Interest Period shall be the average of the
rates at which dollar deposits of $5,000,000 (or in the case of Eurocurrency
Borrowings denominated in an Alternative Currency, deposits with a Dollar
Equivalent of $5,000,000) and for a maturity comparable to such Interest Period
are offered by the principal London office of each of the Reference Lenders in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, on the Quotation Day for the currency in which such
Borrowing is denominated prior to the commencement of such Interest Period. In
the event the LIBO Rate is determined as set forth in the next preceding
sentence, the LIBO Rate shall be determined by the Agent on the basis of the
applicable rates furnished to and received by the Agent from the Reference
Lenders on the applicable Quotation Day.
"Lien" means any lien, charge, easement, claim, mortgage, Option,
pledge, right of first refusal, right of usufruct, security interest, servitude,
transfer
restriction or other encumbrance or any restriction or limitation of any kind
(including, without limitation, any adverse claim to title, conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest).
"Loan" means any loan made by a Lender to a Borrower pursuant to
this Agreement.
"Loan Documents" mean this Agreement, any Borrowing Subsidiary
Agreement, any Borrowing Termination Agreement, the Guarantee Agreement and the
Amendment and Restatement Agreement.
"Local Time" means (a) with respect to any Loan or Borrowing
denominated in Dollars, New York City time and (b) with respect to any Loan or
Borrowing denominated in any Alternative Currency, London time (or such other
time as the Agent may designate in respect of the applicable currency).
"Margin" means, with respect to any Competitive Loan bearing
interest at a rate based on the LIBO Rate, the marginal rate of interest, if
any, to be added to or subtracted from the LIBO Rate to determine the rate of
interest applicable to such Loan, as specified by the Lender making such Loan in
its related Competitive Bid.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Company, the Guarantor and their respective Subsidiaries taken as a whole or
(b) the ability of the Company, the Guarantor and their respective Subsidiaries
taken as a whole to perform any of their respective obligations under this
Agreement or the Guarantee Agreement.
"Material Subsidiary" means (a) each Borrowing Subsidiary and (b)
any Subsidiary which at the time of any determination thereof has Tangible Net
Worth equal to or exceeding $75,000,000.
"Maturity Date" means June 26, 2006.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which a Person or any ERISA Affiliate is making
or accruing an obligation to make contributions, or has within any of the
preceding three plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means an employee benefit plan, other than
a Multiemployer Plan, subject to Title IV of ERISA to which a Person or any
ERISA Affiliate, and more than one employer other than such Person or ERISA
Affiliate, is making or accruing an obligation to make contributions or, in the
event that any such plan has been terminated, to which the Person or any ERISA
Affiliate made or accrued an
obligation to make contributions during any of the five plan years preceding the
date of termination of such plan.
"OECD" means the Organization for Economic Cooperation and
Development.
"Obligations" mean all obligations, including but not limited to,
all principal, interest, fees, expenses and other obligations set forth in
Article II and Section 9.04 hereof, of every nature of any Borrower from time to
time owed to the Agent, any of the Lenders, or all of them, under any of the
Loan Documents.
"Option" means (1) any right to buy or sell specific property in
exchange for an agreed upon sum, (2) any right to receive funds, the amount of
which is determined by reference to the value of capital stock or the purchase
price thereof, (3) any right of the type or kind referred to as a "phantom stock
right," and (4) any other right commonly known or referred to as an "option."
"Other Taxes" means any and all present or future recording, stamp,
documentary, excise, transfer, sales, property or similar taxes, charges or
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement other than (1)
Excluded Taxes, (2) any Taxes required to be paid solely as a result of the
execution or delivery of an instrument effecting an assignment, designation or
participation contemplated in Section 7.09(a), (d) or (h) (excluding any
designation or assignment initiated pursuant to Section 2.17), and (3) any
stamp, documentary, property or similar tax imposed by the State of Florida
solely as a result of the Agent or any Lender bringing this Agreement or any
promissory note executed pursuant to Section 2.08(e) into the State of Florida
other than for the purpose of enforcement of any of the rights of any Agent or
any Lender after the occurrence and during the continuance of an Event of
Default.
"PBGC" means the Pension Benefit Guaranty Corporation, or any entity
or entities succeeding to any or all its functions under ERISA.
"Percentage Interest" shall have the meaning set forth in
Preliminary Statement (2) of this Agreement.
"Person" means any individual, corporation, partnership, business
trust, joint venture, association, joint stock company, trust or other
unincorporated organization, whether or not a legal entity, or any government or
agency or political subdivision thereof.
"Plan" means, at any time, any employee pension benefit plan
maintained by a Person, any of its subsidiaries, or any ERISA Affiliate of such
Person or its subsidiaries, which employee pension benefit plan is covered by
Title IV of ERISA or is subject to the minimum funding standards of the Code.
"POPCIL" means P&O Princess Cruises International Limited, a wholly
owned direct Subsidiary of the Guarantor, incorporated and registered in England
and Wales.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by JPMorgan Chase Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Quotation Day" in respect of the determination of the LIBO Rate for
any Interest Period (a) for any Eurocurrency Borrowing in Dollars or any
Alternative Currency (other than British Pounds Sterling), means the day on
which quotations would ordinarily be given by prime banks in the London
interbank market for deposits in the currency in which such Borrowing is
denominated for delivery on the first day of such Interest Period; provided,
that if quotations would ordinarily be given on more than one date, the
Quotation Day for such Interest Period shall be the last of such dates and (b)
for any Eurocurrency Borrowing denominated in British Pounds Sterling, means the
first day of such Interest Period.
"Reference Lender" means any of, and "Reference Lenders" means all
of, Chase, Bank of America and Citibank, N.A.
"Register" shall have the meaning set forth in Section 7.09(g) of
this Agreement.
"Required Lenders" means, at any time, Lenders having Revolving
Credit Exposures and unused Commitments representing more than 50% of the sum of
the total Revolving Credit Exposures and unused Commitments at such time;
provided that, for purposes of declaring the Loans to be due and payable
pursuant to Article VI, and for all purposes after the Loans become due and
payable pursuant to Article VI or the Commitments expire or terminate, the
outstanding Competitive Loans of the Lenders shall be included in their
respective Revolving Credit Exposures in determining the Required Lenders.
"Restatement Effective Date" shall have the meaning given such term
in the Amendment and Restatement Agreement.
"Restatement Transactions" means the execution and delivery of the
Amendment and Restatement Agreement by each Person party thereto, the
satisfaction of the conditions to the effectiveness thereof, and the
consummation of the transactions contemplated thereby, including the amendments
to the Existing Credit Agreement effected by the restatement thereof.
"Revaluation Date" means, with respect to an Alternative Currency
Borrowing, (a) the last day of each Interest Period with respect to such
Borrowing (and if such Interest Period has a duration of more than three months,
each day prior to the last day of such Interest Period that occurs at intervals
of three months duration after the first day of such Interest Period and (b) any
Business Day requested by the Company upon at
least four Business Days' notice; provided that such requests by the Company,
when added to requests pursuant to clause (a) hereof, shall not be made more
than twice in any calendar month).
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of (a) the outstanding principal amount of such Lender's Revolving
Loans denominated in Dollars plus (b) the Assigned Dollar Value at such time of
the outstanding principal amount of such Lender's Revolving Loans denominated in
Alternative Committed Currencies.
"Revolving Loan" means a Loan made pursuant to Section 2.03.
"S&P" means Standard & Poor's.
"Solvent" means with respect to any Person on a particular date,
that on such date (i) the fair market value of the assets of such Person is
greater than the total amount of liabilities (including the present or expected
value of contingent liabilities) of such Person, (ii) the present fair salable
value of the assets of such Person is greater than the amount that will be
required to pay the probable liabilities of such Person for its debts as they
become absolute and matured, (iii) such Person is able to realize upon its
assets and pay its debts and other liabilities, including contingent
obligations, as they mature, (iv) such Person does not have unreasonably small
capital and (v) such Person does not intend to or believe it will incur debts
beyond its ability to pay as they mature.
"Spot Exchange Rate" means, on any day, (a) with respect to any
Alternative Currency in relation to Dollars, the spot rate at which Dollars are
offered on such day for such Alternative Currency which appears on page FX of
the Reuters Screen at approximately 3:00 p.m., London time (and if such spot
rate is not available on the applicable page of the Reuters Screen, such spot
rate as quoted by Chase Manhattan International Limited at approximately 3:00
p.m., London time), and (b) with respect to Dollars in relation to any specified
Alternative Currency, the spot rate at which such specified Alternative Currency
is offered on such day for Dollars which appears on page FX of the Reuters
Screen at approximately 3:00 p.m., London time (and if such spot rate is not
available on the applicable page of the Reuters Screen, such spot rate as quoted
by Chase Manhattan International Limited at approximately 3:00 p.m., London
time). For purposes of determining the Spot Exchange Rate in connection with an
Alternative Currency Borrowing, such Spot Exchange Rate shall be determined as
of the Denomination Date for such Borrowing with respect to transactions in the
applicable Alternative Currency that will settle on the date of such Borrowing.
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Agent is subject (a) with respect to the
Base CD Rate, for new negotiable nonpersonal time deposits in Dollars of over
$100,000 with maturities approximately equal to three months, and (b) with
respect to the Adjusted LIBO Rate, for
Eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurocurrency Loans shall be deemed to constitute
Eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
"subsidiary" means, with respect to any Person, any corporation,
association, partnership or other business entity of which a majority of the
voting power entitled to vote in the election of directors, managers or trustees
thereof is at the time owned, directly or indirectly, by such Person or by one
or more other subsidiaries, or by such Person and one or more other
subsidiaries, or a combination thereof.
"Subsidiary" means any subsidiary of the Company or the Guarantor.
"Tangible Net Worth" means for any Person at any time (a) the sum
without duplication, to the extent shown on such Person's balance sheet, of (i)
the amount of issued and outstanding share capital, but less the cost of
treasury shares, plus (ii) the amount paid in capital and retained earnings,
less (b) intangible assets as determined in accordance with GAAP (excluding, for
the avoidance of doubt, equity method goodwill).
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Termination Event" means (i) a "reportable event," as such term is
described in Section 4043 of ERISA (other than a "reportable event" not subject
to the provision for 30 day notice to the PBGC), or an event described in
Section 4068(f) of ERISA, or (ii) the withdrawal of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it was a
"substantial employer," as such term is defined in Section 4001(a)(2) of ERISA,
or the incurrence of liability by the Borrower or any ERISA Affiliate under
Section 4064 of ERISA upon the termination of a Multiple Employer Plan, or (iii)
the filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041A of ERISA, or (iv) the institution
of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or
(v) any other event or condition which might constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of
the secondary market quotations for three-month certificates of deposit of major
money center banks in New York City received at approximately 10:00 a.m., New
York City time, on such day (or, if such day is not a Business Day, on the next
preceding Business Day) by the Agent from three negotiable certificate of
deposit dealers of recognized standing selected by it.
"Total Capital" means the sum of the Total Debt and Tangible Net
Worth of the Company, the Guarantor and their respective Subsidiaries.
"Total Credit Exposure" means, at any time, the sum of (a) the
aggregate principal amount at such time of all outstanding Loans denominated in
Dollars, plus (b) the Assigned Dollar Value at such time of the aggregate
principal amount of all outstanding Alternative Currency Loans.
"Total Debt" means, at a particular date, the sum (without
duplication) of (y) all amounts which would, in accordance with GAAP, constitute
short term debt and long term debt of the Company, the Guarantor and their
respective Subsidiaries as of such date and (z) the amount of any Indebtedness
outstanding on such date and not included in the amounts specified in clause
(y), singly or in the aggregate, in excess of Fifty Million Dollars
($50,000,000), of any Person other than the Company, the Guarantor or any of
their respective Subsidiaries, which Indebtedness (i) has been and remains
guaranteed on such date by the Company, the Guarantor or any of their respective
Subsidiaries or is otherwise the legal liability of the Company, the Guarantor
or any of their respective Subsidiaries (whether contingent or otherwise or
direct or indirect, but excluding endorsements of negotiable instruments for
deposit or collection in the ordinary course of business), or (ii) is secured by
any Lien on any property or asset owned or held by the Company, the Guarantor or
any of their respective Subsidiaries, regardless of whether the obligation
secured thereby shall have been assumed or is a personal liability of the
Company, the Guarantor or any of their respective Subsidiaries; provided that
"Total Debt" shall not include (a) any Excluded Indebtedness or (b) Indebtedness
pursuant to any commodity, interest rate or currency exchange hedge or swap
agreement.
"Transaction" means the extension of credit contemplated by the Loan
Documents.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate, the Alternate
Base Rate or, in the case of a Competitive Loan or Borrowing, the LIBO Rate or a
Fixed Rate.
"Withdrawal Liability" shall have the meaning given such term under
Part I of Subtitle E of Title IV of ERISA.
"Yen" or "(Yen)" means the lawful money of Japan.
SECTION 2. Governing Language. All documents, notices and demands
and financial statements to be delivered by any Person to the Agent or any
Lender pursuant to this Agreement shall be in the English language.
SECTION 3. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and each of the words "to" and
"until" means "to but excluding".
SECTION 4. Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurocurrency Loan") or by Class and Type
(e.g., a "Eurocurrency Revolving Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurocurrency Borrowing") or by Class and Type (e.g., a "Eurocurrency Revolving
Borrowing").
SECTION 5. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder" and words of similar
import shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 6. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Company notifies the Agent that the Company requests an amendment
to any provision hereof to eliminate the effect of any change occurring after
the Closing Date in GAAP or in the application thereof on the operation of such
provision (or if the Agent notifies the Company that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.
ARTICLE III.
The Credits
SECTION 1. Commitments. Subject to the terms and conditions set
forth herein, each Lender agrees to make Revolving Loans in Dollars or in any
Alternative Committed Currency to any Borrower from time to time during the
Availability Period in an aggregate principal amount that will not result in (a)
such Lender's Revolving Credit Exposure exceeding such Lender's Commitment, (b)
the Total Credit Exposure exceeding the total Commitments or (c) the aggregate
principal amount of outstanding Revolving Loans denominated in any single
Alternative Committed Currency exceeding $750,000,000 (based on Assigned Dollar
Values). Within the foregoing limits and subject to the terms and conditions set
forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans.
SECTION 2. Loans and Borrowings. (a) Each Revolving Loan shall be
made as part of a Borrowing consisting of Revolving Loans made by the Lenders
ratably in accordance with their respective Commitments. Each Competitive Loan
shall be made in accordance with the procedures set forth in Section 2.04. The
failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments and Competitive Bids of the Lenders are several and no Lender shall
be responsible for any other Lender's failure to make Loans as required.
(b) Subject to Section 2.12, (i) each Revolving Borrowing shall be
comprised entirely of ABR Loans or Eurocurrency Loans as the applicable Borrower
may request in accordance herewith (except that a Revolving Borrowing
denominated in an Alternative Committed Currency must be comprised entirely of
Eurocurrency Loans), and (ii) each Competitive Borrowing shall be comprised
entirely of Eurocurrency Loans or Fixed Rate Loans as the applicable Borrower
may request in accordance herewith. Each Lender at its option may make any
Eurocurrency Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the applicable Borrower to repay such Loan in
accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurocurrency
Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $10,000,000. At the time that
each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than $10,000,000;
provided that an ABR Revolving Borrowing may be in an aggregate amount that is
equal to the entire unused balance of the total Commitments. Each Competitive
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $10,000,000. Subject to Section 2.12, Loans made
pursuant to any Alternative Currency Borrowing shall be made in the Alternative
Currency specified in the applicable Borrowing Request or Competitive Bid
Request in an aggregate amount equal to the Alternative Currency Equivalent of
the Dollar amount specified in such Borrowing Request or, in the case of a
Competitive Borrowing, the Dollar amount accepted pursuant to Section 2.04 (in
each case as determined by the Agent based upon the applicable Spot Exchange
Rate as of the Denomination Date for such Borrowing (which determination shall
be conclusive absent manifest error)); provided, that for purposes of the
borrowing amounts specified above, each Alternative Currency Borrowing shall be
deemed to be in a principal amount equal to its Assigned Dollar Value.
Borrowings of more than one Type and Class may be outstanding at the same time;
provided that there shall not at any time be more than a total of six
Eurocurrency Revolving Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrowers shall not be entitled to request, or to elect to convert or continue
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.
SECTION 3. Requests for Revolving Borrowings. To request a Revolving
Borrowing, the applicable Borrower shall notify the Agent of such request by
telephone (a) in the case of a Eurocurrency Borrowing denominated in Dollars,
not later than 11:00 a.m., New York City time, three Business Days before the
date of the proposed Borrowing, (b) in the case of a Eurocurrency Borrowing
denominated in an Alternative Committed Currency, not later than 11:00 a.m., New
York City time three Business Days before the date of the proposed Borrowing or
(c) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City
time, on the date of the proposed Borrowing. Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Agent of a written Borrowing Request in a form approved by the
Agent and signed by the applicable Borrower. Each such telephonic and written
Borrowing Request shall specify the following information in compliance with
Section 2.02:
(a) the aggregate amount (expressed in Dollars) and currency (which
must be Dollars or an Alternative Committed Currency) of the requested
Borrowing;
(b) the requested Borrowing Date, which shall be a Business Day;
(c) whether such Borrowing is to be an ABR Borrowing or a
Eurocurrency Borrowing;
(d) in the case of a Eurocurrency Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by
the definition of the term "Interest Period";
(e) the location and number of the applicable Borrower's account to
which funds are to be disbursed, which shall comply with the requirements
of Section 2.05; and
(f) the identity of the Borrower in respect of such Borrowing.
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing (if denominated in
Dollars) or a
Eurocurrency Borrowing (if denominated in an Alternative Committed Currency). If
no election as to the currency of the requested Revolving Borrowing is
specified, then the requested Revolving Borrowing shall be denominated in
Dollars. If no Interest Period is specified with respect to any requested
Eurocurrency Revolving Borrowing, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration. If no election as to the
identity of the Borrower is specified, then the requested Revolving Borrowing
shall be made by the Company. Promptly following receipt of a Borrowing Request
in accordance with this Section, the Agent shall advise each Lender of the
details thereof and of the amount of such Lender's Loan to be made as part of
the requested Borrowing.
SECTION 4. Competitive Bid Procedure. (a) Subject to the terms and
conditions set forth herein, from time to time during the Availability Period
the Borrowers may request Competitive Bids and may (but shall not have any
obligation to) accept Competitive Bids and borrow Competitive Loans denominated
in Dollars or any Alternative Currency; provided that the Total Credit Exposure
at any time shall not exceed the total Commitments. To request Competitive Bids,
the applicable Borrower shall notify the Agent of such request by telephone, (i)
in the case of a Eurocurrency Borrowing denominated in Dollars, not later than
11:00 a.m., New York City time, four Business Days before the date of the
proposed Borrowing, (ii) in the case of a Eurocurrency Borrowing denominated in
any Alternative Currency, not later than 11:00 a.m., New York City time, four
Business Days before the date of the proposed Borrowing and (iii) in the case of
a Fixed Rate Borrowing, not later than 10:00 a.m., New York City time, one
Business Day before the date of the proposed Borrowing; provided that the
applicable Borrower may submit not more than one Competitive Bid Request on the
same day. Each such telephonic Competitive Bid Request shall be confirmed
promptly by hand delivery or telecopy to the Agent of a written Competitive Bid
Request in a form approved by the Agent and signed by the applicable Borrower.
Each such telephonic and written Competitive Bid Request shall specify the
following information in compliance with Section 2.02:
(a) the aggregate amount (expressed in Dollars) and currency of the
requested Borrowing;
(b) the requested Borrowing Date, which shall be a Business Day;
(c) whether such Borrowing is to be a Eurocurrency Borrowing or a
Fixed Rate Borrowing;
(d) the Interest Period to be applicable to such Borrowing, which
shall be a period contemplated by the definition of the term "Interest
Period";
(e) the location and number of the applicable Borrower's account to
which funds are to be disbursed, which shall comply with the requirements
of Section 2.05; and
(f) the identity of the Borrower in respect of such Borrowing.
Promptly following receipt of a Competitive Bid Request in accordance with this
Section, the Agent shall notify the Lenders of the details thereof by telecopy,
inviting the Lenders to submit Competitive Bids.
(b) Each Lender may (but shall not have any obligation to) make one
or more Competitive Bids to the applicable Borrower in response to a Competitive
Bid Request. Each Competitive Bid by a Lender must be in a form approved by the
Agent and must be received by the Agent by telecopy, (i) in the case of a
Eurocurrency Competitive Borrowing denominated in Dollars, not later than 9:30
a.m., New York City time, three Business Days before the proposed date of such
Competitive Borrowing, (ii) in the case of a Eurocurrency Competitive Borrowing
denominated in any Alternative Currency, not later than 9:30 a.m., New York City
time, three Business Days before the proposed date of such Competitive Borrowing
and (iii) in the case of a Fixed Rate Borrowing, not later than 9:30 a.m., New
York City time, on the proposed date of such Competitive Borrowing. Competitive
Bids that do not conform substantially to the form approved by the Agent may be
rejected by the Agent, and the Agent shall notify the applicable Lender as
promptly as practicable. Each Competitive Bid shall specify (i) the principal
amount (expressed in Dollars) and currency (which shall be a minimum of
$5,000,000 and an integral multiple of $1,000,000 and which may equal the entire
principal amount of the Competitive Borrowing requested by the applicable
Borrower) (which amount may exceed such Lender's Commitment) of the Competitive
Loan or Loans that the Lender is willing to make, (ii) the Competitive Bid Rate
or Rates at which the Lender is prepared to make such Loan or Loans (expressed
as a percentage rate per annum in the form of a decimal to no more than four
decimal places) and (iii) the Interest Period applicable to each such Loan and
the last day thereof.
(c) The Agent shall promptly notify the applicable Borrower by
telecopy of the Competitive Bid Rate and the principal amount specified in each
Competitive Bid and the identity of the Lender that shall have made such
Competitive Bid.
(d) Subject only to the provisions of this paragraph, the applicable
Borrower may accept or reject any Competitive Bid. Such Borrower shall notify
the Agent by telephone, confirmed by telecopy in a form approved by the Agent,
whether and to what extent it has decided to accept or reject each Competitive
Bid, (i) in the case of a Eurocurrency Competitive Borrowing denominated in
Dollars, not later than 10:30 a.m., New York City time, three Business Days
before the date of the proposed Competitive Borrowing, (ii) in the case of a
Eurocurrency Competitive Borrowing denominated in an Alternative Currency, not
later than 10:30 a.m., New York City time, three Business Days before the date
of the proposed Competitive Borrowing and (iii) in the case of a Fixed Rate
Borrowing, not later than 10:30 a.m., New York City time, on the proposed date
of the Competitive Borrowing; provided that (i) the failure of such Borrower to
give such notice shall be deemed to be a rejection of each Competitive Bid, (ii)
such Borrower shall not accept a Competitive Bid made at a particular
Competitive Bid Rate if such Borrower rejects a Competitive Bid made at a lower
Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids
accepted by such Borrower shall not exceed the aggregate amount of the requested
Competitive Borrowing specified in the related Competitive Bid Request, (iv) to
the extent necessary to comply with clause (iii)
above, such Borrower may accept Competitive Bids at the same Competitive Bid
Rate in part, which acceptance, in the case of multiple Competitive Bids at such
Competitive Bid Rate, shall be made pro rata in accordance with the amount of
each such Competitive Bid, and (v) except pursuant to clause (iv) above, no
Competitive Bid shall be accepted for a Competitive Loan unless such Competitive
Loan is in a minimum principal amount (expressed in Dollars) of $5,000,000 and
an integral multiple of $1,000,000; provided further that if a Competitive Loan
must be in an amount (expressed in Dollars) less than $5,000,000 because of the
provisions of clause (iv) above, such Competitive Loan may be for a minimum
amount (expressed in Dollars) of $1,000,000 or any integral multiple thereof,
and in calculating the pro rata allocation of acceptances of portions of
multiple Competitive Bids at a particular Competitive Bid Rate pursuant to
clause (iv) the amounts shall be rounded to integral multiples of $1,000,000 in
a manner determined by such Borrower. A notice given by such Borrower pursuant
to this paragraph shall be irrevocable.
(e) The Agent shall promptly notify each bidding Lender by telecopy
whether or not its Competitive Bid has been accepted (and, if so, the amount and
Competitive Bid Rate so accepted), and each successful bidder will thereupon
become bound, subject to the terms and conditions hereof, to make the
Competitive Loan in respect of which its Competitive Bid has been accepted.
(f) If the Agent shall elect to submit a Competitive Bid in its
capacity as a Lender, it shall submit such Competitive Bid directly to the
applicable Borrower at least one quarter of an hour earlier than the time by
which the other Lenders are required to submit their Competitive Bids to the
Agent pursuant to paragraph (b) of this Section.
SECTION 5. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time (or time of such
other city designated by the Agent), to the account of the Agent most recently
designated by it for such purpose by notice to the Lenders. The Agent will make
such Loans available to the applicable Borrower by promptly crediting the
amounts so received, in like funds, to an account designated by such Borrower.
(b) Unless the Agent shall have received notice from a Lender prior
to the proposed date of any Borrowing that such Lender will not make available
to the Agent such Lender's share of such Borrowing, the Agent may assume that
such Lender has made such share available on such date in accordance with
paragraph (a) of this Section and may, in reliance upon such assumption, make
available to the applicable Borrower a corresponding amount. In such event, if a
Lender has not in fact made its share of the applicable Borrowing available to
the Agent, then the applicable Lender and the applicable Borrower severally
agree to pay to the Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to such Borrower to but excluding the date of payment to the Agent, at
(i) in the case of such Lender, the greater of (A)(1) the Federal Funds
Effective Rate in the case of Loans denominated in Dollars and (2) the rate
reasonably determined by the Agent to be the cost to it of funding such amount,
in the case of Loans
denominated in any other currency, and (B) a rate determined by the Agent in
accordance with banking industry rules on interbank compensation or (ii) in the
case of such Borrower, the interest rate applicable to ABR Loans. If such Lender
pays such amount to the Agent, then such amount shall constitute such Lender's
Loan included in such Borrowing. If such Borrower pays such amount to the Agent,
such Lender agrees to reimburse such Borrower for any amount in excess of the
amount of interest such Borrower would have owed without giving effect to the
provisions of this Section.
SECTION 6. Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurocurrency Revolving Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the
applicable Borrower may elect to convert such Borrowing to a different Type or
to continue such Borrowing and, in the case of a Eurocurrency Revolving
Borrowing, may elect Interest Periods therefor, all as provided in this Section.
The applicable Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing. This Section shall not apply to Competitive Borrowings, which may not
be converted or continued.
(b) To make an election pursuant to this Section, the applicable
Borrower shall notify the Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if such Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Agent of a written Interest Election Request in a
form approved by the Agent and signed by such Borrower. Notwithstanding any
other provision of this Section, no Borrower shall be permitted to (i) change
the currency of any Borrowing or (ii) convert any Alternative Currency Borrowing
to an ABR Borrowing.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(a) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(b) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(c) if the Borrowing is denominated in Dollars, whether the
resulting Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing;
and
(d) if the resulting Borrowing is a Eurocurrency Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurocurrency Borrowing but does
not specify an Interest Period, then the applicable Borrower shall be deemed to
have selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Agent shall advise each Lender of the details thereof and of such Lender's
portion of each resulting Borrowing.
(e) If the applicable Borrower fails to deliver a timely Interest
Election Request with respect to a Eurocurrency Revolving Borrowing prior to the
end of the Interest Period applicable thereto, then, unless such Borrowing is
repaid as provided herein, at the end of such Interest Period such Borrowing
shall (i) in the case of a Borrowing denominated in Dollars, be converted to an
ABR Borrowing or (ii) in the case of a Borrowing denominated in an Alternative
Committed Currency, be continued as a Eurocurrency Revolving Borrowing with an
Interest Period of one month's duration. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the Agent, at
the request of the Required Lenders, so notifies the applicable Borrower, then,
so long as an Event of Default is continuing (i) no outstanding Revolving
Borrowing denominated in Dollars may be converted to or continued as a
Eurocurrency Borrowing, (ii) unless repaid, each Eurocurrency Revolving
Borrowing denominated in Dollars shall be converted to an ABR Borrowing at the
end of the Interest Period applicable thereto and (iii) any Borrowing
denominated in any Alternative Committed Currency shall be continued as a
Eurocurrency Revolving Borrowing with an Interest Period of one month's duration
at the end of the Interest Period applicable thereto.
SECTION 7. Termination and Reduction of Commitments. (a) Unless
previously terminated, the Commitments shall terminate on the Maturity Date.
(b) The Company may at any time terminate, or from time to time
reduce, the Commitments; provided that (i) each reduction of the Commitments
shall be in an amount that is an integral multiple of $1,000,000 and not less
than $10,000,000 and (ii) the Company shall not terminate or reduce the
Commitments if, after giving effect to any concurrent prepayment of the Loans in
accordance with Section 2.07, the Total Credit Exposure would exceed the total
Commitments.
(c) The Company shall notify the Agent of any election to terminate
or reduce the Commitments under paragraph (b) of this Section at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Promptly following
receipt of any notice, the Agent shall advise the Lenders of the contents
thereof. Each notice delivered by the Company pursuant to this Section shall be
irrevocable; provided that a notice of termination of the Commitments delivered
by the Company may state that such notice is conditioned upon
the effectiveness of other credit facilities, in which case such notice may be
revoked by the Company (by notice to the Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction
of the Commitments shall be permanent. Each reduction of the Commitments shall
be made ratably among the Lenders in accordance with their respective
Commitments.
SECTION 8. Repayment of Loans; Evidence of Debt. (a) Each Borrower
hereby unconditionally promises to pay (i) to the Agent for the account of each
Lender the then unpaid principal amount of each Revolving Loan made to it on the
Maturity Date and (ii) to the Agent for the account of each Lender the then
unpaid principal amount of each Competitive Loan made to it on the last day of
the Interest Period applicable to such Loan.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of each Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Agent shall maintain accounts in which it shall record (i)
the amount of each Loan made hereunder, the Borrower thereof, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from each
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Agent hereunder for the account of the Lenders and each Lender's share
thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein and, in the case of
the accounts maintained pursuant to clause (c), shall be available for
inspection and copying (at the expense of the applicable Borrower or Lender) by
any Borrower or Lender at any reasonable time and upon reasonable prior notice;
provided that the failure of any Lender or the Agent to maintain such accounts
or any error therein shall not in any manner affect the obligation of any
Borrower to repay its Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it to any Borrower be
evidenced by a promissory note. In such event, the applicable Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Agent and the Company.
Thereafter, the Loans evidenced by such promissory note and interest thereon
shall at all times (including after assignment pursuant to Section 7.09) be
represented by one or more promissory notes in such form payable to the order of
the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).
SECTION 9. Prepayment of Loans. (a) Each Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to prior notice in accordance with paragraph (b) of this Section;
provided that the
Borrowers shall not have the right to prepay any Competitive Loan without the
prior consent of the Lender thereof.
(b) If, on any Revaluation Date, the Total Credit Exposure exceeds
105% of the total Commitments, then the Company shall, not later than the next
Business Day after the Company receives notice thereof from the Agent, prepay,
or cause one or more of the other Borrowers to prepay, one or more Revolving
Borrowings in an aggregate amount sufficient to reduce the Total Credit Exposure
to an amount not exceeding the total Commitments; provided that the Borrowers
shall not be required to prepay any Competitive Loans pursuant to this
paragraph.
(c) The Borrowers shall make the prepayments required pursuant to
Section 5.01(g).
(d) The Company shall notify the Agent by telephone (confirmed by
telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurocurrency Revolving Borrowing, not later than 11:00 a.m., New York City time,
two Business Days before the date of prepayment, or (ii) in the case of
prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New York
City time, one Business Day before the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.07, then such notice
of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.07. Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Agent shall advise the Lenders of the
contents thereof. Each partial prepayment of any Revolving Borrowing shall be in
an amount that would be permitted in the case of an advance of a Revolving
Borrowing of the same Type as provided in Section 2.02. Each prepayment of a
Revolving Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.11.
SECTION 10. Fees. (a) The Company agrees to pay to the Agent for the
account of each Lender a facility fee, which shall accrue at the Applicable Rate
on the daily amount of the Commitment of such Lender (whether used or unused)
during the period from and including the Closing Date to but excluding the date
on which such Commitment terminates; provided that, if such Lender continues to
have any Revolving Credit Exposure after its Commitment terminates, then such
facility fee shall continue to accrue on the daily amount of such Lender's
Revolving Credit Exposure from and including the date on which its Commitment
terminates to but excluding the date on which such Lender ceases to have any
Revolving Credit Exposure. Accrued facility fees shall be payable in arrears on
the last day of March, June, September and December of each year and on the date
on which the Commitments terminate, commencing on the first such date to occur
after the date hereof; provided that any facility fees accruing after the date
on which the Commitments terminate shall be payable on demand. All facility fees
shall be computed on the basis of a year of 360 days and shall be payable for
the actual number of days elapsed (including the first day but excluding the
last day).
(b) For each day on which the Total Credit Exposure is in excess of
50% of the total Commitments as of such day (and for each day after the day on
which the Commitments terminate) the Company agrees to pay to the Agent, for the
account of each Lender a utilization fee, which shall accrue at the rate per
annum equal to 0.10% on the amount of the Revolving Credit Exposure of such
Lender on such day. Accrued utilization fees shall be payable in arrears on the
last day of March, June, September and December of each year and on the date on
which the Commitments terminate, commencing on the first such date to occur
after the date hereof; provided that any utilization fees accruing after the
date on which the Commitments terminate shall be payable on demand. All
utilization fees shall be computed on the basis of a year of 360 days and shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day).
(c) The Company agrees to pay to the Agent, for its own account,
fees payable in the amounts and at the times separately agreed upon between the
Company and the Agent.
(d) All fees payable hereunder shall be paid in Dollars on the dates
due, in immediately available funds, to the Agent for distribution, in the case
of facility fees and utilization fees, to the Lenders. Fees paid shall not be
refundable under any circumstances.
SECTION 11. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate.
(b) The Loans comprising each Eurocurrency Borrowing shall bear
interest (i) in the case of a Eurocurrency Revolving Loan, at the Adjusted LIBO
Rate for the Interest Period in effect for such Borrowing plus the Applicable
Rate, or (ii) in the case of a Eurocurrency Competitive Loan, at the LIBO Rate
for the Interest Period in effect for such Borrowing plus (or minus, as
applicable) the Margin applicable to such Loan.
(c) Each Fixed Rate Loan shall bear interest at the Fixed Rate
applicable to such Loan.
(d) Notwithstanding the foregoing, if any principal of or interest
on any Loan or any fee or other amount payable by any Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
(e) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Commitments; provided that (i) interest accrued pursuant
to paragraph
(d) of this Section shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving
Loan prior to the end of the Availability Period), accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurocurrency Revolving Loan prior to the end of the current Interest Period
therefor, accrued interest on such Loan shall be payable on the effective date
of such conversion.
(f) All interest hereunder shall be computed on the basis of a year
of 360 days, except that (i) interest on Borrowings denominated in British
Pounds Sterling and (ii) interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days, and in each case shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate
shall be determined by the Agent, and such determination shall be conclusive
absent manifest error.
SECTION 12. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurocurrency Borrowing denominated in any currency:
the Agent determines (which determination shall be conclusive absent manifest
error) that adequate and reasonable means do not exist for ascertaining the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for the currency in which
such Eurocurrency Borrowing is or is to be denominated (the "Applicable
Currency") for such Interest Period; or
the Agent is advised by the Required Lenders (or, in the case of a Eurocurrency
Competitive Loan, the Lender that is required to make such Loan) that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period for
the Applicable Currency will not adequately and fairly reflect the cost to such
Lenders (or Lender) of making or maintaining their Loans (or its Loan) included
in such Borrowing for such Interest Period;
then the Agent shall give notice thereof to the Company and the Lenders by
telephone or telecopy as promptly as practicable thereafter and, until the Agent
notifies the Company and the Lenders that the circumstances giving rise to such
notice no longer exist, (i) any Interest Election Request that requests the
conversion of any Revolving Borrowing denominated in the Applicable Currency to,
or continuation of any Revolving Borrowing denominated in the Applicable
Currency as, a Eurocurrency Borrowing shall be ineffective, and such Borrowing
shall be converted to or continued on the last day of the Interest Period
applicable thereto (A) if such Borrowing is denominated in Dollars, as an ABR
Borrowing, or (B) if such Borrowing is denominated in an Alternative Committed
Currency, as a Borrowing bearing interest at such rate as the Lenders and the
applicable Borrower may agree adequately reflects the costs to the Lenders of
making or maintaining their Loans plus the Applicable Rate (or, in the absence
of such agreement, shall be repaid as of the last day of the current Interest
Period applicable thereto), (ii) if any Borrowing Request requests a
Eurocurrency Revolving Borrowing denominated in the Applicable Currency, such
Borrowing shall be made as an ABR Borrowing
denominated in Dollars (or such Borrowing shall not be made if the applicable
Borrower revokes (and in such circumstances, such Borrowing Request may be
revoked notwithstanding any other provision of this Agreement) such Borrowing
Request by telephonic notice, confirmed promptly in writing, not later than one
Business Day prior to the proposed date of such Borrowing) and (iii) any request
by a Borrower for a Eurocurrency Competitive Borrowing denominated in the
Applicable Currency shall be ineffective; provided that if the circumstances
giving rise to such notice do not affect all the Lenders, then requests by a
Borrower for Eurocurrency Competitive Borrowings denominated in the Applicable
Currency may be made to Lenders that are not affected thereby.
SECTION 13. Increased Costs. (a) If any Change in Law shall:
(a) impose, modify or deem applicable any reserve, special deposit
or similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate); or
(b) impose on any Lender or the London interbank market any other
condition affecting this Agreement or Eurocurrency Loans or Fixed Rate
Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurocurrency Loan or Fixed Rate Loan (or of
maintaining its obligation to make any such Loan) or to increase the cost to
such Lender or to reduce the amount of any sum received or receivable by such
Lender hereunder (whether of principal, interest or otherwise), then the Company
will pay to such Lender such additional amount or amounts as will compensate
such Lender for such additional costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made by such Lender to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Company will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(c) If the cost to any Lender of making or maintaining any Loan to
any Borrower is increased (or the amount of any sum received or receivable by
any Lender (or its applicable lending office) is reduced) by an amount deemed in
good faith by such Lender to be material, by reason of the fact that such
Borrower is incorporated in, or conducts business in, a jurisdiction outside the
United States, such Borrower will pay to such Lender such additional amount or
amounts as will compensate such Lender for such increased cost or reduction
suffered.
(d) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case may be,
as specified in paragraph (a), (b) or (c) of this Section, together with a
reasonably detailed explanation of the basis for such claim, shall be delivered
to the Company and shall be conclusive absent manifest error. The Company or the
applicable Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
(e) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's right to demand such compensation; provided that, in the case of a
Change in Law, the Company shall not be required to compensate a Lender pursuant
to this Section for any increased costs or reductions incurred more than 270
days prior to the date that such Lender notifies the Company of the Change in
Law giving rise to such increased costs or reductions and of such Lender's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
(f) Notwithstanding the foregoing provisions of this Section, a
Lender shall not be entitled to compensation pursuant to this Section in respect
of any Competitive Loan (i) in the case of paragraph (a) or (b), if the Change
in Law that would otherwise entitle it to such compensation shall have been
publicly announced prior to submission of the Competitive Bid pursuant to which
such Loan was made or (ii) in the case of paragraph (c), in respect of any costs
referred to therein.
SECTION 14. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurocurrency Loan or Fixed Rate Loan other than on the
last day of an Interest Period applicable thereto (including as a result of an
Event of Default), (b) the conversion of any Eurocurrency Loan other than on the
last day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Revolving Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.09(b) and is revoked in accordance therewith), (d) the
failure to borrow any Competitive Loan after accepting the Competitive Bid to
make such Loan, or (e) the assignment of any Eurocurrency Loan or Fixed Rate
Loan other than on the last day of the Interest Period applicable thereto as a
result of a request by the Company pursuant to Section 2.17, then, in any such
event, the Company or the applicable Borrower shall compensate each Lender for
the loss, cost and expense attributable to such event. In the case of a
Eurocurrency Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the
commencement of such period, for deposits in the applicable currency of a
comparable amount and period from other banks in the eurocurrency market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Company, together with a reasonably detailed explanation of the basis for such
claim, and shall be conclusive absent manifest error. The Company or the
applicable Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
SECTION 15. Taxes. (a) Any and all payments by or on account of any
obligation of any Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if any
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Agent or Lender (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions and (iii)
such Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrowers shall indemnify the Agent and each Lender, within
30 days after written demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes paid by the Agent or such Lender, as the case may be, on or
with respect to any payment by or on account of any obligation of the Borrowers
hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto (except to the
extent such penalties, interest or expenses result from the gross negligence or
willful misconduct of the Agent or the applicable Lender), whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrowers by a Lender, or by the Agent on
its own behalf or on behalf of a Lender, shall be conclusive absent manifest
error, provided that such certificate shall include a description in reasonable
detail of the Indemnified Tax or Other Tax for which the indemnity is being
demanded and the calculation in reasonable detail of the amount of such
indemnity. At the request and expense of the Company or the affected Borrower
and after receipt of an opinion from recognized counsel (reasonably satisfactory
to the Agent or the Lender, as the case may be) stating that there is a
substantial basis to contest the imposition or assertion of an Indemnified Tax
or Other Tax (a "Tax Opinion"), the Agent or the Lender, as applicable, may, in
its reasonable discretion, contest the imposition or assertion of such
Indemnified Tax or Other Tax in good faith in accordance with applicable law;
provided, however, that, at the request and expense of the Company or the
affected Borrower and after receipt of a Tax Opinion, the Agent or such Lender
shall contest the imposition or assertion of an Indemnified Tax or Other Tax
that exceeds $100,000. The Agent or the Lender, as applicable, shall have
responsibility for the conduct of any contest conducted
pursuant to this Section 2.15(c); provided, however, that the Agent or such
Lender shall consult in good faith with the Company or the affected Borrower
regarding its course of action with respect to such contest. Notwithstanding any
contrary provision hereof, the Agent or the Lender, as the case may be, shall
have no obligation to contest the imposition or assertion of any Indemnified Tax
or Other Tax if any Borrower is in Default under the terms of this Agreement.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by any Borrower to a Governmental Authority, such Borrower shall
deliver to the Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment (if such a receipt is
reasonably obtainable from such Governmental Authority), a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Agent.
(e) The Agent will deliver to the Company, and each Lender that is
organized under the law of a jurisdiction outside the United States of America
will deliver to the Agent and the Company, on or before the Closing Date (or, in
the case of a Lender that becomes a Lender after the Closing Date, on or before
such later date on which such Lender becomes a Lender) such properly completed
and executed Internal Revenue Service form (Form W-8BEN, W-8ECI, W-8EXP, W-8IMY,
or W-9, as applicable) as will demonstrate, in accordance with applicable
regulations, that payments of interest by the Borrowers to the Agent for the
account of such Lender pursuant to this Agreement will be exempt from (or
entitled to a reduction in the rate of) United States federal withholding taxes.
Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which any Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to such Borrower (with a copy to the
Agent), at the time or times prescribed by applicable law, such other properly
completed and executed documentation prescribed by applicable law or reasonably
requested by such Borrower (including any replacement or successor form) as will
permit such payments to be made without withholding or at a reduced rate,
provided that such Foreign Lender has received prior written notice from such
Borrower advising it of the availability of such exemption or reduction and
containing all applicable documentation.
(f) If the Agent or a Lender determines, in its sole discretion,
that it has received a refund of any Taxes or Other Taxes as to which it has
been indemnified by any Borrower or with respect to which any Borrower has paid
additional amounts pursuant to this Section 2.15, it shall pay over such refund
to such Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by such Borrower under this Section 2.15 with respect
to the Taxes or Other Taxes giving rise to such refund), net of all reasonable
out-of-pocket expenses of the Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided, that such Borrower, upon the request of the Agent or
such Lender, agrees to repay the amount paid over to such Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Agent or such Lender to the extent that the Agent or such
Lender is required to repay such refund to such Governmental Authority. This
Section shall not be construed to require the Agent
or any Lender to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to any Borrower or any other
Person.
SECTION 16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) Each Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest or fees, or of amounts payable under
Section 2.13, 2.14, 2.15 or 2.19, or otherwise) prior to 12:00 noon, Local Time,
on the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Agent to the applicable account specified on Schedule 2.16
or to such other account as the Agent shall from time to time specify in a
notice delivered to the Company, except that payments pursuant to Sections 2.13,
2.14, 2.15, 2.19 and 8.04 shall be made directly to the Persons entitled
thereto; all payments made by any Borrower to the Agent as provided herein shall
be deemed received by the Lenders for all purposes as between the Lenders and
the Borrowers. The Agent shall distribute any such payments received by it for
the account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder of principal or interest in respect of any Loan (or of any amounts
payable under Section 2.14 or, at the request of the applicable Lender, Section
2.13, 2.15 or 2.19 in respect of any Loan) shall be made in the currency in
which such Loan is denominated; all other payments hereunder and under each
other Loan Document shall be made in Dollars, except as otherwise expressly
provided. Any payment required to be made by the Agent hereunder shall be deemed
to have been made by the time required if the Agent shall, at or before such
time, have taken the necessary steps to make such payment in accordance with the
regulations or operating procedures of the clearing or settlement system used by
the Agent to make such payment. Any amount payable by the Agent to one or more
Lenders in the national currency of a member state of the European Union that
has adopted the Euro as its lawful currency shall be paid in Euro.
(b) If at any time insufficient funds are received by and available
to the Agent to pay fully all amounts of principal, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, towards payment of principal then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of principal then due to
such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving Loans
and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the
Revolving Loans of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective
Revolving Loans; provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by any Borrower pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans to any assignee or participant, other than to
any Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply). Each Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against such Borrower rights of set-off and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of such
Borrower in the amount of such participation.
(d) Unless the Agent shall have received notice from the applicable
Borrower prior to the date on which any payment is due to the Agent for the
account of the Lenders hereunder that such Borrower will not make such payment,
the Agent may assume that such Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders the amount due. In such event, if such Borrower has not in fact made
such payment, then each of the Lenders severally agrees to repay to the Agent
forthwith on demand the amount so distributed to such Lender with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Agent, at (i) the greater of the
Federal Funds Effective Rate and a rate determined by the Agent in accordance
with banking industry rules on interbank compensation (in the case of an amount
denominated in Dollars) and (ii) the rate reasonably determined by the Agent to
be the cost to it of funding such amount (in the case of an amount denominated
in any other currency).
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.05(b) or 2.16(d), then the Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by the Agent for the account of such Lender to satisfy such
Lender's obligations under such Sections until all such unsatisfied obligations
are fully paid.
SECTION 17. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.13 or 2.19, or if any Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.13, 2.15, or 2.19, as the case may be, in
the future and (ii) would not subject such Lender to any unreimbursed
cost or expense and would not otherwise be disadvantageous to such Lender. The
Company hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13 or 2.19,
or if any Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Company may, at its sole expense and effort, upon notice to such Lender and the
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 7.09), all
its interests, rights and obligations under this Agreement (other than any
outstanding Competitive Loans held by it) to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment or any Eligible Assignee designated by the Company); provided that
(i) the Company shall have received the prior written consent of the Agent,
which consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
(other than Competitive Loans), accrued interest thereon, accrued fees and all
other amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the applicable Borrower
or Borrowers (in the case of all other amounts) and (iii) in the case of any
such assignment resulting from a claim for compensation under Section 2.13 or
2.19 or payments required to be made pursuant to Section 2.15, such assignment
will result in a material reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Company to require such assignment and delegation cease to apply.
SECTION 18. Borrowing Subsidiaries. On or after the Closing Date,
the Company may designate any Subsidiary of the Company as a Borrower by
delivery to the Agent of a Borrowing Subsidiary Agreement executed by such
Subsidiary and the Company, and upon such delivery such Subsidiary shall for all
purposes of this Agreement be a Borrower and a party to this Agreement. Upon the
execution by the Company and delivery to the Agent of a Borrowing Subsidiary
Termination with respect to any Subsidiary that is a Borrower, such Subsidiary
shall cease to be a Borrower and a party to this Agreement; provided that no
Borrowing Subsidiary Termination will become effective as to any Borrower (other
than to terminate such Borrowing Subsidiary's right to make further Borrowings
under this Agreement) at a time when any principal of or interest on any Loan to
such Borrower shall be outstanding hereunder. Promptly following receipt of any
Borrowing Subsidiary Agreement or Borrowing Subsidiary Termination, the Agent
shall notify each Lender thereof.
SECTION 19. Additional Reserve Costs. (a) If and so long as any
Lender is required to make special deposits with the Bank of England or, to
maintain reserve asset ratios or to pay fees (other than deposits or reserves
reflected in the determination of the Adjusted LIBO Rate), in each case in
respect of such Lender's Eurocurrency Loans in any Alternative Currency, such
Lender may require the relevant Borrower to pay, contemporaneously with each
payment of interest on each of such
Loans, additional interest on such Loan at a rate per annum equal to the
Mandatory Costs Rate calculated in accordance with the formula and in the manner
set forth in Exhibit F, together with a reasonably detailed explanation of the
basis for such claim.
(b) If and so long as any Lender is required to comply with reserve
assets, liquidity, cash margin or other requirements of any monetary or other
authority (other than any such requirements reflected in the determination of
the Adjusted LIBO Rate) (including any such requirement imposed by the European
Central Bank or the European System of Central Banks, but excluding requirements
reflected in the Statutory Reserves or the Mandatory Costs Rate) in respect of
any of such Lender's Eurocurrency Loans in any Alternative Currency, such Lender
may require the relevant Borrower to pay, contemporaneously with each payment of
interest on each of such Lender's Eurocurrency Loans subject to such
requirements, additional interest on such Loan at a rate per annum specified by
such Lender to be the cost to such Lender of complying with such requirements in
relation to such Loan.
(c) Any additional interest owed pursuant to paragraph (a) or (b)
above shall be determined by the relevant Lender, which determination shall be
conclusive absent manifest error, and notified to the relevant Borrower (with a
copy to the Agent), together with a reasonably detailed explanation of the basis
for such claim, at least five Business Days before each date on which interest
is payable for the relevant Loan, and such additional interest so notified to
the relevant Borrower by such Lender shall be payable to the Agent for the
account of such Lender on each date on which interest is payable for such Loan.
SECTION 20. Redenomination of Certain Designated Foreign Currencies.
(a) Each obligation of any party to this Agreement to make a payment denominated
in the national currency unit of any member state of the European Union that
adopts the Euro as its lawful currency after the date hereof shall be
redenominated into Euro at the time of such adoption (in accordance with the EMU
Legislation). If, in relation to the currency of any such member state, the
basis of accrual of interest expressed in this Agreement in respect of that
currency shall be inconsistent with any convention or practice in the London
Interbank Market for the basis of accrual of interest in respect of the Euro,
such expressed basis shall be replaced by such convention or practice with
effect from the date on which such member state adopts the Euro as its lawful
currency; provided that if any Borrowing in the currency of such member state is
outstanding immediately prior to such date, such replacement shall take effect,
with respect to such Borrowing, at the end of the then current Interest Period.
(b) Without prejudice and in addition to any method of conversion or
rounding prescribed by any EMU Legislation and (i) without limiting the
liability of any Borrower for any amount due under this Agreement and (ii)
without increasing any Commitment of any Lender, all references in this
Agreement to minimum amounts (or integral multiples thereof) denominated in the
national currency unit of any member state of the European Union that adopts the
Euro as its lawful currency after the date hereof shall, immediately upon such
adoption, be replaced by references to such minimum
amounts (or integral multiples thereof) as shall be specified herein with
respect to Borrowings denominated in Euro.
(c) Each provision of this Agreement shall be subject to such
reasonable changes of construction as the Agent (in consultation with the
Company) may from time to time specify to be appropriate to reflect the adoption
of the Euro by any member state of the European Union and any relevant market
conventions or practices relating to the Euro.
SECTION 21. Assigned Dollar Value. (a) With respect to each
Alternative Currency Borrowing, its "Assigned Dollar Value" shall mean the
following:
(a) the Dollar amount specified in the Borrowing Request therefor
(or, in the case of a Competitive Borrowing, the Dollar amount thereof
accepted pursuant to Section 2.04) unless and until adjusted pursuant to
the following clause (ii), and
(b) as of each Revaluation Date with respect to such Alternative
Currency Borrowing, the "Assigned Dollar Value" of such Borrowing shall be
adjusted to be the Dollar Equivalent thereof (as determined by the Agent
based upon the applicable Spot Exchange Rate as of the date that is three
Business Days before such Revaluation Date (which determination shall be
conclusive absent manifest error)) (subject to further adjustment in
accordance with this clause (ii) thereafter).
(b) The Assigned Dollar Value of an Alternative Currency Loan shall
equal the Assigned Dollar Value of the Alternative Currency Borrowing of
which such Loan is a part multiplied by the percentage of such Borrowing
represented by such Loan.
(c) The Agent shall notify the Company of any change in the Assigned
Dollar Value of any Alternative Currency Borrowing promptly following
determination of such change.
SECTION 22. Borrowers' Increase of Commitments. (a) The Borrowers
may at any time, by notice to the Agent, propose that the aggregate amount of
the Commitments be increased (a "Commitment Increase"), effective as at a date
(the "Increase Date") that shall be (i) prior to the Maturity Date and (ii) at
least three Business Days after the date specified in such notice on which
agreement as to increased Commitments is to be reached (the "Commitment Date");
provided, however, that (w) the Borrowers may not propose more than one
Commitment Increase per calendar year, (x) the minimum proposed Commitment
Increase per notice shall be an amount not less than One Hundred Million Dollars
($100,000,000), and in no event shall the aggregate amount of the Commitments at
any time exceed Two Billion Dollars ($2,000,000,000), (y) the Company's Index
Debt ratings from Moody's and S&P are and upon giving effect to the proposed
Commitment Increase shall be better than or equal to Baa2 and BBB, respectively,
and (z) no Default or Event of Default has occurred and is continuing or will
result upon giving effect to the Commitment Increase. The Agent shall notify the
Lenders promptly upon its receipt of any such notice. The Agent agrees that it
will cooperate with the Borrowers in discussions with the Lenders and potential
Lenders (which shall be Eligible Assignees) with a view to arranging the
proposed Commitment Increase through the increase of the Commitments of one or
more of the Lenders and the addition of one or more Eligible Assignees
acceptable to the Agent and the Borrowers as Assuming Banks and as parties to
this Agreement; provided, however, that the minimum Commitment of each such
Assuming Bank that becomes a party to this Agreement pursuant to this Section
2.22 shall be at least equal to Ten Million Dollars ($10,000,000). Each Lender
shall decide in its sole discretion whether to agree to increase its Commitment
pursuant to this Section 2.22. If agreement is reached on or prior to the
Commitment Date with the Lenders proposing to increase their respective
Commitments hereunder (the "Increasing Lenders"), if any (whose allocations will
be based on the ratio of each existing Lender's Commitment Increase to the
aggregate of all Commitment Increases), and the Assuming Banks, if any, as to a
Commitment Increase (which may be less than that specified in the applicable
notice from the Borrowers), such agreement to be evidenced by a notice in
reasonable detail from the Borrowers to the Agent on or prior to the Commitment
Date, the Assuming Banks, if any, shall become Lenders hereunder as of the
Increase Date and the Commitments of such Increasing Lenders and such Assuming
Banks shall become or be, as the case may be, as of the Increase Date the
amounts specified in such notice (and the Agent shall give notice thereof to the
Lenders (including such Assuming Banks) in accordance with section (e) below);
provided, however, that:
(x) the Agent shall have received on or prior to 9:00 A.M. (New York
City time) on the Increase Date (A) opinions of the Company's general
counsel and the Company's special Panamanian counsel in substantially the
forms of Exhibits C-1 and C-2 hereto, dated such Increase Date, together
with (B) a copy, certified on the Increase Date by the Secretary, an
Assistant Secretary or a comparable official of each Borrower, of the
resolutions adopted by the Board of Directors of such Borrower,
authorizing such Commitment Increase (with copies for each Lender,
including each Assuming Bank) and (C) evidence of the good standing of
such Borrower in its jurisdiction of formation, dated as of a recent date;
(y) with respect to each Assuming Bank, the Agent shall have
received, on or prior to 9:00 A.M. (New York City time) on the Increase
Date, an appropriate Assumption Agreement in substantially the form of
Exhibit D hereto, duly executed by the Borrowers and such Assuming Bank,
together with the Agent's processing and recordation fee of $3,500; and
(z) each Increasing Lender that proposes to increase its Commitment
in connection with such Commitment Increase shall have delivered, on or
prior to 9:00 A.M. (New York City time) on the Increase Date, confirmation
in writing satisfactory to the Agent as to its increased Commitment.
(b) Upon its receipt of notice from a Lender that it is increasing
its Commitment hereunder, together with the appropriate opinions referred to in
clause (x)
above, the Agent shall (i) record the information contained therein in the
Register and (ii) give prompt notice thereof to the Borrowers. Upon its receipt
of an Assumption Agreement executed by an Assuming Bank representing that it is
an Eligible Assignee, together with the appropriate opinions referred to in
clause (x) above, and its fee referred to in clause (y) above, the Agent shall,
if such Assumption Agreement has been completed and is in substantially the form
of Exhibit D hereto, (i) accept such Assumption Agreement, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrowers.
(c) The Agent shall maintain at its address referred to in Section
9.02 a copy of each Assumption Agreement delivered to and accepted by it and
record in the Register the names and addresses of the Assuming Banks and of the
Increasing Lenders and the Commitment of, and principal amount of the Loans
owing to, each such Assuming Bank and each such Lender from time to time. The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrowers, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement.
(d) In the event that the Agent shall not have received notice from
the Borrowers as to such agreement on or prior to the Commitment Date or any
Borrower shall, by notice to the Agent prior to the Commitment Date, withdraw
such proposal or any of the actions provided for in clauses (x) through (z)
above shall not have occurred by the Increase Date, such proposal by the
Borrowers shall be deemed not to have been made. In such event, the actions
theretofore taken under clauses (x) through (z) above shall be deemed to be of
no effect, and all the rights and obligations of the parties shall continue as
if no such proposal had been made.
(e) In the event that the Agent shall have received notice from the
Borrowers as to such agreement on or prior to the Commitment Date and the action
provided for in clauses (x) through (z) above shall have occurred by 9:00 A.M.
(New York City time) on the Increase Date, the Agent shall notify the Lenders
(including the Assuming Banks) of the occurrence of the Increase Date promptly
and in any event by 10:00 A.M. (New York City time) on such date by telecopier,
telex or cable. Each Increasing Lender and each Assuming Bank shall, before
11:00 A.M. ( New York City time) on the Increase Date, make available for the
account of its Applicable Lending Office to the Agent at its address referred to
in Section 9.02, in same day funds, an amount equal to such Increasing Lender's
or Assuming Bank's ratable portion of the Revolving Loans then outstanding
(calculated based on its Commitment as a percentage of the aggregate Commitments
outstanding after giving effect to the relevant Commitment Increase). After the
Agent's receipt of such funds, the Agent will promptly thereafter cause to be
distributed like funds to the Lenders for the account of their respective
Applicable Lending Offices in an amount to each Lender such that the aggregate
amount of the outstanding Loans owing to each Lender after giving effect to such
distribution equals such Lender's ratable portion of the Revolving Loans then
outstanding (calculated based on its Commitment as a percentage of the aggregate
Commitments outstanding after giving effect to the relevant Commitment
Increase). If the Increase Date shall occur on a date that is not the last day
of the Interest Period of all
Revolving Loans that are Eurocurrency Loans then outstanding, (a) the Borrowers
shall pay any amounts owing pursuant to Section 2.14 as a result of the
distributions to Lenders under this Section 2.22(e) and (b) for each outstanding
Revolving Loan comprised of Eurocurrency Loans, the respective Loans made by the
Increasing Lenders and the Assuming Banks pursuant to this Section 2.22(e) shall
be ABR Loans until the last day of the then existing Interest Period for such
Revolving Loan.
ARTICLE IV.
Conditions of Lending
SECTION 1. [Intentionally Omitted.]
SECTION 2. Conditions Precedent to Each Revolving Borrowing. The
obligation of each Lender to make a Revolving Loan on the occasion of each
Revolving Borrowing (including the initial Revolving Borrowing) shall be subject
to the further conditions precedent that on the Borrowing Date of such Revolving
Borrowing (a) the following statements shall be true, and the Agent shall have
received for the account of such Lender a certificate signed by a duly
authorized officer of the applicable Borrower, effective as of the date of such
Revolving Borrowing, stating that (and each of the giving of the applicable
notice of borrowing and the acceptance by such Borrower of the proceeds of such
Revolving Borrowing shall constitute a representation and warranty by such
Borrower that on the date of such Revolving Borrowing such statements are true):
(a) The representations and warranties contained in Section 4.01 are
correct on and as of the date of such Revolving Borrowing, before and
after giving effect to such Revolving Borrowing and to the application of
the proceeds therefrom, as though made on and as of such date, except that
(A) the representation set forth in the last sentence of Section 4.01(e)
shall be made only (y) on the occasion of the initial Revolving Borrowing
on or after the Closing Date and (z) on the occasion of each Revolving
Borrowing resulting in an aggregate outstanding principal amount of
Revolving Loans greater than such amount outstanding immediately prior to
such Revolving Borrowing and (B) the representations set forth in Section
4.01(h) and in clause (z) of Section 4.01(i) shall be made only on the
Closing Date, and
(b) No Default or Event of Default has occurred and is continuing,
or would result from such Revolving Borrowing or from the application of
the proceeds therefrom;
and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender (other than the Designated Bidders) through the Agent
may reasonably request.
SECTION 3. Conditions Precedent to Each Competitive Loan Borrowing.
The obligation of each Lender which is to make a Competitive Loan on the
occasion of a Competitive Borrowing (including the initial Competitive
Borrowing) to make such Competitive Loan as part of such Competitive Borrowing
is subject to the conditions
precedent that (i) the Agent shall have received the written confirmatory notice
of Competitive Borrowing with respect thereto and (ii) on the Borrowing Date of
such Competitive Borrowing the following statements shall be true (and each of
the giving of the applicable Competitive Bid Request and the acceptance by the
applicable Borrower of the proceeds of such Competitive Borrowing shall
constitute representation and warranty by such Borrower that on the date of such
Competitive Borrowing such statements are true):
(a) The representations and warranties contained in Section 4.01 are
correct on and as of the date of such Competitive Loan Borrowing, before and
after giving effect to such Competitive Borrowing and to the application of the
proceeds therefrom, as though made on and as of such date,
(b) No Default or Event of Default has occurred and is continuing,
or would result from such Competitive Borrowing or from the application of the
proceeds therefrom, and
(c) No event has occurred and no circumstance exists as a result of
which the information concerning the Borrowers that has been provided to the
Agent and each Lender by the Borrowers in connection herewith would include an
untrue statement of a material fact or omit to state any material fact or any
fact necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 4. Initial Borrowing by Each Borrowing Subsidiary. The
obligation of each Lender to make Loans to any Borrowing Subsidiary is subject
to the satisfaction (or waiver in accordance with Section 9.01) of the following
conditions:
(a) The Agent (or its counsel) shall have received such Borrowing
Subsidiary's Borrowing Subsidiary Agreement, duly executed by all parties
thereto.
(b) The Agent shall have received such documents and certificates as
the Agent or its counsel may reasonably request relating to the organization,
existence and good standing (to the extent such concept is relevant to such
Person in its jurisdiction of organization) of such Borrowing Subsidiary, the
authorization of the Transaction insofar as they relate to such Borrowing
Subsidiary and any other legal matters reasonably relating to such Borrowing
Subsidiary, its Borrowing Subsidiary Agreement or such Transaction, all in form
and substance satisfactory to the Agent and its counsel.
ARTICLE V.
Representations and Warranties
SECTION 1. Representations and Warranties of the Borrowers. Each of
the Borrowers and the Guarantor represents and warrants as follows:
Due Existence; Compliance. Each of the Borrowers and the Guarantor is a
corporation duly incorporated, validly existing and in good standing, under the
laws of its jurisdiction
of formation and has all requisite corporate power and authority under such laws
to own or lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted, and to execute, deliver and perform
its obligations under the Loan Documents, to which it is, or will be, a party.
Each of the Borrowers, the Guarantor and their respective subsidiaries is duly
qualified or licensed to do business as a foreign corporation and is in good
standing, where applicable, in all jurisdictions in which it owns or leases
property (including vessels), or proposes to own or lease property (including
vessels), or in which the conduct of its business, and the conduct of its
business upon consummation of the Transaction and the Restatement Transactions,
requires it to so qualify or be licensed, except to the extent that the failure
to so qualify or be in good standing would have no material adverse effect on
the business, operations, properties, prospects or condition (financial or
otherwise) of the Company, the Guarantor and their Subsidiaries or the ability
of any such Person to perform its obligations under any of the Loan Documents to
which it is or may be a party. Each of the Borrowers, the Guarantor and their
respective subsidiaries is in compliance in all material respects with all
applicable laws, rules, regulations and orders.
Corporate Authorities; No Conflicts. The execution, delivery and performance by
each Borrower and the Guarantor of this Agreement and the other Loan Documents
to which it is or will be a party are within its corporate powers and have been
duly authorized by all necessary corporate and stockholder approvals and (i) do
not contravene its charter or by-laws or any law, rule, regulation, judgment,
order or decree applicable to or binding on such Borrower, the Guarantor or any
of their respective subsidiaries and (ii) do not contravene, and will not result
in the creation of any Lien under, any provision of any contract, indenture,
mortgage or agreement to which any of the Borrowers, the Guarantor or their
respective subsidiaries is a party, or by which it or any of its properties are
bound.
Government Approvals and Authorizations. No authorization or approval (including
exchange control approval) or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required for the due execution,
delivery and performance by or enforcement against the Borrowers or the
Guarantor of the Loan Documents (except such as have been duly obtained or made
and remain in full force and effect).
Legal, Valid and Binding. Each of the Loan Documents is, or upon delivery will
be, the legal, valid and binding obligation of each of the Borrowers and the
Guarantor that is a party thereto, enforceable against such Borrower or the
Guarantor, as applicable, in accordance with its terms (except as enforcement
may be limited by bankruptcy, moratorium, insolvency, reorganization or similar
laws generally affecting creditors' rights as well as the award by courts of
relief in lieu of specific performance of contractual provisions).
Financial Information. Each of the consolidated annual audited balance sheet of
the Company as at November 30, 2002, the consolidated annual audited balance
sheet of the Guarantor as at December 31, 2002, and the consolidated quarterly
unaudited balance sheet of the Company and the Guarantor as at August 31, 2003,
and the related consolidated statements of operations and consolidated
statements of cash flows of the
Company and its Subsidiaries for the fiscal year ended November 30, 2002, the
related consolidated statements of operations and consolidated statements of
cash flows of the Guarantor and its Subsidiaries for the fiscal year ended
December 31, 2002 and the related consolidated statements of operation and
consolidated statements of cash flows of the Company (including the Guarantor
and their Subsidiaries) for the nine months ended August 31, 2003, as the case
may be, copies of which have been furnished heretofore by the Company to the
Agent, fairly present the consolidated financial condition of the Company and
its Subsidiaries, the Guarantor and its Subsidiaries or the Company (including
the Guarantor and their Subsidiaries) as at such date and the consolidated
results of the operations of the Company and its Subsidiaries, the Guarantor and
its Subsidiaries or the Company (including the Guarantor and their Subsidiaries)
for the period ended on such date, all in accordance with GAAP consistently
applied (other than in connection with the Guarantor and its Subsidiaries prior
to April 17, 2003, which are in accordance with U.K. generally accepted
accounting principals, and subject, in the case of the August 31, 2003
statements to normal year-end audit adjustments). Since November 30, 2002 or
December 31, 2002, as applicable, there has been no material adverse change in
the business, operations, properties or condition (financial or otherwise) of
the Company, the Guarantor or any of their Subsidiaries.
Litigation and Environmental. There is not pending nor, to the knowledge of any
Borrower or the Guarantor upon due inquiry and investigation, threatened any
action or proceeding affecting any of the Borrowers, the Guarantor or their
Subsidiaries, by or before any court, governmental agency or arbitrator, which
reasonably could be expected (i) to materially adversely affect the assets,
business, properties, prospects, operations or condition (financial or
otherwise) of the Company, the Guarantor and their Subsidiaries taken as a
whole, or (ii) to prohibit, limit in any way or materially adversely affect the
consummation of the Transaction or the Restatement Transactions contemplated by
the Loan Documents, including, without limitation, the ability of the Borrowers
or the Guarantor to perform its obligations under this Agreement or the
Guarantee Agreement. Except with respect to any matters that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect, none of the Borrowers, the Guarantor, nor any of their respective
subsidiaries (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability.
Immunities. None the Borrowers, the Guarantor nor any of their respective
subsidiaries, nor the property of any of them, has any immunity from
jurisdiction of any court or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) under the laws of the jurisdiction of its organization.
No Taxes. There is no tax, levy, impost, deduction, charge or withholding or
similar item imposed (i) by Panama or the States of Florida or New York, or by
any political subdivision of any of the foregoing, on or by virtue of the
execution and delivery of these representations and warranties, the execution or
delivery or enforcement of this
Agreement or any other document to be furnished hereunder or thereunder, or (ii)
by Panama or the States of Florida or New York, or by any political subdivision
of any of the foregoing, on any payment to be made by the Company pursuant to
this Agreement, other than (x) taxes on or measured by net income imposed by any
such jurisdiction in which the Lender has its situs of organization or a fixed
place of business, (y) taxes that have been paid in full by the Company or the
amount or validity of which are being contested in good faith by appropriate
proceedings and with respect to which appropriate reserves in accordance with
GAAP have been provided on its books or (z) de minimus documentary stamp taxes
imposed by the State of Florida, which the Borrowers agree to pay, if any.
No Filing. To ensure the legality, validity, enforceability or admissibility in
evidence of this Agreement in each of Panama, the States of Florida and New
York, it is not necessary (y) that this Agreement, or any other document related
to any thereof, be filed or recorded with any court or other authority in such
jurisdiction, or (z) that any stamp or similar tax be paid on or with respect to
this Agreement except to the extent provided in (h) above.
No Defaults. There does not exist (i) any event of default, or any event that
with notice or lapse of time or both would constitute an event of default, under
any agreement to which any Borrower, the Guarantor or any of their respective
subsidiaries is a party or by which any of them may be bound, or to which any of
their properties or assets may be subject, which default would have a material
adverse effect on the Company, the Guarantor and their respective Subsidiaries
taken as a whole, or would materially adversely affect their ability to perform
their respective obligations under this Agreement or the Guarantee Agreement, or
(ii) any event which is or would result in a Default or Event of Default.
Margin Regulations. No part of the proceeds of the Loan will be used for any
purpose that violates the provisions of any of Regulations T, U or X of the
Board of Governors of the Federal Reserve System or any other regulation of such
Board of Governors. None of the Borrowers nor any of their respective
subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock, within the meaning of Regulations T, U and
X issued by the Board of Governors of the Federal Reserve System.
Investment Company Act. None of the Borrowers or the Guarantor is an "investment
company" or a company "controlled" by an "investment company" (as each of such
terms is defined or used in the Investment Company Act of 1940, as amended).
Taxes Paid. (i) Each of the Borrowers, the Guarantor and their respective
subsidiaries (A) has filed or caused to be filed, or has timely requested an
extension to file or has received from the relevant governmental authorities an
extension to file, all material tax returns which are required to have been
filed, and (B) has paid all taxes shown to be due and payable on said returns or
extension requests or on any material assessments made against it or any of its
properties, and all other material taxes, fees or other charges imposed on it or
any of its properties by any governmental authority (other than those the
amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which appropriate reserves in
conformity with GAAP have been provided on its books); and (ii) no material tax
liens have been filed and no material claims are being asserted with respect to
any such taxes, fees or other charges other than those the amount or validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which appropriate reserves in accordance with GAAP have been
provided on its books; provided, however, that the representations and
warranties made in subdivisions (i)(A) and (i)(B) of this paragraph (m) with
respect to Il Ponte S.p.A. and its subsidiaries acquired on or about September
30, 2000 are limited to tax returns required to be filed with respect to the
period from and after September 30, 2000.
Disclosure. No representation, warranty or statement made or document or
financial statement provided by any Borrower, the Guarantor or any Affiliate or
subsidiary thereof, in or pursuant to this Agreement, the Guarantee Agreement or
in any other document furnished in connection herewith or therewith, is untrue
or incomplete in any material respect or contains any misrepresentation of a
material fact or omits to state any material fact necessary to make any such
statement herein or therein not misleading.
Good Title. Each of the Borrowers and the Guarantor has good title to its
properties and assets, except for (i) as permitted under this Agreement,
existing or future Liens, security interests, mortgages, conditional sales
arrangements and other encumbrances either securing Indebtedness or other
liabilities of such Borrower, the Guarantor or any of their respective
subsidiaries, or which such Borrower or the Guarantor in its reasonable business
judgment has determined would not be reasonably expected to materially interfere
with the business or operations of such Borrower or the Guarantor (as
applicable) and its respective subsidiaries as conducted from time to time, and
(ii) minor irregularities therein which do not materially adversely affect their
value or utility.
ERISA. (i) No Insufficiency or Termination Event has occurred or is reasonably
expected to occur, and no "accumulated funding deficiency" exists and no
"variance" from the "minimum funding standard" has been granted (each such term
as defined in Part III, Subtitle B, of Title I of ERISA) with respect to any
Plan (other than any Multiemployer Plan or Plan that has been terminated and all
the liabilities of which have been satisfied in full prior to March 30, 1990) in
which any Borrower, the Guarantor or any of their respective subsidiaries is a
participant.
(ii) None of the Borrowers, the Guarantor nor any ERISA Affiliate
has incurred, or is reasonably expected to incur, any Withdrawal Liability
to any Multiemployer Plan.
(iii) None of the Borrowers, the Guarantor nor any ERISA Affiliate
has received any notification that any Multiemployer Plan in which it is a
participant is in reorganization or has been terminated, within the
meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably
expected to be in reorganization or to be terminated within the meaning of
Title IV of ERISA.
ARTICLE VI.
Covenants of the Borrowers and Guarantor
SECTION 1. Affirmative Covenants. So long as any Loan or any other
Obligation shall remain unpaid or any Lender shall have any Commitment under
this Agreement, each of the Borrowers and the Guarantor shall, unless the Agent
on behalf of the Lenders shall otherwise consent in writing in accordance with
Section 7.03, comply with each of the following affirmative covenants:
(a) Compliance with Laws. Each of the Borrowers and the Guarantor
shall comply, and cause each of its subsidiaries to comply, in all
material respects with all applicable laws, rules, regulations and orders,
and to pay when due all taxes, assessments and governmental charges
imposed upon it or upon its property, except to the extent contested in
good faith by appropriate proceedings and for which adequate reserves in
conformity with GAAP have been provided.
(b) Use of Proceeds. Each Borrower shall use all proceeds of the
Loans for such general corporate purposes as may be permitted under
applicable law, including support for its commercial paper programs, if
any.
(c) Financial Information; Defaults.
(a) Each of the Borrowers and the Guarantor shall promptly inform
the Agent of any event which is or may become a default or breach of such
Borrower's or the Guarantor's obligations under the Loan Documents or
result in a Default or Event of Default, or any event which materially
adversely affects its ability fully to perform any of its obligations
under any Loan Document, or any event of default which has occurred and is
continuing under any material agreement to which the Company, the
Guarantor or any of their respective Subsidiaries is a party;
(b) As soon as the same become available, but in any event within
120 days after the end of each of its fiscal years, the Company shall
deliver to the Agent on behalf of the Lenders audited consolidated
financial statements of the Company (including the Guarantor and their
Subsidiaries). Delivery of the Company's annual financial statements
containing information required to be filed with the Securities and
Exchange Commission on Form 10-K (as in effect on the Closing Date) shall
satisfy the requirements of the first sentence of this Section 5.01(c)(ii)
insofar as they relate to the Company (including the Guarantor and their
Subsidiaries) on a consolidated basis; provided, however, that such
requirements shall not be satisfied if the Company makes no such filings
or if there is a material change after the Closing Date in the form or
substance of financial disclosures and financial information required to
be set forth in Form 10-K. All such audited consolidated financial
statements of the Company shall set forth, in comparative form the
corresponding figures for the preceding fiscal year (excluding, as to any
Subsidiary acquired after the Closing Date and not
accounted for in accordance with the pooling method of accounting,
corresponding information for the period preceding its acquisition); all
such audited consolidated financial statements shall be accompanied by an
opinion thereon of independent certified public accountants of recognized
national standing reasonably acceptable to the Agent, which opinion shall
state that said financial statements fairly present the consolidated
financial condition and results of operations of the Company (including
the Guarantor and their Subsidiaries) as at the end of, and for, such
fiscal year;
(c) As soon as the same become available and in any event within 75
days after the end of the first three fiscal quarters of each of its
fiscal years, the Company shall deliver to the Agent on behalf of the
Lenders (A) unaudited consolidated statements of income and cash flows of
the Company (including the Guarantor and their Subsidiaries) for each such
quarterly period and for the period from the beginning of its then current
fiscal year to the end of such period, and (B) related unaudited
consolidated balance sheets of the Company (including the Guarantor and
their Subsidiaries), in each case as at the end of each such quarterly
period. Delivery of the Company's quarterly financial statements
containing information required to be filed with the Securities and
Exchange Commission on Form 10-Q (as in effect on the Closing Date) shall
satisfy the requirements of the first sentence of this Section
5.01(c)(iii) insofar as they relate to the Company (including the
Guarantor and their Subsidiaries on a consolidated basis); provided,
however, that such requirements shall not be satisfied if the Company
makes no such filings or if there is a material change after the Closing
Date in the form or substance of financial disclosures and financial
information required to be set forth in Form 10-Q. All such unaudited
consolidated financial statements shall be accompanied by a certificate of
a senior financial officer of the Company, which certificate shall state
that such financial statements fairly present the consolidated financial
condition and results of the operations of the Company (including the
Guarantor and their Subsidiaries), as at the end of, and for, such period
(subject to normal year end audit adjustments) in accordance with GAAP,
consistently applied;
(d) Together with the financial statements to be delivered to the
Agent on behalf of the Lenders from time to time pursuant to clauses (ii)
and (iii) of this Section 5.01(c), the Company shall deliver to the Agent
a certificate of a senior financial officer of the Company, which
certificate shall (A) state that the consolidated financial condition and
operations of the Company (including the Guarantor and their respective
Subsidiaries) are such as to be in compliance with all of the provisions
of Sections 5.01(d) and 5.02(a) and (f) of this Agreement, (B) set forth
in reasonable detail the computations necessary to determine whether the
provisions of Sections 5.01(d) and 5.02(a) and (f) have been complied
with, and (C) state that no Default or Event of Default has occurred and
is continuing;
(e) Promptly upon their becoming available, the Company shall
deliver to the Agent copies of all registration statements and periodic
reports which the Company shall have filed with the Securities and
Exchange Commission or any
national securities exchange or market and any ratings (and changes
thereto) of its debt by S&P, Moody's and, if applicable, Fitch, Inc.;
(f) Promptly upon the mailing thereof to their respective
shareholders, the Company and the Guarantor shall deliver to the Agent
copies of all financial statements and reports so mailed;
(g) As soon as reasonably possible, the Company shall deliver to the
Agent copies of all reports and notices which it or any of its
Subsidiaries files under ERISA with the Internal Revenue Service, the
PBGC, the U.S. Department of Labor or the sponsor of a Multiemployer Plan,
or which it or any of its Subsidiaries receives from the PBGC or the
sponsor of a Multiemployer Plan related to (a) any Termination Event and
(b) with respect to a Multiemployer Plan, (x) any Withdrawal Liability,
(y) any actual or expected reorganization (within the meaning of Title IV
of ERISA), or (z) any termination of a Multiemployer Plan (within the
meaning of Title IV of ERISA); and
(h) From time to time on request, each of the Borrowers and the
Guarantor shall furnish the Agent on behalf of the Lenders with such
information and documents, and provide access to the books, records and
agreements of such Borrower, the Guarantor or any subsidiary of such
Borrower or the Guarantor, as the Agent on behalf of the Lenders may
reasonably require.
All certificates, materials and documents to be furnished by any
Borrower or the Guarantor under this Section 5.01(c) shall be provided to
the Agent in such number of copies as the Agent may reasonably request and
shall be furnished promptly by the Agent to the Lenders; and
(d) Financial Covenants. The Company and the Guarantor shall ensure
that, on a consolidated basis:
(a) the ratio of their Total Debt to Total Capital, tested as of the
last day of each fiscal quarter, shall be at all times less than fifty
percent (50%); and
(b) at the end of each fiscal quarter, the amount of the
Consolidated Cash Flow shall be, for the period of the four fiscal
quarters then ended, at least 125% of the sum of (i) the aggregate amount
of (x) dividend payments, (y) scheduled principal loan repayments
(excluding scheduled principal loan repayments under this Agreement, under
any commercial paper facility backed by a long-term credit facility, or
any short term debt facility or revolving credit facility that are
refinanced on the date of such repayment) and (z) scheduled Capital Lease
payments made, in respect of the Company, the Guarantor and their
respective Subsidiaries, on a consolidated basis during such period of
four fiscal quarters.
(e) Corporate Existence, Mergers. Each of the Borrowers and the
Guarantor shall preserve and maintain in full force and effect its
corporate existence and rights and those of its subsidiaries, and not
merge or consolidate with or into, or convey, transfer, lease or otherwise
dispose of (whether in one
transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired) to, or acquire all or
substantially all of the assets of, any Person or permit any of its
subsidiaries to do so, except that (v) any subsidiary of any Borrower or
the Guarantor may merge or consolidate with or into any Borrower or the
Guarantor if the surviving entity is such Borrower or the Guarantor, or
transfer assets to, or acquire assets of such Borrower or the Guarantor so
long as such assets do not constitute all or substantially all of the
assets of such Borrower or the Guarantor unless the acquiring entity is a
Borrower or the Guarantor, as the case may be, (w) any subsidiary of any
Borrower or the Guarantor may merge or consolidate with or into, or
transfer assets to, or acquire assets of, any other subsidiary of any
Borrower or the Guarantor, (x) any Borrower, the Guarantor and their
respective subsidiaries may acquire all or substantially all of the assets
of any Person if the surviving entity is such Borrower, the Guarantor or
such subsidiary, as the case may be, and (y) any Borrower or the Guarantor
may cause the change of its jurisdiction by way of merger or otherwise,
upon consent of the Required Lenders, which consent shall not unreasonably
be denied.
(f) Insurance. Each of the Borrowers and the Guarantor shall, and
shall cause each of its subsidiaries to, insure and keep insured, with
financially sound and reputable insurers, so much of its properties, in
such amounts and against such risks, as to all the foregoing, in each
case, reasonably satisfactory to the Lenders and as are usually and
customarily insured by companies engaged in a similar business with
respect to properties of a similar character.
(g) Actions Respecting Certain Excess Sale Proceeds. In the event
that the Borrowers and the Guarantor and/or their respective subsidiaries
shall sell or otherwise dispose of, in one or more transactions (excluding
sales to a Borrower, Guarantor and/or their respective Subsidiaries)
"assets" (as hereinafter defined) with an aggregate book value (net of
depreciation) in excess of Seven Hundred Fifty Million Dollars
($750,000,000) during any fiscal year or Two Billion Dollars
($2,000,000,000) during the period from and including the Closing Date to
and including the Maturity Date, the applicable Borrower or the Guarantor
shall apply all proceeds of such sale or disposition in an amount at least
equal to the amount (the "Excess Amount") in excess of Seven Hundred Fifty
Million Dollars ($750,000,000) or Two Billion Dollars ($2,000,000,000), as
applicable, first, to the prepayment, pro rata, of the outstanding amount
of each Revolving Loan, second to establish cash collateral with the Agent
pursuant to an agreement, in form and substance satisfactory to the Agent
providing for interest-bearing investments in cash or cash equivalents
selected by the Company or the Guarantor, as applicable, for the payment
when due on a pro rata basis of the outstanding amount of each Competitive
Loan, and third the balance, if any (including any interest accrued on
cash collateral not required to prepay Competitive Loans pursuant to the
previous clause), to such general corporate purposes as may be permitted
under applicable law; provided, however, that in the case of an Excess
Amount in excess of Two Billion Dollars ($2,000,000,000) that the
Borrowers shall terminate the Commitment of the Lenders in an amount at
least equal to such Excess Amount. For purposes of testing covenant
compliance under this Section 5.01(g), "assets" (i) shall mean only such
assets having a book value (net of depreciation) at the time of sale or
disposition greater than Twenty-five Million Dollars ($25,000,000) and
(ii) shall not include Excluded Assets.
(h) Payment of Obligations. Each of the Company and the Guarantor
will, and will cause each of its subsidiaries to, pay its obligations
that, if not paid, could result in a Material Adverse Effect before the
same shall become delinquent or in default, except where (i) the validity
or amount thereof is being contested in good faith by appropriate
proceedings, (ii) such Borrower, the Guarantor or such subsidiary has set
aside on its books adequate reserves with respect thereto in accordance
with GAAP and (iii) the failure to make payment pending such contest could
not reasonably be expected to result in a Material Adverse Effect.
(i) Maintenance of Properties. Each of the Borrowers and the
Guarantor will, and will cause each of its subsidiaries to, keep and
maintain all property material to the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
(j) Further Assurances. Each of the Borrowers and the Guarantor
shall do all things necessary to maintain each of the Loan Documents to
which it is a party as legal, valid and binding obligations, enforceable
in accordance with their respective terms by the Agent and the Lenders.
Each of the Borrowers and the Guarantor shall take such other actions and
deliver such instruments as may be necessary or advisable, in the opinion
of the Agent on behalf of the Lenders to protect the rights and remedies
of the Agent and the Lenders under the Loan Documents.
SECTION 2. Negative Covenants. So long as any Loan or any other
Obligation shall remain unpaid or any Lender shall have any Commitment, each of
the Borrowers and the Guarantor agrees that it shall not, unless the Agent on
behalf of the Lenders shall otherwise consent in writing in accordance with
Section 7.03:
(a) Sale of Assets. Unless in compliance with Section 5.01(g), sell
or otherwise dispose of, or permit any of its subsidiaries to sell or
dispose of, in one or more transactions, (i) during any fiscal year,
"assets" (as hereinafter defined) with an aggregate book value (net of
depreciation) in excess of Seven Hundred Fifty Million Dollars
($750,000,000), or (ii) during the period from and including the Closing
Date to and including the Maturity Date, "assets" (as hereinafter defined)
with a book value in excess of Two Billion Dollars ($2,000,000,000). For
purposes of testing covenant compliance under this Section 5.02(a),
"assets" (i) shall mean only such assets having a book value (net of
depreciation) at the time of sale or disposition greater than Twenty-five
Million Dollars ($25,000,000) and (ii) shall not include Excluded Assets.
(b) Limitation on Payment Restrictions Affecting Subsidiaries.
Create or otherwise cause or suffer to exist or become effective any
consensual
encumbrance or restriction (other than those contained in or permitted by
or through any other provision of this Agreement or the other Loan
Documents, including those contained in documents existing on the Closing
Date (or, in the case of the Guarantor, the Restatement Effective Date)
evidencing Indebtedness permitted by any of the foregoing) on the ability
of any Subsidiary of the Company or the Guarantor to (i) pay dividends or
make any other distributions on such Subsidiary's capital stock or pay any
Indebtedness owed to the Company, the Guarantor or any of their respective
Subsidiaries, (ii) make loans to the Company, the Guarantor or any of
their respective Subsidiaries, or (iii) transfer any of its property or
assets to the Company, the Guarantor or any of their respective
Subsidiaries.
(c) Transactions with Officers, Directors and Shareholders. Enter or
permit any of its subsidiaries to enter into any material transaction or
material agreement, including but not limited to any lease, Capital Lease,
purchase or sale of real property, purchase of goods or services, with any
subsidiary, Affiliate or any officer, or director of any Borrower, the
Guarantor or of any such subsidiary or Affiliate, or any record or known
beneficial owner of equity securities of any such subsidiary, any known
record or beneficial owner of equity securities of any such Affiliate or
any Borrower, the Guarantor, or any record or beneficial owner of at least
five percent (5%) of the equity securities of any Borrower or the
Guarantor, except on terms that are no less favorable to such Borrower,
the Guarantor or the relevant subsidiary than those that could have been
obtained in a comparable transaction by such Borrower, the Guarantor or
such subsidiary with an unrelated Person and except between Subsidiaries
which are consolidated for financial reporting purposes with the Company
and the Guarantor.
(d) Compliance with ERISA. Become party to any prohibited
transaction, reportable event, accumulated funding deficiency or plan
termination, all within the meaning of ERISA and the Code with respect to
any Plan as to which there is an Insufficiency, nor permit any subsidiary
to do so (except with respect to a Multiemployer Plan if the foregoing
shall result from the act or omission of a Person party to such
Multiemployer Plan other than any Borrower or its subsidiary).
(e) Investment Company. Be or become an investment company subject
to the registration requirements of the Investment Company Act of 1940, as
amended, or permit any subsidiary to do so.
(f) Liens. Create or incur, or suffer to be created or incurred or
come to exist, any Lien in respect of Indebtedness on any vessel or other
of its properties or assets of any kind, real or personal, tangible or
intangible, included in the Company's or the Guarantor's consolidated
balance sheet in accordance with GAAP, nor shall any Borrower or the
Guarantor permit any of its subsidiaries to do any of the foregoing.
Solely for purposes of the preceding sentence the term "Lien" shall not
include (i) Liens with respect to Excluded Assets or Excluded Indebtedness
and (ii) other Liens in respect of Indebtedness up to an amount not
greater than 40% of the amount of total assets of the Company and the
Guarantor as shown on their most recent consolidated balance sheet (but
excluding the value of any intangible assets) delivered pursuant to
Section 4.01(e) or 5.01(c)(ii) or (iii).
(g) Organizational Documents. Amend its articles of incorporation
(or similar charter documents) or by-laws (except for such amendments as
shall not adversely affect the rights and remedies of the Agent or any
Lender).
ARTICLE VII.
Default
SECTION 1. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) Any Borrower shall fail to pay any facility fee, utilization fee
or any installment of principal of any Loan, when due, or shall fail to
pay any interest on any such Loan or fee within two (2) days after such
interest shall become due; or
(b) Any representation or warranty made by or on behalf of any
Borrower or the Guarantor under or in connection with this Agreement or
any of the other Loan Documents shall prove to have been incorrect in any
material respect when made; or
(c) Any Borrower or the Guarantor shall fail to perform or observe
any other term, covenant or agreement contained in this Agreement or any
of the other Loan Documents on its part to be performed or observed and,
in each case, any such failure shall remain unremedied for fifteen (15)
days after written notice thereof shall have been given to (i) such
Borrower or (ii) the Guarantor with a copy to the Company, in each case by
the Agent or any Lender; or
(d) Any Borrower, the Guarantor, any of their Material Subsidiaries
or any Subsidiary of the Company as of the Closing Date, or any Subsidiary
of the Guarantor as of the Restatement Effective Date shall fail to pay
any amount or amounts due in respect of Indebtedness in the aggregate
amount in excess of Fifty Million Dollars ($50,000,000) (but excluding
Indebtedness resulting from the Loans) of such Borrower, the Guarantor,
such Material Subsidiary or other such Subsidiary when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Indebtedness; or any other default under one or more agreements or
instruments relating to Indebtedness in the aggregate amount in excess of
Fifty Million Dollars ($50,000,000) (but excluding Indebtedness resulting
from the Loans) of such Borrower, the Guarantor, such Material Subsidiary
or other such Subsidiary, or any other event, shall occur and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of
such default or event is to accelerate, the maturity of such Indebtedness;
or any such Indebtedness shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or
(e) (1) Any Borrower, the Guarantor or any Material Subsidiary shall
(A) generally not pay its debts as such debts become due, (B) threaten to
stop making payments generally, (C) admit in writing its inability to pay
its debts generally, (D) make a general assignment for the benefit of
creditors, (E) not be Solvent or (F) be unable to pay its debts;
(2) Any proceeding shall be instituted in any jurisdiction by or
against any Borrower, the Guarantor or any Material Subsidiary (A) seeking
to adjudicate it a bankrupt or insolvent, (B) seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or
composition of its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or (C) seeking the entry of an
administration order, an order for relief, or the appointment of a
receiver, trustee, or other similar official, for it or for any
substantial part of its property; provided, that, in the case of any such
proceeding instituted against but not by any Borrower, the Guarantor or
any Material Subsidiary, such proceeding shall remain undismissed or
unstayed for a period of forty-five (45) days or any of the relief sought
in such proceeding (including, without limitation, the entry of an order
for relief against it or the appointment of a receiver, trustee, custodian
or other similar official for it or any substantial part of its property)
shall be granted; or
(3) (A) Any Borrower, the Guarantor or any Material Subsidiary shall
take any corporate action to authorize any of the actions set forth above
in subparagraph (e)(2) of this Section 6.01, or (B) any director, or if
one or more directors are elected and acting, any two directors of any
Borrower, the Guarantor or any Material Subsidiary, or any Person owning
directly, or indirectly, shares of capital stock of any Borrower, the
Guarantor or any Material Subsidiary in a number sufficient to elect a
majority of directors of any Borrower, the Guarantor or any Material
Subsidiary, shall take any preparatory or other steps to convene a meeting
of any kind of any Borrower, the Guarantor or any Material Subsidiary, or
any meeting is convened or any other preparatory steps are taken, for the
purposes of considering or passing any resolution or taking any corporate
action to authorize any of the actions set forth above in subparagraph
(e)(2) of this Section 6.01; or
(f) One or more judgments or orders for the payment of money, singly
or in the aggregate, in excess of an amount equal to Seventy-five Million
Dollars ($75,000,000) (not covered by insurance) shall be rendered against
any Borrower, the Guarantor or any of their respective subsidiaries and
either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall have elapsed any
period of thirty (30) consecutive days
during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not have been in effect; or
(g) (i) any person or group, other than the Company, the Guarantor,
any Subsidiary, any of the Company's, the Guarantor's or their
Subsidiaries' employee benefit plans or permitted holders after the
Closing Date files a Schedule TO or a Schedule 13D (or any successors to
those Schedules) stating that it has become and actually is the beneficial
owner of the Company's or the Guarantor's voting stock representing more
than 50% of the total voting power of all of the Company's or the
Guarantor's classes of voting stock entitled to vote generally in the
election of the members of the Company's or the Guarantor's board of
directors; or (ii) the Company or the Guarantor consolidates with or
merges with or into another person (other than the Company, the Guarantor
or a Subsidiary), the Company or the Guarantor sells conveys, transfers or
leases its properties and assets substantially as an entirety to any
person (other than the Company, the Guarantor or a Subsidiary), or any
person (other than the Company, the Guarantor or a Subsidiary)
consolidates with or merges with or into the Company or the Guarantor, and
the Company's or the Guarantor's outstanding common stock is reclassified
into, exchanged for or converted into the right to receive any other
property or security, provided that none of these circumstances will be an
Event of Default if the persons that beneficially own the Company's or the
Guarantor's voting stock immediately prior to a transaction beneficially
own, in substantially the same proportion, shares with a majority of the
total voting power of all outstanding voting securities of the surviving
or transferee person that are entitled to vote generally in the election
of that person's board of directors. For purposes of this paragraph (g), a
"permitted holder" means each of Marilyn B. Arison, Mickey Meir Arison,
Shari Arison, Michael Arison or their spouses, children or lineal
descendants of Marilyn B. Arison, Mickey Meir Arison, Shari Arison,
Michael Arison or their spouses, any trust established for the benefit of
any Arison family member mentioned in this paragraph, or any "person" (as
such term is used in Section 13(d) or 14(d) of the Exchange Act), 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 permitted holder. Notwithstanding
anything to the contrary, the completion of a merger, consolidation or
other transaction effected with one of the Company's or the Guarantor's
Affiliates for the purpose of changing its jurisdiction of organization or
effecting a corporate reorganization, including, without limitation, the
implementation of a holding company structure shall not be deemed to be an
Event of Default. For purposes of this paragraph (g), (i) the term
"person" and the term "group" have the meanings given by Sections 13(d)
and 14(d) of the Exchange Act or any successor provisions; (ii) the term
"group" includes any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act or any successor provision; and (iii) the term "beneficial
owner" is determined in accordance with Rules 13d-3 and 13d-5 under the
Exchange Act or any successor provision, except that a person will be
deemed to have beneficial
ownership of all shares that person has the right to acquire irrespective
of whether that right is exercisable immediately or only after the passage
of time; or
(h) Any material provision of any of the Loan Documents after
delivery thereof shall for any reason cease to be valid and binding on the
parties thereto (other than the Lenders and the Agent), or any party
thereto (other than a Lender or the Agent) shall so state in writing;
then, and in any such event, the Agent on direction of the Required Lenders (i)
shall, by notice to the Borrowers, declare the Commitment to be terminated,
whereupon the same shall forthwith terminate, and (ii) shall, by notice to the
Borrowers, declare each Loan, all interest thereon and all other amounts payable
under this Agreement, to be forthwith due and payable (except that no notice
shall be required upon the occurrence of an Event of Default described in
paragraph (e) of this Section 6.01) whereupon each Loan, all such interest and
all such amounts shall become and be forthwith due and payable without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrowers and the Guarantor.
ARTICLE VIII.
Relation of Lenders; Assignments, Designations And Participations
SECTION 1. Lenders and Agent. The general administration of this
Agreement and the Loan Documents shall be by the Agent, and each Lender hereby
authorizes and directs the Agent to take such action (including without
limitation retaining lawyers, accountants, surveyors or other experts) or
forbear from taking such action as in the Agent's reasonable opinion may be
necessary or desirable for the administration hereof (subject to any direction
of the Required Lenders and to the other requirements of Section 7.03 hereof).
The Agent shall inform each Lender, and each Lender shall inform the Agent, of
the occurrence of any Event of Default promptly after obtaining knowledge
thereof; however, unless it has actual knowledge of an Event of Default, each of
the Agent and the Lenders may assume that no Event of Default has occurred.
SECTION 2. Setoff. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Loans due and payable pursuant to the provisions of Section 6.01,
each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of any Borrower against any and all of the obligations of such Borrower
now or hereafter existing under this Agreement, whether or not such Lender shall
have made any demand under this Agreement and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrowers after any such
set-off and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of each Lender under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) which such Lender may have.
SECTION 3. Approvals. Upon any occasion requiring or permitting an
approval of any amendment or modification or any consent, waiver, declaring an
Event of Default or taking any action thereafter, or any other action on the
part of the Agent or the Lenders under any of the Loan Documents, (1) action may
(but shall not be required to) be taken by the Agent for and on the behalf or
for the benefit of all Lenders, provided (A) that no other direction of the
Required Lenders shall have been previously received by the Agent, and (B) that
the Agent shall have received consent of the Required Lenders to enter into any
written amendment or modification of the provisions of any of the Loan
Documents, or to consent in writing to any material departure from the terms of
any Loan Documents by any Borrower or any other party thereto or (2) action
shall be taken by the Agent upon the direction of the Required Lenders, and any
such action shall be binding on all Lenders; provided further, however, that
unless all of the Lenders (other than the Designated Bidders) agree in writing
thereto, no amendment, modification, waiver, consent or other action with
respect to this Agreement or any of the Revolving Loans shall be effective which
(a) increases the Commitment or increases the Percentage Interest of any of the
Lenders, except as permitted under Section 2.22, (b) reduces any commission,
fee, the principal or interest owing to any Lender in respect of the Revolving
Loans hereunder or the method of calculation of any thereof, (c) extends the
Maturity Date or the date on which any sum in respect of the Revolving Loans is
due hereunder, (d) releases any collateral, guaranty, including the guarantee by
the Company pursuant to Article VIII, or other security, (e) amends the
provisions of this Section 7.03 or the definition of Required Lenders, (f)
waives any condition for Borrowing set forth in Article III or (h) changes any
of the provisions of this Section or the definition of "Required Lenders" or any
other provision hereof specifying the number or percentage of Lenders required
to waive, amend or modify any rights hereunder or make any determination or
grant any consent hereunder.
SECTION 4. Exculpation. The Agent shall not be liable or answerable
for anything whatsoever in connection with any of the Loan Documents or other
instrument or agreement required hereunder or thereunder, including
responsibility in respect of the execution, delivery, construction or
enforcement of any of the Loan Documents or any such other instrument or
agreement, or for any action taken or not taken by the Agent in any case
involving exercise of any power or authority conferred upon the Agent under any
thereof, except for its wilful misconduct or gross negligence, and the Agent
shall have no duties or obligations other than as provided herein and therein.
The Agent shall be entitled to rely on any opinion of counsel (including counsel
for any Borrower, the Guarantor or any of their subsidiaries) in relation to any
of the Loan Documents or any other instrument or agreement required hereunder or
thereunder and upon writings, statements and communications received from any
Borrower, the Guarantor or any of their subsidiaries (including any
representation made in or in connection with any Loan Document), or from any
other party to any of the Loan Documents or any documents referred to therein or
any other Person, firm or corporation reasonably believed by it to be authentic,
and the Agent shall not be required to
investigate the truth or accuracy of any writing or representation, nor shall
the Agent be liable for any action it has taken or omitted in good faith on such
reliance.
SECTION 5. Indemnification. Each Lender (other than any Designated
Bidder) agrees to indemnify the Agent, except to the extent reimbursed by the
Borrowers or the Guarantor and except in the case of any suit by any Lender
against the Agent resulting in a final judgment against the Agent, ratably
according to the aggregate principal amount of the Revolving Loans then held by
it (or if no Revolving Loans are outstanding or if any such Revolving Loans are
held by Persons which are not Lenders, ratably according to the amount of its
Commitment) against all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (except to the extent the foregoing results from the Agent's
gross negligence or wilful misconduct) which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of (y) any of
the Loan Documents or any other instrument or agreement contemplated hereunder
or thereunder or (z) any action taken or omitted by the Agent under any of the
Loan Documents or such other instrument or agreement.
SECTION 6. Agent as Lender. The Agent shall, in its individual
capacity, have the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not an agent; the term "Lenders" shall
include the Agent in its individual capacity to the extent of its Percentage
Interest. The Agent and its subsidiaries and Affiliates may accept deposits
from, lend money to, and generally engage in any kind of banking, trust or other
business with the Borrowers, the Guarantor and their respective subsidiaries and
Affiliates, as if it were not the Agent.
SECTION 7. Notice of Transfer; Resignation; Successor Agent. (a) The
Agent may deem and treat a Lender party to this Agreement as the owner of such
Lender's interest in any Loan and any other instrument or agreement contemplated
hereunder or thereunder for all purposes hereof unless and until a written
notice of the assignment or transfer thereof, executed by such Lender and
otherwise in compliance with the requirements of Section 7.09 hereof, shall have
been received and accepted by the Agent. The Agent shall resign if directed by
the Required Lenders for any reason. The Agent may not resign at any time,
except that, upon written notice to the Lenders and the Borrowers, the Agent may
resign if in its judgment there exist or may occur reasons related to conflict
of interest, a change in, or violation of, law or regulation or interpretation
thereof, or such other occurrence that may prevent or impede the Agent in
discharging its duties hereunder faithfully and effectively in accordance with
their terms.
(b) Any successor Agent shall be appointed by the Required Lenders
and shall be a bank or trust company reasonably satisfactory to the Borrowers
(so long as no Event of Default shall have occurred and be continuing) and the
Required Lenders. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Required Lender's
removal of the Agent, then such retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $75,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
SECTION 8. Credit Decision; Not Trustee. Each Lender represents that
it has made, and agrees that it shall continue to make, its own independent
investigation of the financial condition and affairs of the Company, the
Guarantor and their Subsidiaries, and its own appraisal of the creditworthiness
of the Company, the Guarantor and their Affiliates and Subsidiaries in
connection with the making and performance of this Agreement. The Agent has and
shall have no duty or responsibility whatsoever on the date hereof or, except as
otherwise expressly provided in this Agreement at any time hereafter, to provide
any Lender with any credit or other information. Nothing herein shall (nor shall
it be construed so as to) constitute the Agent a trustee for any Borrower, the
Guarantor or their subsidiaries or impose on it any duties or obligations other
than those for which express provision is made in this Agreement or under the
other Loan Documents.
SECTION 9. Assignments, Designations and Participation. (a) Each
Lender (other than the Designated Bidders) may assign to one or more banks or
other entities all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and
the Loans owing to it); provided, however, that (i) each such assignment shall
be of constant, and not a varying, percentage of all rights and obligations
under this Agreement (other than any right to make Competitive Loans or
Competitive Loans owing to it), (ii) unless the Borrowers and the Agent shall
otherwise agree with the assigning Lender, the amount of the Commitment of the
assigning Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to such assignment)
that is not to a then existing Lender hereunder, or to a Designated Bidder
designated by a then existing Bank hereunder shall in no event be less than Ten
Million Dollars ($10,000,000) (and in increments of One Million Dollars
($1,000,000) in excess thereof) or such lesser amount as shall constitute all of
such assigning Bank's Commitment and the outstanding principal of Loans payable
to it, (iii) each such assignment shall be to an Eligible Assignee, and (iv) the
parties to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with a processing and recordation fee of $3,500; provided further, however, that
each such assignment that is not to a then existing Lender hereunder, or to a
Designated Bidder designated by a then existing Bank hereunder, (x) shall be
subject to the consent of the Borrowers and the Agent, which consent shall not
unreasonably be denied and which consent shall be deemed given unless a Borrower
gives the assigning Lender and the Agent written notice of and a reasonable
basis for its denial not later than five (5) Business Days following (i) telex,
telecopy or cable notice given to the Borrowers and the Agent by the assigning
Lender or the Agent of the name of the proposed transferee, the amount of
Commitment to be assigned and such
information as the Borrowers and the Agent may reasonably request for purposes
of making an informed judgment, and, if the proposed transferee is organized
under the laws of a jurisdiction outside the United States, (ii) transmission to
the Borrowers and the Agent by telecopy of any documents required by Section
2.15(e) to be delivered by the proposed transferee on or before the effective
date of the assignment, each properly completed and executed by the proposed
transferee. Any consent to assignment untimely or unreasonably denied by a
Borrower shall be void and of no effect, and shall not preclude or bar any
assignment otherwise permitted by this Section 7.09(a). Any assignment or
purported assignment not in compliance with this Section shall be void and of no
effect. Without regard to any of the other terms of this Agreement or of any
other agreement, any Lender may (i) assign, as collateral or otherwise, any of
its rights under this Agreement to any Federal Reserve Bank of the United States
without notice to or consent of the Borrowers, the Agent or any other Person,
and (ii) with notice to the Agent and the Borrowers, assign all or part of its
rights under this Agreement and the other Loan Documents to any of its
affiliates. In case of any assignment pursuant to this Section 7.09(a), the
assignee shall not be entitled to receive the portion (if any) of any amount
otherwise payable under Section 2.13, 2.15 or 2.19 hereof which exceeds the
amount which would have been payable under Section 2.13, 2.15 or 2.19 (as the
case may be) to the assignor with respect to the rights and obligation so
assigned. In the case of a transfer of any Loan from the accounting records of
the office of a Lender where such Loan was originally recorded to the accounting
records of any other office of such Lender, or a change in the location of the
Lending Office from that designated as of the Closing Date, such Lender or the
Agent, as the case may be, shall not be entitled to receive the portion (if any)
of any amount otherwise payable under Section 2.13, 2.15 or 2.19 hereof which
exceeds the amount which would have been payable under Section 2.13, 2.15 or
2.19 (as the case may be) to such Lender or the Agent, as the case may be, if
such transfer or change had not been made. In the case of a change in location,
from the Closing Date, of the Lending Office, unless the Borrowers shall consent
to such change, the Borrowers shall not be required to remit to the Agent
pursuant to Section 2.13, 2.15 or 2.19 hereof any amount that exceeds the amount
which would have been payable under Section 2.13, 2.15 or 2.19 (as the case may
be) if such change in location had not occurred. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, and delivery of the tax forms and other documents
referred to in Section 2.15 hereof, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance and subject to the
foregoing, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished pursuant hereto; (ii)
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any of the Borrowers,
the Guarantor or their respective subsidiaries or the performance or observance
by any of the Borrowers, the Guarantor or their respective subsidiaries of any
of their obligations under this Agreement or any other instrument or document
furnished pursuant hereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to herein Sections 4.01(e) and 5.01(c), and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(c) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
the Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit B hereto and has attached thereto the forms
referred to in paragraph 3(vii) thereof, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register
(including the transfer of Loans to such Eligible Assignee by the assigning
Lender) and (iii) give prompt notice and an execution counterpart thereof to the
Borrowers.
(d) In addition each Lender (other than the Designated Bidders) may
designate one or more banks or other entities to have a right to make
Competitive Loans as a Lender pursuant to Section 2.04; provided, however, that
(i) no such Lender shall be entitled to make more than two such designations
with respect to any particular Competitive Loan Borrowing, (ii) each such Lender
making one or more of such designations shall retain the right to make
Competitive Loans as a Lender pursuant to Section 2.04, (iii) each such
designation shall be to a Designated Bidder and (iv) the parties to each such
designation shall execute and deliver to the Agent, for its acceptance and
recording in the Register, a Designation Agreement. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Designation Agreement, the designee thereunder shall be a party hereto
with a right to make Competitive Loans as a Lender pursuant to Section 2.04 and
the obligations related thereto.
(e) By executing and delivering a Designation Agreement, the Lender
making the designation thereunder and its designee thereunder confirm and agree
with each other and the other parties hereto as follows: (i) such Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any of
the Borrowers, the Guarantor or their respective subsidiaries or the performance
or observance by any of the Borrowers, the Guarantor or their respective
subsidiaries of any of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such designee confirms
that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Section 4.01(e) and 5.01(c) and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into the Designation Agreement; (iv) such
designee will, independently and without reliance upon the Agent, such
designating Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
designee confirms that it is a Designated Bidder; (vi) such designee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vii) such designee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender, including delivery of any documents required
under Section 2.15(e).
(f) Upon its receipt of a Designation Agreement executed by a
designating Lender and a designee representing that it is a Designated Bidder,
the Agent shall, if such Designation Agreement has been completed and is
substantially in the form of Exhibit C hereto, (i) accept such Designation
Agreement, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrowers.
(g) The Agent shall maintain at its address referred to in Section
9.02 of this Agreement a register for the recordation of the names and addresses
of the Lenders and, with respect to Lenders other than Designated Bidders, the
Commitment of, and principal amount of the Loans owing to, each Lender from time
to time and a copy of each Assignment and Acceptance and Designation Agreement
delivered to and accepted by it (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by any Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior notice
and each shall be entitled to make copies thereof at its expense.
(h) Each Lender and the Agent may grant participations to one or
more banks or other entities in or to all or any part of its rights and
obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and
the Loans owing to it); provided, however, that notwithstanding the grant of any
such participation by any Lender, such participation, and the right to grant
such a participation, shall be expressly subject to the following conditions and
limitations: (i) such Lender's obligations under this Agreement (including
without limitation, its Commitment to the Borrowers hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Lender shall remain
the holder of any such Loans for all purposes of this Agreement, (iv) the
Borrowers, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, (v) such Lender shall continue to be able to
agree to any modification or amendment of this Agreement or any waiver hereunder
without the consent, approval or vote of any such participant or group of
participants, other than modifications, amendments, and waivers which (a)
postpone the Maturity Date or any date fixed for any payment of, or reduce any
payment of, principal of or interest on such Lender's Loans or any fees or other
amounts payable under this Agreement, or (b) increase the amount of such
Lender's Commitment, or (c) change the interest rate payable under this
Agreement, or (d) release all or substantially all of any collateral or
guaranty, provided that if a Lender agrees to any modification or waiver
relating to items (a) through (d), the Borrowers, the Agent and each other
Lender may conclusively assume that such Lender duly received any necessary
consent of each of its participants and (vi) except as contemplated by the
immediately preceding clause (v), no participant shall be deemed to be or to
have any of the rights or obligations of a "Lender" hereunder.
(i) Any Lender may, in connection with any assignment, designation
or participation or proposed assignment, designation or participation pursuant
to this Section 7.09, disclose to the assignee, Designated Bidder or
participant, or proposed assignee, designated bidder or participant, any
information relating to any Borrower, the Guarantor or their subsidiaries
furnished to such Lender by or on behalf of such Borrower or the Guarantor,
provided that the Person receiving such information undertakes not to disclose
it to a third party except pursuant to, and subject to the conditions provided
in, this Section 7.09.
SECTION 10. Syndication Agent and Co-Documentation Agents. Each of
the Syndication Agent and Co-Documentation Agents shall have no duties,
responsibilities, rights or liabilities as Syndication Agent or Co-Documentation
Agent under this Agreement or any of the other Loan Documents and, other than as
a Lender, shall not be liable or answerable for anything whatsoever in
connection with any of the Loan Documents or other instrument or agreement
required hereunder or thereunder, including responsibility in respect of the
execution, delivery, construction or enforcement of any of the Loan Documents or
any such other instrument or agreement, or for any action taken or not taken by
any Person with respect thereto. Each of the Syndication Agent and
Co-Documentation Agents has and shall have no duty or responsibility whatsoever
on the date hereof or at any time hereafter, to provide any Bank with any credit
or other information. Nothing herein shall (nor shall it be construed so as to)
constitute the Syndication Agent or any Co-Documentation Agent a trustee for any
Borrower, the Guarantor or its subsidiaries or impose on it any duties or
obligations whatsoever under this Agreement, the other Loan Documents, or
otherwise.
ARTICLE IX.
Company Guarantee
In order to induce the Lenders to extend credit to the Borrowing
Subsidiaries hereunder, the Company hereby irrevocably and unconditionally
guarantees, as a primary obligor and not merely as a surety, the Obligations of
the Borrowing Subsidiaries. The Company further agrees that the due and punctual
payment of the Obligations of the Borrowing Subsidiaries may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
that it will remain bound upon its guarantee hereunder notwithstanding any such
extension or renewal of any Obligation.
The Company waives presentment to, demand of payment from and
protest to any Borrowing Subsidiary of any of the Obligations, and also waives
notice of acceptance of its obligations and notice of protest for nonpayment.
The obligations of the Company hereunder shall not be affected by (a) the
failure of any Lender to assert any claim or demand or to enforce any right or
remedy against any Borrowing Subsidiary under the provisions of this Agreement,
any Borrowing Subsidiary Agreement, any other Loan Document or otherwise; (b)
any extension or renewal of any of the Obligations; (c) any rescission, waiver,
amendment or modification of, or release from, any of the terms or provisions of
this Agreement, any Borrowing Subsidiary Agreement or any other Loan Document or
agreement; (d) the failure or delay of any Lender to exercise any right or
remedy against any other guarantor of the Obligations; (e) the failure of any
Lender to assert any claim or demand or to enforce any remedy under any Loan
Document or any other agreement or instrument; (f) any default, failure or
delay, wilful or otherwise, in the performance of the Obligations; or (g) any
other act, omission or delay to do any other act which may or might in any
manner or to any extent vary the risk of the Company or otherwise operate as a
discharge of the Company as a matter of law or equity or which would impair or
eliminate any right of the Company to subrogation.
The Company further agrees that its guarantee hereunder constitutes
a promise of payment when due (whether or not any bankruptcy or similar
proceeding shall have stayed the accrual or collection of any of the Obligations
or operated as a discharge thereof) and not merely of collection, and waives any
right to require that any resort be had by any Lender to any balance of any
deposit account or credit on the books of any Lender in favor of any Borrower or
subsidiary or any other Person.
The obligations of the Company hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, and shall not
be subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever, by reason of the invalidity, illegality or unenforceability of the
Obligations, any impossibility in the performance of the Obligations or
otherwise.
The Company further agrees that its obligations hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by any Lender upon the bankruptcy or reorganization of any Borrower
or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Lender may have at law or in equity against the Company by
virtue hereof, upon the failure of any Borrowing Subsidiary to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, the Company hereby
promises to and will, upon receipt of written demand by the Agent, forthwith
pay, or cause to be paid, to the Agent for distribution to the Lenders in cash
an amount equal the unpaid principal amount of such Obligation. The Company
further agrees that if payment in respect of any Obligation shall be due in a
currency other than Dollars and/or at a place of payment other than New York and
if, by reason of any legal prohibition, disruption of currency or foreign
exchange markets, war or civil disturbance or other event, payment of such
Obligation in such currency or at such place of payment shall be impossible or,
in the reasonable judgment of any Lender, not consistent with the protection of
its rights or interests, then, at the election of such Lender, the Company shall
make payment of such Obligation in Dollars (based upon the applicable Spot
Exchange Rate in effect on the date of payment) and/or in New York, and shall
indemnify such Lender against any losses or expenses (including losses or
expenses resulting from fluctuations in exchange rates) that it shall sustain as
a result of such alternative payment.
Upon payment in full by the Company of any Obligation of any
Borrowing Subsidiary, each Lender shall, in a reasonable manner, assign to the
Company the amount of such Obligation owed to such Lender and so paid, such
assignment to be pro tanto to the extent to which the Obligation in question was
discharged by the Company, or make such disposition thereof as the Company shall
direct (all without recourse to any Lender and without any representation or
warranty by any Lender). Upon payment by the Company of any sums as provided
above, all rights of the Company against any Borrowing Subsidiary arising as a
result thereof by way of right of subrogation or otherwise shall in all respects
be subordinated and junior in right of payment to the prior indefeasible payment
in full of all the Obligations owed by such Borrowing Subsidiary to the Lenders
(it being understood that, after the discharge of all the Obligations due and
payable from such Borrowing Subsidiary, such rights may be exercised by the
Company notwithstanding that such Borrowing Subsidiary may remain contingently
liable for indemnity or other Obligations).
ARTICLE X.
Miscellaneous
SECTION 1. Amendments. No amendment, supplement or modification to
this Agreement shall be enforceable against any Borrower or the Guarantor unless
the same shall be in writing and signed by such Borrower or the Guarantor. No
amendment or waiver of any provision of this Agreement, the Guarantee Agreement
or any
instrument delivered hereunder, nor consent to any departure by any Borrower or
the Guarantor therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Agent and, to the extent required by Section
7.03 hereof, the Required Lenders or each Lender, as the case may be, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
SECTION 2. Notices. All notices, demands and other communications
provided for hereunder shall be in writing (including telegraphic communication)
(except as otherwise expressly herein provided respecting telephone notice) and
mailed, telexed, telecopied or telegraphed or delivered, if to any Borrower or
the Guarantor at its address set forth below its signature herein written; and
if to a Lender other than the Agent, at its address set forth below its
signature herein written; or, as to each party, at such other address as shall
be designated by such party in a notice to the other parties hereto. All such
notices and communications shall, when mailed, telexed, telecopied, telephoned
or telegraphed, be effective upon the earliest of (i) actual receipt, (ii) seven
days from the date when deposited in the mails, or (iii) when (on a Business Day
and during normal business hours at the addressee's address) transmitted by
telecopy or telex or delivered to the telegraph company, respectively, except
that notices and communications to the Agent or any Lender pursuant to Article
II hereof shall not be effective until received by the Agent or such Lender.
SECTION 3. No Waiver; Remedies. Regardless of any fact known or
investigation undertaken by the Agent or any Lender, no failure on the part of
the Agent or any Lender to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 4. Costs, Expenses, Fees and Indemnities. (a) Each Borrower
agrees to pay on demand (i) in connection with the preparation, execution, and
delivery of this Agreement and the instruments and other documents to be
delivered hereunder, (y) the reasonable fees and out-of-pocket expenses of
Cravath, Swaine & Moore LLP, as special counsel for the Agent (and any local
counsel retained by such firm) with respect to the closing of the Transaction
and the Restatement Transactions and (z) all other reasonable costs and expenses
of the Lenders and the Agent (other than any other legal fees and related
expenses incurred by them) and (ii) after the Closing Date, all reasonable costs
and expenses in connection with the administration of this Agreement and the
other instruments and documents to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of any counsel for
the Agent or the Lenders in connection with advice given the Agent or the
Lenders, from time to time, as to their rights and responsibilities under this
Agreement and such instruments and documents. The Borrowers shall not be liable
to any Lender in respect of any costs or expenses incurred in connection with
any assignment or grant of participation under Section 7.09 hereof. Each
Borrower further agrees to pay on demand all losses, costs and expenses, if any
(including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement of this Agreement and the instruments and other
documents delivered hereunder, including, without limitation, losses, costs and
expenses sustained as
a result of a Default by any Borrower in the performance of its obligations
contained in this Agreement or any instrument or document delivered hereunder.
(b) Each Borrower agrees to indemnify and hold harmless each of the
Lenders and the Agent, and its and their respective Affiliates, directors,
officers, employees, agents, representatives, counsel and advisors (each an
"Indemnified Party") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
disbursements of counsel and the costs of investigation and defense thereof)
which may be incurred by or asserted or awarded against any Indemnified Party,
in each case based upon, arising out of or in connection with or by reason of,
the Transaction or the Restatement Transactions, including, without limitation,
any act or failure to act by the Agent where such act or failure to act was
taken pursuant to any Borrower's request or any transaction contemplated by this
Agreement or any Loan Document, whether or not any Loan hereunder is made,
except to the extent that such claim, damage, loss, liability or expense results
from the gross negligence or willful misconduct of such Indemnified Party. The
indemnities of this Agreement shall survive the termination of this Agreement
and the other Loan Documents.
SECTION 5. Judgment. (a) If, for the purpose of obtaining judgment
in any court, it is necessary to convert a sum owing hereunder in one currency
into another currency, each party hereto agrees, to the fullest extent that it
may effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures in the relevant jurisdiction the first
currency could be purchased with such other currency on the Business Day
immediately preceding the day on which final judgment is given.
(b) The obligations of each Borrower in respect of any sum due to
any party hereto or any holder of the obligations owing hereunder (the
"Applicable Creditor") shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than the currency in which such sum is stated to be
due hereunder (the "Agreement Currency"), be discharged only to the extent that,
on the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, such Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss. The obligations of the Borrowers
contained in this Section 9.05 shall survive the termination of this Agreement
and the payment of all other amounts owing hereunder.
SECTION 6. Consent to Jurisdiction; Waiver of Immunities. (a) Each
of the Borrowers and the Guarantor hereby irrevocably submits to the
jurisdiction of any New York State court sitting in New York County and to the
jurisdiction of the United States District Court for the Southern District of
New York in any action or proceeding arising out of or relating to this
Agreement, and each of the Borrowers and the Guarantor hereby irrevocably agrees
that all claims in respect of such action or proceeding may be
heard and determined in such New York State or Federal court. Each of the
Borrowers and the Guarantor hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding. Each of the Borrowers and the Guarantor hereby
irrevocably appoints C T Corporation System (the "Process Agent"), with an
office on the date hereof at 111 Eighth Avenue, New York, New York 10011, United
States, as its agent to receive on behalf of itself and its property service of
copies of the summons and complaint and any other process which may be served in
any such action or proceeding. Such service may be made by mailing or delivering
a copy of such process to any Borrower or the Guarantor in care of the Process
Agent (or any successor thereto, as the case may be) at such Process Agent's
above address (or the address of any successor thereto, as the case may be), and
each of the Borrowers and the Guarantor hereby irrevocably authorizes and
directs the Process Agent (and any successor thereto) to accept such service on
its behalf. Each of the Borrowers and the Guarantor shall appoint a successor
agent for service of process should the agency of C T Corporation System
terminate for any reason, and further shall at all times maintain an agent for
service of process in New York, New York, so long as there shall be outstanding
any Obligations under the Loan Documents. Each of the Borrowers and the
Guarantor shall give notice to the Agent of any appointment of successor agents
for service of process, and shall obtain from each successor agent a letter of
acceptance of appointment and promptly deliver the same to the Agent. As an
alternative method of service, each of the Borrowers and the Guarantor also
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to it at its address
specified in Section 9.02 hereof. Without waiver of its rights of appeal
permitted by relevant law, each of the Borrowers and the Guarantor agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(b) Nothing in this Section 9.06 shall affect the right of the Agent
or any Lender to serve legal process in any other manner permitted by law, or
affect the right of the Agent or any Lender to bring any action or proceeding
against any Borrower or the Guarantor or its properties in the courts of any
other jurisdiction.
(c) To the extent that any Borrower or the Guarantor has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, it hereby irrevocably waives such immunity in respect of its
obligations under this Agreement.
SECTION 7. Binding Effect; Merger; Severability; GOVERNING LAW. (a)
This Agreement shall become effective when it shall have been executed by the
Borrowers and the Agent and when the Agent shall have been notified by each Bank
that such Bank has executed it and thereafter this Agreement shall be binding
upon, and shall inure to the benefit of each Borrower, the Agent and each
Lender, and their respective successors and assigns, except that no Borrower
shall have the right to assign its rights hereunder or any interest herein. Each
Lender may, to the extent permitted under this Agreement, assign to any other
financial institution all or any part of, or any interest in,
the Lender's rights and benefits hereunder and under any instrument delivered
hereunder, and to the extent of such assignment such assignee shall have the
same rights and benefits against each Borrower and the Guarantor as it would
have had if it were the Lender hereunder.
(b) The Loan Documents, together with all attachments and exhibits
to each of them and all other documents referenced herein and therein, and
delivered hereunder and thereunder and pursuant hereto and thereto, constitute
the entire agreement among the parties with respect to the subject matter hereof
and thereof, and supersede all prior and contemporaneous written and oral
understandings and agreements related thereto among the parties.
(c) If any word, phrase, sentence, paragraph, provision or section
of the Loan Documents shall be held, declared, pronounced or rendered invalid,
void, unenforceable or inoperative for any reason by any court of competent
jurisdiction, governmental authority, statute, or otherwise, such holding,
declaration, pronouncement or rendering shall not adversely affect any other
word, phrase, sentence, paragraph, provision or section of the Loan Documents,
which shall otherwise remain in full force and effect and be enforced in
accordance with their respective terms.
(d) This Agreement has been delivered in New York, New York. THIS
AGREEMENT SHALL BE GOVERNED BY, AND BE CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK, UNITED STATES OF AMERICA, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE (WITHOUT REFERENCE TO CONFLICTS OF LAWS
PRINCIPLES (OTHER THAN TITLE 14 OF ARTICLE 5 OF THE GENERAL OBLIGATIONS LAW)).
SECTION 8. Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient and by each party hereto
on separate counterparts, each of which, when so executed, shall be deemed as
original, but all such counterparts shall constitute but one and the same
agreement.
SECTION 9. Existing Credit Agreement; Effectiveness of Amendment and
Restatement. Until this Agreement becomes effective in accordance with the terms
of the Amendment and Restatement Agreement, the Existing Credit Agreement shall
remain in full force and effect and shall not be affected hereby. After the
Restatement Effective Date, all obligations of the Borrowers under the Existing
Credit Agreement shall become obligations of the Borrowers hereunder, and the
provisions of the Existing Credit Agreement shall be superseded by the
provisions hereof.
SECTION 10. WAIVER OF JURY TRIAL. BY ITS SIGNATURE BELOW WRITTEN
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE LOAN DOCUMENTS HEREIN DESCRIBED OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
JPMORGAN CHASE BANK, CARNIVAL CORPORATION
as Agent
By: /s/ By: /s/
--------------------------------- ------------------------------------
Title: Title:
Address: 270 Park Avenue Address: 3655 N.W. 87th Avenue
New York, NY 10017 Miami, FL 33178-2428
Telephone: (212) 270-0606 Telephone: (305) 599-2600
Telecopy: (212) 270-5100 Telecopy: (305) 406-4700
BANK OF AMERICA, N.A., CARNIVAL PLC
By: /s/ By: /s/
--------------------------------- ------------------------------------
Title: Title:
Address: 555 S. Flower Street Address: Carnival House
Los Angeles, CA 90071 5 Gainsford Street
London SE1 2NE
Telephone: (213) 228-2639 United Kingdom
Telecopy: (213) 228-3145 Telephone:
Telecopy:
Percentage
Interest Commitment JPMORGAN CHASE BANK
---------- ----------
15.2% $212,500,000
By: /s/
------------------------------------
Title:
Address: 270 Park Avenue, 48th Floor
New York, NY 10017
Telephone: (212) 270-0606
Telecopy: (212) 270-5100
Percentage
Interest Commitment BANK OF AMERICA, N.A.
---------- ----------
15.2% $212,500,000
By: /s/
------------------------------------
Title:
Address: 555 S. Flower Street
Los Angeles, CA 90071
Telephone: (213) 228-2639
Telecopy: (213) 228-3145
Percentage
Interest Commitment BNP PARIBAS
---------- ----------
10.0% $140,000,000
By: /s/
------------------------------------
Title:
Address: 1200 Smith, Suite 3100
Houston, TX 77002
Telephone: (713) 982-1105
Telecopy: (713) 659-5228
Percentage
Interest Commitment CITIBANK, N.A.
---------- ----------
10.0% $140,000,000
By: /s/
---------------------------------------
Title:
Address: 388 Greenwich Street, 23rd Fl.
New York, NY 10013
Telephone: (212) 816-5430
Telecopy: (212) 516-5429
Percentage
Interest Commitment UNICREDITO ITALIANO - New York Branch
---------- ----------
10.0% $140,000,000
By: /s/
---------------------------------------
Title:
By: /s/
---------------------------------------
Title:
Address: 375 Park Avenue
New York, NY 10152
Telephone: (212) 546-9611
Telecopy: (212) 546-9665
Percentage
Interest Commitment KREDITANSTAL FUER WEIDERAUFBAU
----------- ----------
7.1% $100,000,000
By: /s/
------------------------------------
Title:
By: /s/
------------------------------------
Title:
Address: Palmengartenstr Str. 5-9
60325 Frankfurt am Main
Germany
Telephone: 49-69-7431 0
Telecopy: 49-69-7431 3768
Percentage
Interest Commitment SUN TRUST BANKS, INC.
---------- ----------
7.1% $100,000,000
By: /s/
------------------------------------
Title:
Address: 501 E. Las Olas Blvd.
Ft. Lauderdale, FL 33301
Telephone: (954) 765-7331
Telecopy: (954) 765-7363
Percentage
Interest Commitment BANCA DI ROMA - New York Branch
---------- ----------
3.6% $50,000,000
By: /s/
------------------------------------
Title:
By: /s/
------------------------------------
Title:
Address: 34 East 51st Street
New York, NY 10022
Telephone: (212) 407-1791
Telecopy: (212) 407-1740
Percentage BANCA NAZIONALE DEL LAVORO, S.P.A. -
Interest Commitment New York Branch
---------- ----------
3.6% $50,000,000
By: /s/
------------------------------------
Title:
By: /s/
------------------------------------
Title:
Address: 25 West 51st Street
New York, NY 10019
Telephone: (212) 314-0263
Telecopy: (212) 765-2978
Percentage
Interest Commitment CREDIT SUISSE FIRST BOSTON
---------- ----------
3.6% $50,000,000
By: /s/
------------------------------------
Title:
By: /s/
------------------------------------
Title:
Address: 11 Madison Avenue
New York, NY 10010
Telephone: (212) 325-9038
Telecopy: (212) 325-8319
Percentage
Interest Commitment FIRSTAR BANK, N.A.
---------- ----------
3.6% $50,000,000
By: /s/
------------------------------------
Title:
Address: Firstar Tower
425 Walnut Street
8th Floor
Cincinnati, OH 45202
Telephone: (513) 632-3002
Telecopy: (513) 632-2068
Percentage WESTDEUTSCHE LANDESBANK GIROZENTRALE -
Interest Commitment New York Branch
---------- ----------
3.6% $50,000,000
By: /s/
------------------------------------
Title:
By: /s/
------------------------------------
Title: Associate Director
Address: 1211 Avenue of the Americas
New York, NY 10036
Telephone: (212) 852-6152
Telecopy: (212) 302-7946
Percentage
Interest Commitment INTESABCI - New York Branch
----------- ----------
2.1% $30,000,000
By: /s/
------------------------------------
Title:
By: /s/
------------------------------------
Title:
Address: One William Street
New York, NY 10004
Telephone: (212) 607-3896
Telecopy: (212) 809-2124
Percentage
Interest Commitment THE DAI-ICHI KANGYO BANK, LTD
---------- ----------
1.8% $25,000,000
By: /s/
------------------------------------
Title:
Address: One World Trade Center,
Suite 4911
New York, NY 10048
Telephone: (212) 432-6667
Telecopy: (212) 524-0049
Percentage
Interest Commitment THE NORTHERN TRUST COMPANY
---------- ----------
1.8% $25,000,000
By: /s/
------------------------------------
Title:
Address: 50 S. LaSalle
Chicago, IL 60675
Telephone: (312) 630-6203
Telecopy: (312) 630-6062
Percentage
Interest Commitment SAN PAOLO IMI SPA
-------- ----------
1.8% $25,000,000
By: /s/
------------------------------------
Title:
Address: 245 Park Avenue
New York, NY 10167
By: /s/
------------------------------------
Title:
Address: 245 Park Avenue
New York, NY 10167
Telephone: (212) 692-3016/3165
Telecopy: (212) 692-3178
Exhibit 12
CARNIVAL CORPORATION & PLC
Ratio of Earnings to Fixed Charges
(In millions, except ratios)
Years Ended November 30,
-----------------------------------------------------
2003 2002 2001 2000 1999
------- ------- ------- ----- -------
Net income $ 1,194 $ 1,016 $ 926 $ 965 $ 1,027
Income tax expense (benefit),
net 29 (57) (12) 1 3
------- ------- ------- ----- -------
Income before
income taxes 1,223 959 914 966 1,030
Adjustment to earnings:
Minority interest 14
Loss (income) from
affiliated operations
and dividends received 57 (21) (61)
------- ------- ------- ----- -------
Earnings as adjusted 1,223 959 971 945 983
------- ------- ------- ----- -------
Fixed charges
Interest expense, net 195 111 121 41 47
Interest portion of
rent expense (a) 16 5 4 4 3
Capitalized interest 49 39 29 41 41
------- ------- ------- ----- -------
Total fixed charges 260 155 154 86 91
------- ------- ------- ----- -------
Fixed charges not affecting
earnings:
Capitalized interest (49) (39) (29) (41) (41)
------- ------- ------- ----- -------
Earnings before fixed
charges $ 1,434 $ 1,075 $ 1,096 $ 990 $ 1,033
======= ======= ======= ===== =======
Ratio of earnings to
fixed charges 5.5x 6.9x 7.1x 11.5x 11.4x
======= ======= ======= ===== =======
(a) Represents one-third of rent expense, which we believe to be representative
of the interest portion of rent expense.
44
Exhibit 13
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
Years Ended November 30,
-------------------------------
2003 2002 2001
------- ------- -------
Revenues
Cruise
Passenger tickets $ 5,039 $ 3,346 $ 3,530
Onboard and other 1,420 898 841
Other 259 139 178
------- ------- -------
6,718 4,383 4,549
------- ------- -------
Costs and Expenses
Operating
Cruise
Passenger tickets 1,021 658 813
Onboard and other 229 116 116
Payroll and related 744 458 459
Food 393 256 265
Other ship operating 1,237 734 694
Other 194 108 135
------- ------- -------
Total 3,818 2,330 2,482
Selling and administrative 932 609 619
Depreciation and amortization 585 382 372
Impairment charge 20 140
Loss from affiliated operations, net 44
------- ------- -------
5,335 3,341 3,657
------- ------- -------
Operating Income 1,383 1,042 892
------- ------- -------
Nonoperating (Expense) Income
Interest income 27 32 34
Interest expense, net of
capitalized interest (195) (111) (121)
Other income (expense), net 8 (4) 109
------- ------- -------
(160) (83) 22
------- ------- -------
Income Before Income Taxes 1,223 959 914
Income Tax (Expense) Benefit, Net (29) 57 12
------- ------- -------
Net Income $ 1,194 $ 1,016 $ 926
======= ======= =======
Earnings Per Share
Basic $ 1.66 $ 1.73 $ 1.58
======= ======= =======
Diluted $ 1.66 $ 1.73 $ 1.58
======= ======= =======
Dividends Per Share $ 0.44 $ 0.42 $ 0.42
======= ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
45
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(in millions, except par/stated values)
November 30,
---------------------
ASSETS 2003 2002
-------- --------
Current Assets
Cash and cash equivalents $ 1,070 $ 667
Short-term investments 1 39
Accounts receivable, net 403 108
Inventories 171 91
Prepaid expenses and other 212 149
Fair value of derivative contracts 275
Fair value of hedged firm commitments 78
-------- --------
Total current assets 2,132 1,132
-------- --------
Property and Equipment, Net 17,522 10,116
Goodwill 3,031 681
Trademarks 1,324
Other Assets 345 297
Fair Value of Derivative Contracts 135
Fair Value of Hedged Firm Commitments 2 109
-------- --------
$ 24,491 $ 12,335
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 94
Current portion of long-term debt 392 $ 155
Accounts payable 645 269
Accrued liabilities 441 290
Customer deposits 1,352 771
Dividends payable 100 61
Fair value of hedged firm commitments 264
Fair value of derivative contracts 27 74
-------- --------
Total current liabilities 3,315 1,620
-------- --------
Long-Term Debt 6,918 3,014
Deferred Income and Other Long-Term Liabilities 299 170
Fair Value of Hedged Firm Commitments 103
Fair Value of Derivative Contracts 63 113
Commitments and Contingencies (Notes 8, 9 and 14)
Shareholders' Equity
Common stock of Carnival Corporation; $.01 par
value; 1,960 shares at 2003 and 960 at 2002
authorized; 630 shares at 2003 and
587 shares at 2002 issued and outstanding 6 6
Ordinary shares of Carnival plc; $1.66 stated value;
226 shares authorized; 210 shares issued 349
Additional paid-in capital 7,163 1,089
Retained earnings 7,191 6,326
Unearned stock compensation (18) (11)
Accumulated other comprehensive income 160 8
Treasury stock; 42 shares of Carnival plc at cost (1,058)
-------- --------
Total shareholders' equity 13,793 7,418
-------- --------
$ 24,491 $ 12,335
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
46
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Years Ended November 30,
-------------------------------
2003 2002 2001
------- ------- -------
OPERATING ACTIVITIES
Net income $ 1,194 $ 1,016 $ 926
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 585 382 372
Impairment charge 20 140
Gain on sale of investments in affiliates, net (117)
Loss from affiliated operations and
dividends received 57
Accretion of original issue discount 20 19 2
Other 8 14 19
Changes in operating assets and liabilities,
excluding business acquired
(Increase) decrease in
Receivables (91) (5) (7)
Inventories (17) 2 9
Prepaid expenses and other 82 (81) 44
Increase (decrease) in
Accounts payable 43 (12) (63)
Accrued and other liabilities (16) (28)
Customer deposits 125 142 (143)
------- ------- -------
Net cash provided by operating activities 1,933 1,469 1,239
------- ------- -------
INVESTING ACTIVITIES
Additions to property and equipment (2,516) (1,986) (827)
Proceeds from sale of investments in affiliates 531
Cash acquired from (expended for) the acquisition
of Carnival plc, net 140 (30)
Proceeds from retirement of property and equipment 51 4 15
Sale (purchase) of short-term investments, net 42 2 (33)
Other, net (50) (10) (28)
------- ------- -------
Net cash used in investing activities (2,333) (2,020) (342)
------- ------- -------
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 2,123 232 2,574
Principal repayments of long-term debt (1,137) (190) (1,971)
Dividends paid (292) (246) (246)
Proceeds from short-term borrowings, net 94
Proceeds from issuance of common stock and
ordinary shares 53 7 5
Other (15) (1) (25)
------- ------- -------
Net cash provided by (used in)
financing activities 826 (198) 337
------- ------- -------
Effect of exchange rate changes on cash and
cash equivalents (23) (5) (2)
------- ------- -------
Net increase (decrease) in cash and
cash equivalents 403 (754) 1,232
Cash and cash equivalents at beginning of year 667 1,421 189
------- ------- -------
Cash and cash equivalents at end of year $ 1,070 $ 667 $ 1,421
======= ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
47
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in millions)
Unearned
Compre- Additional stock
hensive Common Ordinary paid-in Retained compen-
income stock shares capital earnings sation
------ ----- ------ ------- -------- ------
Balances at November 30, 2000 $ 6 $ 1,773 $ 4,884 $ (12)
Comprehensive income
Net income $ 926 926
Foreign currency
translation adjustment, net 46
Unrealized gains on
marketable securities, net 6
Minimum pension liability
adjustment (6)
Changes related to cash flow
derivative hedges, net (4)
Transition adjustment for
cash flow derivative hedges (4)
-------
Total comprehensive income $ 964
=======
Cash dividends declared (246)
Issuance of stock under
stock plans 32 (5)
Amortization of unearned stock
compensation 5
Other (8)
--- ----- ------- ------- -----
Balances at November 30, 2001 6 1,805 5,556 (12)
Comprehensive income
Net income $ 1,016 1,016
Foreign currency
translation adjustment 51
Minimum pension liability
adjustment (9)
Unrealized gains on
marketable securities, net 3
-------
Total comprehensive income $ 1,061
=======
Cash dividends declared (246)
Issuance of stock under
stock plans 11 (4)
Retirement of treasury stock (727)
Amortization of unearned stock
compensation 5
--- ----- ------- ------- -----
Balances at November 30, 2002 6 1,089 6,326 (11)
Comprehensive income
Net income $ 1,194 1,194
Foreign currency
translation adjustment 162
Unrealized losses on
marketable securities, net (1)
Changes related to cash flow
derivative hedges, net (9)
-------
Total comprehensive income $ 1,346
=======
Cash dividends declared (329)
Acquisition of Carnival plc $ 346 6,010
Issuance of stock under
stock plans 3 64 (14)
Amortization of unearned stock
compensation 7
--- ----- ------- ------- -----
Balances at November 30, 2003 $ 6 $ 349 $ 7,163 $ 7,191 $ (18)
=== ===== ======= ======= =====
Accumulated Total
other share-
comprehensive Treasury holders'
income (loss) stock equity
------------- ----- ------
Balances at November 30, 2000 $ (75) $ (705) $ 5,871
Comprehensive income
Net income 926
Foreign currency
translation adjustment, net 46 46
Unrealized gains on
marketable securities, net 6 6
Minimum pension liability
adjustment (6) (6)
Changes related to cash flow
derivative hedges, net (4) (4)
Transition adjustment for
cash flow derivative hedges (4) (4)
Total comprehensive income
Cash dividends declared (246)
Issuance of stock under
stock plans (22) 5
Amortization of unearned stock
compensation 5
Other (8)
----- -------- --------
Balances at November 30, 2001 (37) (727) 6,591
Comprehensive income
Net income 1,016
Foreign currency
translation adjustment 51 51
Minimum pension liability
adjustment (9) (9)
Unrealized gains on
marketable securities, net 3 3
Total comprehensive income
Cash dividends declared (246)
Issuance of stock under
stock plans 7
Retirement of treasury stock 727
Amortization of unearned stock
compensation 5
----- -------- --------
Balances at November 30, 2002 8 7,418
Comprehensive income
Net income 1,194
Foreign currency
translation adjustment 162 162
Unrealized losses on
marketable securities, net (1) (1)
Changes related to cash flow
derivative hedges, net (9) (9)
Total comprehensive income
Cash dividends declared (329)
Acquisition of Carnival plc (1,058) 5,298
Issuance of stock under
stock plans 53
Amortization of unearned stock
compensation 7
----- -------- --------
Balances at November 30, 2003 $ 160 $ (1,058) $ 13,793
===== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
48
CARNIVAL CORPORATION & PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - General
Description of Business
On April 17, 2003, Carnival Corporation and Carnival plc (formerly known
as P&O Princess Cruises plc) completed a dual listed company ("DLC") transaction
(the "DLC transaction"), which implemented Carnival Corporation & plc's DLC
structure. The DLC transaction combined the businesses of Carnival Corporation
and Carnival plc through a number of contracts and amendments to Carnival
Corporation's articles of incorporation and by-laws and to Carnival plc's
memorandum of association and articles of association. The two companies have
retained their separate legal identities, and each company's shares continue to
be publicly traded on the New York Stock Exchange ("NYSE") for Carnival
Corporation and the London Stock Exchange for Carnival plc. In addition,
Carnival plc ADS's are traded on the NYSE. However, the two companies operate as
if they were a single economic enterprise (see Note 3).
Carnival Corporation is a Panamanian corporation and Carnival plc is
incorporated in England and Wales. Together with their consolidated subsidiaries
they are referred to collectively in these consolidated financial statements and
elsewhere in this 2003 Annual Report as "Carnival Corporation & plc," "our,"
"us," and "we." Our consolidated financial statements include the consolidated
results of operations of Carnival Corporation for all periods presented and
Carnival plc's consolidated results of operations since April 17, 2003.
We are a global cruise company and one of the largest vacation companies
in the world. As of February 15, 2004, a summary of the number of cruise ships
we operate, by brand, their passenger capacity and the primary areas in which
they are marketed is as follows:
Cruise Number Passenger Primary
Brands of Cruise Ships Capacity (a) Market
------ --------------- ------------ ------
Carnival Cruise
Lines ("CCL") 20 43,446 North America
Princess Cruises
("Princess") 11 19,880 North America
Holland America Line 12 16,320 North America
Costa Cruises ("Costa") 10 15,570 Europe
P&O Cruises 4 7,724 United Kingdom
AIDA 4 5,314 Germany
Cunard Line ("Cunard") 3 5,078 United Kingdom/North America
Ocean Village 1 1,602 United Kingdom
P&O Cruises Australia 1 1,200 Australia
Swan Hellenic 1 678 United Kingdom
Seabourn Cruise Line
("Seabourn") 3 624 North America
Windstar Cruises ("Windstar") 3 604 North America
-- -------
73 118,040
== =======
(a) In accordance with cruise industry practice, passenger capacity is
calculated based on two passengers per cabin even though some cabins can
accommodate three or more passengers.
Preparation of Financial Statements
The preparation of our consolidated financial statements in accordance
with accounting principles generally accepted in the United States of America
requires us to make estimates and assumptions that affect the amounts reported
and disclosed in our financial statements. Actual results could differ from
these estimates. All material intercompany accounts, transactions and unrealized
profits and losses on transactions within our consolidated group and with
affiliates are eliminated in consolidation.
Commencing in 2003, we changed the reporting format of our consolidated
statements of operations to present our significant revenue sources and their
directly related variable costs and expenses. In addition, we have separately
identified certain ship operating expenses, such as payroll and related expenses
and food costs. All prior periods were reclassified to conform to the current
year presentation.
49
NOTE 2 - Summary of Significant Accounting Policies
Basis of Presentation
We consolidate entities over which we have control, as typically evidenced
by a direct ownership interest of greater than 50%. For affiliates where
significant influence over financial and operating policies exists, as typically
evidenced by a direct ownership interest from 20% to 50%, the investment is
accounted for using the equity method. See Note 6.
Cash and Cash Equivalents and Short-Term Investments
Cash and cash equivalents include investments with original maturities of
three months or less, which are stated at cost. At November 30, 2003 and 2002,
cash and cash equivalents included $937 million and $616 million of investments,
respectively, primarily comprised of strong investment grade asset-backed debt
obligations, commercial paper and money market funds.
Short-term investments are comprised of marketable debt and equity
securities which are categorized as available for sale and, accordingly, are
stated at their fair values. Unrealized gains and losses are included as a
component of accumulated other comprehensive income ("AOCI") within
shareholders' equity until realized. The specific identification method is used
to determine realized gains or losses.
Inventories
Inventories consist primarily of provisions, gift shop and art merchandise
held for resale, spare parts, supplies and fuel carried at the lower of cost or
market. Cost is determined using the weighted average or first-in, first-out
methods.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization
were computed using the straight-line method over our estimates of average
useful lives and residual values, as a percentage of original cost, as follows:
Residual
Values Years
-------- -----
Ships 15% 30
Buildings and improvements 0-10% 5-40
Transportation equipment and other 0-25% 2-20
Leasehold improvements, including port facilities Shorter of lease term
or related asset life
We review our long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of these assets may not be
fully recoverable. The assessment of possible impairment is based on our ability
to recover the carrying value of our asset based on our estimate of its
undiscounted future cash flows. If these estimated undiscounted future cash
flows are less than the carrying value of the asset, an impairment charge is
recognized for the excess, if any, of the assets carrying value over its
estimated fair value (see Note 5).
Dry-dock costs are included in prepaid expenses and are amortized to other
ship operating expenses using the straight-line method generally over one year.
Ship improvement costs that we believe add value to our ships are
capitalized to the ships, and depreciated over the improvements' estimated
useful lives, while costs of repairs and maintenance are charged to expense as
incurred. We capitalize interest on ships and other capital projects during
their construction period. Upon the replacement or refurbishment of previously
capitalized ship components, these assets' estimated cost and accumulated
depreciation are written-off and any resulting loss is recognized in our results
of operations. No such material losses were recognized in fiscal 2003, 2002 or
2001. See Note 4.
Goodwill
Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill
and Other Intangible Assets" requires companies to stop amortizing goodwill and
requires an annual,
50
or when events or circumstances dictate, a more frequent, impairment review of
goodwill. Accordingly, upon adoption of SFAS No. 142 on December 1, 2001, we
ceased amortizing our goodwill, all of which had been allocated to our cruise
reporting units. In April 2003, we recorded $2.25 billion of additional goodwill
as a result of our acquisition of Carnival plc, which was also allocated to our
cruise reporting units (see Note 3). There was no other change to our goodwill
carrying amount since November 30, 2001, other than the changes resulting from
using different foreign currency translation rates at each balance sheet date.
The SFAS No. 142 goodwill impairment review consists of a two-step process
of first determining the fair value of the reporting unit and comparing it to
the carrying value of the net assets allocated to the reporting unit. Fair
values of our reporting units were determined based on our estimates of
comparable market price or discounted future cash flows. If this fair value
exceeds the carrying value, which was the case for our reporting units, no
further analysis or goodwill write-down is required. If the fair value of the
reporting unit is less than the carrying value of the net assets, the implied
fair value of the reporting unit is allocated to all the underlying assets and
liabilities, including both recognized and unrecognized tangible and intangible
assets, based on their fair value. If necessary, goodwill is then written-down
to its implied fair value.
Prior to fiscal 2002, our goodwill was reviewed for impairment pursuant to
the same policy as our other long-lived assets as discussed above (see Note 5)
and our goodwill was amortized over 40 years using the straight-line method.
If goodwill amortization, including goodwill expensed as part of our loss
from affiliated operations, had not been recorded for fiscal 2001 our adjusted
net income would have been $952 million and our adjusted basic and diluted
earnings per share would have been $1.63 and $1.62, respectively.
Trademarks
The cost of developing and maintaining our trademarks have been expensed
as incurred. However, pursuant to SFAS No. 141, "Business Combinations,"
commencing for acquisitions made after June 2001, we have allocated a portion of
the purchase price to the acquiree's identified trademarks. The trademarks that
Carnival Corporation recorded as part of the DLC transaction, which are
estimated to have an indefinite useful life and, therefore, are not amortizable,
are reviewed for impairment annually, or more frequently when events or
circumstances indicate that the trademark may be impaired. Our trademarks are
considered impaired if their carrying value exceeds their fair value. See Note
3.
Derivative Instruments and Hedging Activities
We utilize derivative and nonderivative financial instruments, such as
forward foreign currency contracts, cross currency swaps and foreign currency
debt obligations to limit our exposure to fluctuations in foreign currency
exchange rates and interest rate swaps to manage our interest rate exposure and
to achieve a desired proportion of variable and fixed rate debt (see Note 12).
All derivatives are recorded at fair value, and the changes in fair value
must be immediately included in earnings if the derivatives do not qualify as
effective hedges. If a derivative is a fair value hedge, then changes in the
fair value of the derivative are offset against the changes in the fair value of
the underlying hedged firm commitment. If a derivative is a cash flow hedge,
then changes in the fair value of the derivative are recognized as a component
of AOCI until the underlying hedged item is recognized in earnings. If a
derivative or a nonderivative financial instrument is designated as a hedge of a
net investment in a foreign operation, then changes in the fair value of the
financial instrument are recognized as a component of AOCI to immediately offset
the change in the translated value of the net investment being hedged, until the
investment is liquidated.
The ineffective portion of a hedge's change in fair value is immediately
recognized in earnings. We formally document all relationships between hedging
instruments and hedged items, as well as our risk management objectives and
strategies for undertaking our hedge transactions.
We classify the fair value of our derivative contracts and the fair value
of our offsetting hedged firm commitments as either current or long-term assets
and liabilities depending on whether the maturity date of the derivative
contract is within or beyond one year from our balance sheet dates,
respectively. The cash flows from derivatives treated as hedges are classified
in our statements of cash flows in the same category as the item being hedged.
51
During fiscal 2003, 2002 and 2001, all net changes in the fair value of
both our fair value hedges and the offsetting hedged firm commitments and our
cash flow hedges were immaterial, as were any ineffective portions of these
hedges. No fair value hedges or cash flow hedges were derecognized or
discontinued in fiscal 2003, 2002 or 2001, and the amount of estimated cash flow
hedges unrealized net losses which are expected to be reclassified to earnings
in the next twelve months is not material. At November 30, 2003 and 2002, AOCI
included $17 million and $8 million of unrealized net losses, respectively, from
cash flow hedge derivatives, the majority of which were variable to fixed
interest rate swap agreements.
Finally, if any shipyard with which we have contracts to build our ships
is unable to perform, we would be required to perform under our foreign currency
forward contracts related to these shipbuilding contracts. Accordingly, based
upon the circumstances, we may have to discontinue the accounting for those
forward contracts as hedges, if the shipyard cannot perform. However, we believe
that the risk of shipyard nonperformance is remote.
Revenue and Expense Recognition
Guest cruise deposits represent unearned revenues and are initially
recorded as customer deposit liabilities when received. Customer deposits are
subsequently recognized as cruise revenues, together with revenues from onboard
and other activities and all associated direct costs of a voyage, 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. Future travel discount vouchers issued to
guests are recorded as a reduction of revenues when such vouchers are utilized.
Revenues and expenses from our tour and travel services are recognized at the
time the services are performed or expenses are incurred.
Advertising Costs
Substantially all of our advertising costs are charged to expense as
incurred, except costs which result in tangible assets, such as brochures, which
are recorded as prepaid expenses and charged to expense as consumed. Media
production costs are also recorded as prepaid expenses and charged to expense
upon the first airing of the advertisement. Advertising expenses totaled $334
million, $208 million and $214 million in fiscal 2003, 2002 and 2001,
respectively. At November 30, 2003 and 2002, the amount of advertising costs
included in prepaid expenses was not material.
Foreign Currency Translations and Transactions
For our foreign subsidiaries and affiliates using the local currency as
their functional currency, assets and liabilities are translated at exchange
rates in effect at the balance sheet dates. Translation adjustments resulting
from this process are reported as cumulative translation adjustments, which are
a component of AOCI. Revenues and expenses of these foreign subsidiaries and
affiliates are translated at weighted-average exchange rates for the period.
Therefore, the U.S. dollar value of these items on the income statement
fluctuates from period to period, depending on the value of the dollar against
these functional currencies. Exchange gains and losses arising from transactions
denominated in a currency other than the functional currency of the entity
involved are immediately included in our earnings.
Earnings Per Share
Basic earnings per share is computed by dividing net income by the
weighted average number of shares of common stock and ordinary shares
outstanding during each period. Diluted earnings per share is computed by
dividing adjusted net income by the weighted-average number of shares of common
stock and ordinary shares, common stock equivalents and other potentially
dilutive securities outstanding during each period. See Note 15.
Stock-Based Compensation
Pursuant to SFAS No. 123, "Accounting for Stock-Based Compensation," as
amended, we elected to use the intrinsic value method of accounting for our
employee and director stock-based compensation awards. Accordingly, we have not
recognized compensation expense for our noncompensatory employee and director
stock option awards. Our adjusted net income and adjusted earnings per share,
had we elected to adopt the fair value approach of SFAS No. 123, which charges
earnings for the estimated fair value of stock options, would have
52
been as follows (in millions, except per share amounts):
Years ended November 30,
--------------------------------
2003 2002 2001
-------- -------- --------
Net income, as reported $ 1,194 $ 1,016 $ 926
Stock-based compensation
expense included in
net income, as reported 7 5 5
Total stock-based compensation
expense determined under
the fair value-based
method for all awards (36) (30) (27)
-------- -------- --------
Adjusted net income for basic
earnings per share 1,165 991 904
Interest on dilutive convertible notes 5
-------- -------- --------
Adjusted net income for diluted
earnings per share $ 1,170 $ 991 $ 904
======== ======== ========
Earnings per share
Basic
As reported $ 1.66 $ 1.73 $ 1.58
======== ======== ========
Adjusted $ 1.62 $ 1.69 $ 1.54
======== ======== ========
Diluted
As reported $ 1.66 $ 1.73 $ 1.58
======== ======== ========
Adjusted $ 1.62 $ 1.69 $ 1.54
======== ======== ========
As recommended by SFAS No. 123, the fair value of options were estimated
using the Black-Scholes option-pricing model. The Black-Scholes weighted-average
assumptions were as follows:
Fair value of options at the
dates of grant $ 13.33 $ 12.16 $ 12.67
======== ======== ========
Risk free interest rates 3.5% 4.3% 4.5%
======== ======== ========
Dividend yields 1.30% 1.23% 1.16%
======== ======== ========
Expected volatility 48.7% 48.0% 50.0%
======== ======== ========
Expected option life (in years) 6 6 6
======== ======== ========
The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options that have no vesting or trading restrictions
and are fully transferable. In addition, option-pricing models require the input
of subjective assumptions, including expected stock price volatility. Because
our options have characteristics different from those of traded options, the
existing models do not necessarily provide a reliable single measure of the fair
value of our options.
Concentrations of Credit Risk
As part of our ongoing control procedures, we monitor concentrations of
credit risk associated with financial and other institutions with which we
conduct significant business. Credit risk, including counterparty nonperformance
under derivative instruments, contingent obligations and new ship progress
payment guarantees, is considered minimal, as we primarily conduct business with
large, well-established financial institutions who have long-term credit ratings
of A or above and we seek to diversify our counterparties. In addition, we have
established guidelines regarding credit ratings and investment maturities that
we follow to maintain safety and liquidity. We do not anticipate nonperformance
by any of our significant counterparties.
We also monitor the creditworthiness of our customers to which we grant
credit terms in the normal course of our business. Concentrations of credit risk
associated with these receivables are considered minimal primarily due to their
short maturities and large number of accounts within our customer base. We have
experienced only minimal credit losses on our trade receivables. We do not
normally require collateral or other security to support normal credit sales.
However, we do normally require collateral and/or guarantees to support notes
receivable on significant asset sales and new ship progress payments to
shipyards.
53
Reclassifications
Reclassifications have been made to prior year amounts to conform to the
current year presentation.
NOTE 3 - DLC Transaction
The contracts governing the DLC structure provide that Carnival
Corporation and Carnival plc each continue to have separate boards of directors,
but the boards and senior executive management of both companies are identical.
The amendments to the constituent documents of each of the companies also
provide that, on most matters, the holders of the common equity of both
companies effectively vote as a single body. On specified matters where the
interests of Carnival Corporation's shareholders may differ from the interests
of Carnival plc's shareholders (a "class rights action"), each shareholder body
will vote separately as a class, such as transactions primarily designed to
amend or unwind the DLC structure. Generally, no class rights action will be
implemented unless approved by both shareholder bodies.
Upon the closing of the DLC transaction, Carnival Corporation and Carnival
plc also executed the Equalization and Governance Agreement, which provides for
the equalization of dividends and liquidation distributions based on an
equalization ratio and contains provisions relating to the governance of the DLC
structure. Because the current equalization ratio is 1 to 1, one Carnival plc
ordinary share is entitled to the same distributions, subject to the terms of
the Equalization and Governance Agreement, as one share of Carnival Corporation
common stock. In a liquidation of either company or both companies, if the
hypothetical potential per share liquidation distributions to each company's
shareholders are not equivalent, taking into account the relative value of the
two companies' assets and the indebtedness of each company, to the extent that
one company has greater net assets so that any liquidation distribution to its
shareholders would not be equivalent on a per share basis, the company with the
ability to make a higher net distribution is required to make a payment to the
other company to equalize the possible net distribution to shareholders, subject
to certain exceptions.
At the closing of the DLC transaction, Carnival Corporation and Carnival
plc also executed deeds of guarantee. Under the terms of Carnival Corporation's
deed of guarantee, Carnival Corporation has agreed to guarantee all indebtedness
and certain other monetary obligations of Carnival plc that are incurred under
agreements entered into on or after the closing date of the DLC transaction. The
terms of Carnival plc's deed of guarantee are identical to those of Carnival
Corporation's. In addition, Carnival Corporation and Carnival plc have each
extended their respective deeds of guarantee to the other's pre-DLC indebtedness
and other monetary obligations, thus effectively cross guaranteeing all Carnival
Corporation and Carnival plc indebtedness and other monetary obligations. Each
deed of guarantee provides that the creditors to whom the obligations are owed
are intended third party beneficiaries of such deed of guarantee.
The deeds of guarantee are governed and construed in accordance with the
laws of the Isle of Man. Subject to the terms of the guarantees, the holders of
indebtedness and other obligations that are subject to the guarantees will have
recourse to both Carnival plc and Carnival Corporation though a Carnival plc
creditor must first make written demand on Carnival plc and a Carnival
Corporation creditor on Carnival Corporation. Once the written demand is made by
letter or other form of notice, the holders of indebtedness or other obligations
may immediately commence an action against the relevant guarantor. There is no
requirement under the deeds of guarantee to obtain a judgment, take other
enforcement actions or wait any period of time prior to taking steps against the
relevant guarantor. All actions or proceedings arising out of or in connection
with the deeds of guarantee must be exclusively brought in courts in England.
Under the terms of the DLC transaction documents, Carnival Corporation and
Carnival plc are permitted to transfer assets between the companies, make loans
or investments in each other and otherwise enter into intercompany transactions.
The companies have entered into some of these types of transactions and expect
to enter into additional transactions in the future to take advantage of the
flexibility provided by the DLC structure and to operate both companies as a
single unified economic enterprise in the most effective manner. In addition,
under the terms of the Equalization and Governance Agreement and the deeds of
guarantee, the cash flow and assets of one company are required to be used to
pay the obligations of the other company, if necessary.
Given the DLC structure as described above, we believe that providing
separate
54
financial statements for each of Carnival Corporation and Carnival plc would not
present a true and fair view of the economic realities of their operations.
Accordingly, separate financial statements for both Carnival Corporation and
Carnival plc have not been presented.
Simultaneously with the completion of the DLC transaction, a partial share
offer ("PSO") for 20% of Carnival plc's shares was made and accepted, which
enabled 20% of Carnival plc shares to be exchanged for 41.7 million Carnival
Corporation shares. The 41.7 million shares of Carnival plc held by Carnival
Corporation as a result of the PSO, which cost $1.05 billion, are being
accounted for as treasury stock in the accompanying balance sheet. The holders
of Carnival Corporation shares, including the new shareholders who exchanged
their Carnival plc shares for Carnival Corporation shares under the PSO, now own
an economic interest equal to approximately 79%, and holders of Carnival plc
shares now own an economic interest equal to approximately 21%, of Carnival
Corporation & plc.
The management of Carnival Corporation and Carnival plc ultimately agreed
to enter into the DLC transaction because, among other things, the creation of
Carnival Corporation & plc would result in a company with complementary
well-known brands operating globally with enhanced growth opportunities,
benefits of sharing best practices and generating cost savings, increased
financial flexibility and access to capital markets and a DLC structure, which
allows for continued participation in an investment in the global cruise
industry by Carnival plc's shareholders who wish to continue to hold shares in a
UK-listed company.
Carnival plc was the third largest cruise company in the world and
operated many well-known global brands with leading positions in the U.S., UK,
Germany and Australia. The combination of Carnival Corporation with Carnival plc
under the DLC structure has been accounted for under U.S. generally accepted
accounting principles ("GAAP") as an acquisition of Carnival plc by Carnival
Corporation pursuant to SFAS No. 141. The purchase price of $25.31 per share was
based upon the average of the quoted closing market price of Carnival
Corporation's shares beginning two days before and ending two days after January
8, 2003, the date the Carnival plc board agreed to enter into the DLC
transaction. The number of additional shares effectively issued in the combined
entity for purchase accounting purposes was 209.6 million. In addition, Carnival
Corporation incurred approximately $60 million of direct acquisition costs,
which have been included in the purchase price. The aggregate purchase price of
$5.36 billion, computed as described above, has been allocated to the assets and
liabilities of Carnival plc as follows (in millions):
Ships $ 4,669
Ships under construction 233
Other tangible assets 868
Goodwill 2,248
Trademarks 1,291
Debt (2,879)
Other liabilities (1,072)
-------
$ 5,358
=======
During the fourth quarter of fiscal 2003 an appraisal firm who we engaged
completed its valuation work in connection with establishing the estimated fair
values of Carnival plc's cruise ships and non-amortizable and amortizable
intangible assets as of the April 17, 2003 acquisition date. Accordingly, we
reduced the carrying values of 15 Carnival plc ships, including three ships
which were under construction at the acquisition date, by $689 million.
Trademarks are non-amortizable and represent the Princess, P&O Cruises, P&O
Cruises Australia, AIDA, and A'ROSA trademarks' estimated fair values. There
were no significant amortizable intangible assets identified in this appraisal
firm's valuation study.
The information presented below gives pro forma effect to the DLC
transaction between Carnival Corporation and Carnival plc. Management has
prepared the pro forma information based upon the companies' reported financial
information and, accordingly, the pro forma information should be read in
conjunction with the companies' financial statements.
As noted above, the DLC transaction has been accounted for as an
acquisition of Carnival plc by Carnival Corporation, using the purchase method
of accounting. Carnival
55
plc's accounting policies have been conformed to Carnival Corporation's
policies. Carnival plc's reporting period has been changed to Carnival
Corporation's reporting period and the information presented below covers the
same periods of time for both companies.
This pro forma information has been prepared as if the DLC transaction had
occurred on December 1, 2002 and 2001, respectively, rather than April 17, 2003,
and has not been adjusted to reflect any net transaction benefits. In addition,
this pro forma information does not purport to represent what the results of
operations actually could have been if the DLC transaction had occurred on
December 1, 2002 and 2001 or what those results will be for any future periods.
Years ended November 30,
------------------------
2003 2002
------ ------
(in millions, except earnings per share)
Pro forma revenues $7,596 $6,768
====== ======
Pro forma net income (a)-(d) $1,159 $1,271
====== ======
Pro forma earnings per share
Basic $ 1.46 $ 1.60
====== ======
Diluted $ 1.45 $ 1.59
====== ======
Pro forma weighted-average
shares outstanding
Basic 797 795
====== ======
Diluted 805 800
====== ======
(a) In accordance with SFAS No. 141, pro forma net income was reduced by $51
million in 2003 and $104 million in 2002 for Carnival plc's nonrecurring
costs related to its terminated Royal Caribbean transaction and the
completion of the DLC transaction with Carnival Corporation, which were
expensed by Carnival plc prior to April 17, 2003.
(b) As a result of the reduction in depreciation expenses due to the
revaluation of Carnival plc's ships carrying values, pro forma net income
has been increased by $16 million in 2003 and $14 million in 2002.
(c) The 2002 pro forma net income included a $51 million nonrecurring income
tax benefit related to an Italian incentive tax law, which allowed Costa
to receive an income tax benefit for contractual expenditures during 2002
incurred on the construction of a new ship.
(d) The 2003 pro forma net income included a $13 million nonrecurring expense
related to a DLC litigation matter and $19 million of income related to
the receipt of nonrecurring net insurance proceeds.
NOTE 4 - Property and Equipment
Property and equipment consisted of the following (in millions):
November 30,
-----------------------
2003 2002
-------- --------
Ships $ 18,134 $ 10,666
Ships under construction 886 713
-------- --------
19,020 11,379
Land, buildings and improvements,
and port facilities 504 315
Transportation equipment and other 549 409
-------- --------
Total property and equipment 20,073 12,103
Less accumulated depreciation and amortization (2,551) (1,987)
-------- --------
$ 17,522 $ 10,116
======== ========
Capitalized interest, primarily on our ships under construction, amounted
to $49 million, $39 million and $29 million in fiscal 2003, 2002 and 2001,
respectively. Ships under construction include progress payments for the
construction of the ship, as well as design and engineering fees, capitalized
interest, construction oversight costs and various owner supplied items. At
November 30, 2003, seven ships with an aggregate net book value of $1.94 billion
were pledged as collateral pursuant to mortgages related to $1.04 billion of
debt and a $469 million contingent obligation (see Notes 7 and 9). During fiscal
2003, $1.05 billion of ship collateral, which was pledged against $697 million
of Carnival plc debt was released as collateral in exchange for revising the
maturity dates of this debt
56
and providing Carnival Corporation guarantees (see Note 7).
Maintenance and repair expenses and dry-dock amortization were $251
million, $175 million and $160 million in fiscal 2003, 2002 and 2001,
respectively.
NOTE 5 - Impairment Charge
In fiscal 2002 we reduced the carrying value of one of our ships by
recording an impairment charge of $20 million. In fiscal 2001, we recorded an
impairment charge of $140 million, which consisted principally of a $71 million
reduction in the carrying value of ships, a $36 million write-off of Seabourn
goodwill, a $15 million write-down of a Holland America Line note receivable,
and a $11 million loss on the sale of the Seabourn Goddess I and II. The
impaired ships' and note receivable fair values were based on third party
appraisals, negotiations with unrelated third parties or other available
evidence, and the fair value of the impaired goodwill was based on our estimates
of discounted future cash flows.
NOTE 6 - Investments In and Advances To Affiliates
On June 1, 2001, we sold our equity investment in Airtours plc, which
resulted in a nonoperating net gain of $101 million and net cash proceeds of
$492 million. Cumulative foreign currency translation losses of $59 million were
reclassified from AOCI and included in determining the 2001 net gain.
NOTE 7 - Debt
Short-Term Borrowings
Short-term borrowings consisted of unsecured notes, bearing interest at
libor plus 0.18% (1.3% weighted-average interest rate at November 30, 2003),
repaid to a bank in December 2003.
Long-Term Debt
Long-term debt consisted of the following (in millions):
November 30,
---------------------
2003(a) 2002(a)
---- ----
Secured
Floating rate notes, collateralized by two ships,
bearing interest at libor plus 1.25% and libor
plus 1.29% (2.24% and 2.33% at November 30, 2003),
due through 2015 (b) $ 631
Euro floating rate note, collateralized by one
ship, bearing interest at euribor plus 0.5% (2.75% and
4.0 % at November 30, 2003 and 2002, respectively),
due through 2008 115 $ 119
Euro fixed rate note, collateralized by one ship,
bearing interest at 4.74%, due through 2012 (b) 182
Capitalized lease obligations, collateralized by
two ships, implicit interest at 3.66%, due
through 2005 115
Other 3 3
------- -------
1,046 122
------- -------
Unsecured
Fixed rate notes, bearing interest at 3.75% to 8.2%,
due through 2028 (b) 2,123 857
Euro floating rate notes, bearing interest at
euribor plus 0.35% to euribor plus 1.29%
(2.4% to 3.9% and 3.8% to 4.0% at November 30,
2003 and 2002, respectively), due through 2008 (b) 1,129 570
Euro revolving credit facilities, bearing interest
at euribor plus 0.50% and euro libor plus 0.98%
(2.6% to 3.2% and 3.6% at November 30, 2003 and
2002, respectively), due through 2006 (b) 300 110
Sterling fixed rate notes, bearing interest at 6.4%,
due in 2012 (b) 355
Euro fixed rate notes, bearing interest at 5.57%,
due in 2006 353 297
Floating rate note, bearing interest at libor plus
1.33% (2.45% at November 30, 2003), due through 2008 (b) 244
Revolving credit facility, bearing interest at
libor plus 0.17% (1.6% at November 30, 2002),
due through 2006 50
Other 44 42
Convertible notes, bearing interest at 2%, due in
2021, with first put option in 2005(b) 600 600
Zero-coupon convertible notes, net of discount,
with a face value of $1.05 billion, due in 2021,
with first put option in 2006(b) 541 521
Convertible notes, bearing interest at 1.75%, net of
discount, with a face value of $889 million, due in 2033,
with first put option in 2008(b) 575
------- -------
6,264 3,047
------- -------
7,310 3,169
Less portion due within one year (392) (155)
------- -------
$ 6,918 $ 3,014
======= =======
57
(a) All borrowings are in U.S. dollars unless otherwise noted. Euro and
sterling denominated notes have been translated to U.S. dollars at the
period-end exchange rates. At November 30, 2003, 67%, 28% and 5% of our
debt was U.S. dollar, euro and sterling denominated, respectively, and at
November 30, 2002, 65% was U.S. dollar and 35% was euro denominated.
(b) At November 30, 2003, all of Carnival plc's $1.20 billion of debt was
unconditionally guaranteed by P&O Princess Cruises International Limited
("POPCIL"), a 100% direct wholly-owned subsidiary of Carnival plc. On June
19, 2003, POPCIL, Carnival Corporation and Carnival plc executed a deed of
guarantee under which POPCIL agreed to guarantee all indebtedness and
related obligations of both Carnival Corporation and Carnival plc incurred
under agreements entered into after April 17, 2003, the date the DLC
transaction was completed. Under this deed of guarantee, POPCIL also
agreed to guarantee all other Carnival Corporation and Carnival plc
indebtedness and related obligations that Carnival Corporation and
Carnival plc agreed to guarantee under their deeds of guarantee. We
anticipate that, in connection with corporate reorganization transactions
that we expect to complete shortly, the POPCIL guarantee will terminate in
accordance with its terms.
In addition, in exchange for certain amendments to Carnival plc's
consolidated indebtedness, which was outstanding prior to April 17, 2003,
Carnival Corporation has guaranteed substantially all of the Carnival plc
consolidated pre-acquisition debt outstanding at November 30, 2003.
Finally, Carnival plc has guaranteed all of the Carnival Corporation
pre-acquisition debt outstanding at November 30, 2003.
Carnival Corporation's 2% convertible notes ("2% Notes"), its zero-coupon
convertible notes ("Zero-Coupon Notes") and its 1.75% convertible notes ("1.75%
Notes") are convertible into 15.3 million shares, 17.4 million shares and a
maximum of 20.9 million shares, respectively, of Carnival Corporation common
stock.
The 2% Notes are convertible at a conversion price of $39.14 per share,
subject to adjustment, during any fiscal quarter for which the closing price of
the Carnival Corporation common stock is greater than $43.05 per share for a
defined duration of time in the preceding fiscal quarter. The conditions for
conversion of the 2% Notes have not been met since their issuance in 2001
through November 30, 2003.
The Zero-Coupon Notes have a 3.75% yield to maturity and are convertible
during any fiscal quarter for which the closing price of the Carnival
Corporation common stock is greater than a specified trigger price for a defined
duration of time in the preceding fiscal quarter. The trigger price commenced at
a low of $31.94 per share for the first quarter of fiscal 2002 and increases at
an annual rate of 3.75% thereafter, until maturity. As of the end of the 2003
third and fourth quarters, the Zero-Coupon Notes became convertible into
Carnival Corporation common stock for the 2003 fourth quarter and the 2004 first
quarter as a result of Carnival Corporation's common stock achieving its target
conversion trigger price per share of $33.77 and $34.09, respectively, for the
requisite periods of time (see Note 15). No Zero-Coupon Notes were converted in
fiscal 2003.
58
The 1.75% Notes, which were issued in April 2003, are convertible at a
conversion price of $53.11 per share, subject to adjustment, during any fiscal
quarter for which the closing price of the Carnival Corporation common stock is
greater than a specified trigger price for a defined duration of time in the
preceding fiscal quarter. During the fiscal quarters ending from August 31, 2003
through April 29, 2008, the trigger price will be $63.73 per share. Thereafter,
this conversion trigger price increases each quarter based on an annual rate of
1.75%, until maturity. In addition, holders may also surrender the 1.75% Notes
for conversion if they have been called for redemption or, for other specified
occurrences, including the credit rating assigned to the 1.75% Notes being Baa3
or lower by Moody's Investors Service and BBB- or lower by Standard & Poor's
Rating Services, as well as certain corporate transactions. The conditions for
conversion of the 1.75% Notes were not met during fiscal 2003. The 1.75% Notes
interest is payable in cash semi-annually in arrears, commencing October 29,
2003 through April 29, 2008. Effective April 30, 2008, the 1.75% Notes no longer
require a cash interest payment, but interest will accrete at a 1.75% yield to
maturity.
Subsequent to April 29, 2008 and October 23, 2008, we may redeem all or a
portion of the 1.75% Notes and Zero-Coupon Notes, respectively, at their
accreted values and subsequent to April 14, 2008, we may redeem all or a portion
of our 2% Notes at their face value plus any unpaid accrued interest.
In addition, on April 29, 2008, 2013, 2018, 2023 and 2028 the 1.75%
Noteholders, on April 15 of 2005, 2008 and 2011 the 2% Noteholders and on
October 24 of 2006, 2008, 2011 and 2016 the Zero-Coupon Noteholders may require
us to repurchase all or a portion of the outstanding 1.75% Notes and Zero-Coupon
Notes at their accreted values and the 2% Notes at their face value plus any
unpaid accrued interest.
Upon conversion, redemption or repurchase of the 1.75% Notes, the 2% Notes
and the Zero-Coupon Notes we may choose to deliver Carnival Corporation common
stock, cash or a combination of cash and common stock with a total value equal
to the value of the consideration otherwise deliverable. If the 1.75% Notes, 2%
Notes and Zero-Coupon Notes were to be put back to us, we would expect to settle
them for cash and, accordingly, they are not included in our diluted earnings
per share common stock calculations, unless they become convertible and are
dilutive to our earnings per share computation. However, no assurance can be
given that we will have sufficient liquidity to make such cash payments. See
Note 15.
Costa has a 257.5 million euro ($303 million U.S. dollars at the November
30, 2003 exchange rate) unsecured euro revolving credit facility, which expires
in May 2006, of which $219 million was available at November 30, 2003. In
addition, POPCIL has $710 million of unsecured revolving multi-currency credit
facilities, which expire in September 2005, of which $494 million was available
at November 30, 2003.
Carnival Corporation's $1.4 billion unsecured multi-currency revolving
credit facility matures in June 2006. This facility currently bears interest at
libor/eurolibor plus 20 basis points ("BPS"), which interest rate spread over
the base rate will vary based on changes to Carnival Corporation's senior
unsecured debt ratings, and provides for an undrawn facility fee of ten BPS.
Carnival Corporation's commercial paper program is supported by this revolving
credit facility and, accordingly, any amounts outstanding under its commercial
paper program, none at November 30, 2003 and 2002, reduce the aggregate amount
available under this facility. At November 30, 2003, the entire facility was
available.
This $1.4 billion facility and other of our loan and derivative agreements
contain covenants that require us, among other things, to maintain a minimum
debt service coverage and limits our debt to capital ratios and debt to equity
ratio, and the amounts of our secured assets and secured indebtedness, and
shareholders' equity. In addition, if our business suffers a material adverse
change or if other events of default under our loan agreements are triggered,
then pursuant to cross default acceleration clauses, substantially all of our
outstanding debt and derivative contract payables could become due and the
underlying facilities could be terminated. At November 30, 2003, we were in
compliance with all of our debt covenants.
In November 2003, we issued $550 million of unsecured 3.75% Notes due in
November 2007, the proceeds of which we used to repay some of the amounts
outstanding under the POPCIL $710 million credit facilities and for working
capital purposes.
At November 30, 2003, the scheduled annual maturities of our long-term
debt was as follows (in millions):
59
Fiscal
------
2004 $ 392
2005 1,263(a)
2006 1,587(a)
2007 999
2008 1,492(a)
Thereafter 1,577
------
$7,310
======
(a) Includes $600 million of Carnival Corporation's 2% Notes in 2005, $541
million of its Zero-Coupon Notes in 2006, and $575 million of its 1.75%
Notes in 2008, based in each case on the date of the noteholders' first
put option.
Debt issuance costs are generally amortized to interest expense using the
straight-line method, which approximates the effective interest method, over the
term of the notes or the noteholders first put option date, whichever is
earlier. In addition, all loan issue discounts are amortized to interest expense
using the effective interest rate method over the term of the notes.
NOTE 8 - Commitments
Ship Commitments
A description of our ships under contract for construction at November 30,
2003 was as follows (in millions, except passenger capacity):
Expected Estimated
Service Passenger Total
Brand and Ship Date(a) Shipyard Capacity Cost(b)
- -------------- ------- -------- -------- ---------
Princess
Diamond Princess 3/04 Mitsubishi 2,674 $ 475
Caribbean Princess 4/04 Fincantieri(c) 3,114 500
Sapphire Princess 6/04 Mitsubishi 2,674 475
Newbuild 6/06 Fincantieri 3,114 500
------ ------
Total Princess 11,576 1,950
------ ------
CCL
Carnival Miracle 2/04 Masa-Yards (c)(d) 2,124 375
Carnival Valor 12/04 Fincantieri(c) 2,974 510
Carnival Liberty 8/05 Fincantieri 2,974 460
------ ------
Total CCL 8,072 1,345
------ ------
Holland America Line
Westerdam 4/04 Fincantieri(c) 1,848 410
Noordam 2/06 Fincantieri(c) 1,848 410
------ ------
Total Holland America Line 3,696 820
------ ------
Cunard
Queen Mary 2 1/04 Chantiers de
L'Atlantique(c)(d) 2,620 800
Queen Victoria 4/05 Fincantieri (c) 1,968 410
------ ------
Total Cunard 4,588 1,210
------ ------
Costa
Costa Magica 11/04 Fincantieri(e) 2,702 545
------ ------
Total 30,634 $5,870
====== ======
(a) The expected service date is the month in which the ship is currently
expected to begin its first revenue generating cruise.
(b) Estimated total cost of the completed ship includes the contract price
with the shipyard, design and engineering fees, capitalized interest,
construction oversight costs and various owner supplied items.
60
(c) These construction contracts are denominated in euros and have been fixed
into U.S. dollars through the utilization of forward foreign currency
contracts.
(d) The Carnival Miracle and the Queen Mary 2 were delivered in February 2004
and December 2003, respectively.
(e) This construction contract is denominated in euros, which is Costa's
functional currency and, therefore, we have not entered into a forward
foreign currency contract to hedge this commitment. The estimated total
cost has been translated into U.S. dollars using the November 30, 2003
exchange rate.
In addition to these ship construction contracts, in January 2004, Costa
entered into a letter of intent for a 3,004-passenger ship with Fincantieri for
a Summer 2006 delivery date at an estimated total cost of 450 million euros.
In connection with our cruise ships under contract for construction, we
have paid $876 million through November 30, 2003 and anticipate paying the
remaining estimated total costs as follows: $2.98 billion in 2004, $1.24 billion
in 2005 and $775 million in 2006.
Operating Leases
Rent expense under our operating leases, primarily for office and
warehouse space, was $48 million, $15 million and $13 million in fiscal 2003,
2002 and 2001, respectively. At November 30, 2003, minimum annual rentals for
our operating leases, with initial or remaining terms in excess of one year,
were as follows (in millions): $57, $49, $36, $26, $23 and $85 in fiscal 2004
through 2008 and thereafter, respectively.
Port Facilities and Other
At November 30, 2003, we had commitments through 2052, with initial or
remaining terms in excess of one year, to pay minimum amounts for our annual
usage of port facilities and other contractual commitments as follows (in
millions): $57, $32, $33, $35, $35 and $200 in fiscal 2004 through 2008 and
thereafter, respectively.
NOTE 9 - Contingencies
Litigation
In 2002, two actions (collectively, the "Facsimile Complaints") were filed
against Carnival Corporation on behalf of purported classes of persons who
received unsolicited advertisements via facsimile, alleging that Carnival
Corporation and other defendants distributed unsolicited advertisements via
facsimile in contravention of the U.S. Telephone Consumer Protection Act. The
plaintiffs seek to enjoin the sending of unsolicited facsimile advertisements
and statutory damages. The advertisements referred to in the Facsimile
Complaints were not sent by Carnival Corporation, but rather were distributed by
a professional faxing company at the behest of travel agencies that referenced a
CCL product. We do not advertise directly to the traveling public through the
use of facsimile transmission. The ultimate outcomes of the Facsimile Complaints
cannot be determined at this time. We believe that we have meritorious defenses
to these claims and, accordingly, we intend to vigorously defend against these
actions.
In February 2001, Holland America Line-USA, Inc. ("HAL-USA"), a
wholly-owned subsidiary, received a grand jury subpoena requesting that it
produce documents and records relating to the air emissions from Holland America
Line ships in Alaska. HAL-USA responded to the subpoena. The ultimate outcome of
this matter cannot be determined at this time.
On August 17, 2002, an incident occurred in Juneau, Alaska onboard Holland
America Line's Ryndam involving a wastewater discharge from the ship. As a
result of this incident, various Ryndam ship officers and crew have received
grand jury subpoenas from the Office of the U.S. Attorney in Anchorage, Alaska
requesting that they appear before a grand jury. One subpoena also requested the
production of Holland America Line documents, which Holland America Line has
produced. Holland America Line is also complying with a subpoena for additional
documents. If the investigation results in charges being filed, a judgment could
include, among other forms of relief, fines and debarment from federal
contracting, which would prohibit operations in Glacier Bay National Park and
Preserve during the period of debarment. The State of Alaska is separately
investigating this incident. The ultimate outcomes of these matters cannot be
determined at this time. However, if Holland America
61
Line were to lose its Glacier Bay permits we would not expect the impact on our
financial statements to be material to us since we believe there are additional
attractive alternative destinations in Alaska that can be substituted for
Glacier Bay.
Costa has instituted arbitration proceedings in Italy to confirm the
validity of its decision not to deliver its ship, the Costa Classica, to the
shipyard of Cammell Laird Holdings PLC ("Cammell Laird") under a 79 million euro
denominated contract for the conversion and lengthening of the ship. Costa has
also given notice of termination of the contract. It is now expected that the
arbitration tribunal's decision will be made in late-2004 at the earliest. In
the event that an award is given in favor of Cammell Laird, the amount of
damages, which Costa would have to pay, if any, is not currently determinable.
The ultimate outcome of this matter cannot be determined at this time.
On April 23, 2003, Festival Crociere S.p.A. commenced an action against
the European Commission (the "Commission") in the Court of First Instance of the
European Communities in Luxembourg seeking to annul the Commission's antitrust
approval of the DLC transaction (the "Festival Action"). We have been granted
leave to intervene in the Festival Action and intend to contest such action
vigorously. A successful third party challenge of an unconditional Commission
clearance decision would be unprecedented, and based on a review of the law and
the factual circumstances of the DLC transaction, as well as the Commission's
approval decision in relation to the DLC transaction, we believe that the
Festival Action will not have a material adverse effect on the companies or the
DLC transaction. However, the ultimate outcome of this matter cannot be
determined at this time.
In the normal course of our business, various other claims and lawsuits
have been filed or are pending against us. Most of these claims and lawsuits are
covered by insurance and, accordingly, the maximum amount of our liability is
typically limited to our self-insurance retention levels. However, the ultimate
outcome of these claims and lawsuits which are not covered by insurance cannot
be determined at this time.
Contingent Obligations
At November 30, 2003, we had contingent obligations totaling $1.08 billion
to participants in lease out and lease back type transactions for three of our
ships. At the inception of the leases, the entire amount of the contingent
obligations was paid by us to major financial institutions to enable them to
directly pay these obligations. Accordingly, these obligations were considered
extinguished, and neither funds nor the contingent obligations have been
included on our balance sheets. We would only be required to make any payments
under these contingent obligations in the remote event of nonperformance by
these financial institutions, all of which have long-term credit ratings of AAA
or AA. In addition, we obtained a direct guarantee from another AAA rated
financial institution for $298 million of the above noted contingent
obligations, thereby further reducing the already remote exposure to this
portion of the contingent obligations. If the major financial institutions'
credit ratings fall below AA-, we would be required to move a majority of the
funds from these financial institutions to other highly-rated financial
institutions. If Carnival Corporation's credit rating falls below BBB, we would
be required to provide a standby letter of credit for $90 million, or
alternatively provide mortgages in the aggregate amount of $90 million on two of
Carnival Corporation's ships.
In the unlikely event that we were to terminate the three lease agreements
early or default on our obligations, we would, as of November 30, 2003 have to
pay a total of $168 million in stipulated damages. As of November 30, 2003, $177
million of standby letters of credit have been issued by a major financial
institution in order to provide further security for the payment of these
contingent stipulated damages. In the event we were to default under our $1.4
billion revolving credit facility, we would be required to post cash collateral
to support the stipulated damages standby letters of credit. Between 2017 and
2022, we have the right to exercise options that would terminate these
transactions at no cost to us. As a result of these three transactions, we have
$40 million and $43 million of deferred income recorded on our balance sheets as
of November 30, 2003 and 2002, respectively, which is being amortized to
nonoperating income through 2022.
Other Contingent Obligations
Some of the debt agreements that we enter into include indemnification
provisions that obligate us to make payments to the counterparty if certain
events occur. These contingencies generally relate to changes in taxes, changes
in laws that increase lender capital costs and other similar costs. The
indemnification clauses are often standard contractual terms and were entered
into in the normal course of business. There are no
62
stated or notional amounts included in the indemnification clauses and we are
not able to estimate the maximum potential amount of future payments, if any,
under these indemnification clauses. We have not been required to make any
payments under such indemnification clauses in the past and, under current
circumstances, we do not believe a request for indemnification is probable.
NOTE 10 - Income and Other Taxes
We believe that substantially all of our income, with the exception of our
U.S. source income from the transportation, hotel and tour businesses of Holland
America Tours and Princess Tours and the items listed in the regulations under
Section 883 that the Internal Revenue Service does not consider to be incidental
to ship operations discussed in the following paragraph, is exempt from U.S.
federal income taxes. If we were found not to qualify for exemption pursuant to
applicable income tax treaties or under the Internal Revenue Code or if the
income tax treaties or Internal Revenue Code were to be changed in a manner
adverse to us, a portion of our income would become subject to taxation by the
U.S. at higher than normal corporate tax rates.
On August 26, 2003, final regulations under Section 883 of the Internal
Revenue Code were published in the Federal Register. Section 883 is the primary
provision upon which we rely to exempt certain of our international ship
operation earnings from U.S. income taxes. The final regulations list elements
of income that are not considered to be incidental to ship operations and, to
the extent earned within the U.S., are subject to U.S. income tax. Among the
items identified in the final regulations are income from the sale of air and
other transportation, shore excursions and pre-and post cruise land packages.
These rules will first be effective for us in fiscal 2004.
AIDA, A'ROSA, Ocean Village, P&O Cruises, P&O Cruises Australia and Swan
Hellenic are all strategically and commercially managed in the UK and have
elected to enter the UK tonnage tax regime. Accordingly, these operations pay UK
corporation tax on shipping profits calculated by reference to the net tonnage
of qualifying vessels. Income not considered to be shipping profits is taxable
under the normal UK tax rules. We believe that substantially all of the income
attributable to these brands constitutes shipping profits and, accordingly,
income tax expense from these operations has been and is expected to be minimal.
Some of our subsidiaries, including Costa, Holland America Tours, Princess
Tours and other of our non-shipping activities, are subject to foreign and/or
U.S. federal and state income taxes. In fiscal 2003, we recognized a net $29
million income tax expense, primarily related to these operations. In 2002, we
recognized a net $57 million income tax benefit primarily due to an Italian
investment incentive law, which allowed Costa to receive a $51 million income
tax benefit based on contractual expenditures during 2002 on the construction of
a new ship. At November 30, 2003, Costa had a remaining net deferred tax asset
of approximately $61 million relating primarily to the tax benefit of the net
operating loss carryforwards arising from this incentive law, which expire in
2007. In fiscal 2001, we recognized a $9 million income tax benefit from Costa
primarily due to changes in Italian tax law.
We do not expect to incur income taxes on future distributions of
undistributed earnings of foreign subsidiaries and, accordingly, no deferred
income taxes have been provided for the distribution of these earnings.
In addition to or in place of income taxes, virtually all jurisdictions
where our ships call, impose taxes based on passenger counts, ship tonnage or
some other measure. These taxes, other than those directly charged to and/or
collected from passengers by us, are recorded as operating expenses in the
accompanying statements of operations.
NOTE 11 - Shareholders' Equity
Carnival Corporation's articles of incorporation authorize its Board of
Directors, at its discretion, to issue up to 40 million shares of its preferred
stock and Carnival plc has 100,000 authorized preference shares. At November 30,
2003 and 2002, no Carnival Corporation preferred stock had been issued and only
a nominal amount of Carnival plc preferred shares had been issued.
At November 30, 2003, there were 91.7 million shares of Carnival
Corporation common stock reserved for issuance pursuant to its convertible notes
and its employee benefit and dividend reinvestment plans. In addition, Carnival
plc shareholders have authorized 4.8 million ordinary shares for future issuance
under its employee benefit plans.
63
At November 30, 2003 and 2002, AOCI included cumulative foreign currency
translation adjustments which increased shareholders' equity by $191 million and
$29 million, respectively.
NOTE 12 - Financial Instruments
We estimated the fair value of our financial instruments through the use
of public market prices, quotes from financial institutions and other available
information. Considerable judgment is required in interpreting data to develop
estimates of fair value and, accordingly, amounts are not necessarily indicative
of the amounts that we could realize in a current market exchange. Our financial
instruments are not held for trading or other speculative purposes.
Cash and Cash Equivalents
The carrying amounts of our cash and cash equivalents approximate their
fair values due to their short maturities.
Other Assets
At November 30, 2003 and 2002, long-term other assets included marketable
securities held in rabbi trusts for certain of our nonqualified benefit plans
and notes and other receivables. These assets had carrying and fair values of
$225 million at November 30, 2003 and $173 million at November 30, 2002. Fair
values were based on public market prices, estimated discounted future cash
flows or estimated fair value of collateral.
Debt
The fair values of our non-convertible debt and convertible notes were
$5.8 billion and $1.92 billion, respectively, at November 30, 2003 and $2.04
billion and $1.28 billion at November 30, 2002. These fair values were greater
than the related carrying values by $140 million and $205 million, respectively,
at November 30, 2003 and $4 million and $162 million at November 30, 2002. The
net difference between the fair value of our debt and its carrying value was due
primarily to our issuance of debt obligations at fixed interest rates that are
above market interest rates in existence at the measurement dates, as well as
the impact of changes in the Carnival Corporation common stock value on our
convertible notes on those dates. The fair values of our unsecured fixed rate
public notes, convertible notes, sterling bonds and unsecured 5.57% euro notes
were based on their public market prices. The fair values of our other debt were
estimated based on appropriate market interest rates being applied to this debt.
Foreign Currency Contracts
We have forward foreign currency contracts, designated as foreign currency
fair value hedges, for seven of our euro denominated shipbuilding contracts (see
Note 8). At November 30, 2003 and 2002, the fair value of these forward
contracts was an unrealized gain of $363 million and an unrealized loss of $178
million, respectively. These forward contracts mature through 2006. The fair
values of our forward contracts were estimated based on prices quoted by
financial institutions for these instruments.
We have cross currency swaps totaling $644 million that are designated as
hedges of our net investments in foreign subsidiaries, which have euro and
sterling denominated functional currencies. These cross currency swaps were
entered into to effectively convert U.S. dollar denominated debt into euro or
sterling debt, which acts as a hedge of our net investments in cruise lines
whose functional currencies are the euro and sterling. At November 30, 2003, the
fair value of these cross currency swaps was an unrealized loss of $49 million,
of which $39 million is included in the cumulative translation adjustment
component of AOCI. These currency swaps mature through 2007. We also have $171
million of cross currency swaps, which effectively converts euro denominated
debt into sterling debt, which is the functional currency of our subsidiary
which was the borrower. At November 30, 2003, the fair value of these cross
euro/sterling currency swaps was a loss of $21 million. These currency swaps
mature through 2012. The fair value of our cross currency swaps were estimated
based on prices quoted by financial institutions for these instruments. Finally,
we have designated $355 million of outstanding sterling debt, which is a
nonderivative and matures in 2012, as a hedge of our net investments in foreign
operations and, accordingly, have included $24 million of foreign currency
transaction losses in the cumulative translation adjustment component of AOCI at
November 30, 2003.
Interest Rate Swaps
We have interest rate swap agreements designated as fair value hedges
whereby we
64
receive fixed interest rate payments in exchange for making variable interest
rate payments. At November 30, 2003 and 2002, these interest rate swap
agreements effectively changed $1.19 billion and $225 million of fixed rate debt
to Libor-based floating rate debt.
In addition, we also have interest rate swap agreements designated as cash
flow hedges whereby we receive variable interest rate payments in exchange for
making fixed interest rate payments. At November 30, 2003 and 2002, these
interest rate swap agreements effectively changed $760 million and $468 million,
respectively, of euribor floating rate debt to fixed rate debt.
These interest rate swap agreements mature through 2012. At November 30,
2003 and 2002, the fair value of our interest rate swaps was a loss of $6
million and $0.1 million, respectively. The fair values of our interest rate
swap agreements were estimated based on prices quoted by financial institutions
for these instruments.
NOTE 13 - Segment Information
Our cruise segment included thirteen cruise brands since April 17, 2003,
and six Carnival Corporation cruise brands from December 1, 2001 to April 16,
2003, which have been aggregated as a single reportable segment based on the
similarity of their economic and other characteristics.
Our other segment represents the transportation, hotel and tour operations
of Holland America Tours and Princess Tours and the business to business travel
agency operations of P&O Travel Ltd., the latter two since completion of the DLC
transaction on April 17, 2003. The significant accounting policies of our
segments are the same as those described in Note 2 -"Summary of Significant
Accounting Policies." Information for our cruise and other segments as of and
for the year ended November 30, was as follows (in millions):
Selling
and Depreciation Operating Capital
Operating adminis- and income expend- Total
Revenues(a)(b) expenses trative amortization (loss) itures assets
-------- -------- ------- ------------ ------ ------ ------
2003
Cruise $ 6,459 $ 3,624 $896 $ 568 $ 1,371 $ 2,454 $24,090
Other 345 280 36 17 12 62 401(c)
Intersegment
elimination (86) (86)
------- ------- ---- ------ ------- -------- -------
$ 6,718 $ 3,818 $932 $ 585 $ 1,383 $ 2,516 $24,491
======= ======= ==== ====== ======= ======== =======
2002
Cruise(d) $ 4,244 $ 2,222 $577 $ 371 $ 1,055(c) $ 1,949 $12,120
Other 176 145 32 11 (13) 37 215(c)
Intersegment
elimination (37) (37)
------- ------- ---- ------ ------- -------- -------
$ 4,383 $ 2,330 $609 $ 382 $ 1,042 $ 1,986 $12,335
======= ======= ==== ====== ======= ======== =======
2001
Cruise(d) $ 4,371 $ 2,347 $584 $ 361 $ 946(e) $ 802 $11,375
Other 229 186 35 11 (10)(e) 25 189(c)
Affiliated
operations(f) (44)
Intersegment
elimination (51) (51)
------- ------- ---- ------ ------- -------- -------
$ 4,549 $ 2,482 $619 $ 372 $ 892 $ 827 $11,564
======= ======= ==== ====== ======= ======== =======
(a) Other revenues included revenues for the cruise portion of a tour, when a
cruise is sold along with a land tour package by Holland America Tours and
Princess Tours, and shore excursion and port hospitality services provided
to cruise passengers by these tour companies. These intersegment revenues
are eliminated from other revenues in the line "Intersegment elimination."
(b) Revenue amounts in 2002 and 2001 have been reclassified to conform to the
2003 presentation.
(c) Other assets primarily included hotels and lodges in Alaska and the
Canadian Yukon, luxury dayboats offering tours to the glaciers of Alaska
and the Yukon River, motor coaches used for sightseeing and charters in
the States of Washington and Alaska, British Columbia, Canada and the
Canadian Yukon and private, domed rail cars, which run on the Alaska
Railroad between Anchorage and Fairbanks.
65
(d) In 2003, we commenced allocating all corporate expenses to our cruise
segment. Accordingly, the 2002 and 2001 presentations have been restated
to allocate the previously unallocated 2002 and 2001 corporate expenses
and assets to our cruise segment.
(e) Cruise operating income included impairment charges of $20 million in 2002
and $134 million in 2001 and other operating loss included an impairment
charge of $6 million in 2001.
(f) On June 1, 2001, we sold our investment in Airtours. Accordingly, we did
not record any equity in the earnings or losses of Airtours after May 31,
2001.
Foreign revenues for our cruise brands represent sales generated from
outside the U.S. primarily by foreign tour operators and foreign travel
agencies. Substantially all of these foreign revenues are from the UK, Italy,
Germany, Canada, France, Australia, Spain, Switzerland and Brazil. Substantially
all of our long-lived assets are located outside of the U.S. and consist
principally of our goodwill, trademarks, ships and ships under construction.
Revenue information by geographic area for fiscal 2003, 2002 and 2001 was
as follows (in millions):
2003 2002 2001
------ ------ ------
U.S $4,513 $3,304 $3,500
Foreign 2,205 1,079 1,049
------ ------ ------
$6,718 $4,383 $4,549
====== ====== ======
NOTE 14 - Benefit Plans
Stock Option Plans
We have stock option plans primarily for supervisory and management level
employees and members of our Board of Directors. The Carnival Corporation and
Carnival plc plans are administered by a committee of three of our directors
(the "Committee") which determines who is eligible to participate, the number of
shares for which options are to be granted and the amounts that may be exercised
within a specified term. The Carnival Corporation and Carnival plc option
exercise price is generally set by the Committee at 100% of the fair market
value of the common stock/ordinary shares on the date the option is granted.
Substantially all Carnival Corporation options granted during fiscal 2003, 2002
and 2001 and Carnival plc options granted in 2003 were granted at an exercise
price per share equal to the fair market value of the Carnival Corporation
common stock and Carnival plc ordinary shares, respectively, on the date of
grant. Carnival Corporation employee options generally vest evenly over five
years and have a ten year term. Carnival plc employee options generally vest at
the end of three years and have a ten year term. Carnival Corporation director
options granted subsequent to fiscal 2000 vest evenly over five years and have a
ten year term. At November 30, 2003, Carnival Corporation had 34.9 million
shares and Carnival plc had 4.8 million shares, which were available for future
grants under the option plans.
A combined summary of the activity and status of the Carnival Corporation
and Carnival plc stock option plans was as follows:
Weighted
Average Exercise Price Number of Options
Per Share Years Ended November 30,
2003 2002 2001 2003 2002 2001
-------- -------- -------- ----------- ----------- -----------
Outstanding options-
beginning of year $ 29.26 $ 28.95 $ 26.80 11,828,958 12,774,293 8,840,793
Carnival plc
outstanding options
at April 17, 2003(a) $ 19.64 5,523,013
Options granted $ 30.88 $ 26.54 $ 26.44 5,464,109 33,000 6,580,250
Options exercised(b) $ 17.35 $ 14.35 $ 11.70 (2,919,554) (404,615) (2,218,075)
Options canceled $ 28.64 $ 32.80 $ 35.15 (598,547) (573,720) (428,675)
----------- ----------- -----------
Outstanding options-
end of year (e) $ 28.79 $ 29.26 $ 28.95 19,297,979(c) 11,828,958 12,774,293
=========== =========== ===========
Options exercisable-
end of year $ 27.68 $ 28.71 $ 25.96 7,848,335(d) 4,775,894 2,972,498
=========== =========== ===========
(a) All Carnival plc unvested options outstanding on the date the DLC
transaction was completed vested fully on such date, except for 1.3
million options, which were granted on April 15, 2003.
(b) Included 1.8 million Carnival plc options in 2003, of which 1.0 million
had a
66
sterling denominated exercise price.
(c) Included 3.6 million of Carnival plc options at a weighted average
exercise price of $20.89 per share, based on the November 30, 2003 U.S.
dollar to sterling exchange rate.
(d) Included 2.2 million of Carnival plc options at a weighted average
exercise price of $18.06 per share.
(e) On December 1, 2003, as a result of the Princess cruise operations being
transferred to the Carnival Corporation side of the DLC structure, options
to purchase 567,000 shares of Carnival plc vested immediately, and the
termination date of 1.5 million Carnival plc exercisable options were
shortened to the earlier of 12 months after the December 1, 2003
reorganization date or 42 months after the date of grant. All such changes
have been made pursuant to the original terms of the Carnival plc plan.
Combined information with respect to outstanding and exercisable Carnival
Corporation and Carnival plc stock options at November 30, 2003 was as follows:
Options Outstanding Options Exercisable
----------------------------------- ---------------------
Weighted Weighted Weighted
Average Average Average
Exercise Remaining Exercise Exercise
Price Range Shares Life (Years) Price Shares Price
- ----------- ----------------------------------- ---------------------
$ 1.94-$ 2.25 30,980 (a) $ 2.07 30,980 $ 2.07
$10.59-$15.00 735,102 5.4 $13.54 735,102 $13.54
$16.28-$22.57 4,477,849 7.1 $20.71 2,617,539 $19.70
$23.04-$27.88 5,714,089 8.4 $26.44 1,319,694 $25.00
$28.21-$34.91 5,518,009 8.4 $32.12 1,172,570 $30.27
$36.72-$41.34 102,000 4.8 $38.09 97,600 $38.06
$43.56-$48.56 2,719,950 5.7 $44.36 1,874,850 $44.50
---------- --- ------ --------- ------
Total 19,297,979 7.6 $28.79 7,848,335 $27.68
========== === ====== ========= ======
(a) These stock options do not have an expiration date.
Carnival Corporation Restricted Stock
Carnival Corporation has issued restricted stock to a few officers. These
shares have the same rights as Carnival Corporation common stock, except for
transfer restrictions and forfeiture provisions. During fiscal 2003, 2002 and
2001, 455,000 shares, 150,000 shares and 150,000 shares, respectively, of
Carnival Corporation common stock were issued, which were valued at $14 million,
$4 million and $5 million, respectively. Unearned stock compensation was
recorded within shareholders' equity at the date of award based on the quoted
market price of the Carnival Corporation common stock on the date of grant and
is amortized to expense using the straight-line method from the grant date
through the earlier of the vesting date or the officers estimated retirement
date. These shares either have three or five-year cliff vesting or vest evenly
over five years after the grant date. As of November 30, 2003 and 2002 there
were 1,055,000 shares and 750,000 shares, respectively, issued under the plan
which remained to be vested.
Defined Benefit Pension Plans
We have several defined benefit pension plans, which cover some of our
shipboard and shoreside employees. The U.S. and UK shoreside employee plans are
closed to new membership. The plans are funded, at a minimum, in accordance with
U.S. or UK regulatory requirements, with the remaining plans being primarily
unfunded. In determining our plans' benefit obligations at November 30, 2003, we
used assumed weighted-average discount rates of 6.0% and 5.3% for our U.S. and
foreign plans, respectively. The net liabilities related to the obligations
under these single employer defined benefit pension plans are not material.
A minimum pension liability adjustment is required when the actuarial
present value of accumulated benefits exceeds plan assets and accrued pension
liabilities. At November 30, 2003 and 2002, our single employer plans had
aggregated additional minimum pension liability adjustments, less allowable
intangible assets, of $14 million and $15 million, respectively, which are
included in AOCI.
In addition, P&O Cruises participated in a Merchant Navy Ratings Pension
Fund ("MNRPF"), which is a defined benefit multiemployer pension plan. This plan
has a significant funding deficit and has been closed to further benefit accrual
since prior to the completion of the DLC transaction. P&O Cruises, along with
other unrelated employers,
67
are making payments into this plan under a non-binding Memorandum of
Understanding to reduce the deficit. Accordingly, at November 30, 2003, we had
recorded a long-term pension liability of $19 million, which represented our
estimate of the present value of the entire liability due by us under this plan.
P&O Cruises, Princess and Cunard Line Limited also participate in an
industry-wide British merchant navy officers pension fund ("MNOPF"), which also
is a defined benefit multiemployer pension plan that is available to certain of
their shipboard British officers. The MNOPF is divided into two sections, the
"New Section" and the "Old Section", each of which covers a different group of
participants, with the Old Section closed to further benefit accrual and the New
Section only closed to new membership. Holland America Line also participates in
a Dutch shipboard officers defined benefit multiemployer pension plan. Our
multiemployer yearly pension fund plan expenses are based on the amount of
contributions we are required to make annually into the plans.
Total expense for all of our defined benefit pension plans, including our
multiemployer plans, was $17 million, $11 million and $8 million in fiscal 2003,
2002 and 2001, respectively.
As of March 31, 2003, the date of the most recent formal actuarial
valuation prepared by the MNOPF's actuary, the New Section of the MNOPF was
estimated to have a fund deficit of approximately 200 million sterling, or $340
million, assuming a 7.7% discount rate. At November 30, 2003, our external
actuary informally updated the March 31, 2003 valuation and estimated that the
New Section deficit was approximately 640 million sterling, or $1.1 billion,
assuming a 5.3% discount rate. The 5.3% is the assumed discount rate we have
used for determining our other foreign pension plans obligations. Based solely
upon our share of current contributions to the MNOPF, our share of these deficit
amounts would be between $27 million and $85 million, depending on whether the
deficit was $340 million or $1.1 billion, respectively. However, the extent of
our portion of any liability with respect to the fund's deficit is uncertain,
and is the subject of ongoing litigation, the outcome of which cannot be
determined at this time. In addition, the amount of the fund deficit is subject
to estimates and assumptions, which could cause the deficit amount to vary
considerably.
A substantial portion of any MNOPF fund deficit liability which we may
have relates to P&O Cruises and Princess liabilities which existed prior to the
DLC transaction. However, since the MNOPF is a multiemployer plan and it is not
probable that we will withdraw from the plan nor is our share of the liability
certain, we are required to record our MNOPF plan expenses, including any
contributions to fund the deficit, as they are contributed, instead of as a
Carnival plc acquisition liability that existed at the DLC transaction date. It
is currently expected that deficit funding contributions, if any, will be
required to be paid over at least ten years.
Defined Contribution Plans
We have several defined contribution plans available to substantially all
employees. We contribute to these plans based on employee contributions, salary
levels and length of service. Total expense relating to these plans was $12
million, $8 million and $8 million in fiscal 2003, 2002 and 2001, respectively.
NOTE 15 - Earnings Per Share
Our basic and diluted earnings per share were computed as follows (in
millions, except per share data):
Years
Ended November 30,
--------------------------------
2003 2002 2001
-------- -------- --------
Net income $ 1,194 $ 1,016 $ 926
Interest on dilutive convertible notes 5
-------- -------- --------
Net income for diluted earnings
per share $ 1,199 $ 1,016 $ 926
======== ======== ========
Weighted-average common and ordinary
shares outstanding 718 587 585
Dilutive effect of convertible notes 4
Dilutive effect of stock plans 2 1 2
-------- -------- --------
Diluted weighted-average shares
outstanding 724 588 587
======== ======== ========
Basic earnings per share $ 1.66 $ 1.73 $ 1.58
======== ======== ========
Diluted earnings per share $ 1.66 $ 1.73 $ 1.58
======== ======== ========
68
The weighted-average shares outstanding for the year ended November 30,
2003 includes the pro rata Carnival plc shares since April 17, 2003.
If Carnival Corporation's common stock price reaches specified trigger
prices for a defined duration of time within a completed quarter, then, under
the terms of various classes of Carnival Corporation's convertible debt
securities (each having its own trigger prices), such classes of debt securities
will become convertible for the next succeeding quarter, and the shares of
Carnival Corporation common stock into which those debt securities become
convertible will be considered outstanding for the most recently completed
quarter's diluted earnings per share computation, if dilutive.
Carnival Corporation's Zero-Coupon Notes' contingent conversion trigger
price was reached in the second half of fiscal 2003. Accordingly, the diluted
earnings per share computation included an adjustment to increase net income for
the imputed interest expense recorded on these Zero-Coupon Notes and the diluted
weighted-average shares outstanding for fiscal 2003 included the
weighted-average of the 17.4 million shares that could be converted at the
noteholders' options. The conversion of these notes was only dilutive in the
2003 third quarter.
Our diluted earnings per share computation for fiscal 2003 did not include
a maximum of 36.2 million (32.7 million in 2002 and 2001) shares of Carnival
Corporation common stock issuable upon conversion of its convertible debt, as
this common stock was not issuable under the contingent conversion provisions of
these debt instruments (see Note 7).
Options to purchase 8.4 million, 6.0 million and 5.4 million shares for
fiscal 2003, 2002 and 2001, respectively, were excluded from our diluted
earnings per share computation since the effect of including them was
anti-dilutive.
NOTE 16 - Supplemental Cash Flow Information
Years Ended November 30,
--------------------------
2003 2002 2001
---- ---- ----
(in millions)
Cash paid for
Interest, net of amount capitalized $156 $110 $109
Income taxes, net $ 21 $ 4
Other noncash investing and financing
activities
Common stock received as payment of
stock option exercise price $ 23
Notes received upon the sale of
the Nieuw Amsterdam $ 60
NOTE 17 - Recent Accounting Pronouncement
In January 2003, as amended, the Financial Accounting Standards Board
("FASB") issued Financial Accounting Standards Board Interpretation ("FIN") No.
46, "Consolidation of Variable Interest Entities." FIN No. 46 requires
consolidation of variable interest entities ("VIE's") by the "primary
beneficiary", as defined, if certain criteria are met. FIN No. 46 is effective
immediately for VIE's created or acquired after January 31, 2003. For
pre-existing VIE's, disclosure requirements are effective immediately and
consolidation provisions are effective for our 2004 second quarter. In
accordance with FIN No. 46, we have determined that we are carrying a loan,
initially made in April 2001, to a ship repair facility that is a VIE. Although
we use this facility for some of our ship repair work, we are not a "primary
beneficiary" and, accordingly, this entity will not be consolidated in our
financial statements. At November 30, 2003, our loan to this VIE, which is also
our maximum exposure to loss, was $41 million.
69
Report of Independent Certified Public Accountants
To the Boards of Directors and Shareholders of
Carnival Corporation and Carnival plc
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, cash flows and shareholders' equity
present fairly, in all material respects, the financial position of Carnival
Corporation & plc (comprising Carnival Corporation and Carnival plc and their
respective subsidiaries) at November 30, 2003 and 2002, and the results of their
operations and their cash flows for each of the three years in the period ended
November 30, 2003 in conformity with accounting principles generally accepted in
the United States of America. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
As described in Note 2 to the financial statements, the Company adopted SFAS
No.142 "Goodwill and Other Intangible Assets" which changed the method of
accounting for goodwill and other intangible assets effective December 1, 2001.
/s/ PricewaterhouseCoopers LLP
Miami, Florida
January 29, 2004
70
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Cautionary Note Concerning Factors That May Affect Future Results
Some of the statements contained in this 2003 Annual Report are
"forward-looking statements" that involve risks, uncertainties and assumptions
with respect to us, including some statements concerning future results, plans,
outlook, 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 Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934. 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 our actual results, performance or
achievements to differ materially from those expressed or implied in this 2003
Annual Report. Forward-looking statements include those statements which may
impact the forecasting of our earnings per share, net revenue yields, booking
levels, pricing, occupancy, operating, financing and tax costs, costs per
available lower berth day, estimates of ship depreciable lives and residual
values, outlook or business prospects. These factors include, but are not
limited to, the following:
- - achievement of expected benefits from the DLC transaction;
- - risks associated with the DLC structure;
- - 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 net revenue yields for our cruise
brands;
- - 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 conflicts,
terrorist attacks, availability of air service and other world events and
adverse publicity, and their impact on the demand for cruises;
- - accidents and other incidents affecting the health, safety, security and
vacation satisfaction of passengers;
- - our ability to implement our shipbuilding programs and brand strategies
and to continue to expand our business worldwide;
- - our ability to attract and retain qualified shipboard crew and maintain
good relations with employee unions;
- - our ability to obtain financing on terms that are favorable or consistent
with our expectations;
- - the impact of changes in operating and financing costs, including changes
in foreign currency and interest rates and fuel, food, payroll, insurance
and security costs;
- - changes in the tax, environmental, health, safety, security and other
regulatory regimes under which we operate;
- - continued availability of attractive port destinations;
- - our ability to successfully implement cost improvement plans and to
integrate business acquisitions;
- - continuing financial viability of our travel agent distribution system;
- - weather patterns or natural disasters; and
- - the ability of a small group of shareholders to effectively control the
outcome of shareholder voting.
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 expressly disclaim any obligation to disseminate,
after the date of this 2003 Annual Report, 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.
Executive Overview
Over the past three years our net revenue yields have declined (see "Key
Performance
71
Indicators" below). We believe this decline has been a result of a number of
factors affecting consumers' vacation demand including, among other things,
armed conflicts in the Middle East and elsewhere, terrorist attacks in the U.S.
and elsewhere, minor passenger and crew illnesses, the uncertain worldwide
economy and adverse publicity surrounding these and other events. In addition to
these concerns, the recent large increase in new ship capacity in the cruise
industry over this period has intensified competition to attract customers from
land-based vacation alternatives, which has also contributed to lower cruise
ticket prices.
In addition to the lower pricing trends over this period, the cruise
industry has also experienced historically high fuel costs; significant
increases in insurance and security costs, precipitated by the events of
September 11, 2001; and higher environmental costs, resulting primarily from
upgrading environmental compliance programs. It is possible that some of these
increasing cost trends will continue in the future. However, as we have done in
the past, we expect to be able to partially offset these increases through the
continuing benefits of scale, as well as cost containment measures.
The factors mentioned above have put pressure on our earnings over this
period, especially since most of our costs are largely fixed once we put a ship
into service. Although it is impossible to quantify the financial impact on us
of each of the foregoing factors, these events adversely impacted the entire
leisure and travel industry in general, and the cruise industry and us in
particular.
During 2003, we were able to complete the largest acquisition in our
history, the DLC transaction with P&O Princess. We have made significant
progress in integrating our two organizations, including announcing the expected
redeployment in late 2004 of CCL's Jubilee to the P&O Cruises Australia fleet,
the transfer of a Holland America newbuild shipyard slot to Princess for a new
ship deployment in 2006, the consolidation of our German and London office
operations and the sale of our German river boat business, global procurement
savings and the implementation of many best practices among our brands. As a
result, we are well on our way to realizing the $100 million of annual DLC
transaction synergies we initially targeted.
In addition, during the second half of 2003, we saw a strong rebound in
our booking volumes, which commenced shortly after the conclusion of the Iraqi
war, although our cruise ticket prices were still somewhat lower than last year.
As mentioned above, the entire cruise industry had a large increase in
capacity during this three year period, including our introduction of seven new
ships into service during 2003. Even with our 17.5% pro forma capacity increase
in fiscal 2003, we were able to maintain our occupancy level at over 103%. As a
large part of our operating costs are fixed in nature, we strategically manage
our prices to enable us to fill our ships at the highest possible prices, since
incremental passengers contribute to our fixed costs. Our ability to maintain
these high occupancy levels helped us to achieve an increasing level of onboard
and other revenues, which partially offset the impact of lower cruise ticket
prices.
Throughout this period, despite the adverse external travel and leisure
environment and the significant increase in cruise industry capacity, we
generated significant cash flows. These results provide an indication of the
strength of our business. However, our operations are subject to many risks, as
briefly noted above and under the caption "Cautionary Note Concerning Factors
That May Affect Future Results," which could significantly impact our future
results.
The year over year percentage increases in Carnival Corporation & plc's
available lower berth day ("ALBD") capacity for fiscal 2004 (versus fiscal 2003
pro forma ALBD, assuming that the DLC transaction was completed and Carnival plc
was consolidated for the full period in 2003), 2005 and 2006, resulting
primarily from new ships entering service, is currently expected to be 17.5%,
9.2% and 5.3%, respectively.
We believe that given a more stable geopolitical environment, our net
revenue yields will increase in 2004, despite the expected significant increase
in our 2004 passenger capacity.
Outlook For Fiscal 2004 ("2004")
As of December 18, 2003, we said that we expected our first quarter 2004
earnings per share to be in the range of $0.17 to $0.20 versus 2003 pro forma
first quarter earnings per share of $0.16 ($0.18 less a $0.02 per share
non-recurring gain from insurance settlements). We also said that we were
comfortable with consensus earnings estimates for
72
the 2004 year, which at that time was $1.98 per share, assuming no significant
geopolitical or economic shocks.
Since early January, the cruise industry has entered the "wave season" (a
period of higher booking levels than during the rest of the year). As we had
expected, bookings during this year's wave season have been significantly higher
than during the comparable period last year, which was adversely impacted by the
build up to the war in Iraq. Since the beginning of January, company wide
booking levels have been running 59% higher than during the same period last
year, which is significantly above the company's 17.5% proforma capacity
increase for 2004.
We now expect that first quarter 2004 net revenue yields will increase 3%
to 4% (versus an increase of 1% to 2% in our previous guidance) and net cruise
costs per ALBD, will be at the low end of our previous guidance of an increase
of 1% to 3%. The increase in expected net revenue yields is largely due to the
weakening of the U.S. dollar, and to a lesser extent, higher than expected
pricing on close to sailing bookings. The weak dollar also had the effect of
increasing net cruise costs per ALBD, however that is expected to be more than
offset by lower than anticipated advertising costs, which is partially timing
and is expected to be expended later in the year, and lower than forecasted fuel
costs. We now expect first quarter 2004 earnings per share to be in the range of
$0.21 to $0.22.
Net revenue yields for the year 2004 are now forecast to increase 5% to
7%, versus our previous forecast of an increase of 2% to 4%. The increase in
expected net revenue yields is largely due to weakness in the U.S. dollar (our
current to guidance is based on an exchange rate of $1.27 to the euro and $1.84
to the sterling), and to a lesser extent, strengthening booking levels noted
during wave season. Net cruise costs per ALBD is forecast to increase 2% to 3%
versus our earlier guidance of flat compared to 2003 proforma costs. The
increase in expected net cruise costs per ALBD is due to the weaker U.S. dollar.
Carnival Corporation's 2% Notes become convertible if the share price of
its common stock closes above $43.05 for 20 days out of the last 30 trading days
of the quarter. If the 2% Notes become convertible, earnings per share for the
full year 2004 will be reduced by $0.02 per share. Assuming this dilution
occurs, we are comfortable with the current consensus 2004 earnings estimates of
$2.02 per share, assuming no geopolitical or economic shocks.
Income Taxes
The new U.S. income tax regulations under Section 883 of the Internal
Revenue Code have become effective for us in 2004. Although we are still in the
process of analyzing the impact of these new rules on our operations, based upon
our preliminary analysis, we currently estimate that their application will
reduce our 2004 earnings per share by approximately $0.02 to $0.03.
Key Performance Indicators
We use net cruise revenues per ALBD ("net revenue yields") and net cruise
costs per ALBD as significant non-GAAP financial measures of our cruise segment
financial performance. We believe that net revenue yields are commonly used in
the cruise industry to measure a company's revenue performance and pricing
power. This measure is also used for revenue management purposes. In calculating
net revenue yields, we use net cruise revenues rather than gross cruise
revenues. We believe that "net cruise revenues" is a more meaningful measure in
determining revenue yield than gross cruise revenues because it reflects the
cruise revenues earned by us net of its most significant variable costs (travel
agent commissions, cost of air transportation and certain other variable direct
costs associated with onboard revenues). Substantially all of our remaining
cruise costs are largely fixed once our ship capacity levels have been
determined.
Net cruise costs per ALBD is the most significant measure we use to
monitor our ability to control costs. In calculating this measure, we exclude
the same variable costs as described above, which are included in the
calculation of net cruise revenues. This is done to avoid duplicating these
variable costs in the two non-GAAP financial measures described above.
Critical Accounting Estimates
Our critical accounting estimates are those which we believe require our
most significant judgments about the effect of matters that are inherently
uncertain. A discussion of our critical accounting estimates, the underlying
judgments and uncertainties
73
used to make them and the likelihood that materially different estimates would
be reported under different conditions or using different assumptions, is set
forth below.
Ship Accounting
Our most significant assets are our ships and ships under construction,
which represent 78% of our total assets. We make several critical accounting
estimates dealing with our ship accounting. First, we compute our ships'
depreciation expense, which represents 11.9% of our cruise operating expenses in
fiscal 2003, which requires us to estimate the average useful life of each of
our ships, as well as their residual values. Secondly, we account for ship
improvement costs by capitalizing those costs, which we believe will add value
to our ships and depreciate those improvements over their estimated useful
lives. Finally, we account for the replacement or refurbishment of our ship
components and recognize the resulting loss in our results of operations.
We determine the average useful lives of our ships based primarily on our
estimates of the average useful lives of the ships' major component systems,
such as cabins, main diesels, main electric, superstructure and hull. In
addition, we consider, among other things, the impact of anticipated
technological changes, long-term vacation market conditions and competition and
historical useful lives of similarly-built ships. We have estimated our new
ships' average useful lives at 30 years and their residual values at 15% of our
original ship cost.
Given the very large and complex nature of our ships, ship accounting
estimates require considerable judgment and are inherently uncertain. We do not
have cost segregation studies performed to specifically componetize our ship
systems; therefore, our overall estimates of the relative costs of these
component systems are based principally on general and technical information
known about major ship component system lives and our knowledge of the cruise
industry. In addition, we do not identify and track the depreciation of specific
component systems, but instead utilize estimates when determining the net cost
basis of assets being replaced or refurbished. If materially different
conditions existed, or if we materially changed our assumptions of ship lives
and residual values, our depreciation expense or loss on replacement or
refurbishment of ship assets and net book value of our ships would be materially
different. In addition, if we change our assumptions in making our
determinations as to whether improvements to a ship add value, the amounts we
expense each year as repair and maintenance costs could increase, partially
offset by a decrease in depreciation expense, as less costs would have been
initially capitalized to our ships. Our fiscal 2003 ship depreciation expense
would have increased by approximately $18 million for every year we reduced our
estimated average 30 year ship useful life. In addition, if our ships were
estimated to have no residual value, our fiscal 2003 depreciation expense would
have increased by approximately $78 million. Some ships in our fleet are over 30
years old.
We believe that the estimates we made for ship accounting purposes are
reasonable and our methods are consistently applied and, accordingly, result in
depreciation expense that is based on a rational and systematic method to
equitably allocate the costs of our ships to the periods during which services
are obtained from their use. In addition, we believe that the estimates we made
are reasonable and our methods consistently applied (1) in determining the
average useful life and residual values of our ships; (2) in determining which
ship improvement costs add value to our ships; and (3) in determining the net
cost basis of ship component assets being replaced or refurbished. Finally, we
believe our critical ship accounting estimates are generally comparable with
those of other major cruise companies.
Asset Impairment
The impairment reviews of our ship and trademark assets and of our
goodwill, which has been allocated to our reporting units, such as our cruise
lines, require us to make significant estimates to determine the fair values,
including the cash flows, of these assets or reporting units.
The determination of fair value includes numerous uncertainties, unless a
viable actively traded market exists for the asset or for a comparable reporting
unit, which is usually not the case for cruise ships, cruise lines and
trademarks. For example, in determining fair values of ships and cruise lines
utilizing discounted forecasted cash flows, significant judgments are made
concerning, among other things, future net revenue yields, net cruise costs per
ALBD, interest and discount rates, cruise itineraries, ship additions and
retirements, technological changes, consumer demand, governmental regulations
74
and the effects of competition. In addition, third party appraisers are
sometimes used to determine fair values and some of their valuation
methodologies are also subject to similar types of uncertainties. Also, the
determination of fair values of reporting units using a price earnings multiple
approach also requires significant judgments, such as determining reasonably
comparable multiples. Finally, determining trademark fair values also requires
significant judgments in determining both the estimated trademark cash flows,
and the appropriate royalty rates to be applied to those cash flows to determine
their fair value. We believe that we have made reasonable estimates and
judgments in determining whether our ships, goodwill and trademarks have been
impaired. However, if there is a material change in the assumptions used in our
determination of fair value or if there is a material change in the conditions
or circumstances influencing fair value, we could be required to recognize a
material impairment charge.
Contingencies
We periodically assess the potential liabilities related to any lawsuits
or claims brought against us, as well as for other known unasserted claims,
including environmental, legal and tax matters. While it is typically very
difficult to determine the timing and ultimate outcome of these matters, we use
our best judgment to determine if it is probable that we will incur an expense
related to the settlement or final adjudication of such matters and whether a
reasonable estimation of such probable loss, if any, can be made. In assessing
probable losses, we make estimates of the amount of insurance recoveries, if
any. We accrue a liability when we believe a loss is probable and the amount of
the loss can be reasonably estimated, in accordance with the provisions of SFAS
No. 5, "Accounting for Contingencies," as amended. Such accruals are typically
based on developments to date, management's estimates of the outcomes of these
matters, our experience in contesting, litigating and settling other similar
matters and any related insurance coverage. See Notes 9 and 14 in the
accompanying financial statements for additional information concerning our
contingencies.
Given the inherent uncertainty related to the eventual outcome of these
matters and potential insurance recoveries, it is possible that all or some of
these matters may be resolved for amounts materially different from any
provisions or disclosures that we may have made with respect to their
resolution. In addition, as new information becomes available, we may need to
reassess the amount of probable liability that needs to be accrued related to
our contingencies. All such revisions in our estimates could materially impact
our results of operations and financial position.
Property, Plant and Equipment Draft Statement of Position
In late 2003, the Accounting Standards Executive Committee issued a new
Statement of Position draft, entitled "Accounting for Certain Costs and
Activities Related to Property, Plant and Equipment" ("PP&E SOP"), the adoption
of which is subject to the final clearance of the FASB. If issued in its new
form, the PP&E SOP would allow us the choice of selecting the level at which we
componetize our ships, as long as the identified components are at or below the
"functional unit level", which is the ship itself. If we elect to identify and
track ship components below the ship level, the PP&E SOP will require us, among
other things, to maintain very detailed historical cost records for these ship
parts and determine separate depreciable lives for each component, which may
result in changes in the amount and timing of depreciation and repair and
maintenance expenses and the amount of loss recognized on the replacement or
refurbishment of ship parts. Alternatively, the PP&E SOP allows us to identify
our entire ship as one component; however, electing each ship as one component
will require us to expense as incurred all otherwise capitalizable expenditures
incurred after the ship is placed into service, rather than capitalize and
depreciate these expenditures over their estimated useful lives. In addition,
the PP&E SOP will require us to expense our dry-dock costs as incurred, instead
of amortizing our dry-dock costs to expense generally over one year.
We have not decided what level of componentization we will choose nor have
we completed an analysis of the impact this PP&E SOP would have on our financial
statements, although it may be material, dependent upon the alternatives we
choose in relation to identifying components. The PP&E SOP is expected to be
effective for fiscal years beginning after December 15, 2004 (fiscal 2006 for
us), with earlier application encouraged.
Results of Operations
We earn our cruise revenues primarily from the following:
- sales of passenger cruise tickets and, in some cases, the sale of
air and other
75
transportation to and from our ships. The cruise ticket price
includes accommodations, meals, entertainment and many onboard
activities, and
- the sale of goods and/or services primarily on board our ships,
which include bar and beverage sales, casino gaming, shore
excursions, gift shop and spa sales, photo and art sales and pre-and
post cruise land packages. These activities are either performed
directly by us or by independent concessionaires, from which we
receive a percentage of their revenues.
We incur cruise operating costs and expenses for the following:
- the costs of passenger cruise tickets which represent costs that
vary directly with passenger cruise ticket revenues, and include
travel agent commissions, air and other travel related costs and
credit card fees,
- onboard and other cruise costs which represent costs that vary
directly with onboard and other revenues, and include the costs of
liquor and beverages, costs of tangible goods sold from our gift,
photo and art auction activities, pre-and post cruise land packages
and credit card fees. Concession revenues do not have any
significant amount of costs associated with them, as the costs and
services incurred for these activities are provided by our
concessionaires,
- payroll and related costs which represent costs for all our
shipboard personnel, including deck and engine officers and crew and
hotel and administrative employees,
- food costs which include both our passenger and crew food costs, and
- other ship operating costs which include fuel, repairs and
maintenance, port charges, insurance, entertainment and all other
shipboard operating costs and expenses.
We do not allocate payroll and related costs, food costs or other ship
operating costs to the passenger cruise ticket costs or to onboard and other
cruise costs since they are incurred to support the total cruise experience and
do not vary significantly with passenger levels.
For segment information related to our revenues, expenses, operating
income and other financial information see Note 13 in the accompanying financial
statements. Operations data expressed as a percentage of total revenues and
selected statistical information were as follows (a):
Years Ended November 30,
---------------------------------
2003 2002 2001
------- ------- -------
Revenues
Cruise
Passenger tickets 75.0% 76.3% 77.6%
Onboard and other 21.1 20.5 18.5
Other 3.9 3.2 3.9
------- ------- -------
100.0 100.0 100.0
------- ------- -------
Costs and Expenses
Operating
Cruise
Passenger tickets 15.2 15.0 17.9
Onboard and other 3.4 2.7 2.6
Payroll and related 11.1 10.5 10.1
Food 5.8 5.8 5.8
Other ship operating 18.4 16.7 15.2
Other 2.9 2.5 3.0
------- ------- -------
Total 56.8 53.2 54.6
Selling and administrative 13.9 13.9 13.6
Depreciation and amortization 8.7 8.7 8.2
Impairment charge 0.4 3.0
Loss from affiliated operations, net 1.0
------- ------- -------
Operating Income 20.6 23.8 19.6
Nonoperating (Expense) Income, Net (2.4) (1.9) 0.5
------- ------- -------
Income Before Income Taxes 18.2 21.9 20.1
Income Tax (Expense) Benefit, Net (0.4) 1.3 0.3
------- ------- -------
Net Income 17.8% 23.2% 20.4%
======= ======= =======
Selected Statistical Information
Passengers carried (in thousands) 5,038 3,549 3,385
Occupancy percentage (b) 103.4% 105.2% 104.7%
76
(a) The information presented above includes the results of Carnival plc since
April 17, 2003. See below for discussion of pro forma results.
(b) In accordance with cruise industry practice, occupancy percentage is
calculated using a denominator of 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.
Fiscal 2003 ("2003") Compared To Fiscal 2002 ("2002")
Given that our reported results for 2003 include the results of Carnival
plc for only the last seven and one-half months of 2003 and the preceding year
does not include any of Carnival plc's results, we believe that the most
meaningful presentation of our operating performance measures for 2003 is on a
pro forma basis, which reflects the results of both Carnival Corporation and
Carnival plc for the entirety of both years. Accordingly, we have disclosed pro
forma information, as well as the required reported information, in the
discussion of our results of operations.
Revenues
Cruise revenues increased $2.22 billion, or 52.2%, to $6.46 billion in
2003 from $4.24 billion in 2002. Approximately $1.75 billion of our cruise
revenue increase was due to the consolidation of Carnival plc and $462 million
(a 10.9% increase over 2002) was due to increased revenues from Carnival
Corporation's cruise brands. Carnival Corporation's increase in cruise revenues
resulted primarily from a 17.3% increase in its standalone ALBD capacity in 2003
compared to 2002, partially offset by lower cruise ticket prices and, to a
lesser extent, a reduced number of passengers purchasing air transportation from
Carnival Corporation.
Included in onboard and other revenues were concession revenues of $198
million in 2003 and $154 million in 2002.
Our pro forma ALBD capacity increase was 17.5% in 2003 compared to 2002.
Pro forma gross revenue yields (gross revenue per ALBD) declined 3.8% (reported
declined 2.1%) in 2003 compared to 2002 primarily for the same reasons as the
decline in net revenue yields discussed below. Pro forma net revenue yields
declined 3.2% (reported declined 3.4%) in 2003 compared to 2002 largely because
of lower cruise ticket prices and, to a lesser extent, lower occupancy levels.
Our revenue yields were adversely affected by consumer concerns about travel
during the period leading up to the war with Iraq and its eventual outbreak, the
uncertain world economy and the increase in cruise industry capacity. Finally,
our pro forma net revenue yields in 2003 were favorably impacted by the
strengthening of the euro and sterling against the dollar.
Other non-cruise revenues increased $169 million, or 96.0%, to $345
million in 2003 from $176 million in 2002 due to the consolidation of Princess
Tours and P&O Travel Ltd.
Costs and Expenses
Total cruise operating expenses increased $1.40 billion, or 63.1%, to
$3.62 billion in 2003 from $2.22 billion in 2002. Approximately $1.02 billion of
our increase was due to the consolidation of Carnival plc, and the remaining
$380 million (a 17.1% increase over 2002) of the increase was from Carnival
Corporation. Carnival Corporation's increase was primarily a result of the
impact of the 17.3% increase in its standalone ALBD capacity in 2003 compared to
2002. In addition, higher fuel prices added approximately $44 million to the
Carnival Corporation standalone expenses in 2003 compared to 2002. Finally, the
increase in each of the individual cruise operating expense line items was
primarily a result of the same factors as discussed above. Pro forma cruise
operating expenses increased $655 million, or 18.4%, to $4.2 billion in 2003
from $3.57 billion in 2002
77
primarily as a result of the 17.5% increase in pro forma ALBD capacity and
higher fuel costs.
Other non-cruise operating expenses increased $135 million, or 93.1%, to
$280 million in 2003 from $145 million in 2002 due to the consolidation of
Princess Tours and P&O Travel Ltd.
Cruise selling and administrative expenses increased $319 million, or
55.3%, to $896 million in 2003 from $577 million in 2002. Approximately $247
million of our increase was due to the consolidation of Carnival plc and the
remaining $72 million (a 12.5% increase over 2002) of the increase was from
Carnival Corporation, which was primarily due to the 17.3% increase in
standalone ALBD capacity. Pro forma cruise selling and administrative expenses,
excluding Carnival plc nonrecurring DLC transaction expenses, increased $142
million, or 15.6%, to $1.05 billion from $912 million in 2002, primarily as a
result of the 17.5% increase in pro forma ALBD capacity, partially offset by the
benefits of scale and synergy savings from the DLC transaction.
Pro forma gross cruise costs per ALBD increased by 0.2% (reported
increased 3.9%) in 2003 compared to 2002. Pro forma net cruise costs per ALBD
increased 2.9% (reported increased 4.0%) in 2003 compared to 2002. Pro forma
gross and net cruise costs per ALBD in 2003 compared to 2002 were higher largely
because of higher fuel costs. Finally, our pro forma net cruise costs were
unfavorably affected by the weakening of the dollar against the euro and
sterling.
Depreciation and amortization increased by $203 million, or 53.1%, to $585
million in 2003 from $382 million in 2002. A large portion of this increase was
from the consolidation of Carnival plc, which accounted for approximately $126
million of the increase. The majority of the remaining increase was a result of
the expansion of the Carnival Corporation fleet and ship improvement
expenditures. Pro forma depreciation and amortization expense increased by $120
million, or 22.5%, to $654 million from $534 million largely due to the
expansion of the combined fleet and ship improvement expenditures.
Nonoperating (Expense) Income
Interest expense, net of interest income and excluding capitalized
interest, increased to $217 million in 2003 from $118 million in 2002, or $99
million, which increase was comprised primarily of a $125 million increase in
interest expense from our increased level of average borrowings, partially
offset by a $31 million decrease in interest expense due to lower average
borrowing rates. The higher average debt balances were primarily a result of our
consolidation of Carnival plc's debt (see Note 7 in the accompanying financial
statements) and new ship deliveries. Capitalized interest increased $10 million
during 2003 compared to 2002 due primarily to higher average levels of
investments in ship construction projects.
Other income was $8 million in 2003, which included $19 million from net
insurance proceeds, $10 million as a result of Windstar's Wind Song casualty
loss and $9 million as a reimbursement of expenses incurred in prior years,
partially offset by $13 million related to a DLC-related litigation matter.
Income Taxes
The income tax provision of $29 million in 2003 was primarily due to the
consolidation of Carnival plc's U.S. based Princess Tours and Costa's Italian
taxable income.
Fiscal 2002 ("2002") Compared to Fiscal 2001 ("2001")
Revenues
Cruise revenues decreased $127 million, or 2.9%, to $4.24 billion in 2002
from $4.37 billion in 2001. Our cruise revenue change resulted from a 7.0%
decrease in our gross revenue per passenger cruise day, partially offset by a
3.6% increase in passenger capacity and a 0.5% increase in our occupancy rate.
This decrease in our gross revenue per passenger cruise day was primarily caused
by a significant decline in the number of guests purchasing air transportation
from us in 2002 compared to 2001. When a guest elects to provide his or her own
transportation, rather than purchasing air transportation from us, both our
cruise revenues and operating expenses decrease by approximately the same
amount. Also adding to the reduction in gross revenue per passenger cruise day
was the adverse impact of the September 11, 2001 events, which resulted in lower
cruise ticket prices. Net revenue yield was down 2.7% (gross revenue yield was
down 6.3%) in 2002 compared to 2001.
78
Included in onboard and other revenues were concession revenues of $154
million in 2002 and $136 million in 2001.
Other revenues, which consisted of Holland America Tours decreased $53
million, or 23.1%, to $176 million in 2002 from $229 million in 2001 principally
due to a lower number of Alaska and Canadian Yukon cruise/tours sold. This
revenue decrease was primarily as a result of one less ship offering land tours
to its guests in 2002 compared to 2001 and increased competition. In addition,
three isolated cancellations of Holland America Alaska cruises in 2002 resulting
primarily from mechanical malfunctions also contributed to this decrease in
revenues.
Costs and Expenses
Total cruise operating costs decreased by $125 million, or 5.3%, to $2.22
billion in 2002 from $2.35 billion in 2001. Approximately $116 million of this
decrease was due to reduced air travel and related costs primarily due to fewer
guests purchasing air transportation through us, and $41 million was primarily
due to lower commissions because of lower cruise revenues. This decrease was
partially offset by an increase in fuel and other cruise operating expenses,
which was largely due to costs associated with our 3.6% increase in passenger
capacity. Net cruise operating costs per ALBD decreased 2.4% (gross cruise
operating costs per ALBD decreased 7.8%), partially as a result of the cost
reduction initiatives we undertook after the events of September 11, 2001.
Other operating expenses, which consisted of Holland America Tours,
decreased $41 million, or 22.0%, to $145 million in 2002 from $186 million in
2001 principally due to the reduction in the number of cruise/tours sold.
Selling and administrative expenses decreased $10 million, or 1.6%, to
$609 million in 2002 from $619 million in 2001. Selling and administrative
expenses decreased in 2002 primarily because of our 4.7% decrease in cruise
selling and administrative costs per ALBD, partially offset by additional
expenses associated with our 3.6% increase in passenger capacity. Our costs per
ALBD decreased partially because of the cost containment actions taken after
September 11, 2001.
Depreciation and amortization increased by $10 million, or 2.7%, to $382
million in 2002 from $372 million in 2001. Depreciation and amortization in 2002
compared to 2001 increased by $30 million primarily as a result of the expansion
of our fleet and ship improvement expenditures, partially offset by the
elimination of $20 million of annual goodwill amortization upon our adoption of
SFAS No. 142 on December 1, 2001 (see Note 2 in the accompanying financial
statements).
See Notes 5 and 6 in the accompanying financial statements for a
discussion of the 2002 and 2001 impairment charge and 2001 affiliated
operations.
Nonoperating (Expense) Income
Interest income decreased by $2 million in 2002 compared to 2001, which
was comprised of a $25 million reduction in interest income due to lower average
interest rates, partially offset by a $23 million increase in interest income
from our higher average invested cash balances. Interest expense was the same in
2002 and in 2001, which was comprised of a $22 million increase in interest
expense due to our increased level of average borrowings, offset by a $22
million reduction in interest expense due to lower average borrowing rates. The
higher level of average borrowings in 2002 were due primarily from the issuance
of our convertible notes in April and October 2001. Capitalized interest
increased $10 million during 2002 compared to 2001 due primarily to higher
average levels of investments in ship construction projects.
Other expense in 2002 of $4 million consisted primarily of a $8 million
loss, including related expenses, resulting from the sale of Holland America
Line's former Nieuw Amsterdam, partially offset by $4 million of income related
to the termination of an over funded pension plan.
79
Income Taxes
The income tax benefit of $57 million recognized in 2002 was substantially
all due to an Italian investment incentive law, which allowed Costa to receive
an income tax benefit of $51 million based on contractual expenditures during
2002 on the construction of a new ship.
Liquidity and Capital Resources
Sources and Uses of Cash
Our business provided $1.93 billion of net cash from operations during
fiscal 2003, an increase of $464 million, or 31.6%, compared to fiscal 2002, due
primarily to the consolidation of Carnival plc. We continue to generate
substantial cash from operations and remain in a strong financial position.
During fiscal 2003, our net expenditures for capital projects were $2.52
billion, of which $2.25 billion was spent for our ongoing new shipbuilding
program. The remaining capital expenditures consisted primarily of $133 million
for ship improvements and refurbishments, and $130 million for Alaska tour
assets, cruise port facility developments and information technology assets.
During fiscal 2003, we borrowed net proceeds of $1.08 billion primarily to
finance a portion of our shipbuilding programs and other capital expenditures,
and for working capital purposes. Specifically, we issued 1.75% Notes and 3.75%
unsecured notes for gross proceeds of $1.12 billion, and we borrowed $335
million for the acquisition of the Island Princess. We also paid cash dividends
of $292 million in fiscal 2003.
Future Commitments and Funding Sources
At November 30, 2003, our contractual cash obligations, with initial or
remaining terms in excess of one year, and the effects such obligations are
expected to have on our liquidity and cash flow in future periods were as
follows (in millions):
Payments Due by Fiscal Year
---------------------------------------------------------------
Contractual Cash
Obligations (a) Total 2004 2005 2006 2007 2008 Thereafter
- ----------------- ------- ------ ------ ------ ------ ------ ----------
Long-term debt $ 7,310 $ 392 $1,263 $1,587 $ 999 $1,492 $1,577
Shipbuilding 4,994 2,982 1,237 775
Port and other
commitments 392 57 32 33 35 35 200
Operating leases 276 57 49 36 26 23 85
------- ------ ------ ------ ------ ------ ------
Total contractual
cash obligations $12,972 $3,488 $2,581 $2,431 $1,060 $1,550 $1,862
======= ====== ====== ====== ====== ====== ======
(a) See Notes 7, 8, 9 and 14 in the accompanying financial statements for
additional information regarding our debt, shipbuilding and other
contractual cash obligations and commitments and our contingent
obligations.
At November 30, 2003, we had liquidity of $3.92 billion, which consisted
of $1.07 billion of cash and cash equivalents, $2.11 billion available for
borrowing under our $2.41 billion revolving credit facilities, and $736 million
under committed ship financing arrangements. Our revolving credit facilities
mature in September 2005 with respect to $710 million, and in May and June 2006
with respect to $1.70 billion. A key to our access to liquidity is the
maintenance of our strong credit ratings.
We believe that our liquidity, including cash and committed financings,
and cash flow from future operations will be sufficient to fund most of our
expected capital projects, debt service requirements, dividend payments, working
capital and other firm commitments. However, our forecasted cash flow from
future operations, as well as our credit ratings, may be adversely affected by
various factors, including, but not limited to, those factors noted under
"Cautionary Note Concerning Factors That May Affect Future Results." To the
extent that we are required, or choose, to fund future cash requirements,
including our future shipbuilding commitments, from sources other than as
discussed above, we believe that we will be able to secure such financing from
banks or through the offering of debt and/or equity securities in the public or
private markets. No assurance can be given that
80
our future operating cash flow will be sufficient to fund future obligations or
that we will be able to obtain additional financing, if necessary.
Off-Balance Sheet Arrangements
We are not a party to any off-balance sheet arrangements, including
guarantee contracts, retained or contingent interests, certain derivative
instruments and variable interest entities, that either have, or are reasonably
likely to have, a current or future material effect on our financial statements.
Other Matters
Market Risks
We are principally exposed to market risks from fluctuations in foreign
currency exchange rates, bunker fuel prices and interest rates. We seek to
minimize foreign currency and interest rate risks through our normal operating
and financing activities, including netting certain exposures to take advantage
of any natural offsets, through our long-term investment and debt portfolio
strategies and, when considered appropriate, through the use of derivative
financial instruments. The financial impacts of these hedging instruments are
generally offset by corresponding changes in the underlying exposures being
hedged. Our policy is to not use financial instruments for trading or other
speculative purposes.
Exposure to Foreign Currency Exchange Rates
One of our primary foreign currency exchange risks is related to our
outstanding commitments under ship construction contracts denominated in a
currency other than the functional currency of the cruise brand that is expected
to be operating the ship. These currency commitments are affected by
fluctuations in the value of the functional currency as compared to the currency
in which the shipbuilding contract is denominated. Foreign currency forward
contracts are generally used to manage this risk (see Notes 2, 8 and 12 in the
accompanying financial statements). Accordingly, increases and decreases in the
fair value of these foreign currency forward contracts offset changes in the
fair value of the foreign currency denominated ship construction commitments,
thus resulting in the elimination of such risk.
We have forward foreign currency contracts for seven of our euro
denominated shipbuilding contracts. At November 30, 2003, the fair value of
these forward contracts was an unrealized gain of $363 million which is
recorded, along with an offsetting $363 million fair value liability related to
our shipbuilding firm commitments, on our accompanying 2003 balance sheet. Based
upon a 10% strengthening or weakening of the U.S. dollar compared to the euro as
of November 30, 2003, assuming no changes in comparative interest rates, the
estimated fair value of these contracts would decrease or increase by $247
million, which would be offset by a decrease or increase of $247 million in the
U.S. dollar value of the related foreign currency ship construction commitments
resulting in no net dollar impact to us.
The cost of shipbuilding orders that we may place in the future for our
cruise lines who generate their cash flows in a currency that is different than
the shipyard's operating currency, generally the euro, is expected to be
affected by foreign currency exchange rate fluctuations. Given the recent
decline in the U.S. dollar relative to the euro, the U.S. dollar cost to order
new cruise ships at current exchange rates has increased significantly. We
currently have on order new cruise ships for delivery through 2006. Should the
U.S. dollar remain at current levels or decline further, this may affect our
ability to order new cruise ships for 2007 or later years.
In addition to the foreign currency denominated operations of our Costa
subsidiary, we have broadened our global presence as a result of Carnival plc's
foreign operations. Specifically, our expanded international business operations
through P&O Cruises, Ocean Village and Swan Hellenic in the UK and Aida in
Germany subject us to an increasing level of foreign currency exchange risk
related to the sterling and euro. These are the primary currencies for which we
have U.S. dollar exchange rate exposures. Accordingly, these foreign currency
exchange fluctuations against the dollar will affect our reported financial
results since the reporting currency for our consolidated financial statements
is the U.S. dollar and the functional currency for our international operations
is generally the local currency. Any weakening of the U.S. dollar against these
local functional currencies has the financial statement effect of increasing the
U.S. dollar values reported
81
for cruise revenues and cruise expenses in our consolidated financial
statements. Strengthening of the U.S. dollar has the opposite effect. We will
continue to monitor the effect of such exposures to determine if any additional
actions, such as the issuance of additional foreign currency denominated debt or
use of other financial instruments would be warranted to reduce such risk.
We consider our investments in foreign subsidiaries to be denominated in
relatively stable currencies and/or of a long-term nature. However, we partially
hedge these exposures by denominating our debt in our subsidiary's functional
currency (generally euros or sterling). Specifically, we have $815 million of
cross currency swaps, whereby we have converted U.S. dollar debt to euro and
sterling debt and euro debt to sterling debt, thus partially offsetting this
foreign currency exchange risk. At November 30, 2003, the fair value of these
cross currency swaps was a loss of $70 million, $39 million of which is recorded
in AOCI and offsets a portion of the gains recorded in AOCI upon translating
these foreign subsidiaries net assets into U.S. dollars. Based upon a 10%
hypothetical increase or decrease in the November 30, 2003 foreign currency
exchange rate, we estimate that these contracts fair values would increase or
decrease by $82 million, which would be offset by a decrease or increase of $82
million in the U.S. dollar value of our net investments.
Exposure to Bunker Fuel Prices
Other cruise ship operating expenses are impacted by changes in bunker
fuel prices. Fuel consumed over the past three fiscal years ranged from
approximately 5.5% in fiscal 2003 to 4.5% in fiscal 2002 and 4.2% in fiscal 2001
of our cruise revenues. We have typically not used financial instruments to
hedge our exposure to the bunker fuel price market risk.
Based upon a 10% hypothetical increase or decrease in the November 30,
2003 bunker fuel price, we estimate that our fiscal 2004 bunker fuel cost would
increase or decrease by approximately $45 million.
Exposure to Interest Rates
In order to limit our exposure to interest rate fluctuations, we have
entered into a substantial number of fixed rate debt instruments. We
continuously evaluate our debt portfolio, including interest rate swap
agreements, and make periodic adjustments to the mix of floating rate and fixed
rate debt based on our view of interest rate movements. Accordingly in 2003 and
2001, we entered into fixed to variable interest rate swap agreements, which
lowered our fiscal 2003, 2002 and 2001 interest costs and are also expected to
lower our fiscal 2004 interest costs. At November 30, 2003, 61% of the interest
cost on our debt was effectively fixed and 39% was variable, including the
effect of our interest rate swaps.
At November 30, 2003, our long-term debt had a carrying value of $7.31
billion. At November 30, 2003, our interest rate swap agreements effectively
changed $1.19 billion of fixed rate debt to Libor-based floating rate debt. In
addition, interest rate swaps at November 30, 2003 effectively changed $760
million of euribor floating rate debt to fixed rate debt. The fair value of our
long-term debt and interest rate swaps at November 30, 2003 was $7.69 billion.
Based upon a hypothetical 10% decrease or increase in the November 30, 2003
market interest rates, the fair value of our long-term debt and swaps would
increase or decrease by $128 million. In addition, based upon a hypothetical 10%
decrease or increase in our November 30, 2003 common stock price, the fair value
of our convertible notes would increase or decrease by approximately $97
million.
These hypothetical amounts are determined by considering the impact of the
hypothetical interest rates and common stock price on our existing long-term
debt and interest rate swaps. This analysis does not consider the effects of the
changes in the level of overall economic activity that could exist in such
environments or any relationships which may exist between interest rate and
stock price movements. Furthermore, since substantially all of our fixed rate
long-term debt cannot currently be called or prepaid and some of our variable
rate long-term debt is subject to interest rate swaps which effectively fix the
interest rate, it is unlikely we would be able to take any significant steps in
the short-term to mitigate our exposure in the unlikely event of a significant
decrease in market interest rates.
82
REPORTED GAAP RECONCILING INFORMATION
Gross and net revenue yields were computed as follows:
Years Ended November 30,
--------------------------------------------
2003 2002 2001
------------ ------------ ------------
(in millions, except ALBDs and yields)
Cruise revenues
Passenger tickets $ 5,039 $ 3,346 $ 3,530
Onboard and other 1,420 898 841
------------ ------------ ------------
Gross cruise revenues 6,459 4,244 4,371
Less cruise costs
Passenger tickets (1,021) (658) (813)
Onboard and other (229) (116) (116)
------------ ------------ ------------
Net cruise revenues $ 5,209 $ 3,470 $ 3,442
============ ============ ============
ALBDs(a) 33,309,785 21,435,828 20,685,123
============ ============ ============
Gross revenue yields (b) $ 193.91 $ 198.01 $ 211.33
============ ============ ============
Net revenue yields (c) $ 156.38 $ 161.91 $ 166.44
============ ============ ============
Gross and net cruise costs per ALBD were computed as follows:
Years Ended November 30,
--------------------------------------------
2003 2002 2001
------------ ------------ ------------
(in millions, except ALBDs and costs per ALBD)
Cruise operating expenses $ 3,624 $ 2,222 $ 2,347
Cruise selling and
administrative expenses 896 577 584
------------ ------------ ------------
Gross cruise costs 4,520 2,799 2,931
Less cruise costs
Passenger tickets (1,021) (658) (813)
Onboard and other (229) (116) (116)
------------ ------------ ------------
Net cruise costs $ 3,270 $ 2,025 $ 2,002
============ ============ ============
ALBDs(a) 33,309,785 21,435,828 20,685,123
============ ============ ============
Gross cruise costs per ALBD (d) $ 135.69 $ 130.54 $ 141.66
============ ============ ============
Net cruise costs per ALBD (e) $ 98.16 $ 94.43 $ 96.76
============ ============ ============
83
PRO FORMA GAAP RECONCILING INFORMATION
Pro forma gross and net revenue yields, assuming that the DLC transaction
was completed and Carnival plc was consolidated for the full years noted below,
would have been computed as follows (f):
Years Ended November 30,
-------------------------------
2003 2002
------------ ------------
(in millions, except ALBDs and yields)
Cruise revenues
Passenger tickets $ 5,732 $ 5,128
Onboard and other 1,600 1,356
------------ ------------
Gross cruise revenues 7,332 6,484
Less cruise costs
Passenger tickets (1,227) (1,121)
Onboard and other (279) (240)
------------ ------------
Net cruise revenues $ 5,826 $ 5,123
============ ============
ALBDs (a) 37,554,709 31,962,000
============ ============
Gross revenue yields (b) $ 195.23 $ 202.85
============ ============
Net revenue yields (c) $ 155.11 $ 160.25
============ ============
Pro forma gross and net cruise costs per ALBD would have been computed as
follows (f):
Years Ended November 30,
-------------------------------
2003 2002
------------ ------------
(in millions, except ALBDs and costs per ALBD)
Cruise operating expenses $ 4,222 $ 3,567
Cruise selling and
administrative expenses 1,054 912
------------ ------------
Gross cruise costs 5,276 4,479
Less cruise costs
Passenger tickets (1,227) (1,121)
Onboard and other (279) (240)
------------ ------------
Net cruise costs $ 3,770 $ 3,118
============ ============
ALBDs(a) 37,554,709 31,962,000
============ ============
Gross cruise costs per ALBD (d) $ 140.50 $ 140.15
============ ============
Net cruise costs per ALBD (e) $ 100.38 $ 97.55
============ ============
(a) Total passenger capacity for the period, assuming two passengers per
cabin, that we offer for sale, which is computed by multiplying passenger
capacity by revenue-producing ship operating days in the period.
(b) Gross cruise revenues divided by ALBDs.
(c) Net cruise revenues divided by ALBDs.
(d) Gross cruise costs divided by ALBDs.
(e) Net cruise costs divided by ALBDs.
(f) The pro forma information gives pro forma effect for the DLC transaction
between Carnival Corporation and Carnival plc, which was completed on
April 17, 2003, as if the DLC transaction had occurred on December 1,
2001. Management has prepared the pro forma information based upon the
companies' reported financial information and, accordingly, the above
information should be read in conjunction with the companies' financial
statements.
The DLC transaction has been accounted for as an acquisition of Carnival
plc by Carnival Corporation, using the purchase method of accounting. The
Carnival plc accounting policies have been conformed to Carnival
Corporation's policies. Carnival plc's reporting period has been changed
to the Carnival Corporation reporting period and the information presented
above covers the same periods of time for both companies.
The above pro forma information has not been adjusted to reflect any net
transaction benefits from the DLC transaction. In addition, it excludes
the costs related to the terminated Royal Caribbean transaction and the
completion of the DLC transaction with Carnival Corporation, which were
expensed by Carnival plc prior to April 17, 2003. The exclusion of these
nonrecurring costs is consistent with the requirements of Article 11 of
Regulation S-X. Finally, the pro forma information does not purport to
represent what the results of operations actually could have been if the
DLC transaction had occurred on December 1, 2001 or what those results
will be for any future periods.
The 2003 pro forma information is computed by adding four and one-half
months of Carnival plc's results of operations, adjusted for SFAS No. 141
acquisition accounting adjustments, to the reported Carnival Corporation &
plc results since the April 17, 2003 DLC transaction date. The 2002 pro
forma information is computed by adding Carnival plc's 2002 results,
adjusted for acquisition adjustments, to the 2002 Carnival Corporation
reported results. For additional information related to the pro forma
statements of operations see Note 3 in the accompanying financial
statements.
(g) We have not provided estimates of future gross revenue yields or gross
cruise costs per ALBD because we are unable to provide reconciliations of
forecasted net cruise revenues to forecasted gross cruise revenues or
forecasted net cruise costs to forecasted cruise operating expenses
without unreasonable effort. The reconciliations would require us to
forecast, with reasonable accuracy, the amount of air and other
transportation costs that our forecasted cruise passengers would elect to
purchase from us (the "air/sea mix"). Since the forecasting of future
air/sea mix involves several significant variables and the revenues from
the sale of air and other transportation approximate the costs of
providing that transportation, management focuses primarily on forecasts
of net cruise revenues and costs rather than gross cruise revenues and
costs. This does not impact, in any material respect, our ability to
forecast our future results, as any variation in the air/sea mix has no
material impact on our forecasted net cruise revenues or forecasted net
cruise costs.
84
Selected Financial Data
The selected consolidated financial data presented below for fiscal 1999
through 2003 and as of the end of each such year, are derived from our audited
financial statements and should be read in conjunction with those financial
statements and the related notes.
Years Ended November 30,
------------------------
2003 2002 2001 2000 1999
----------- ----------- ----------- ----------- -----------
(in millions, except per share and other operating data)
Statement of Operations
and Cash Flow Data (a)(b)
Revenues(c) $ 6,718 $ 4,383 $ 4,549 $ 3,791 $ 3,509
Operating income $ 1,383 $ 1,042 $ 892 $ 983 $ 1,020
Net income(d) $ 1,194 $ 1,016(e) $ 926(e) $ 965 $ 1,027
Earnings per share (d)
Basic $ 1.66 $ 1.73 $ 1.58 $ 1.61 $ 1.68
Diluted $ 1.66 $ 1.73 $ 1.58 $ 1.60 $ 1.66
Dividends declared
per share $ 0.440 $ 0.420 $ 0.420 $ 0.420 $ 0.375
Cash from operations $ 1,933 $ 1,469 $ 1,239 $ 1,280 $ 1,330
Capital expenditures $ 2,516 $ 1,986 $ 827 $ 1,003 $ 873
Other Operating Data(a)(b)
Available lower berth days (f)
North America 24,388,144 17,037,860 16,536,756 15,033,370 13,505,014
Europe and Australia 8,921,641 4,397,968 4,148,367 855,034 831,466
----------- ----------- ----------- ----------- -----------
Total 33,309,785 21,435,828 20,685,123 15,888,404 14,336,480
=========== =========== =========== =========== ===========
Passengers carried 5,037,553 3,549,019 3,385,280 2,669,153 2,365,720
Occupancy percentages (g) 103.4% 105.2% 104.7% 105.4% 104.3%
As of November 30,
------------------
2003 2002 2001 2000 1999
----------- ----------- ----------- ----------- -----------
(in millions, except percentages)
Balance Sheet and Other
Data (a)(b)
Total assets $ 24,491(h) $ 12,335(h) $ 11,564(h) $ 9,831 $ 8,286
Long-term debt, excluding
current portion $ 6,918 $ 3,014 $ 2,955 $ 2,099 $ 868
Total shareholders'
equity $ 13,793 $ 7,418 $ 6,591 $ 5,871 $ 5,931
Debt to capital (i) 34.9% 29.9% 31.1% 28.6% 15.3%
85
(a) Includes the results of Carnival plc since April 17, 2003. Accordingly,
the information for 2003 is not comparable to the prior periods.
(b) From June 1997 through September 28, 2000, we owned 50% of Costa. On
September 29, 2000, we completed the acquisition of the remaining 50%
interest in Costa. We accounted for this transaction using the purchase
accounting method. Prior to the fiscal 2000 acquisition, we accounted for
our 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 our other wholly-owned subsidiaries. Our November 30, 2000 and
subsequent consolidated balance sheets include Costa's balance sheet. All
statistical information prior to 2001 does not include Costa.
(c) Reclassifications have been made to prior period amounts to conform to the
current period presentation.
(d) Effective December 1, 2001, we adopted SFAS No. 142, which required us to
stop amortizing goodwill as of December 1, 2001, and requires an annual,
or when events or circumstances dictate a more frequent, impairment review
of goodwill. If goodwill had not been recorded for periods prior to
December 1, 2001, our adjusted net income and adjusted basic and diluted
earnings per share would have been as follows (in millions, except per
share data):
Years Ended November 30,
--------------------------
2001 2000 1999
----- ----- ------
Net income $ 926 $ 965 $1,027
Goodwill amortization 26 23 21
----- ----- ------
Adjusted net income $ 952 $ 988 $1,048
===== ===== ======
Adjusted earnings per share
Basic $1.63 $1.65 $ 1.71
===== ===== ======
Diluted $1.62 $1.64 $ 1.70
===== ===== ======
(e) Our net income for fiscal 2002 and 2001 includes an impairment charge of
$20 million and $140 million, respectively, and fiscal 2001 includes a
nonoperating net gain of $101 million from the sale of our investment in
Airtours plc. In addition, fiscal 2002 includes a $51 million income tax
benefit as a result of an Italian investment incentive.
(f) Total annual passenger capacity for the period, assuming two passengers
per cabin, that we offered for sale, which is computed by multiplying
passenger capacity by revenue- producing ship operating days in the
period. North America brands in 2003 include CCL, Holland America Line,
Princess, Seabourn and Windstar. Europe brands in 2003 include AIDA,
A'ROSA, Costa, Cunard, Ocean Village, P&O Cruises and Swan Hellenic.
(g) In accordance with cruise industry practice, occupancy percentage is
calculated using a denominator of 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.
(h) Effective December 1, 2000, we adopted SFAS No. 133, which requires that
all derivative instruments be recorded on our balance sheet. At November
30, 2003, total assets included $410 million of derivative contract fair
values. Total assets at November 30, 2002 and 2001 included $187 million
and $578 million, respectively, of fair value of hedged firm commitments.
See Note 2 in the accompanying financial statements.
(i) Percentage of total debt to the sum of total debt and shareholders'
equity.
Market Price for Common Stock and Ordinary Shares
Carnival Corporation's common stock, together with paired trust shares of
beneficial interest in the P&O Princess Special Voting Trust (which holds a
Special Voting Share of Carnival plc), is traded on the NYSE under the symbol
"CCL". Effective April 22, 2003, Carnival plc's ordinary shares trade on the
London Stock Exchange ("LSE") under the symbol "CCL" (formerly traded under
"POC"). Effective April 21, 2003, Carnival plc's American Depositary Shares or
ADSs, each one of which represents one Carnival plc ordinary share, are traded
on the NYSE under the symbol "CUK" (formerly traded under "POC"). The depository
for the ADSs is JPMorgan Chase Bank. The high and low stock sales price for the
periods indicated were as follows:
86
Carnival Corporation
High Low
------ ------
Fiscal 2003
Fourth Quarter $35.99 $32.76
Third Quarter $36.04 $30.50
Second Quarter $30.74 $20.34
First Quarter $28.15 $21.86
Fiscal 2002
Fourth Quarter $29.78 $22.07
Third Quarter $30.90 $22.81
Second Quarter $34.64 $27.40
First Quarter $28.62 $25.05
Carnival plc (a)
Price per Ordinary
Share (GBP) Price per ADS ($)
---------------- -----------------
High Low High Low
----- ----- ------ ------
Fiscal 2003
Fourth Quarter 21.80 18.72 $35.71 $31.21
Third Quarter 21.80 16.50 $33.98 $27.92
Second Quarter 17.41 11.24 $28.50 $18.54
First Quarter 16.82 11.97 $26.22 $19.97
Fiscal 2002
Fourth Quarter 17.88 12.32 $27.92 $20.72
Third Quarter 15.06 11.15 $23.13 $18.14
Second Quarter 16.64 12.98 $23.54 $19.35
First Quarter 13.85 11.75 $20.89 $17.06
(a) Per share price has been adjusted for the effect of the
consolidation of each 3.3289 existing shares into one share effected
in connection with the DLC transaction.
As of January 29, 2004, there were approximately 4,897 holders of record
of Carnival Corporation and 63,801 holders of record of Carnival plc ordinary
shares and 64 holders of record of Carnival plc ADSs.
Since the completion of the DLC transaction, Carnival plc dividends per
share are the same as Carnival Corporation's per share dividends and are
declared in U.S. dollars. Carnival plc UK ordinary shareholders can elect to
receive these dividends either in U.S. dollars or Sterling, based upon a current
U.S. dollar to Sterling exchange rate announced prior to the dividend payment
date.
87
Selected Quarterly Financial Data (Unaudited)
Our revenue from the sale of passenger tickets is seasonal, with our third
quarter being the strongest. Historically, demand for cruises has been greatest
during our third fiscal quarter, which includes the North American summer
months. The consolidation of Carnival plc has caused our quarterly results to be
slightly more seasonal than we had previously experienced, as their business is
more seasonal. This higher demand during the third quarter results in higher net
revenue yields and, accordingly, the largest share of our net income is earned
during this period. Revenues from our Holland America Tours and Princess Tours
units are highly seasonal, with a vast majority of those revenues generated
during the late spring and summer months in conjunction with the Alaska cruise
season.
Quarterly financial results for fiscal 2003 were as follows:
Quarters Ended
---------------------------------------------------------
February 28 May 31 August 31 November 30
----------- ------ --------- -----------
(in millions, except per share data)
Revenues $1,035 $1,342 $2,523 $1,818
Operating income $ 132 $ 168 $ 809 $ 274
Net income $ 127(a) $ 128(b) $ 734 $ 205
Earnings per share
Basic $ 0.22 $ 0.19 $ 0.92 $ 0.26
Diluted $ 0.22 $ 0.19 $ 0.90 $ 0.26
Dividends declared
per share $0.105 $0.105 $0.105 $0.125
(a) Included $19 million of income from net insurance proceeds.
(b) Included $16 million of expenses related to litigation and other charges
associated with the DLC transaction.
Quarterly financial results for fiscal 2002 were as follows:
Quarters Ended
---------------------------------------------------------
February 28 May 31 August 31 November 30
----------- ------ --------- -----------
(in millions, except per share data)
Revenues(a) $ 910 $ 993 $1,440 $1,040
Operating income $ 146 $ 220 $ 488 $ 188
Net income $ 130 $ 194 $ 501(b) $ 191(b)
Earnings per share
Basic $ 0.22 $ 0.33 $ 0.85 $ 0.33
Diluted $ 0.22 $ 0.33 $ 0.85 $ 0.33
Dividends declared
per share $0.105 $0.105 $0.105 $0.105
(a) Reclassifications have been made to these amounts to conform to the 2003
presentation.
(b) Included a $17 million and a $34 million income tax benefit in the August
31 and November 30 quarters, respectively, from Costa, resulting from an
Italian investment incentive law. In addition, the August 31 quarter
included a $20 million impairment charge.
88
Glossary of Terms
The attached financial statements include certain U.S. accounting terminology,
which may not be familiar to a UK reader. The following glossary is provided to
assist in interpreting these financial statements:
UK Term U.S. Term
Acquisition accounting Purchase method of accounting
Associate/Joint venture Equity investment
Called up share capital Common stock at par value
Creditors Payables
Debtors Receivables
Finance lease Capital lease
Financial year Fiscal year
Gearing Debt/Capital (debt plus equity)
Interest payable Interest expense
Interest receivable Interest income
Profit Income
Profit and loss account Statement of operations
Profit and loss account reserves Retained earnings
Profit for the financial year Net income
Provisions Liabilities or reserves
Share premium Additional paid-in capital
Shareholders' funds Shareholders' equity
Stocks Inventories
Tangible fixed assets Property, plant and equipment
Turnover Revenue
89
Exhibit 21
Significant Subsidiaries of Carnival Corporation and Carnival plc(1)
Jurisdiction
of Incorporation
Name of Subsidiary or Organization
------------------ ---------------
Costa Crociere, S.p.A.(2) Italy
Costa Finance, S.A.(3) Luxembourg
Costa Holdings, Srl(4) Italy
HAL Antillen N.V. Netherlands Antilles
HAL Buitenland B.V.(5) Netherlands
Holland America Line N.V.(5) Netherlands Antilles
P&O Princess Cruises International Limited ("POPCIL")(6) United Kingdom
Princess Bermuda Holdings Ltd.(7) Bermuda
Princess Cruise Lines Ltd.(8) Bermuda
Sitmar International Srl ("Sitmar")(9) Panama
Sunshine Shipping Corp. ("Sunshine")(10) Bermuda
(1) Carnival Corporation, incorporated in the Republic of Panama, and Carnival
plc, incorporated in England and Wales, are separate legal entities, which
have entered into a DLC structure as discussed in Notes 1 and 3 to the
Consolidated Financial Statements in Exhibit 13 to the joint Annual Report
on Form 10-K. We have accounted for the DLC transaction under U.S. GAAP as
an acquisition of Carnival plc by Carnival Corporation. Accordingly, we
have determined the significant subsidiaries based upon the consolidated
results of operations and financial position of Carnival Corporation &
plc.
(2) Subsidiary of Costa Holdings, Srl
(3) Subsidiary of HAL Buitenland B.V. and Carnival Corporation
(4) Subsidiary of Costa Finance, S.A.
(5) Subsidiaries of HAL Antillen N.V. as of November 30, 2003. All of HAL
Buitenland shares were sold to Carnival plc in December 2003.
(6) Subsidiary of Carnival plc
(7) Subsidiary of Sitmar
(8) Subsidiary of Sunshine
(9) Subsidiary of POPCIL as of November 30, 2003. All of Sitmar shares were
sold to Carnival Corporation on December 1, 2003.
(10) Subsidiary of Princess Bermuda Holdings Ltd.
90
Exhibit 23
Consent of Independent Certified Public Accountants
We hereby consent to the incorporation by reference in the joint
Registration Statements on Form S-3 of Carnival Corporation and Carnival plc
(File Nos. 333-106850, 333-106553, 333-106293, 333-72729, 333-68999 and
333-43269),the Registration Statements on Form S-8 of Carnival Corporation (File
Nos. 333-105672, 333-87036, 333-67394, 333-60558, 333-43885, 33-53099, 33-51195,
33-45287 and 33-26898) and the Registration Statements on Form S-8 of Carnival
plc (File Nos. 333-104609, 333-84968, 333-13794 and 333-12742), of our report,
dated January 29, 2004, relating to the financial statements appearing in the
joint Annual Report to Shareholders of Carnival Corporation and Carnival plc,
which is incorporated in this joint Annual Report on Form 10-K.
/s/ PricewaterhouseCoopers LLP
Miami, Florida
February 20, 2004
91
Exhibit 31.1
I, Micky Arison, certify that:
1. I have reviewed this annual report on Form 10-K of Carnival Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: February 24, 2004
By: /s/ Micky Arison
- ----------------------------------
Micky Arison
Chairman of the Board of Directors
and Chief Executive Officer
92
Exhibit 31.2
I, Howard S. Frank, certify that:
1. I have reviewed this annual report on Form 10-K of Carnival Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: February 24, 2004
By: /s/ Howard S. Frank
- ----------------------------------
Howard S. Frank
Vice Chairman of the Board of
Directors and Chief
Operating Officer
93
Exhibit 31.3
I, Gerald R. Cahill, certify that:
1. I have reviewed this annual report on Form 10-K of Carnival Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: February 24, 2004
By: /s/ Gerald R. Cahill
- ----------------------------------
Gerald R. Cahill
Executive Vice President
and Chief Financial and
Accounting Officer
94
Exhibit 31.4
I, Micky Arison, certify that:
1. I have reviewed this annual report on Form 10-K of Carnival plc;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: February 24, 2004
By: /s/ Micky Arison
- ----------------------------------
Micky Arison
Chairman of the Board of Directors
and Chief Executive Officer
95
Exhibit 31.5
I, Howard S. Frank, certify that:
1. I have reviewed this annual report on Form 10-K of Carnival plc;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: February 24, 2004
By: /s/ Howard S. Frank
- ----------------------------------
Howard S. Frank
Vice Chairman of the Board of
Directors and Chief
Operating Officer
96
Exhibit 31.6
I, Gerald R. Cahill, certify that:
1. I have reviewed this annual report on Form 10-K of Carnival plc;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: February 24, 2004
By: /s/ Gerald R. Cahill
- ----------------------------------
Gerald R. Cahill
Executive Vice President
and Chief Financial and
Accounting Officer
97
Exhibit 32.1
In connection with the Annual Report on Form 10-K for the year ended
November 30, 2003 as filed by Carnival Corporation with the Securities and
Exchange Commission on the date hereof (the "Report"), I certify pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Carnival
Corporation.
Date: February 24, 2004
By: /s/ Micky Arison
-----------------------------
Micky Arison
Chairman of the Board of Directors
and Chief Executive Officer
98
Exhibit 32.2
In connection with the Annual Report on Form 10-K for the year ended
November 30, 2003 as filed by Carnival Corporation with the Securities and
Exchange Commission on the date hereof (the "Report"), I certify pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Carnival
Corporation.
Date: February 24, 2004
By: /s/ Howard S. Frank
-----------------------------
Howard S. Frank
Vice Chairman of the Board of Directors
and Chief Operating Officer
99
Exhibit 32.3
In connection with the Annual Report on Form 10-K for the year ended
November 30, 2003 as filed by Carnival Corporation with the Securities and
Exchange Commission on the date hereof (the "Report"), I certify pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Carnival
Corporation.
Date: February 24, 2004
By: /s/ Gerald R. Cahill
-----------------------------
Gerald R. Cahill
Executive Vice President
and Chief Financial and
Accounting Officer
100
Exhibit 32.4
In connection with the Annual Report on Form 10-K for the year ended
November 30, 2003 as filed by Carnival plc with the Securities and Exchange
Commission on the date hereof (the "Report"), I certify pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Carnival
plc.
Date: February 24, 2004
By: /s/ Micky Arison
-----------------------------
Micky Arison
Chairman of the Board of Directors
and Chief Executive Officer
101
Exhibit 32.5
In connection with the Annual Report on Form 10-K for the year ended
November 30, 2003 as filed by Carnival plc with the Securities and Exchange
Commission on the date hereof (the "Report"), I certify pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Carnival
plc.
Date: February 24, 2004
By: /s/ Howard S. Frank
-----------------------------
Howard S. Frank
Vice Chairman of the Board of Directors
and Chief Operating Officer
102
Exhibit 32.6
In connection with the Annual Report on Form 10-K for the year ended
November 30, 2003 as filed by Carnival plc with the Securities and Exchange
Commission on the date hereof (the "Report"), I certify pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Carnival
plc.
Date: February 24, 2004
By: /s/ Gerald R. Cahill
-----------------------------
Gerald R. Cahill
Executive Vice President
and Chief Financial and
Accounting Officer
103
