EXHIBIT 10.1
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PRINCESS CRUISES
CHIEF EXECUTIVE OFFICER
SUPPLEMENTAL RETIREMENT PLAN
2006 RESTATEMENT
PREAMBLE
A. Effective as of November 1, 1998 (the "Effective Date"), Princess
Cruises, Inc. (the "Former Sponsor") established the "Princess
Cruises, Inc. President's Retirement Plan" (the "Plan"), for the
Participant (as defined in Section 2.21 below), who was then the
President of Former Sponsor. The name of the Plan was changed to the
"Princess Cruises, Inc. Special Senior Executive Supplemental
Retirement Plan," and was changed again to the "Princess CRUISES
Special Senior Executive Supplemental Retirement Plan." Effective as
of the Restatement Effective Date of this 2006 Restatement of the
Plan, the name of the Plan is changed to the "Princess Cruises Chief
Executive Officer Supplemental Retirement Plan."
B. In connection with the sale of substantially all of Former Sponsor's
assets to Princess Cruise Lines, Ltd., a corporation organized under
the laws of Bermuda ("PCLL"), PCLL adopted and assumed sponsorship of
the Plan and all of Former Sponsor's rights, liabilities and
obligations under and with respect to the Plan (except as otherwise
set forth in the Asset Purchase Agreement).
C. Before October 16, 2000, the Participant was a member in the P&O
Pension Scheme. At that date a new scheme was established by P&O
Princess Cruises plc and the Participant's benefit under the P&O
Pension Scheme was transferred to the new scheme. Effective as of
October 16, 2000 the Participant became a member in the new scheme,
which is called the "P&O Princess Cruises Pension Scheme." The
scheme, as modified by certain agreements dated January 16, 2001 and
October 17, 2001, is herein referred to as the "UK Pension Scheme"
D. With effect on and from April 5, 2006 (the "Opt Out Date"), the
Participant elected to opt out of the UK Pension Scheme. As a member
of the UK Pension Scheme whose active membership has ceased, the
Participant is entitled to a deferred pension. However, future
accruals under the scheme ceased as of the Opt Out Date.
E. Pursuant to Section 6.3 of the Participant's Employment Agreement (as
defined in Section 2.15), generally effective as of the Opt Out Date,
the Plan is being amended and completely restated into this document,
which is referred to herein as the "2006 Restatement." The primary
purpose of the 2006 Restatement is to maintain the benefit structure
provided to the Participant before the Opt Out Date. Accordingly,
under the 2006 Restatement, the Participant is entitled to receive
substantially the same benefits he was entitled to under this Plan
and the UK Pension Scheme, both as in effect immediately before the
Opt Out Date.
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ARTICLE I. INTRODUCTION
1.1 PURPOSE. The purpose of the Plan is to enable the Sponsor to attract,
retain and motivate the Participant by providing to such executive
certain retirement income as more fully set forth herein.
1.2 EFFECTIVE DATE AND TERM. The effective date of the Plan is November
1, 1998 (the "Effective Date"), provided, however that the effective
date of this 2006 Restatement is the Restatement Effective Date The
Plan shall continue in effect until terminated by the Committee
pursuant to the provisions of Section 7.5.
1.3 PARTICIPATION. Participation in this Plan is open only to Peter G.
Ratcliffe. The participation in this Plan and the payment of any
benefits under this Plan shall be governed by the terms of this Plan.
Participant shall execute a copy of this Plan evidencing his
acceptance of the terms and conditions hereof and his participation
in the Plan.
1.4 APPLICABILITY OF ERISA. This Plan is intended to be a "top-hat"
plan--that is, an unfunded plan maintained primarily for the purpose
of providing deferred compensation to a select group of management or
highly compensated employees within the meaning of ERISA.
ARTICLE II. DEFINITIONS
2.1 409A CHANGE IN CONTROL EVENT. "409A Change in Control Event" means an
event described in Code Section 409A(a)(2)(A)(v) as further defined
in applicable regulations thereunder.
2.2 ACTIVE PARTICIPANT. "Active Participant" means the Participant so
long as he has not Separated from Service and the Committee has not
elected to terminate his Active Participation pursuant to Section
4.6. "Active Participation" means participation as an Active
Participant. Active Participation will cease on the earlier of the
Participant's Separation from Service or the date the Committee
terminates the Participant's Active Participation under Section 4.6.
2.3 ADJUSTMENT DATE. "Adjustment Date" means the date upon which Pension
increases shall be effective under Section 3.3, which shall be April
1.
2.4 AFFILIATED COMPANY. "Affiliated Company" means any entity that
constitutes the Employer other than the Sponsor.
2.5 ALTERNATE PAYEE. "Alternate Payee" means the Participant's spouse or
former spouse.
2.6 AVERAGE ANNUAL COMPENSATION. "Average Annual Compensation" means,
with respect to the Participant and as of any date of reference (the
"Determination Date"), the quotient obtained by dividing (a) the
highest aggregate amount of Pensionable Earnings earned by such
Participant during any consecutive 60-month period prior to (or
ending on) such Determination Date, by (b) a factor of five.
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2.7 BENEFICIARY. "Beneficiary" means the Surviving Spouse, who shall be
entitled to receive the lump sum death benefit pursuant to Section
5.2(b), but if there is no Surviving Spouse at the Participant's
death or the Surviving Spouse dies within the five-year period
following the Participant's Separation from Service, such person or
persons or entity or entities designated or deemed designated
pursuant to Section 3.9 to receive the lump sum death benefit under
Section 5.2.
2.8 BENEFIT ENTITLEMENT STATEMENT. "Benefit Entitlement Statement" means
the statement of a Participant's benefit entitlement referenced in
Section 3.10 of the Plan.
2.9 CHANGE IN CONTROL.
(a) "Change in Control" means the following and shall be deemed
to occur if any of the following events occurs:
(i) Any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than
an entity created by Carnival as part of a
reorganization of the structure of the Carnival
Corporation and plc Group ("Carnival Created
Holding Company") is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of
Carnival representing more than 50% of the combined
voting power of Carnival's then outstanding voting
securities.
(ii) Any "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act, other than
Carnival or a direct or indirect subsidiary of
Carnival ("Carnival Subsidiary") is or becomes the
"beneficial owner" (as defined in Rule13d-3 under
the Exchange Act), directly or indirectly, of
securities of Sponsor representing more than 50% of
the combined voting power of Sponsor's then
outstanding voting securities.
(iii) The stockholders of Carnival approve a merger or
consolidation of Carnival with any other
corporation, other than the following:
(A) A merger or consolidation which would
result in the voting securities of
Carnival outstanding immediately prior
thereto continuing to represent (either by
remaining outstanding or by being
converted into voting securities or
another entity) 50% or more of the
combined voting power of the voting
securities of Carnival or such other
entity outstanding
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immediately after such merger or
consolidation; or
(B) A merger or consolidation effected to
implement a recapitalization or
reorganization of Carnival (or similar
transaction) in which no person acquires
more than 50% of the combined voting power
of Carnival's then outstanding voting
securities; or
(C) A merger or consolidation with a Carnival
Created Holding Company.
(iv) The stockholders of Sponsor approve a merger or
consolidation of Sponsor with any other
corporation, other than the following:
(A) A merger or consolidation which would
result in the voting securities of Sponsor
outstanding immediately prior thereto
continuing to represent (either by
remaining outstanding or by being
converted into voting securities or
another entity) 50% or more of the
combined voting power of the voting
securities of Sponsor or such other entity
outstanding immediately after such merger
or consolidation; or
(B) A merger or consolidation effected to
implement a recapitalization or
reorganization of Sponsor (or similar
transaction) in which no person acquires
more than 50% of the combined voting power
of Sponsor's then outstanding voting
securities; or
(C) A merger or consolidation with a Carnival
Subsidiary or Carnival Created Holding
Company.
(v) The stockholders of Carnival approve (i) a plan of
complete liquidation of Carnival or (ii) an
agreement for the sale or other disposition by the
Carnival of all or substantially all of the
Carnival's assets to an entity other than one
created by Carnival as part of a reorganization of
the structure of the Carnival Corporation and plc
Group.
(vi) The stockholders of Sponsor approve a plan of
complete liquidation of Sponsor or an agreement for
the sale or other disposition by Sponsor of all or
substantially all of Sponsor's assets to a person
that is not a Carnival Subsidiary.
(b) Notwithstanding the preceding provisions of this Section
2.9, a Change in Control shall not be deemed to have
occurred (A) if the "person" described in the preceding
provisions of this Section 2.9 is an underwriter or
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underwriting syndicate that has acquired the ownership of
50% or more of the combined voting power of Carnival's then
outstanding voting securities solely in connection with a
public offering of Carnival's securities, or (B) if the
"person" described in the preceding provisions of this
Section 2.9 is an underwriter or underwriting syndicate that
has acquired the ownership of 50% or more of the combined
voting power of Sponsor's then outstanding voting securities
solely in connection with a public offering of Sponsor's
securities.
(c) Wherever in the Plan there is reference of "Carnival", this
shall mean both Carnival Corporation, a corporation
organized under the laws of the Republic of Panama, and
Carnival plc, a company incorporated under the laws of
England and Wales, and reference to Carnival's outstanding
voting securities shall be a reference to the combined
voting power on joint electorate actions of the outstanding
voting securities of both Carnival Corporation and Carnival
plc.
2.10 CODE. "Code" means the Internal Revenue Code of 1986, as amended.
2.11 COMMITTEE. "Committee" means the committee established to administer
this Plan as set forth in Section 3.1 hereof, which shall be
comprised of at least two persons who are members of the Compensation
Committee of the Board of Directors of Carnival Corporation and
Carnival plc, other than the Participant.
2.12 DESIGNATED PARTICIPANT. "Designated Participant" shall have the
meaning given such term in the Trust Agreement.
2.13 EFFECTIVE DATE. "Effective Date" means the original effective date of
the Plan, which is November 1, 1998.
2.14 EMPLOYER. "Employer" means Carnival plc, a company incorporated in
England and Wales, Carnival Corporation, a corporation organized
under the laws of the Republic of Panama, and any other employers
whose employees are treated as employed by the same employer with
Carnival plc or Carnival Corporation pursuant to Code Section 414(b)
and (c).
2.15 EMPLOYMENT AGREEMENT. "Employment Agreement" means the agreement by
and between P&O Princess Cruises International, Ltd. and the
Participant dated April 17, 2003, as amended July 19, 2004.
2.16 ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
2.17 FINAL PENSIONABLE EARNINGS. "Final Pensionable Earnings" means the
higher of
(a) the Pensionable Earnings received by the Participant in the
twelve months
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ending on the last day of his Active Participation; and
(b) the annual average of Pensionable Earnings over the period
of three consecutive Tax Years which gives the highest
result out of the 13 years ending on the last day of the
Participant's Active Participation. For this purpose, a Tax
Year means a year ending April 5.
2.18 FORMER SPONSOR. "Former Sponsor" means Princess Cruises, Inc., a
former Sponsor of the Plan.
2.19 LEGAL FEES. "Legal Fees" means the reasonable legal fees and expenses
incurred by Participant and his beneficiaries in connection with
lawsuits, actions or other proceedings brought by such persons to
enforce their rights under the Plan for which Sponsor is obligated to
reimburse the Participant after the earlier of the Participant's
Separation from Service or a 409A Change in Control Event.
2.20 NORMAL RETIREMENT DATE. "Normal Retirement Date" means the date on
which the Participant attains age 60.
2.21 PARTICIPANT. "Participant" means Peter G. Ratcliffe, who was
President of Former Sponsor on the Effective Date, and who is the
Chief Executive Officer of P&O Princess Cruises International on the
Restatement Effective Date.
2.22 PAYMENT DATE. "Payment Date" means the date upon which monthly
installments of a Pension payable under the Plan shall be made, which
shall be the first day of each calendar month.
2.23 PCLL. "PCLL" means Princess Cruises Lines, Ltd., a corporation
organized under the laws of Bermuda.
2.24 PENSION. "Pension" means a pension payable under this Plan, as
further defined in Section 3.4.
2.25 PENSIONABLE EARNINGS. "Pensionable Earnings" means, in relation to
the Participant, basic pay from the Employer that is payable during
Active Participation (a) including (i) any sums paid by Employer to
the Participant as director's fees or their equivalent, (ii) any
amounts not currently includible in such Participant's gross income
by reason of Code Section 402(e)(3) and/or Code Section 125, and
(iii) any portion of base salary deferred pursuant to the Princess
Cruises Deferred Compensation Plan, provided that benefit payments
under the Deferred Compensation Plan shall not be included in
Pensionable Earnings, and (b) excluding any fixed allowances,
overtime, bonus, commission or other fluctuating emoluments which are
not pensionable under the terms of the Participant's employment,
including without limitation the Participant's car allowance payable
under Section 5.4 of his Employment Agreement and his
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recreational and/or health club membership fees under Section 5.5 of
his Employment Agreement.
2.26 PENSIONABLE SERVICE. "Pensionable Service" means, in relation to the
Participant, 35 years and 57 days as of March 31, 2006 plus any
additional Service credited after such date and before the
Participant ceases Active Participation.
2.27 PLAN. "Plan" means this Princess Cruises Chief Executive Officer
Supplemental Retirement Plan adopted as of the Effective Date and as
it has been and may be amended from time to time.
2.28 POTENTIAL PENSIONABLE SERVICE. "Potential Pensionable Service" means
the Pensionable Service that the Participant would have had if he had
continued as an Active Participant up to Normal Retirement Date.
2.29 RECORDKEEPER. "Recordkeeper" means the person appointed by the
Compensation Committee of the Board of Directors of Carnival
Corporation in accordance with the relevant provisions of the Trust
Agreement.
2.30 REDETERMINATION DATE. "Redetermination Date" means the date as of
which Pension increases under Section 3.3 and offset redeterminations
under Section 3.4(c) shall be made, which shall be September 30.
2.31 RESTATEMENT EFFECTIVE DATE. "Restatement Effective Date" means the
effective date of this 2006 Restatement, which shall be April 5,
2006, provided, however, the effective date of Section 7.14 and the
amendments set forth in Exhibit B, which are designed to bring the
Plan into compliance with Code Section 409A, shall be January 1,
2005.
2.32 SEPARATION FROM SERVICE. "Separation from Service" means a separation
from service with the Employer, as such term is used in Code Section
409A(a)(2)(A(i), and as defined in applicable regulations thereunder.
To "Separate from Service" means to experience a Separation from
Service. In general, the Participant will have a Separation from
Service with the Employer if he dies, retires or otherwise has a
termination of employment with the Employer. Whether a termination of
employment has occurred with respect to the Participant shall be
based upon the facts and circumstances as determined by the
Committee, in its discretion, in accordance with applicable
regulations.
2.33 SERVICE. "Service" means employment with the Employer.
2.34 SPECIFIED RATE. "Specified Rate" means the annual interest rate (as
such rate may change from time to time) that is credited on new
monies deposited to the fixed income investment offered under the
401(k) plan that Sponsor offers to its employees.
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2.35 SPONSOR. "Sponsor" means Princess Cruises Lines, Ltd., a company
organized under the laws of Bermuda.
2.36 SPOUSE. "Spouse" means, with respect to the Participant, only that
person (if any) to whom such Participant is married as of such
Participant's Separation from Service, provided, however, that a
person who has been married to the Participant for less than one year
as of such Participant's Separation from Service shall not be deemed
to be the "Spouse" of such Participant.
2.37 SURVIVING SPOUSE. "Surviving Spouse" means the Participant's Spouse
at the time of his death, if the Participant has a Spouse at the time
of his death.
2.38 TOTAL INCAPACITY. "Total Incapacity" means in relation to a
Participant, a physical or mental condition which in the opinion of
the Employer is likely permanently to prevent the Participant from
doing his or her job with the Employer and from doing a suitable job
with any other employer. "Suitable job" means a job which it is
reasonable to expect the Participant to take (on the assumption that
such jobs are available) and which allows the Participant to maintain
his or her basic standard of living.
2.39 TRUST. "Trust" means the trust that funds certain benefits payable
under the Plan in accordance with the applicable provisions of the
Trust Agreement.
2.40 TRUST AGREEMENT. "Trust Agreement" means the agreement pursuant to
which the Trust is established.
2.41 TRUSTEE. "Trustee" means the initial trustee of the Trust and any
successor or individual or entity acting as a trustee of the Trust.
2.42 UK PENSION SCHEME. "UK Pension Scheme" means the P&O Princess Cruises
Pension Scheme effective as of October 16, 2000, as modified by the
agreements dated January 16, 2001 and October 17, 2001, all as in
effect on April 5, 2006.
2.43 UNDISPUTED BENEFIT ENTITLEMENT STATEMENT. "Undisputed Benefit
Entitlement Statement" means (a) any Benefit Entitlement Statement
which is not initially disputed by the Participant (or Beneficiary)
in the manner and within the time period specified in Section
3.10(c), and (b) any Benefit Entitlement Statement reissued by the
Committee pursuant to Section 3.10(c) and with respect to which the
Participant (or Beneficiary) does not file a statement of objection
in the manner and within the time period specified in Section
3.10(d).
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ARTICLE III. ADMINISTRATION OF THE PLAN
3.1 COMMITTEE AUTHORITY: RULES AND REGULATIONS. The Committee shall
administer the Plan. The Committee shall have discretionary authority
to (a) make, amend, interpret and enforce all appropriate rules and
regulations for the administration of the Plan, and (b) decide or
resolve, in its discretion, any and all questions, including
interpretations of the Plan, as may arise in connection with the
Plan. The Committee shall have authority to take or approve, in its
discretion, all such actions relating to the Plan (including, without
limitation, actions described in the preceding sentence). Any
decision or action of the Committee (and, subject to the provisions
of Section 3.6 hereof, any decision or action of the Committee) in
respect of any question arising out of or in connection with the
administration, interpretation and application of this Plan and the
rules and regulations promulgated hereunder shall be final,
conclusive and binding upon the Participant.
3.2 APPOINTMENT OF AGENTS. In the administration of this Plan, the
Committee may from time to time employ agents (which may include
officers and/or employees of the Sponsor) and delegate to them such
administrative duties as the Committee (as applicable) deems
appropriate.
3.3 PENSION INCREASES.
(a) A Pension will be increased in payment under this Section
3.3. Increases will be effective once every calendar year on
April 1 (the "Adjustment Date").
(b) Subject to (c) below, the rate of the increase for that part
of a Pension that is attributable to Pensionable Service
before April 6, 1997 will be 3%, or if less the percentage
increase in the Consumer Price Index - Urban Wage Earners
and Clerical Workers ("CPI-W") over the twelve-month period
ending on the Redetermination Date immediately preceding the
Adjustment Date. The rate increase for that part of a
Pension that is attributable to Pensionable Service on or
after April 6, 1997 will be 5%, or if less, the percentage
increase in the CPI-W over the twelve-month period ending on
the Redetermination Date immediately preceding the
Adjustment Date. In the event there is a decrease in the
CPI-W for any year, the percentage increase in the amount of
the Pension for that year shall be zero, and the percentage
increase in the CPI-W for any subsequent year shall be
calculated taking into account such prior year decrease in
the CPI-W.
(c) The rate of increase under this Section 3.3 for a retirement
Pension under Article IV, which has been in payment for less
than nine months at the Adjustment Date will be a percentage
of the rate that would have been paid if it had been in
payment for a full year, depending on how long the
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Pension has been in payment as set out below:
PERIOD IN PAYMENT PERCENTAGE OF FULL RATE
INCREASE
Less than 3 months 25%
Less than 6 months 50%
Less than 9 months 75%
3.4 CALCULATION AND PAYMENT OF BENEFITS.
(a) PENSIONS PAYABLE FOR LIFE. Unless the contrary is expressly
stated, a Pension is payable for life and its amount as
described in Article IV and V is its annual amount.
(b) PAYMENT OF PENSIONS / LUMP SUMS.
(i) All Pensions payable under the Plan will be paid in
United States Dollars by monthly installments in
arrear on the Payment Date. Except as provided by
(ii) below, the first installment will fall due on
the Payment Date next following the date on which
the Pension was due to commence (that is, upon
Separation from Service or the Participant's death)
and will be apportioned to take into account part
of a month. The last installment will fall due on
the Payment Date next following the date on which
the event giving rise to the cessation of such
Pension occurs and will not be apportioned to the
date of such event.
(ii) Where a Pension commences as a result of the death
of the Participant if he is in receipt of a Pension
under the Plan, the first installment of such
Pension will fall due on the second Payment Date
following the Participant's death and will not be
apportioned.
(iii) Where a lump sum is payable as a result of the
death of the Participant under Section 5.1 or
Section 5.2(b) or as a result of the Surviving
Spouse's death under Section 5.2(c), such lump sum
shall be paid in United States Dollars within a
period of ninety (90) days following the
Participant's death or the Surviving Spouse's
death, whichever is applicable.
(c) UK PENSION SCHEME OFFSET.
(i) The amount of any Pension payable under the Plan
shall be offset by the amount of the pension that
the Participant would be entitled to receive under
the UK Pension Scheme if he had elected to
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receive such pension at the same time and in the
same form as the Pension payable under this Plan,
all as determined under this subparagraph (i).
(A) The offset for the initial payment of any
Pension to be paid under the Plan shall be
determined as of the date (the "Initial
Offset Determination Date") that is 30
days before the initial Payment Date. As
of the Initial Offset Determination Date,
the amount of the pension that would be
payable under the UK Pension Scheme, which
is expressed in Pounds Sterling, shall be
converted into an equivalent amount
expressed in terms of United States
Dollars, using the average of exchange
rates published in the Wall Street Journal
on the first day of each month during the
one-year period ending on the Initial
Offset Determination Date.
(B) The amount of the offset used in
determining the amount of a Pension
payable under the Plan shall be
redetermined annually on the
Redetermination Date in accordance with
the provisions of this subparagraph (B)
with the first such redetermination to be
made as of the Redetermination Date
following the initial Payment Date for the
Pension and with redeterminations to be
made each subsequent Redetermination Date.
The effective date of any redetermination
shall be the Adjustment Date following the
Redetermination Date. As of each
Redetermination Date following the initial
Payment Date, the amount of the offset
shall be redetermined based on the amount
of the pension that would be payable under
the UK Pension Scheme after adjustment for
the increase under the terms of the UK
Pension Scheme that would be effective on
the following Adjustment Date. The
redetermined offset shall be converted
into an equivalent amount expressed in
terms of United States Dollars, using the
average of exchange rates published in the
Wall Street Journal on the first day of
each month during the one-year period
ending on the Redetermination Date at
which the redetermination is to be made.
(C) As of each Redetermination Date, the
offset redetermined and converted into an
amount expressed in terms of United States
Dollars in accordance with subparagraph
(B) above shall be used to determine the
Pension payable under the Plan annually at
the same time as the Pension increase is
determined under the provisions of Section
3.3, with any
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change in the amount of such Pension to be
effective at the Adjustment Date following
the redetermination of the offset.
(D) The amount of any Pension payable under
the Plan shall not be offset by the
payment of any cash supplement under the
UK Pension Scheme.
(E) If the Participant has the right to
commute (that is, exchange) the whole or
part of any pension payable under the UK
Pension Scheme for a cash sum, the offset
described in this subparagraph (i) shall
be determined assuming that the
Participant has elected not to exercise
such right to commute his pension for a
cash sum.
(F) The six-month delay required under Section
4.9 and the resulting lump sum that is
payable on account of the delay under
Section 4.4 shall be disregarded in
determining the offset described in this
subparagraph (i), that is, the offset
shall be determined as if the six-month
delay had not occurred and the lump sum
had not been paid.
(ii) Notwithstanding the provisions of subparagraph (i)
above, if a lump sum is payable under paragraphs
(b) or (c) of Section 5.2 of the Plan, then the
amount of such lump sum shall be offset by the
amount of the lump sum that the Participant would
have been entitled to receive under the
corresponding provisions of the UK Pension Scheme
had the Participant elected to receive the pension
payable to the Participant under the UK Pension
Scheme at the same time and in the same form as the
Pension payable under this Plan. The amount of the
lump sum that would be payable under the UK Pension
Scheme, which is expressed in terms of Pounds
Sterling, shall be converted to United States
Dollars using the average of the exchange rates
published in the Wall Street Journal on the first
day of each month during (A) the one-year period
ending on the death of the Participant in the case
of a payment under Section 5.2(b), or (B) the
one-year period ending on the death of the
Surviving Spouse in the case of a payment under
5.2(c).
(iii) If the Participant (or in the case of a spouse's
benefit, the Participant's Spouse) is not entitled
to a benefit (pension or lump sum) under the UK
Pension Scheme for whatever reason including as the
result of a waiver of the benefit by the
Participant (or
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Participant's Spouse), then the offset under this
Section 3.4(c) in respect of all or that part of
the benefit that the Participant (or Participant's
Spouse) is not entitled to receive shall be zero.
Nothing in this Plan shall restrict in any way the
right of the Participant (or Participant's Spouse)
to waive a benefit payable under the UK Pension
Scheme.
3.5 INITIAL ACTION ON APPLICATION. If the Plan fails to pay the benefits
provided under the terms of the Plan to the Participant and/or his
Beneficiary (the "Claimant"), then the Claimant or the Claimant's
authorized representative may make application for such benefits.
Within 60 days (45 days in the case of a determination regarding
Total Incapacity) following receipt of an application for benefits
and all necessary documents and information, the Committee shall:
(a) determine whether the Participant claiming benefits (or with
respect to whom benefits are claimed) has incurred
Separation from Service and is otherwise entitled to
benefits under this Plan, and
(b) furnish the Claimant with written notice of the decision
rendered with respect to such application. Should special
circumstances require an extension of time for processing
the claim, written notice of the extension shall be
furnished to the Claimant prior to the expiration of the
initial 60 (or 45) day period. The notice shall indicate the
special circumstances requiring an extension of time and the
date by which a final decision is expected to be rendered.
In no event shall the period of the extension exceed 90 days
(30 days in the case of a determination of Total Incapacity)
from the end of the initial 60 day (or 45 day) period. In
the case of a denial of the claimant's application, the
written notice thereof shall set forth specific reasons for
the denial, with references to the Plan provisions upon
which the denial is based, a description of any additional
information or material necessary to perfect the application
(together with an explanation why such material or
information is necessary), and an explanation of the Plan's
claim review procedure including the right of the Claimant
to bring a civil action under ERISA Section 502(a) following
an adverse benefit determination on review.
3.6 APPEAL OF INITIAL DECISION.
(a) If the Claimant does not agree with the initial decision
rendered with respect to his application pursuant to Section
3.5 hereof he or his authorized representative may appeal
such decision to the Committee. The appeal must be in
writing and must be filed with the Committee within 65 days
after the date of notice of the initial decision with
respect to the application, or, if the application has
neither been approved nor denied within the applicable
period provided in Section 3.5 hereof, then the appeal must
be filed within 65 days after the expiration of such
applicable period.
13
(b) The Claimant may request that his application be given full
and fair review by the Committee. The claimant may review
all pertinent documents and submit issues and comments to
the Committee in writing in connection with the appeal. The
decision of the Committee shall be made promptly, and not
later than 60 days (45 days in the case of a determination
of Total Incapacity) after the Committee's receipt of a
request for review and all supporting documentation and
information to be submitted by the Claimant, unless special
circumstances require an extension of time for processing,
in which case a decision shall be rendered as soon as
possible, but not later than 120 days (90 days in the case
of a determination of Total Incapacity) after receipt of a
request for review and such supporting documentation and
information. If special circumstances require such
extension, a written notice will be provided to the Claimant
prior to the expiration the initial 60-day (or 45-day)
period. The notice shall indicate the special circumstances
requiring an extension of time and the date by which a final
decision is expected to be rendered. The Committee's
decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner
calculated to be understood by the Claimant, with specific
reference to the pertinent Plan provisions upon which the
decision is based. In the case of a denial of the Claimant's
appeal, the written notice thereof shall set forth specific
reasons for the denial, with references to the Plan
provisions upon which the denial is based, a statement that
the Claimant has the right to receive, upon request and free
of charge, reasonable access to, and copies of, all
documents, records and other information relevant to the
Claimant's claim for benefits and a statement of the
Claimant's right to bring a civil action under ERISA Section
502(a).
3.7 LEAVE OF ABSENCE. In the event the Participant takes a leave of
absence from active employment with the Employer, the Committee shall
determine, in its discretion, (a) whether such leave of absence shall
be deemed to constitute a termination of employment with the Employer
for purposes of this Plan, and (b) if such leave of absence is not
deemed to constitute a termination of employment with the Employer
under this Plan, whether such Participant shall continue to earn
Pensionable Service during such leave of absence notwithstanding the
provisions of Section 2.26 hereof. The employment relationship shall
be treated as continuing intact while the Participant is on military
leave, sick leave or other bona fide leave of absence (such as
temporary employment by the government), if the leave does not exceed
six months, or if longer, so long as the Participant's right to
reemployment with the Employer is provided either by statute or by
contract. If the period of leave exceeds six months and the
Participant's right to reemployment is not provided by statute or by
contract, the employment relationship is deemed to terminate on the
first day immediately following such six-month period.
14
3.8 ACTUARIAL ASSUMPTIONS. In any case in which it is necessary to make
actuarial adjustments or to determine actuarial equivalence in order
to carry out the provisions of this Plan (including, without
limitation, the provisions requiring the determination of an
actuarially equivalent benefit under Section 5.2(d) hereof), the
assumptions used for financial reporting in the most recent SEC 10-k
filing or equivalent by Carnival Corporation shall be applied,
provided, however, that the foregoing assumptions shall not apply to
the actuarial adjustments described in Sections 4.2(c), 4.3(b), and
5.4.
3.9 DESIGNATION OF BENEFICIARY. A Participant shall be entitled to
designate one or more individuals or entities (including a trust or
trusts), in any combination, as his or her "Beneficiary" or
"Beneficiaries" to receive the lump sum death benefit under Section
5.2 if there is no Surviving Spouse at the Participant's death or if
the Surviving Spouse dies within five years following the
Participant's death. Any such designation may be made or changed at
any time prior to the Participant's death by written notice filed
with the Committee, with such written notice to be in such form and
contain such information as the Committee may from time to time
determine. In the event that (a) a Beneficiary designation is not on
file or is not effective at the date of a Participant's death, (b)
no Beneficiary survives the Participant or Surviving Spouse, as
applicable, or (c) no Beneficiary is living at the time the lump sum
death benefit under Section 5.2 becomes payable under this Plan,
then, for purposes of making payment of such benefit, such
Participant's Beneficiary or Beneficiaries shall be deemed to be the
Participant's estate.
3.10 BENEFIT ENTITLEMENT STATEMENTS.
(a) On or before March 31 of each calendar year, the Committee
shall cause to be given to the Participant (or Beneficiary
then entitled to payment in the case of a deceased
Participant) a Benefit Entitlement Statement setting forth
the Participant's benefit entitlement under the Plan and the
Payment Allocation Ratio (as such term is defined in the
Trust Agreement) determined by the Recordkeeper under the
relevant provisions of the Trust Agreement. If the
Participant (or Beneficiary) is in pay status as of the
preceding December 31 (the "Cut-Off Date"), the
Participant's Benefit Entitlement Statement shall set forth
the amount of the Pension to which the Participant (or
Beneficiary) is entitled effective as of the April 1
following the Cut-Off Date. If the Participant (or
Beneficiary) is not in pay status, that is, the Participant
has not Separated from Service as of the Cut-Off Date, then
the Benefit Entitlement Statement shall set forth the amount
of the Pension to which the Participant would have been
entitled if he had Separated from Service as of the Cut-Off
Date. Concurrently with the Committee's providing a Benefit
Entitlement Statement to the Participant (or Beneficiary),
the Committee shall provide a copy of such Benefit
15
Entitlement Statement to the Recordkeeper and the Trustee.
In each case (including in the case of a Benefit Entitlement
Statement issued under paragraph (b) below), the Benefit
Entitlement Statement shall show how the Pension is
calculated including the Participant's Pensionable Service,
Final Pensionable Earnings (and the Pensionable Earnings for
the applicable periods used to calculate the Participant's
Final Pensionable Earnings), Average Annual Compensation
(and the Pensionable Earnings for the applicable periods
used to calculate the Participant's Average Annual
Compensation), and any other information that is pertinent
to the calculation of the Participant's Pension (or Spouse's
Pension) including but not limited to the rate of increase
determined under Section 3.3 and, if applicable, the amount
of the offset for the UK Pension Scheme determined under
Section 3.4(c).
(b) Notwithstanding the foregoing, (i) in the case of the
Participant's Separation from Service (other than on death),
the Committee shall cause to be given to the Participant a
Benefit Entitlement Statement within 90 days following such
Separation from Service and the Statement shall include the
amount of the Pension that is payable to the Participant,
and (ii) in the case of the Participant's Separation from
Service on account of death, the Committee shall cause to be
given to the Participant's Beneficiary a Benefit Entitlement
Statement within 90 days following such Separation from
Service and the Statement shall include the amount of the
Spouse's Pension that is payable to the Beneficiary,
(c) The Participant (or Beneficiary then entitled to payment in
the case of a deceased Participant) shall have the right to
dispute his Benefit Entitlement Statement on or before May
31 of the calendar year following the applicable Cut-Off
Date (or in the case of a Benefit Entitlement Statement
issued under paragraph (b), on or before 60 days following
the end of the 90-day period within which such Statement
shall be issued) by filing a written statement with the
Committee setting forth the basis of his objection, with a
copy to the Recordkeeper and, the Trustee. On or before the
Committee Response Date (as defined below), the Committee
shall respond in writing to the Participant's (or
Beneficiary's) objections and shall cause the Benefit
Entitlement Statement to be reissued (and designated as
such), and such reissued Benefit Entitlement Statement shall
reflect such changes, if any, as the Committee determines
are appropriate in light of the Participant's (or
Beneficiary's) objections. Concurrently with the Committee's
providing such reissued Benefit Entitlement Statement to the
Participant (or Beneficiary), the Committee shall provide a
copy of such reissued Benefit Entitlement Statement to the
Recordkeeper and the Trustee. As used herein, "Committee
Response Date" shall mean, with respect to any Benefit
Entitlement Statement to which a Participant (or
Beneficiary) objects as provided hereinabove (i) June 30 of
the calendar
16
year following the applicable Cut-Off Date in the case of a
Benefit Entitlement Statement issued under paragraph (a)
above, or (ii) within 30 days following the date the
Participant files his written statement with the Committee
in the case of a Benefit Entitlement Statement issued under
paragraph (b) above, or (iii) such later date to which the
Participant (or Beneficiary) may agree in writing, provided,
however, that no such agreement shall be effective to extend
the Committee Response Date unless a copy of such agreement
is provided to the Recordkeeper and the Trustee.
(d) The Participant (or Beneficiary then entitled to payment in
the case of a deceased Participant) shall have the right to
dispute any Benefit Entitlement Statement reissued by the
Committee with respect to the Participant (or Beneficiary)
as provided in paragraph (c) above. In order to dispute any
reissued Benefit Entitlement Statement, the Participant (or
Beneficiary) must file a written statement of his objection
(and the basis therefore) with the Committee on or before
the date which is 60 days following the Committee Response
Date applicable to such reissued Benefit Entitlement
Statement, with a copy of such statement of objection to the
Recordkeeper and the Trustee. Any such dispute between the
Participant (or Beneficiary) and the Committee concerning a
reissued Benefit Entitlement Statement shall be resolved
pursuant to the claim review procedure set forth in Sections
3.5 and 3.6, in which case the Benefit Entitlement Statement
shall be revised, if necessary, and republished in
accordance with the determination made pursuant to such
claim review procedure.
(e) In the event of any dispute between the Participant (or
Beneficiary then entitled to payment in the case of
Participant being deceased) and the Sponsor as to the amount
of Pension or Spouse's Pension that is payable to such
Participant (or Beneficiary), the Participant (or
Beneficiary) shall be entitled in accordance with the
applicable provisions of the Trust Agreement to receive
benefit payments during the period of such dispute based
upon the most recent applicable Undisputed Benefit
Entitlement Statement, with such payments to be adjusted
following the final resolution of such dispute to reflect
the determination made pursuant to such final resolution.
For purposes of the preceding sentence, in the case of any
dispute described therein which is reviewed by the Committee
pursuant to the claims review procedure set forth in
Sections 3.5 and 3.6, the determination made pursuant to
such claims review procedure shall not be deemed to
constitute a "final resolution of such dispute" unless the
Participant (or Beneficiary) agrees in writing that such
determination shall constitute a final resolution of such
dispute. A copy of any such written agreement shall be
provided to the Recordkeeper and the Trustee.
17
(f) For the purpose of determining whether any Benefit
Entitlement Statement or reissued Benefit Entitlement
Statement constitutes an Undisputed Benefit Entitlement
Statement and therefore may be relied upon for the purpose
of making payments to a Participant (or Beneficiary)
pursuant to paragraph (e) above, the Recordkeeper and
Trustee shall conclusively presume that any Benefit
Entitlement Statement or reissued Benefit Entitlement
Statement constitutes an Undisputed Benefit Entitlement
Statement unless the Recordkeeper or Trustee, as applicable,
has actually received a copy of the Participant's (or
Beneficiary's) written statement of objection to such
Benefit Entitlement Statement or reissued Benefit
Entitlement Statement within seven days following the
expiration of the period for filing such written statement
of objection as provided in paragraph (c) or paragraph (d)
above, as applicable.
3.11 FUNDING OF RABBI TRUST. Subject to the amendment or termination of
this Plan, the Sponsor shall contribute to the Trust such amounts as
shall be determined under the applicable provisions of the Trust
Agreement.
3.12 ACCELERATED PAYMENTS. The time or schedule of a payment under the
Plan shall be accelerated under the following circumstances:
(a) PAYMENT UPON INCOME INCLUSION UNDER CODE SECTION 409A. (i)
If the United States Internal Revenue Service (the
"Service") prevails in a claim that the Plan fails to meet
the requirements of Code Section 409A, or (ii) if legal
counsel satisfactory to the Sponsor and the Participant or
his Surviving Spouse (if the Participant is not alive)
renders an opinion that the Service would likely prevail in
such a claim, a lump sum which is the actuarial equivalent
of the Pension payable to the Participant (and the Spouse's
Pension payable under Article V) shall be immediately paid
to the Participant (or to the Surviving Spouse, if the
Participant is not alive). For purposes of the Plan, the
Service shall be deemed to have prevailed in a claim if such
claim is upheld by a court of final jurisdiction, or if the
Participant or Surviving Spouse (if the Participant is not
alive), based upon an opinion of legal counsel satisfactory
to the Sponsor and the Participant or Surviving Spouse (if
the Participant is not alive), fails to appeal a decision of
the Service, or a Court of applicable jurisdiction, with
respect to such claim, to an appropriate Service appeals
authority or to a Court of higher jurisdiction within the
appropriate time period. Notwithstanding the foregoing, any
payment made under this paragraph (a) may not exceed the
amount required to be included in income as a result of the
failure to comply with the requirements of Code Section 409A
and the regulations thereunder. If an amount is paid
pursuant to this paragraph (a), then any Pension or lump sum
payable under the Plan shall be reduced to take into account
the payment made.
18
(b) PAYMENT OF EMPLOYMENT TAXES. If FICA Tax is due with respect
to benefits under the Plan or Withholding is applicable as a
result of payment of the FICA Amount, then payment under the
Plan shall be made to pay the FICA Tax and to satisfy the
Withholding obligation. For purposes of this paragraph (b),
the following definitions shall apply: (i) "FICA Tax" means
the Federal Insurance Contributions Act tax imposed under
Code Section 3101, Code Section 3121(a) or Code Section
3121(v)(2) to the extent applicable; (ii) "FICA Amount" is
the amount of FICA Tax due with respect to benefits under
the Plan; and (iii) "Withholding" is the income tax at
source on wages imposed under Code Section 3401 or the
corresponding withholding provisions of applicable state,
local, or foreign tax laws. If an amount is paid pursuant to
this paragraph (b), then any subsequent payment(s) due under
the Plan shall be reduced to take into account the payment
made under this paragraph.
(c) DOMESTIC RELATIONS ORDERS. The Plan shall make payment to an
Alternate Payee as may be necessary to fulfill a domestic
relations order, as such term is defined in Code Section
414(p)(1)(B), provided the order may not:
(i) require the Plan to provide any type or form of
benefit, or any option, not otherwise provided
under the Plan, for example, the order may not
require the Plan to pay a Spouse's Pension
described in Article V, nor may the order require
the Plan to provide the Medical Coverage described
in Sections 4.8 and 5.6 unless the Plan is required
by applicable law to provide such coverage, and
then only to extent required;
(ii) require the Plan to provide increased benefits
(determined on the basis of actuarial equivalent
value); and
(iii) require the payment of benefits to an Alternate
Payee which are required to be paid to another
Alternate Payee under another order directed to the
Plan.
If an amount is paid pursuant to this paragraph (c), then
any Pension payable under the Plan shall be reduced to take
into account the payment made.
ARTICLE IV. RETIREMENT BENEFITS
The Pensions described in Sections 4.1, 4.2, 4.3 and 4.5 are stated in terms
of a gross amount payable before application of the offset provisions of
Section 3.4(c). The actual amount payable under the Plan is net of the offset
required under Section 3.4(c).
4.1 NORMAL RETIREMENT. If the Participant ceases Active Participation and
Separates
19
from Service at Normal Retirement Date, he shall be paid a Pension
commencing at Separation from Service equal to the sum of:
(a) 1/60th of Final Pensionable Earnings for each year of
Pensionable Service (and pro rata for a fraction of one
year) for the period of the Participant's Pensionable
Service from June 1, 1973 to March 31, 1988 together with
two service credit periods of 250 days and 1 year and 258
days; and
(b) 1/45th of Final Pensionable Earnings for each year of
Pensionable Service (and pro rata for a fraction of one
year) on and from April 1, 1988.
4.2 LATE RETIREMENT.
(a) While the Participant remains in Service, he shall be
entitled to elect to cease Active Participation at or at any
time after his Normal Retirement Date, provided, however,
that if he does not so elect, he shall continue Active
Participation.
(b) If the Participant's Active Participation continues after
Normal Retirement Date, he shall be paid a Pension
commencing at Separation from Service that is calculated in
accordance with the provisions of Section 4.1 based on Final
Pensionable Earnings at and Pensionable Service accrued up
to the date the Participant ceases Active Participation,
provided, however that the maximum number of years of
Pensionable Service used for purposes of calculating the
Pension will be 42 years and 57 days.
(c) If the Participant's Active Participation ceases after
Normal Retirement Date and before he Separates from Service,
then the amount of the Pension described in paragraph (b)
above shall be increased in accordance with the provisions
of Section 3.3 (as if the Pension were in pay status) from
the date at which the Participant's Active Participation
ceases to the date of his Separation from Service. In
addition, to take into account the later commencement of the
benefit, the amount of such Pension shall be further
increased at the rate of 5% per year for the period
commencing on the date at which the Participant's Active
Participation ceases to the date of his Separation of
Service.
4.3 EARLY RETIREMENT. If the Participant Separates from Service before
Normal Retirement Date, he shall be paid the Pension described in (a)
or (b) below, whichever is applicable:
(a) If the Participant is retiring at the request of the
Employer or the Participant elects to terminate his
employment with the Employer for "Good Reason," as defined
in Section 12.5 of the Employment Agreement, he shall be
paid a Pension commencing at Separation from
20
Service that is calculated in accordance with the provisions
of Section 4.1 based on Final Pensionable Earnings at and
Pensionable Service accrued up to the date the Participant
ceases Active Participation. No actuarial reduction to take
into account early payment shall be made.
(b) If the Participant is retiring in other circumstances, he
shall be paid a Pension commencing at Separation from
Service that is calculated in accordance with the provisions
of Section 4.1 based on Final Pensionable Earnings at and
Pensionable Service accrued up to the date the Participant
ceases Active Participation, but reduced as described below
to take into account early payment, provided, however, the
amount of the Pension payable under this paragraph (b) shall
not be less than two-thirds of Final Pensionable Earnings
without any actuarial reduction to take into account early
payment. The reduction referenced above shall be applied by
multiplying the Pension by the factor corresponding to the
age of the Participant at the date of his Separation from
Service as determined in the table below:
AGE FACTOR
58 .9300 plus .0025 for each month over age 58
59 .9600 plus .0033 for each month over age 59
60 1.0000 no reduction
(c) If the Participant's Active Participation ceases before
Normal Retirement Date and before he Separates from Service,
then the amount of the Pension described in paragraph (a) or
(b) above shall be increased in accordance with the
provisions of Section 3.3 (as if the Pension were in pay
status) from the date at which the Participant's Active
Participation ceases to the date of his Separation from
Service.
4.4 DELAY IN PAYMENT.
(a) If payment of a Pension has been delayed pursuant to Section
4.9 (i.e., the Pension would have commenced to be paid, but
for the delay in payment of the Pension as required under
Section 4.9) or for any other reason, the aggregate monthly
Pension payments that would have been made during the delay
shall be paid to the Participant (or to the Surviving Spouse
in the case of Spouse's Pension) in one lump sum, together
with interest at the Specified Rate from the date each such
monthly Pension payment otherwise would have been paid until
such monthly payment is paid, and the remaining monthly
Pension payments of such Pension shall be paid on
21
their respective regularly-scheduled Payment Dates.
(b) If payment of a lump sum is delayed, the amount of such lump
sum shall be increased to reflect interest at the Specified
Rate from the date by which such payment was required to be
made until such payment is paid.
4.5 TOTAL INCAPACITY. If the Participant has a Separation from Service
before Normal Retirement Date and such separation is due to Total
Incapacity, he shall be paid a Pension commencing at Separation from
Service that is calculated in accordance with the provisions of
Section 4.3(a) above, but based on Final Pensionable Earnings at the
date the Participant ceases Active Participation and Potential
Pensionable Service, provided, however, if the Participant ceases
Active Participation before Separation from Service, the Pension
shall be calculated using Pensionable Service instead of Potential
Pensionable Service.
4.6 TERMINATION OF ACTIVE PARTICIPATION. In the event that the Committee
determines that the Participant's employment performance is no longer
at a level which merits continued Active Participation in the Plan,
the Committee may terminate such Participant's Active Participation
in the Plan (without necessarily terminating such Participant's
employment) as of the date specified by the Committee.
Notwithstanding any other provision of this Plan, the Pension payable
to the Participant or his Surviving Spouse if Active Participation is
terminated pursuant to this Section 4.6 or if the Participant elects
under Section 4.2(a) to cease Active Participation shall be
calculated by taking into account, in determining the amount of such
Pension, only the Pensionable Service, Pensionable Earnings and
Average Annual Compensation earned by such Participant during his
Active Participation. If the Participant's Active Participation
ceases at or after Normal Retirement Date and before his Separation
from Service, the Participant's Pension payable at Separation from
Service shall be calculated taking into account the adjustments
described in Section 4.2(c). If the Participant's Active
Participation ceases before Normal Retirement Date and before
Separation from Service, the Participant's Pension payable at
Separation from Service shall be calculated taking into account the
adjustments described in Section 4.3(c).
4.7 BENEFITS SUBJECT TO FORFEITURE.
(a) Subject to paragraph (b) below, while the Participant
remains a participant in the Plan, the benefits of and in
respect to his participation, which have not yet been paid
to him, will be subject to forfeiture if:
(i) the Participant is convicted in a court of law of
having committed a fraudulent act or omission
against the Employer or the Plan; and
(ii) that act or omission gives rise to a monetary
obligation by the Participant towards the Employer
or the Plan as the case may be; and
(iii) the amount of that monetary obligation is equal to
or exceeds the value of the Participant's benefits
referred to above;
22
and
(b) where a forfeit applies under paragraph (a) above:
(i) the Participant must be given a certificate showing
the amount forfeited and its effect on his total
benefits under the Plan; and
(ii) where there is a dispute as to the amount to be
forfeited, that amount must not be forfeited unless
the obligation in question has become enforceable
under an order of a competent court or in
consequence of an award of an arbitrator.
4.8 MEDICAL COVERAGE UPON SEPARATION FROM SERVICE.
(a) The Sponsor shall provide medical coverage ("Medical
Coverage") to the Participant and his Spouse on
substantially the same terms and conditions as active
employees of Sponsor, provided that the Participant (or
Spouse) bears the cost of such coverage and the person(s) to
whom the coverage is provided (i.e., the Participant and/or
his Spouse) are residing in the United States. For purposes
of this Section 4.8, the "cost of such coverage" shall be
equal to the charge imposed for the same or similar coverage
offered to active employees through Sponsor's Flexible
Benefit Plan. Neither the Participant nor his Spouse shall
be entitled to a flex credit under Sponsor's Flexible
Benefit Plan.
(b) The Participant's Medical Coverage offered under this
Section 4.8 shall commence on the Participant's Separation
from Service and shall end on the earlier to occur of (i)
the date the Participant attains the age as of 67; or (ii)
the date the Participant attains the age as of which he
would be eligible for Medicare benefits under Title XVIII of
the Social Security Act if he were to satisfy all of the
requirements (other than age) for such benefits, provided,
however, the Participant shall not be entitled to such
coverage if the date on which the coverage would end occurs
before the Participant's Separation from Service.
(c) The Spouse's Medical Coverage offered under this Section 4.8
shall commence on the date of the Participant's Separation
from Service and shall end on the earlier to occur of (i)
the date that the Spouse's eligibility would end under the
terms of the medical coverage provided to active employees
of the Sponsor, or (ii) the date she attains the age as of
which she would be eligible for Medicare benefits under
Title XVIII of the
23
Social Security Act if she were to satisfy all of the
requirements (other than age) for such benefits. The
Spouse's Medical Coverage shall continue in accordance with
the provisions of this Section 4.8 notwithstanding the death
of the Participant.
(d) The Medical Coverage offered under this Section 4.8 shall be
provided under an individual or group policy of accident or
health insurance issued by a licensed insurance company or
under an arrangement in the nature of a prepaid health care
plan that is regulated under federal or state law in a
manner similar to the regulation of insurance companies.
4.9 SIX-MONTH DELAY. The initial Payment Date for any Pension payable to
the Participant upon his Separation from Service shall be delayed
until the date that is six months after the date of the Participant's
Separation from Service (or, if earlier, the Participant's date of
death). This Section 4.9 is intended to satisfy the Code Section
409A(a)(2)(B)(i) requirement for a six-month delay in any payment to
a specified employee (as defined in Code Section 409A(a)(2)(B)(i))
following such an employee's Separation from Service and it shall be
interpreted and applied in accordance with such section of the Code
and the applicable regulations thereunder.
ARTICLE V. DEATH OF THE PARTICIPANT
The Pensions described in Sections 5.1, 5.2 and 5.3 are stated in terms of a
gross amount payable before application of the offset provisions of Section
3.4(c). The actual amount payable under the Plan is net of the offset required
under Section 3.4(c).
5.1 DEATH BEFORE SEPARATION FROM SERVICE. If the Participant dies before
Separation from Service, the Participant's Surviving Spouse shall be
paid a lump sum death benefit determined under (c) below and a
Spouse's Pension commencing at the Participant's death in an amount
determined under (a) or (b) below, whichever is applicable:
(a) If the Participant dies on or before Normal Retirement Date,
the Spouse's Pension shall be 60% of the Pension to which
the Participant would have been entitled at Normal
Retirement Date using the benefit formula in Section 4.1 and
the Participant's Final Pensionable Earnings and Pensionable
Service at the date the Participant ceases Active
Participation, taking into account the adjustments described
in Sections 4.2(c) and 4.3(c), provided, however, the amount
of the Spouse's Pension payable under this paragraph (a),
redetermined each year in accordance with the provisions of
Sections 3.3, shall not be less than 65% of the
Participant's Average Annual Compensation at the date the
Participant ceases Active Participation reduced by the
401(k)/Social Security Reduction Amount (as defined below in
Section 5.5). The minimum Spouse's Pension described
24
in the immediately preceding proviso shall not be increased
under Section 3.3, nor shall the adjustments described in
Sections 4.2(c) and 4.3(c) be applicable. In calculating the
Pension to which the Participant would have been entitled at
Normal Retirement Date, there shall be no actuarial
reduction to take into account that the Pension would have
commenced to be paid before Normal Retirement Date.
(b) If the Participant dies after Normal Retirement Date, the
Spouse's Pension shall be 60% of the Pension to which the
Participant would have been entitled on the date of his
death using the benefit formula under Section 4.1 and the
Participant's Final Pensionable Earnings at and Pensionable
Service accrued through the date the Participant ceases
Active Participation, taking into account the adjustments
described in Sections 4.2(c) and 4.3(c), and assuming that
the Participant had Separated from Service on the day before
his death, provided, however, the amount of the Spouse's
Pension payable under this paragraph (b), redetermined each
year in accordance with the provisions of Sections 3.3,
shall not be less than 65% of the Participant's Average
Annual Compensation at the date the Participant ceases
Active Participation reduced by the 401(k)/Social Security
Reduction Amount (as defined below in Section 5.5). The
minimum Spouse's Pension described in the immediately
preceding proviso shall not be increased under Section 3.3,
nor shall the adjustments described in Sections 4.2(c) and
4.3(c) be applicable.
(c) The lump sum death benefit payable under this paragraph (c)
shall be equal to $4,600,000, which is equal to four times
the Participant's annual basic pay as of the Restatement
Effective Date.
5.2 DEATH AFTER SEPARATION FROM SERVICE BUT BEFORE END OF FIVE-YEAR PERIOD.
(a) SPOUSE'S PENSION. If the Participant dies after Separation
from Service but before the expiration of the five-year
period following Separation from Service, the Participant's
Surviving Spouse at the date of the Participant's Separation
from Service (if the Participant has the same spouse at
death as he had at Separation from Service) shall be paid a
Spouse's Pension commencing at the Participant's death equal
to 60% of the Pension the Participant would have been
receiving on the date of death had the offset described in
Section 3.4(c) not been applied, provided, however, the
Spouse's Pension payable under this Section 5.2(a),
redetermined each year in accordance with Sections 3.3 shall
not be less than 65% of the Participant's Average Annual
Compensation at the date the Participant ceases Active
Participation reduced by the sum of the Special Reduction
Amount (as defined below in paragraph (d)) and the
401(k)/Social Security Reduction Amount (as defined below in
Section 5.5). The minimum Spouse's Pension described in the
immediately preceding proviso shall not be increased under
Section 3.3, nor shall the adjustments
25
described in Sections 4.2(c) and 4.3(c) be applicable,
provided that such minimum shall be adjusted annually to
take into account the increased Special Reduction Amount as
described in (ii) of paragraph (d) below.
(b) LUMP SUM. If the Participant dies after Separation from
Service but before the expiration of the five-year period
following Separation from Service, a lump sum payment shall
be made to the Participant's Beneficiary. The amount of the
lump sum is equal to (i) the balance of installments of the
Pension which would have been paid during the rest of the
five-year period if the Participant had survived, minus (ii)
the aggregate installments of the Spouse's Pension, if any,
expected to be paid during the rest of that period.
Prospective Pension increases under Section 3.3 are not
taken into account in this calculation.
(c) FURTHER LUMP SUM ON SPOUSE'S DEATH. If a deduction is made
in respect of a Surviving Spouse's Pension under (b)(ii)
above and the Surviving Spouse dies during the remainder of
that five-year period, then a further lump sum payment shall
be made to the Participant's Beneficiary in an amount equal
to the total of the further installments of Pension that the
Surviving Spouse would have received if she had lived to the
end of the five-year period, but without taking into account
prospective Pension increases under Section 3.3.
(d) SPECIAL REDUCTION AMOUNT. The "Special Reduction Amount"
shall be determined under this paragraph (d). The Special
Reduction Amount that shall be used for determining the
initial payment for the Pension payable under this Section
5.2(a) shall be determined in accordance with subparagraph
(i). The Special Reduction Amount shall be increased
annually in accordance with subparagraph (ii), with such
increase to be made at the same time as the Pension increase
is determined under Section 3.3.
(i) The Special Reduction Amount that shall be used for
determining the initial payment for the Pension
payable under this Section 5.2(a) shall be the
amount that would be paid in the first year of a
stream of payments, where the stream of payments is
the actuarial equivalent of the lump sum payable
under Section 5.2(b), and such stream of payments
provides a monthly amount for the Spouse's life
that increases in accordance with the provisions of
the UK Pension Scheme that provide for an annual
increase in the pension based on the UK Retail
Price Index, as defined below. For purposes of this
paragraph (d), the "UK Retail Price Index" means
the UK Government's General Index of Retail Prices
and actuarial equivalence shall be determined in
accordance with the assumptions set forth in
Section 3.8.
26
(ii) The Special Reduction Amount shall be increased
annually by the increase in the UK Retail Price
Index assumed for purposes of the determination
under subparagraph (i) above.
5.3 DEATH AFTER SEPARATION FROM SERVICE AND AFTER END OF FIVE-YEAR
PERIOD. If the Participant dies after Separation from Service and
after the expiration of the five-year period following Separation
from Service, the Participant's Surviving Spouse at the date of the
Participant's Separation from Service (if the Participant has the
same spouse at death as he had at Separation from Service) shall be
paid a Spouse's Pension commencing at the Participant's death equal
to 60% of the Pension the Participant would have been receiving on
the date of death had the offset described in Section 3.4(c) not been
applied, provided, however, the Spouse's Pension payable under this
Section 5.3, redetermined each year in accordance with Sections 3.3,
shall not be less than 65% of the Participant's Average Annual
Compensation at the date the Participant ceases Active Participation
reduced by the 401(k)/Social Security Reduction Amount (as defined
below in Section 5.5). The minimum Spouse's Pension described in the
immediately preceding proviso shall not be increased under Section
3.3, nor shall the adjustments described in Sections 4.2(c) and
4.3(c) be applicable.
5.4 LIMITATIONS ON SURVIVING SPOUSE'S PENSION. A Spouse's Pension payable
to a Surviving Spouse who is more than 10 years younger than the
Participant shall be reduced by 2.5% for each year by which the age
difference exceeds 10 years. Notwithstanding the foregoing, if the
minimum Spouse's Pension is payable under the provisos in paragraphs
(a) or (b) of Section 5.1, paragraph (a) of Section 5.2, or Section
5.3, then the reduction shall be 1% for each year by which the age
difference exceeds 10 years.
5.5 401(K)/SOCIAL SECURITY REDUCTION AMOUNT. The amount of the minimum
Spouse's Pension payable under each of the provisos in Sections
5.1(a), 5.1(b), 5.2(a) and 5.3 shall be reduced by the 401(k)/Social
Security Reduction Amount, which is the amount set forth below
opposite the age of the Participant at the time his Active
Participation in the Plan ceases, provided that if the Participant's
age is between two of the ages listed below, the corresponding
401(k)/Social Security Reduction Amount shall be calculated on a
straight line basis between those two ages.
Age Amount
58 $35,000
60 $44,000
65 $65,000
27
70 $75,000
75 $85,000
The amounts set forth above are intended to approximate the Social
Security offset and the offset for the 401(k) plan applicable to the
benefit that was payable under the Plan prior to its amendment
effective as of April 5, 2006.
5.6 MEDICAL COVERAGE UPON PARTICIPANT'S DEATH. If the Participant dies
before he has Separated from Service, then Sponsor shall provide
medical coverage to the Spouse of the Participant on substantially
the same terms and conditions as active employees of Sponsor,
provided that (a) the Spouse bears the cost of such coverage, and (b)
the Spouse is residing in the United States. The terms of such
coverage shall be the same as the Medical Coverage described in
Section 4.8, provided that the cost for such coverage shall be the
charge imposed on active employees of Sponsor for employee only
coverage.
ARTICLE VI. LEGAL FEES
The Sponsor shall reimburse the Participant or his Beneficiary for all Legal
Fees and expenses reasonably incurred by the Participant or Beneficiary in
seeking to enforce against the Sponsor any right or benefit to which the
Participant or Beneficiary is entitled under the Plan after the earlier of the
Participant's Separation from Service or a 409A Change in Control Event,
provided, however, any payment under this Article VI shall be delayed until
the date that is six months after the date of the Participant's Separation
from Service (or, if earlier, the Participant's date of death) to the extent
required under Code Section 409A(a)(2)(B)(i). The Participant's claim for
Legal Fees under this Article VI shall be paid from the Trust pursuant to the
applicable provisions of the Trust Agreement.
ARTICLE VII. MISCELLANEOUS PROVISIONS
7.1 PAYMENTS DURING INCAPACITY. In the event the Participant (or
Beneficiary) is under mental or physical incapacity at the time of
any payment to be made to such Participant (or Beneficiary) pursuant
to this Plan, any such payment may be made to the conservator or
other legally appointed personal representative having authority over
and responsibility for the person or estate of such Participant (or
Beneficiary), as the case maybe, and for purposes of such payment,
references in this Plan to the Participant (or Beneficiary) shall
mean and refer to such conservator or other personal representative,
whichever is applicable. In the absence of any lawfully appointed
conservator or other personal representative of the person or estate
of the Participant (or Beneficiary), any such payment may be made to
any person or institution that has apparent responsibility for the
person and/or estate of the Participant (or Beneficiary) as
determined by the Committee. Any payment made in accordance with the
provisions of this Section 7.1 to a
28
person or institution other than the Participant (or Beneficiary)
shall be deemed for all purposes of this Plan as the equivalent of a
payment to such Participant (or Beneficiary), and the Sponsor shall
have no further obligation or responsibility with respect to such
payment.
7.2 PROHIBITION AGAINST ASSIGNMENT. Except as otherwise expressly
provided in Section 7.1 hereof or this Section 7.2, the rights,
interests and benefits of the Participant under this Plan (a) may not
be sold, assigned, transferred, pledged, hypothecated, gifted,
bequeathed or otherwise disposed of to any other party by such
Participant or any Beneficiary, executor, administrator, heir,
distributee or other person claiming under such Participant, and (b)
shall not be subject to execution, attachment or similar process. Any
attempted sale, assignment, transfer, pledge, hypothecation, gift,
bequest or other disposition of such rights, interests or benefits
contrary to the foregoing provisions of this Section 7.2 shall be
null and void and without effect. Notwithstanding the foregoing, the
benefits of the Participant under this Plan may be assigned pursuant
to a domestic relations order, as such term is defined in Code
Section 414(p)(1)(B), provided, however, that this provision shall
not permit an Alternate Payee, as such term is defined in Section
2.5, to accelerate the time or schedule of a payment under the Plan
except as permitted under Section 3.12(c). An Alternate Payee may be
assigned the benefits of the Participant under the Plan only if the
domestic relations order pursuant to which the assignment is made
satisfies the requirements set forth in Section 3.12(c).
7.3 BINDING EFFECT. The Provisions of this Plan shall be binding upon the
Sponsor, the Participant, all entities that constitute the Employer,
and any successor-in-interest to the Sponsor, the Participant or any
such entity that constitutes the Employer.
7.4 NO TRANSFER OF INTEREST. Benefits under this Plan shall be payable
solely from the general assets of the Sponsor, and no person shall be
entitled to look to any other source for payment of such benefits.
The Sponsor shall have and possess all title to, and beneficial
interest in, any and all funds or reserves maintained or held by the
Sponsor on account of any obligation to pay benefits as required
under this Plan, whether or not earmarked as a fund or reserve for
such purpose; any such funds, other property or reserves shall be
subject to the claims of the creditors of the Sponsor, and the
provisions of this Plan are not intended to create, and shall not be
interpreted as vesting, in the Participant, Beneficiary or other
person, any right to or beneficial interest in any such funds, other
property or reserves. Nothing in this Section 7.4 shall be construed
or interpreted as prohibiting or restricting the establishment of a
grantor trust within the meaning of Code Section 671 which is
unfunded for purposes of Sections 201(2), 301(a)(3) and 401(a)(l) of
ERISA, from which benefits under this Plan may be payable.
7.5 AMENDMENT OR TERMINATION OF THE PLAN. The Committee may amend this
Plan from time to time in any respect that it deems appropriate or
desirable, and the
29
Committee may terminate this Plan at any time; provided, however,
that (a) any such amendment or termination may not, without the
written consent of the Participant, eliminate or reduce the Pension
that has accrued with respect to such Participant as of the effective
date of such amendment or termination, and (b) in any event no such
amendment or termination shall be made that would (i) cause the
benefits under the Plan to be distributed earlier than the occurrence
of a permissible distributable event described in Code Section
409A(a)(2), (ii) permit the acceleration of the time or schedule of
any payment under the Plan except as provided in applicable
regulations under Code Section 409A, (iii) provide for an initial
deferral election or subsequent change election that would not
satisfy the requirements of Code Section 4090A(a)(4), or (iv)
otherwise cause the Plan to fail to satisfy the requirements of Code
Section 409A. If the Participant has not yet Separated from Service,
then for purposes of this Section 7.5, the Pension that has accrued
with respect to the Participant as of the date of any amendment of
termination of the Plan shall be deemed to be the Pension to which
such Participant would be entitled pursuant to Article IV hereof if
such Participant incurred Separation from Service immediately prior
to such Plan amendment or Plan termination.
7.6 NO RIGHT TO EMPLOYMENT. This Plan is voluntary on the part of the
Employer, and the Plan shall not be deemed to constitute an
employment contract between the Participant and the Employer, nor
shall the adoption or existence of the Plan or any provision
contained in the Plan be deemed to be a required condition of the
employment of the Participant. Nothing contained in this Plan shall
be deemed to give the Participant the right to continued employment
with the Employer, and the Employer may terminate the Participant at
any time, in which case the Participant's rights arising under this
Plan shall be only those expressly provided under the terms of this
Plan.
7.7 NOTICES. All notices, requests, or other communications (hereinafter
collectively referred to as "Notices") required or permitted to be
given hereunder or which are given with respect to this Plan shall be
in writing and may be personally delivered, or may be deposited in
the United States mail, postage prepaid and addressed as follows:
To the Sponsor or the Committee at:
Princess Cruise Lines, Ltd.
Attention: Vice President, Corporate Human Resources
24305 Town Center Drive
Santa Clarita, CA 91355
30
To Participant at:
The Participant's residential mailing address as reflected
in the Sponsor's employment records.
A Notice which is delivered personally shall be deemed given as of
the date of personal delivery, and a Notice mailed as provided herein
shall be deemed given on the second business day following the date
so mailed. The Participant may change his address for purposes of
Notices hereunder pursuant to a Notice to the Committee, given as
provided herein, advising the Committee of such change. The Sponsor
and/or the Committee may at any time change its address for purposes
of Notices hereunder pursuant to a Notice to all affected
Participants, given as provided herein, advising such Participants of
such change.
7.8 GOVERNING LAW. This Plan shall be governed by, interpreted under, and
construed and enforced in accordance with the internal laws, and not
the laws pertaining to conflicts or choice of laws, of the State of
California applicable to agreements made and to be performed wholly
within the State of California.
7.9 TITLES AND HEADINGS: GENDER OF TERMS. Article and Section headings
herein are for reference purposes only and shall not be deemed to be
part of the substance of this Plan or in any way to enlarge or limit
the meaning or interpretation of any provision in this Plan. Use in
this Plan of the masculine, feminine or neuter gender shall be deemed
to include each of the omitted genders wherever the context so
requires.
7.10 SEVERABILITY. In the event that any provision of this Plan is found
to be invalid or otherwise unenforceable by a court or other tribunal
of competent jurisdiction, such invalidity or unenforceability shall
not be construed as rendering any other provision contained herein
invalid or unenforceable, and all such other provisions shall be
given full force and effect to the same extent as though the invalid
and unenforceable provision was not contained herein.
7.11 TAX EFFECT OF PLAN. Neither the Sponsor nor the Committee warrants
any tax benefit or any financial benefit under the Plan. Without
limiting the foregoing, the Sponsor and each Affiliated Company and
their directors, officers, employees and agents shall be held
harmless by the Participant from, and shall not be subject to any
liability on account of, any Federal or State tax consequences or any
consequences under ERISA of any determination as to the amount of
Plan benefits to be paid, the method by which Plan benefits are paid,
the persons to whom Plan benefits are paid, or the commencement or
termination of the payment of Plan benefits.
31
7.12 GUARANTEE. On or about the date this Plan is restated, the Sponsor
will undertake to obtain an unconditional guarantee of each and all
of the obligations of Sponsor under this Plan from each of the
members of the Carnival Corporation and plc Group named in the
attached Exhibit A and such additional members of the Carnival
Corporation and plc Group as may be identified by Sponsor for this
purpose from time to time.
7.13 ASSIGNMENT BY THE SPONSOR. The powers, duties, rights and obligations
of the Sponsor under this Plan may be assigned (a) to any company
into which the Sponsor may be merged, or with which it may be
consolidated, or (b) to any company resulting from any merger,
reorganization or consolidation to which the Sponsor is a party, or
(c) to any company to which the business of the Sponsor may be
transferred, to the extent affected Participants transfer their
employment to such company. If such an assignment occurs, the
successor-in-interest to the Sponsor shall assume the powers, duties,
rights and obligations of the Sponsor in writing.
7.14 CODE SECTION 409A. Notwithstanding any other provision of the Plan to
the contrary (including any provision of the Plan in effect before
April 5, 2006), (a) benefits under the Plan may not be distributed
earlier than the occurrence of an permissible distributable event
described in Section 409A(a)(2), (b) the acceleration of the time or
schedule of any payment under the Plan is not permitted except as
provided in applicable regulations under Section 409A, and (c)
initial deferral elections and subsequent election changes shall be
made in accordance with the provisions of Section 409A(a)(4). It is
intended that this Plan be construed, administered and applied in
compliance with Section 409A. For purposes of this Plan, Section 409A
means Section 409A of the Code, as the same may be amended from time
to time, and any successor statute thereto. References to Section
409A or any requirement under Section 409A, as the same may be
interpreted, construed or applied to this Plan at any particular
time, shall be deemed to mean and include, to the extent then
applicable and then in force and effect (but not to the extent
overruled, limited or superseded), published guidance, regulations,
notices, rulings and similar announcements issued by the Internal
Revenue Service or by the Secretary of the Treasury under or
interpreting Section 409A, decisions by any court of competent
jurisdiction involving the Participant or a Beneficiary and any
closing agreement made under Section 7121 of the Code that is
approved by the Internal Revenue Service and involves the
Participant, all
32
as determined by the Committee in good faith, which determination may
(but shall not be required to) be made in reliance on the advice of
such tax counsel or other tax professional(s) with whom the Committee
may from time to time elect to consult with respect to any such
matter.
IN WITNESS WHEREOF, this Plan has been executed by a duly authorized
officer of Sponsor and the Participant effective as of the Restatement
Effective Date.
PRINCESS CRUISES LINES, LTD.
Date: By:
-------------------- --------------------------------
Its:
---------------------------
Date: Participant:
--------------------
------------------------------------
Peter G. Ratcliffe
33
EXHIBIT A
GUARANTEEING COMPANY
Carnival Corporation
34
EXHIBIT B
SECTION 409A AMENDMENTS - EFFECTIVE JANUARY 1, 2005
Notwithstanding any other provision of the Plan to the contrary (including any
provision of the Plan in effect before April 5, 2006), effective January 1,
2005 the provisions of Section 7.14 of this 2006 Restatement shall apply to
the extent necessary to bring the Plan into compliance with Section 409A. So
for example, (a) payment of a Plan benefit shall be delayed in accordance with
Section 409A(a)(2)(B) if the Participant is determined to be a specified
employee, as such term is defined in Section 409A(a)(2)(B), (b) payment of a
Supplemental Benefit at the Participant's Retirement shall be made only if
such Retirement constitutes a Separation from Service, (c) reimbursement for
Legal Fees after a Change in Control shall be made only if the event
triggering a Change in Control also qualifies as a 409A Change in Control
Event, (d) the Surviving Spouse's right to delay the commencement of benefits
upon the death of the Participant in accordance with Section 5.4 of the Plan
as in effect before April 5, 2006 is no longer effective as of January 1,
2005. The Plan shall be operated in good faith compliance with the provisions
of Section 409A including IRS Notice 2005-1.
35