UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2004
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number: 1-11884

ROYAL CARIBBEAN CRUISES LTD.

(Exact name of Registrant as specified in its charter)

Republic of Liberia		98-0081645
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1050 Caribbean Way, Miami, Florida 33132

(Address of principal executive offices) (zip code)

(305) 539-6000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $.01 per share	New York Stock Exchange

Liquid Yield Option ^TM Notes due February 2, 2021	New York Stock Exchange

Zero Coupon Convertible Notes due May 18, 2021	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No o

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold was $4.6 billion as of the last business day of the registrant’s most recently completed second fiscal quarter.

There were 201,696,110 shares of common stock outstanding as of February 28, 2005.

DOCUMENTS INCORPORATED BY REFERENCE

The information required under Part III of this report is incorporated herein by reference to registrant's definitive proxy statement for the 2005 Annual Meeting of Shareholders.

ROYAL CARIBBEAN CRUISES LTD.

TABLE OF CONTENTS

		Page

PART I
Item 1.	Business	1
Item 2.	Properties	19
Item 3.	Legal Proceedings	20
Item 4.	Submission of Matters to a Vote of Security Holders	20

PART II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters	21
Item 6.	Selected Financial Data	22
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 8.	Financial Statements and Supplementary Data	36
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	36
Item 9A.	Controls and Procedures	36
Item 9B.	Other Information	36

PART III
Item 10.	Directors and Executive Officers of the Registrant	37
Item 11.	Executive Compensation	37
Item 12.	Security Ownership of Certain Beneficial Owners and Management	37
Item 13.	Certain Relationships and Related Transactions	37
Item 14.	Principal Accounting Fees and Services	37

PART IV
Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	38
Signatures		39

PART I

As used in this Annual Report on Form 10-K, the terms “Royal Caribbean,” “Company,” “we,” “our” and “us” refer to Royal Caribbean Cruises Ltd., the term “Celebrity” refers to Celebrity Cruise Lines Inc. and the terms “Royal Caribbean International” and “Celebrity Cruises” refer to our two cruise brands. In accordance with cruise vacation industry practice, the term “berths” is determined based on double occupancy per cabin even though many cabins can accommodate three or more passengers.

Item 1. Business

General

Royal Caribbean International was founded in 1968. The current parent corporation, Royal Caribbean Cruises Ltd., was incorporated on July 23, 1985 in the Republic of Liberia under the Business Corporation Act of Liberia.

We are the world’s second largest cruise company with 29 cruise ships and 60,590 berths.

We operate two brands, Royal Caribbean International and Celebrity Cruises, in the cruise vacation industry. The cruise vacation industry is comprised of the budget, contemporary, premium and luxury segments. Our ships operate on a selection of worldwide itineraries that call on approximately 160 destinations. We compete principally on the basis of quality of ships, quality of service, variety of itineraries and price.

Royal Caribbean International Brand

Royal Caribbean International serves the contemporary and premium segments of the cruise vacation industry. The contemporary segment is served by cruises that are generally seven nights or shorter and feature a casual ambiance. The premium segment is served by cruises that are generally seven to 14 nights and appeal to the more experienced passenger who is usually more affluent. Royal Caribbean International operates 19 cruise ships with 44,136 berths, offering various cruise itineraries that range from two to 14 nights.

Royal Caribbean International’s strategy is to attract an array of vacationing consumers in the contemporary segment by providing a wide variety of itineraries and cruise lengths with multiple innovative options for onboard dining, entertainment and other onboard activities. Royal Caribbean International offers a wide array of onboard activities, services and amenities, including swimming pools, sun decks, beauty salons, exercise and spa facilities, ice skating rinks, in-line skating, basketball courts, rock climbing walls, miniature golf courses, gaming facilities, lounges, bars, Las Vegas-style entertainment, cinemas and “Royal Promenades” which are boulevards with shopping, dining and entertainment venues. Additionally, Royal Caribbean International offers a variety of shore excursions at each port of call. We believe that the variety and quality of Royal Caribbean International’s product offerings represent excellent value to consumers, especially to couples and families traveling with children. Because of the brand’s extensive product offerings, we believe Royal Caribbean International is well positioned to attract new consumers to the cruise vacation industry and to continue to bring past passengers back for their next vacation. While the brand is positioned at the upper end of the contemporary segment, we believe that Royal Caribbean International’s quality enables it to attract consumers from the premium segment as well, thereby achieving one of the broadest market coverage of any of the major brands in the cruise vacation industry.

Celebrity Cruises Brand

Celebrity Cruises primarily serves the premium segment of the cruise vacation industry. Celebrity Cruises operates 10 cruise ships with 16,454 berths and offers various cruise itineraries that range from two to 16 nights.

Celebrity Cruises’ focus is to attract experienced cruisers, with a discerning eye towards unique and enriching experiences, who sail on premium, contemporary and luxury brands. We believe Celebrity Cruises delivers a high quality experience and good value with modern ships, extensive and luxurious spa facilities, premium dining, superior service, unique entertainment programs and a high staff-to-passenger ratio. These are hallmarks of the premium cruise vacation segment. Celebrity Cruises provides a variety of itineraries and cruise lengths and has a high proportion of its fleet deployment in seasonal markets (i.e. Alaska, Bermuda, Europe, Hawaii, the Panama Canal and South America). Celebrity Cruises has increased its breadth of product offerings to include itineraries to the Galapagos Islands, the Arctic, and the Antarctic and has announced it will offer cruises to the Asia-Pacific region in 2006.

Risk Factors

The risk factors set forth below and elsewhere in this Annual Report on Form 10-K are important factors, among others, that could cause actual results to differ from expected or historic results. It is not possible to predict or identify all such factors. Consequently, this list should not be considered a complete statement of all potential risks or uncertainties. (See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for a note regarding forward-looking statements.)

We may lose business to competitors throughout the vacation market.

We operate in the vacation market and cruising is one of many alternatives for people choosing a vacation. We therefore risk losing business not only to other cruise lines, but also to other vacation operators which provide other leisure options including hotels, resorts and package holidays and tours.

We face significant competition from other cruise lines, both on the basis of cruise pricing and also in terms of the nature of ships and services we offer to cruise passengers. Our principal competitors within the cruise vacation industry include Carnival Corporation & plc, which owns, among others, Carnival Cruise Lines, Princess Cruises, Holland America Line, Costa Cruises, P&O Cruises, and Cunard Line; Star Cruises, which owns, among others, Star Cruises and Norwegian Cruise Line; Mediterranean Shipping Company, which owns MSC Cruises; and Disney Cruise Line.

In the event that we do not compete effectively with other vacation alternatives and cruise companies, our results of operations and financial condition could be adversely affected.

Overcapacity within the cruise vacation industry, a reduction in demand or geo-political and economic uncertainties could have a negative impact on revenues, result in impairment of assets and may adversely affect profitability.

Cruising capacity has grown in recent years and we expect it to increase further as the major cruise vacation companies introduce new ships. Demand for cruises has been and is expected to continue to be dependent on the strength of the economies in the countries in which we market our products, the public’s attitude towards the safety of travel and the geo-political climate. Economic or political changes may reduce demand for cruise vacations and may lead to reduced occupancy and/or price discounting which, in turn, could adversely affect our results of operations and financial condition and could result in impairment of our asset values.

Furthermore, events such as terrorist attacks, war and other hostilities and the resulting political instability and concerns over safety and security aspects of traveling have had, and could have in the future, a significant adverse impact on demand and pricing in the travel and vacation industry. Events such as terrorist attacks, war and other hostilities and the resulting security measures and concerns could also impact our ability to source qualified crew from throughout the world at competitive costs and, therefore, increase our shipboard employee costs.

Incidents or adverse publicity concerning the cruise vacation industry could affect our reputation and harm our future sales and profitability.

The operation of cruise ships involves the risk of accidents, illnesses and other incidents which may bring into question passenger safety, health, security and vacation satisfaction and thereby adversely affect future industry performance. Incidents involving cruise ships or adverse media publicity concerning the cruise vacation industry could impact demand and consequently have an adverse impact on our profitability.

Environmental, health and safety, financial responsibility and other maritime regulations could affect operations and increase operating costs.

The United States and various state and foreign government or regulatory agencies have enacted or are considering new environmental regulations or policies that could adversely impact the cruise vacation industry. Some environmental groups have lobbied for more stringent regulation of cruise ships and have generated negative publicity about the cruise vacation industry and its environmental impact. In addition, we are subject to various international, national, state and local laws, regulations and treaties that govern, among other things, safety standards applicable to our ships, health and sanitary standards applicable to our passengers, security standards on board our ships and at the ship/port interface areas, and financial responsibilities to our passengers. These issues are, and we believe will continue to be, an area of focus by the relevant authorities throughout the world. This could result in the enactment of more stringent regulation of cruise ships that would subject us to increasing compliance costs in the future.

We may not be able to obtain financing on terms that are favorable or consistent with our expectations.

To fund our capital expenditures and scheduled debt payments, we rely on a combination of cash flows provided by operations, drawdowns under our available credit facility, the incurrence of additional indebtedness and the sales of equity or debt securities in private or public securities markets. Our credit ratings impact our ability to obtain financing in financial markets and the terms of the financing. Any lowering of our credit ratings may have adverse consequences on our ability to access the financial markets and/or on our cost of financings. In addition, interest rates and our ability to obtain financing are dependent on many economic and political factors beyond our control. Accordingly, we cannot be sure that our cash flows from operations and additional financings will be available in accordance with our expectations.

Conducting business internationally may result in increased costs and other risks.

We operate our business internationally and plan to continue to develop our international presence. Operating internationally exposes us to a number of risks. Examples include political risks and risk of increases in duties and taxes as well as changes in laws and policies affecting cruising, vacation or maritime businesses, or governing the operations of foreign-based companies. Additional risks include currency fluctuations, interest rate movements, imposition of trade barriers and restrictions on repatriation of earnings. If we are unable to address these risks adequately, our results of operations and financial condition could be adversely affected.

We have ship construction contracts which are denominated in euros. While we have entered into euro denominated options and forward contracts to manage a portion of the currency risk associated with these ship construction contracts, we are exposed to fluctuations in the euro exchange rate for the portion of the ship construction contracts that has not been hedged. If the shipyard is unable to perform under the related ship construction contract, any foreign currency hedges that were entered into to manage the currency risk would need to be terminated. Termination of these contracts could result in a significant loss.

Ship construction delays or mechanical faults may result in cancellation of cruises and unscheduled drydocks and repairs.

We depend on the shipyards to construct and deliver our cruise ships on a timely basis and in good working order. The sophisticated nature of building a ship involves risks. Delays or mechanical faults in ship construction have in the past and may in the future result in delays or cancellation of cruises or necessitate unscheduled drydocks and repairs of the ship. Shipyard insolvency and other industrial actions could also delay or indefinitely postpone the timely delivery of new ships. We have experienced mechanical problems with the pod propulsion units on certain ships and there can be no assurance that we will not experience such problems in the future. These events together with any related adverse publicity could, to the extent they are not covered by contractual provisions or insurances, adversely affect our financial results.

Our operating costs and taxes could increase due to market forces and economic or political factors beyond our control.

Our operating costs, including fuel, food, payroll, insurance and security costs, are subject to increases due to market forces and economic or political instability or other factors beyond our control. Increases in these operating costs could adversely affect our profitability. In addition, United States state and local authorities as well as foreign authorities periodically consider increases in taxes. For instance, initiatives are currently pending in Alaska, which, if adopted, would impose taxes on us and our cruise passengers. The implementation of these and other taxes could also cause an increase in our costs.

Unavailability of ports of call may adversely affect our profits.

We believe that port destinations are a major reason why passengers choose to go on a particular cruise or on a cruise vacation. The availability of ports is affected by a number of factors, including, but not limited to, existing capacity constraints, security concerns, adverse weather conditions and natural disasters, financial limitations on port development, local governmental regulations and local community concerns about port development and other adverse impacts on their communities from additional tourists. Any limitations on the availability of our ports of call could adversely affect our profits.

A change in our tax status under the United States Internal Revenue Code may have adverse effects on our income.

We and a number of our subsidiaries are foreign corporations that derive income from a United States trade or business and/or from sources within the United States. Drinker Biddle & Reath LLP, our United States tax counsel, has delivered to us an opinion, based on certain representations and assumptions set forth therein, to the effect that this income, to the extent derived from or incidental to the international operation of a ship or ships, is exempt from United States income tax pursuant to Section 883 of the Internal Revenue Code. We believe that the majority of our income (including that of our subsidiaries) is derived from or incidental to the international operation of a ship or ships. In 2003, final regulations under Section 883 were issued, which narrowed the scope of activities that are considered by the Internal Revenue Service to be incidental to the international operation of ships. Because the regulations are new, the scope of such income that will not qualify for exemption under Section 883 is not clear. (See Outlook under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)

Under Section 883, the exemption for our international shipping income is derived from, among other things, a reciprocal exemption provided to United States companies by the Republic of Liberia, the country in which we and our relevant subsidiaries are incorporated. The continuing existence of this reciprocal exemption by Liberia is one of the assumptions upon which our United States tax counsel's opinion is based. To clarify the continued existence of the exemption under an amendment to Liberian tax law adopted in 2000, the Minister of Finance of Liberia promulgated regulations on December 7, 2004, confirming the continued existence of the exemption. This point has also been confirmed in a legal opinion issued by the Minister of Justice and Attorney General of Liberia and in a diplomatic Note sent by the Republic of Liberia to the United States Department of State. We do not have any reason to believe that either the United States Department of State or the Department of Treasury will contest or disagree with the Liberian government's position with respect to the continued existence of the exemption, and are awaiting further confirmation of this point in a diplomatic Note from the United States to Liberia. Based on the foregoing, we believe that the requirement in Section 883 of a reciprocal exemption provided to United States companies by Liberia is and has been satisfied, but until confirmation of this point from the United States Department of State or the Treasury Department is received, there remains the possibility that the Internal Revenue Service might dispute the conclusions regarding Liberian tax law that have been reached by the Liberian authorities.

It should be noted that the provisions of Section 883 are subject to change at any time by legislation. Moreover, changes could occur in the future with respect to the identity, residence or holdings of our direct or indirect shareholders that could affect our eligibility for the Section 883 exemption. Accordingly, there can be no assurance that we will continue to be exempt from United States income tax on United States source shipping income in the future. If we were not entitled to the benefit of Section 883, we and our subsidiaries would be subject to United States taxation on a portion of the income derived from or incidental to the international operation of our ships, which would reduce our net income. See Taxation of the Company below for a discussion of such taxation in the absence of an exemption under Section 883.

We are controlled by principal shareholders that have the power to determine our policies, management and actions requiring shareholder approval.

As of February 28, 2005, A. Wilhelmsen AS., a Norwegian corporation indirectly owned by members of the Wilhelmsen family of Norway, owned approximately 21.3% of our common stock and Cruise Associates, a Bahamian general partnership indirectly owned by various trusts primarily for the benefit of certain members of the Pritzker family and various trusts primarily for the benefit of certain members of the Ofer family, owned approximately 16.5% of our common stock. A. Wilhelmsen AS. and Cruise Associates have the power to determine, among other things:

• our policies and the policies of our subsidiaries,

• the persons who will be our directors and officers, and

• actions requiring shareholder approval.

A. Wilhelmsen AS. and Cruise Associates are parties to a shareholders’ agreement. The agreement provides that our board of directors will consist of the following persons:

• four nominees of A. Wilhelmsen AS.,

• four nominees of Cruise Associates and

• our Chief Executive Officer.

During the term of the shareholders’ agreement, certain corporate actions require the approval of at least one director nominated by A. Wilhelmsen AS. and one director nominated by Cruise Associates. Our principal shareholders are not prohibited from engaging in a business that may compete with our business, subject to certain exceptions. If A. Wilhelmsen AS. and Cruise Associates cease to own a specified percentage of our common stock, we may be obligated to prepay indebtedness outstanding under the majority of our credit facilities, which we may be unable to replace on similar terms. If this were to occur, it could have an adverse impact on our operations and liquidity.

The holders of our common stock may experience a decrease in the value of their equity interest as a result of the sale of currently restricted shares of our common stock into the public market.

A substantial number of shares of our common stock were either issued by us in private transactions not involving a public offering or are held by our affiliates and, therefore the sale of these securities is subject to restrictions under the Securities Act of 1933 (“Securities Act”). These shares include the 42,966,472 shares of our common stock held by A. Wilhelmsen AS. and the 33,281,900 held by Cruise Associates. No predictions can be made as to the effect, if any, that market sales of such shares, or the availability of such shares for future market sales, will have on the market price of our common stock prevailing from time to time. Sales of substantial amounts of our common stock, or the perceptions that such sales could occur, could materially adversely affect the prevailing market price for our common stock and could impair our ability to raise capital through an offering of equity securities. Each of A. Wilhelmsen AS. and Cruise Associates has the right, pursuant to a registration rights agreement, to require us, subject to certain qualifications, to effect the registration under the Securities Act of all or part of their shares of common stock which would allow these shares to be sold into the public market.

We are not a United States corporation and our shareholders may be subject to the uncertainties of a foreign legal system in protecting their interests.

Our corporate affairs are governed by our Restated Articles of Incorporation and By-Laws and by the Business Corporation Act of Liberia. The provisions of the Business Corporation Act of Liberia resemble provisions of the corporation laws of a number of states in the United States. However, while most states have a fairly well developed body of case law interpreting their respective corporate statutes, there are very few judicial cases in Liberia interpreting the Business Corporation Act of Liberia. For example, the rights and fiduciary

responsibilities of directors under Liberian law are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain United States jurisdictions. Thus, our public shareholders may have more difficulty in protecting their interests with respect to actions by management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction.

Industry

Since 1970, cruising has been one of the fastest growing sectors of the vacation market, as the number of North American passengers has grown to an estimated 9.1 million in 2004 from 0.5 million in 1970, a compound annual growth rate of approximately 9%. We have sought to capitalize on the increasing popularity of cruises through an extensive fleet expansion program.

According to our estimates, the North American cruise market was served by an estimated 114 cruise ships with approximately 136,440 berths at the beginning of 2000. We estimate that this capacity increased to approximately 213,570 berths on 137 ships by the end of 2004. The increase in capacity over the last five years is net of approximately 40 ships with approximately 32,800 berths that have either been retired or moved out of the North American market. There are 11 cruise ships on order with an estimated 30,740 berths which will be placed in service between 2005 and 2007.

The following table details the growth in the North American cruise market of both passengers and weighted-average berths over the past five years:

Year	North American Cruise Passengers(1)	Weighted-Average Supply of Berths Marketed in North America(2)
2000	6,886,000	144,499
2001	6,906,000	151,690
2002	7,640,000	163,187
2003	8,195,000	182,698
2004	9,108,000	206,895

__________

(1)	Source: Cruise Lines International Association based on passengers carried for at least two consecutive nights.
(2)	Source: Our estimates.

Cruise lines compete for consumers’ disposable leisure time spending with other vacation alternatives such as land-based resort hotels and sightseeing destinations. Demand for such activities is influenced by geo-political and general economic conditions. We believe that cruise passengers currently represent only a small share of the vacation market and that a significant portion of cruise passengers carried are first-time cruisers.

Our ships operate worldwide and have itineraries that call on destinations in Alaska, the Antarctic and Arctic, the Bahamas, Bermuda, California, Canada, the Caribbean, Europe, the Galapagos Islands, Hawaii, Mexico, New England, the Panama Canal and South America.

We compete with a number of cruise lines; however, our principal competitors are Carnival Corporation & plc, which owns, among others, Carnival Cruise Lines, Princess Cruises, Holland America Line, Costa Cruises, P&O Cruises, and Cunard Line; Star Cruises, which owns, among others, Star Cruises and Norwegian Cruise Line; Mediterranean Shipping Company, which owns MSC Cruises; and Disney Cruise Line. We compete principally on the bases of quality of ships, quality of service, variety of itineraries and price.

Operating Strategies

Our principal operating strategies are to:

• improve the awareness and market penetration of both our Royal Caribbean International and Celebrity Cruises brands,

• continue to expand our fleet with state-of-the-art cruise ships,

• continue to improve and expand the quality and innovation of our fleet,

• expand into new markets and itineraries,

• further expand our international passenger sourcing,

• utilize sophisticated yield management systems (revenue optimization per berth),

• further improve our technological capabilities, and

• maintain strong relationships with travel agencies, the principal industry distribution system.

Brand Awareness

We continue to broaden the recognition of both the Royal Caribbean International brand and the Celebrity Cruises brand in the cruise vacation industry. Royal Caribbean International is an established brand in the contemporary and premium segments of the cruise vacation industry. We believe we are positioning Celebrity Cruises brand as the best choice in the premium segment of the cruise vacation industry. Each brand has a distinct identity and marketing focus but utilizes shared infrastructure resources.

The Royal Caribbean International brand awareness is achieved through communication strategies designed to broadly communicate its high quality and excellent-value cruise vacations. Royal Caribbean International’s communication strategies target active adults and families who are vacation enthusiasts interested in exploring new destinations, seeking new experiences and having a real “lust for life”. These strategies are also designed to attract first-time cruisers to the cruise vacation industry and to the Royal Caribbean International brand.

In order to attract the active cruiser who is seeking new experiences as well as first-time cruisers, Royal Caribbean International provides multiple choices to passengers through a wide array of itineraries, accommodations, dining options, onboard activities and shore excursions. Hallmarks of the brand include friendly and engaging service, state-of-the-art cruise ships, family programs, entertainment, health and fitness and energizing onboard and shoreside activities designed for passengers of all ages. With the number of young cruisers increasing, we have partnered with Fisher-Price, Inc. and Crayola^R to develop innovative programs for children and their parents to further enhance their cruise experience.

Celebrity Cruises communicates its brand image and message through a series of consumer and trade campaigns, partnerships, products and experiences, all designed to build awareness within the premium cruise sector. Celebrity Cruises’ communications target the savvy cruiser who is well traveled and informed. We believe the savvy cruiser appreciates quality and is interested in local cultures, the arts and fine cuisine.

In order to attract the savvy cruiser, we believe Celebrity Cruises provides a unique vacation through continuous product evolution while staying true to the hallmarks of the brand. Hallmarks of Celebrity Cruises include award-winning cuisine, luxurious spa facilities, unique entertainment, stateroom amenities and personal service with a high staff-to-passenger ratio. To continue its product evolution, Celebrity Cruises has introduced several initiatives. The brand has recently introduced a first for this segment – a partnership with the world-famous Cirque du Soleil. The Bar at the Edge of the Earth^SM has been designed exclusively by Cirque du Soleil for two Celebrity Cruises’ ships to deliver a unique, one-of-a-kind bar and nightclub experience. In addition, Celebrity Cruises has partnered with National Geographic Traveler to offer one of the most extensive enrichment

programs at sea. The “Captain’s Club” loyalty program continues to be a marketing focus as these passengers are far more likely to cruise again with Celebrity Cruises than non-members. Launched in 2004, Celebrity Xpeditions^SM continues to offer a series of unique, upscale experiences designed to differentiate and elevate the Celebrity Cruises brand within the premium cruise segment. A Celebrity Xpedition may be experienced as part of the cruise vacation or as a separate itinerary. These limited-capacity experiences offer itineraries to the Galapagos Islands aboard the Xpedition and the Arctic and Antarctic aboard the Kapitan Khlebnikov. Land experiences include a behind-the-scenes visit with the KGB and Kremlin in Moscow. For 2005, we are adding 13 new Celebrity Xpeditions^SM including excursions to the Matterhorn, Easter Island, Houston Space Center and The Great Pyramids of Egypt.

Fleet Expansion

Based on the ships currently on order, our December 31, 2007 capacity is expected to increase to 66,738 berths. Since our first capital expansion program beginning in 1988, we have continued to increase our average ship size and number of available berths, which has enabled us to achieve certain economies of scale. Larger ships allow us to carry more passengers without a corresponding increase in certain operating expenses.

Royal Caribbean International. Founded in 1968, Royal Caribbean International was the first cruise line to design cruise ships especially for warm water year-round cruising. Royal Caribbean International operated a modern fleet in the 1970s and early 1980s, establishing a reputation for high quality. Between 1988 and 1992, the brand tripled its capacity by embarking on its first major capital expansion program by taking delivery of three Sovereign-class ships. From 1995 through 1998, Royal Caribbean International completed its second capital expansion program by taking delivery of six Vision-class ships, ranging in size from 1,804 to 2,000 berths. During this same period, Royal Caribbean International sold four of its original ships because these ships were older in age and design and no longer consistent with its image and marketing strategy.

Royal Caribbean International began its third capital expansion program with orders for five Voyager-class ships and four Radiance-class ships. The Voyager-class ships were placed in service from 1999 through 2003. Each ship is approximately 140,000 gross tons with 3,114 berths. This class of ships is designed to provide more diverse vacation options for families and for those seeking active sports and entertainment alternatives during their vacation experience. Each Voyager-class ship has a variety of unique features, including the cruise vacation industry’s first horizontal atrium, the “Royal Promenade” (which is four decks tall, longer than a football field and provides entertainment, shopping and dining experiences), recreational activities such as ice skating, in-line skating, rock climbing, miniature golf and full court basketball, enhanced staterooms, expanded dining venues and a variety of intimate spaces.

The brand introduced its four Radiance-class ships from 2001 through 2004. The Radiance-class ships (approximately 90,000 gross tons each) are a progression from the brand’s Vision-class ships and have approximately 2,100 berths each. The Radiance-class ships incorporate many of the dining and entertainment options of the Voyager-class ships, as well as offer a wide array of unique features. These features include alternative dining venues, panoramic glass elevators facing outward to the sea, floor to ceiling glass windows offering spectacular sea views and a billiards club featuring gyroscopic billiard tables.

Building on the success of our Voyager-class ships, we have entered into agreements with a shipyard to purchase two Freedom-class ships, Freedom of the Seas and an unnamed ship. The Freedom-class ships will be approximately 15% larger than the Voyager-class ships with approximately 3,600 berths each. The Freedom-class ships will have some of the largest staterooms and balconies in the industry, including flat screen televisions, capabilities for cell phones and other amenities. Innovations include enhancements to the ship’s security, navigational and environmental-management systems. The two ships on order are scheduled for delivery in the second quarters of 2006 and 2007. Also, on March 4, 2005, we signed a letter of intent to purchase a third Freedom-class ship, subject to certain conditions.

Celebrity Cruises. Celebrity Cruises was founded in 1990 and operated three ships between 1992 and 1995. Between 1995 and 1997, Celebrity Cruises undertook its first capital expansion program, adding three Century-class ships which range in size from 1,750 to 1,870 berths and disposing of one of its original three ships. Celebrity Cruises completed its second capital expansion program with the delivery of four Millennium-class ships from 2000 through 2002. Each Millennium-class ship has 2,034 berths and is approximately 90,000 gross tons.

The Millennium-class ships have elevated the brand’s position in the premium segment of the marketplace. This class of ships, which is a progression from the Century-class ships, builds on the brand’s primary strengths, including gourmet dining, luxurious spa facilities, and spacious staterooms and suites complete with balconies. On the Millennium-class ships, an entire resort deck is dedicated to health, fitness and the rejuvenating powers of water. Celebrity Cruises’ spas are among the most luxurious facilities afloat and offer a variety of features, including a large hydropool with neck massage and body jets and luxurious services including “acupuncture at sea”. To further enhance the onboard experience, Celebrity Cruises offers a more intimate setting in our piano, champagne, and martini bars and lounges.

In 2004, as an alternative to the customary ship experience, Celebrity Cruises placed in service Xpedition, a 100-berth ship that offers a more intimate, smaller ship experience with sailings to the Galapagos Islands.

Fleet Innovation

We place a strong focus on product innovation, not only for stimulating repeat business, but also for driving new demand for our products. The Voyager, Radiance and Millennium-class ships introduced several product innovations to the marketplace, and our brands have begun to adopt these innovations as signature elements. For example, rock climbing walls reflect Royal Caribbean International’s focus on active vacationers, while spa facilities reflect Celebrity Cruises’ focus on discerning travelers. In order to offer passengers a wider range of activities and amenities and to ensure consistency across our fleets, we have embarked on a program of revitalizing our older ships to update and refresh their interiors and to incorporate signature brand elements. Following the completion of extensive renovations to Monarch of the Seas in 2003, Royal Caribbean International completed extensive renovations on Empress of the Seas and Sovereign of the Seas in 2004. Renovations included new balconies, dining venues, lounges and teen areas as well as extensive refurbishments to staterooms and public areas. The Enchantment of the Seas will undergo a lengthening in the spring of 2005 with a new 73-foot midsection, which will feature an additional 151 staterooms, suspension bridges, an overhanging bar offering spectacular panoramic views and bungee trampolines that send passengers soaring into the air high above the sea.

New Markets and Itineraries

Our ships operate worldwide with a selection of itineraries that call on approximately 160 ports. New ships allow us to expand into new destinations, itineraries and markets. Both Royal Caribbean International and Celebrity Cruises have added new itineraries departing from major United States drive markets. Both brands have expanded their mix of itineraries in Alaska and Europe. The brands are now offering a wide variety of cruise tours from Alaska, the Canadian Rockies and Europe in order to provide vacationers with a much broader range of product options. Most recently, Celebrity Cruises has introduced Celebrity Xpeditions^SMsailings, excursions and pre and post cruise packages to exotic destinations. Itineraries in 2006 will include Asian-Pacific countries such as Australia, China, Hong Kong, Japan, New Zealand, Singapore, South Korea, Vietnam, and other destinations.

In an effort to secure satisfactory berthing facilities for our ships, and to provide new or enhanced cruise destinations for our passengers, from time to time we assist or invest in the development or enhancement of certain port facilities and infrastructure located in strategically important ports of call. Generally, we collaborate with local private or governmental entities by providing management and/or financial assistance. In exchange for our involvement, we generally secure preferential berthing rights for our ships.

International Passengers

Although the majority of our passengers are from the United States, international passengers represent an important segment of our business. International passengers have grown from approximately 213,000 in 1998 to approximately 511,000 in 2004. We sell and market the Royal Caribbean International and Celebrity Cruises brands to international passengers through our offices in the United States, United Kingdom, Germany, Norway and Italy and through a network of 42 independent international representatives located throughout the world. In order to accommodate the needs of international passengers, we have made selected adjustments to our onboard product and service, including the use of multi-lingual service staff on our ships with a significant number of international passengers. Passenger ticket revenues generated from countries outside the United

States were 18%, 19% and 18% of total revenues in 2004, 2003 and 2002, respectively. Passenger ticket revenues are attributed to geographic areas based on where the reservation was made.

In connection with our international strategy, we have a multi-faceted strategic alliance with First Choice Holidays PLC (“First Choice”), one of the United Kingdom’s largest integrated tour operators. First Choice now provides both of our brands with a significantly larger distribution base in the United Kingdom and access to First Choice’s significant retail outlets. Separately, we are party to a joint venture with First Choice which operates a cruise brand, Island Cruises, that offers itineraries designed to attract international passengers. Island Cruises operates a 1,512-berth ship sailing under the name Island Escape. In October 2005, Celebrity Cruises’ Horizon will move to our joint venture under a six-year lease agreement in order to expand Island Cruises’ presence in Europe and South America.

Revenue Management

We believe we have one of the most advanced revenue management systems in the industry which enables us to make more advantageous decisions about pricing, inventory and marketing actions. We are continuously working to refine these systems and tools through increased forecasting capabilities, ongoing improvements to our understanding of price/demand relationships, and greater automation of the decision process.

Technological Development

We continue to invest in information technology to support our corporate infrastructure and passenger and travel trade relations. Both Royal Caribbean International and Celebrity Cruises have extensive websites that are world-class marketing portals with consumer booking engines providing access to millions of Internet users throughout the world. We have streamlined our documentation process by providing cruise-only passengers with electronic documents accessible online. We also offer passengers the ability to complete their embarkation forms online prior to the embarkation date and, during 2005, we expect to complete the automation of our pierside embarkation process. To further enhance our customer service, we have provided online access so passengers can book shore excursions and Alaska cruisetour land excursions via our websites. We launched a new website for Celebrity Cruises which improves the ease of use and distribution of multimedia marketing information to our current and potential customers. Additionally, we have implemented a customer relationship management tool, which improves our ability to respond to passenger and travel agent inquiries in a timely and accurate manner. Other innovations include wireless internet cafes and cellular phone access on selected ships to satisfy our passengers’ mobile computing and communication needs. We have installed interactive televisions in passenger staterooms on certain ships, enabling passengers to shop for shore excursions, select a dinner wine and monitor their onboard accounts. We have cruisingpower.com, a website dedicated to Internet communications with the travel agency community, which enables fast access to online tools and is the ultimate shared resource center for Royal Caribbean International and Celebrity Cruises information. These online tools include CruiseMatch® Online, an Internet browser-based booking system, CruisePay^SM, an online payment service, Insight, a booking summary report and Cruise Writer^SM, which provides the capability to customize brochures and flyers.

Travel Agency Support

Travel agencies generate the majority of the bookings for our ships and we are committed to further developing and strengthening this very important distribution channel. In 2004, Royal Caribbean International and Celebrity Cruises launched a brand-dedicated sales force for the United States comprised of our former dual-branded sales force with additional staffing. Each sales team can now focus on the unique qualities of each brand and will be poised to improve the support to the travel agency community. A new department has been created, “Trade Support & Services”, with branded call center operations, which will further support the travel agency community in designing the cruise vacation experience. We offer an automated reservations system, CruiseMatch® Online, which allows travel agents direct access to our computer reservation system for bookings with both brands. We have launched a dedicated home-based portal on cruisingpower.com which offers home-based travel partners access to exclusive communication, education, sales and marketing tools and resources needed to grow their business with us. We have customer service representatives that are trained to assist travel agents in providing a higher level of service and Insight, the first Internet service tool of its kind in the industry, which assists agencies with productivity and enhances customer service. We currently operate

two reservation call centers, one in Miami, Florida and the other in Wichita, Kansas, with plans to open a third in Springfield, Oregon, at the end of 2005 offering flexibility and extended hours of operations.

Passenger Services

During 2004, we enrolled our three-millionth member in the “Crown & Anchor Society” loyalty program which includes benefits such as the Crown & Anchor magazine, special cruise offers, onboard amenities and a new, higher level of member recognition, Diamond Plus.

Celebrity ConciergeClass offers an enhanced level of accommodations featuring new amenities and priority services. As a result of the favorable response to these accommodations, the number of Celebrity ConciergeClass staterooms will more than double in 2005. The “Captain’s Club” loyalty program has been enhanced to reward the most loyal Celebrity Cruises passengers by offering special services and amenities.

In order to provide even more value to our passengers, Royal Caribbean International and Celebrity Cruises have partnered with MBNA America Bank to offer the Royal Caribbean Rewards and Celebrity Rewards Visa Credit Cards. Also, we offer Celebrity Rewards American Express Credit Cards. The cards enable card users to redeem points for cruise vacation benefits. Further, the Celebrity Rewards’ cards enable users to redeem points for non-cruise vacation benefits, including travel, merchandise and cash rewards.

We offer to handle virtually all travel aspects related to passenger reservations and transportation, including arranging passenger air transportation. Our air/sea program offers passengers the choice of our standard air or custom air programs. Our standard air program allows our passengers to benefit from comprehensive relationships that we maintain with many of the major airlines ranging from fare negotiation and space handling to baggage transfer. Our custom air program enables a passenger to customize their flight arrangements, including selection of airline, specific flights and class of service.

Operations

Cruise Ships and Itineraries

We operate 29 ships, under two brands, with a selection of worldwide itineraries ranging from two to 16 nights that call on approximately 160 destinations. The following table represents summary information concerning our ships and their areas of operation based on 2005 itineraries (subject to change):

Ship	Year Ship Entered Service		Berths		Primary Areas of Operation
Royal Caribbean International
Jewel of the Seas		2004		2,112		Eastern/Western Caribbean, Europe
Mariner of the Seas		2003		3,114		Eastern/Western Caribbean
Serenade of the Seas		2003		2,112		Alaska, Southern Caribbean, Panama Canal, Hawaii
Navigator of the Seas		2002		3,114		Eastern/Western Caribbean
Brilliance of the Seas		2002		2,110		Caribbean, Europe, Panama Canal
Adventure of the Seas		2001		3,114		Southern Caribbean
Radiance of the Seas		2001		2,110		Eastern/Western Caribbean, Pacific Coastal, Alaska, Hawaii, Panama Canal, Mexican Riviera
Explorer of the Seas		2000		3,114		Eastern/Western Caribbean
Voyager of the Seas		1999		3,114		Eastern/Western Caribbean, Bermuda
Vision of the Seas		1998		2,000		Alaska, Mexican Riviera, Pacific Coastal
Enchantment of the Seas¹		1997		1,950		Western Caribbean, Canada/New England
Rhapsody of the Seas		1997		2,000		Western Caribbean
Grandeur of the Seas		1996		1,950		Western Caribbean, Bermuda
Splendour of the Seas		1996		1,804		Western Caribbean, Europe
Legend of the Seas		1995		1,804		Hawaii, Panama Canal, Europe, Western Caribbean
Majesty of the Seas		1992		2,354		Bahamas
Monarch of the Seas		1991		2,384		Baja Mexico
Empress of the Seas²		1990		1,600		Western/Southern Caribbean
Sovereign of the Seas		1988		2,276		Bahamas

Celebrity Cruises Constellation		2002		2,034		Caribbean, Europe, Canada/New England
Summit		2001		2,034		Western Caribbean, Alaska, Panama Canal, Mexican Riviera, Pacific Coastal, Hawaii
Infinity		2001		2,034		Hawaii, Alaska, Panama Canal, South America, Baja Mexico, Pacific Coastal
Millennium		2000		2,034		Eastern/Western Caribbean, Europe, Bahamas
Mercury		1997		1,870		Alaska, Pacific Coastal, Mexican Riviera
Galaxy		1996		1,870		Panama Canal, Europe
Century		1995		1,750		Eastern/Western Caribbean, Europe
Zenith		1992		1,374		Caribbean, Bermuda
Horizon³		1990		1,354		Bermuda, Caribbean
Xpedition⁴		2004		100		Galapagos Islands

¹ Enchantment of the Seas will be lengthened resulting in an additional 302 berths in the Spring of 2005. In connection with this project, the ship will be out of service from May until early July 2005.

² Formerly Nordic Empress.

³Horizon will be leased to Island Cruises starting in October 2005 (See Item 1. Business - International Passengers).

⁴Xpedition was built in 2001.

We have two Freedom-class ships on order for the Royal Caribbean International brand. The Freedom-class ships are being built in Turku, Finland by Aker Finnyards. The planned berths and expected delivery dates of the two ships on order are as follows:

Ship	Expected Delivery Date	Berths
Freedom-class:
Freedom of the Seas	2nd Quarter 2006	3,600
Unnamed	2nd Quarter 2007	3,600

Also, we have signed a letter of intent to purchase a third Freedom-class ship, subject to certain conditions, for an additional capacity of approximately 3,600 berths, with an expected delivery date in early 2008.

Seasonality

Our revenues are seasonal based on the demand for cruises. Demand is strongest for cruises during the summer months.

Passengers and Capacity

Selected statistical information is shown in the following table (see Terminology under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, for definitions):

	Year Ended December 31,

	2004	2003	2002	2001	2000

Passengers Carried	3,405,227	2,990,607	2,768,475	2,438,849	2,049,902
Passenger Cruise Days	22,661,965	20,064,702	18,112,782	15,341,570	13,019,811
Available Passenger Cruise Days	21,439,288	19,439,238	17,334,204	15,067,605	12,475,916
Occupancy Percentage	105.7%	103.2%	104.5%	101.8%	104.4%

Cruise Pricing

Our cruise prices include a wide variety of activities and amenities, including meals and entertainment. Prices vary depending on the destination, cruise length, cabin category selected and the time of year the voyage takes place. Additionally, we offer air transportation as a service for passengers that elect to utilize the air program. Our air transportation is available from cities in the United States, Canada and Europe and prices vary by gateway and destination. On average, air tickets are sold to passengers at prices close to cost.

Onboard Activities and Other Revenues

Both of our brands offer modern fleets with a wide array of onboard activities, services and amenities, including swimming pools, sun decks, spa facilities (which include massage and exercise facilities), beauty salons, gaming facilities, lounges, bars, Las Vegas-style entertainment, retail shopping, libraries, cinemas, conference centers and shore excursions at each port of call. In addition, the Royal Caribbean International brand ships offer rock climbing walls and the Voyager-class ships offer additional activities including ice skating rinks and in-line skating. In 2005, Royal Caribbean International will be introducing bungee trampolines on the renovated Enchantment of the Seas. While many onboard activities are included in the base price of a cruise, we realize additional revenues from, among other things, gaming, the sale of alcoholic and other beverages, gift shop items, shore excursions, photography and spa services. In addition, both Royal Caribbean International and Celebrity Cruises offer a catalogue gift service which is now offered via the internet to provide travel agents and others the opportunity to purchase “bon voyage” gifts.

In conjunction with our cruise vacations, we offer pre and post cruise tours, which generally include vacations at nearby attractions or other destinations. We also offer fully escorted, premium land tour packages in Alaska, British Columbia and Europe through Royal Celebrity Tours. Tour itineraries include travel by deluxe motorcoach and/or Wilderness Express traincars. In addition, we sell cruise vacation protection coverage which provides passengers with coverage for trip cancellation, medical protection and baggage protection.

Segment Reporting

We operate two cruise brands, Royal Caribbean International and Celebrity Cruises. The brands have been aggregated as a single operating segment based on the similarity of their economic characteristics, as well as products and services provided. (For financial information see Item 8. Financial Statements and Supplementary Data.)

Employees

As of December 31, 2004, we employed approximately 3,670 full-time and 600 part-time employees worldwide in our shoreside operations. We also employed approximately 34,600 crew and staff for our ships. As of December 31, 2004, approximately 78% of our shipboard employees were covered by collective bargaining agreements. We believe that our relationship with our employees is good.

Suppliers

Our largest purchases are for travel agency services, port facility utilization, food, fuel, airline transportation, advertising, hotel supplies and products related to passenger accommodations. Most of the supplies we require are available from numerous sources at competitive prices. None of our suppliers provided goods or services in excess of 10% of our total revenues in 2004.

Insurance

We maintain insurance on the hull and machinery of our ships, which includes additional coverage for disbursements, earnings and increased value, which are maintained in amounts related to the value of each ship. The coverage for each of the hull policies is maintained with syndicates of insurance underwriters from the British, Scandinavian, French, United States and other international insurance markets.

We maintain liability protection and indemnity insurance on each of our ships through either Assuranceforeningen GARD or the United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited.

We maintain war risk insurance, including terrorist risk insurance, on each ship through a Norwegian war risk insurance organization in an amount equal to the total insured hull value. This coverage includes coverage for physical damage to the ship which is not covered under the hull policies as a result of war exclusion clauses in such hull policies. We also maintain protection and indemnity war risk coverage for risks that would be excluded by the rules of the indemnity insurance organizations, subject to certain limitations. Consistent with most marine war risk policies, under the terms of our war risk insurance coverage, underwriters can give seven days notice to us that the policy will be canceled and reinstated at higher premium rates.

We also maintain a form of business interruption insurance with our insurance underwriters in the event that a ship is unable to operate during scheduled cruise periods due to loss or damage to the ship arising from certain covered events that last more than a specified period of time. We also maintain insurance coverage for certain events which would result in a delayed delivery of our contracted new ships, which we normally place starting approximately two years prior to the scheduled delivery dates.

Insurance coverage for shoreside property, onboard consumables and inventory, and general liability risks are maintained with insurance underwriters in the United States and the United Kingdom. We have decided not to carry business interruption insurance for shoreside operations based on our evaluation of the risks involved and our protective measures already in place, as compared to the premium expense.

All insurance coverage is subject to certain limitations, exclusions and deductible levels. In addition, in certain circumstances, we co-insure a portion of these risks. Premiums charged by insurance carriers, including carriers in the maritime insurance industry, increase or decrease from time to time and tend to be cyclical in nature. These cycles are impacted both by our own loss experience and by losses incurred in direct and reinsurance markets. We historically have been able to obtain insurance coverage in amounts and at premiums we have deemed to be commercially acceptable. No assurance can be given that affordable and secure insurance markets will be available to us in the future, particularly for war risk insurance.

The Athens Convention relating to the Carriage of Passengers and their Luggage by Sea (1974) and the 1976 Protocol to the Athens Convention are generally applicable to passenger ships. The United States has not ratified the Athens Convention; however, the 1976 Athens Convention Protocol may be contractually enforced for cruises that do not call at a United States port if the ship flies the flag of a country that has ratified the 1976 Protocol or for cruises which begin or end in such a country. The International Maritime Organization Diplomatic Conference agreed upon a new Protocol to the Athens Convention on November 1, 2002. The 2002 Protocol, which has not yet been ratified, substantially increases the level of compulsory insurance which must be maintained by passenger ship operators. No assurance can be given as to if or when the 2002 Protocol will be ratified. If ratified, no assurance can be given that affordable and secure insurance markets will be available to provide the level of coverage required under the 2002 Protocol.

Trademarks

We own a number of registered trademarks related to the Royal Caribbean International and Celebrity Cruises brands, including the name “Royal Caribbean” and its crown and anchor logo, the name “Celebrity Cruises” and its “X” logo, and the names of our cruise ships. We believe such trademarks are widely recognized throughout the world and have considerable value.

Regulation

Our ships are regulated by various international, national, state and local laws, regulations and treaties in force in the jurisdictions in which they operate. In addition, all of our ships are registered in the Bahamas with the exception of the Xpedition, which is registered in Ecuador. Each ship is subject to regulations issued by its country of registry, including regulations issued pursuant to international treaties governing the safety of the ship and its passengers. Each country of registry conducts periodic inspections to verify compliance with these regulations. Ships operating out of United States ports are subject to inspection by the United States Coast Guard for compliance with international treaties and by the United States Public Health Service for sanitary conditions. Our ships are also subject to similar inspections pursuant to the laws and regulations of various other countries our ships visit.

Our ships are required to comply with international safety standards defined in the Safety of Life at Sea Convention. The Safety of Life at Sea Convention standards are revised from time to time and the most recent modifications are being phased in through 2010. We do not anticipate that we will be required to make any material expenditures in order to comply with these rules.

We are required to obtain certificates from the United States Federal Maritime Commission relating to our ability to meet liability in cases of non-performance of obligations to passengers, as well as casualty and personal injury. Pursuant to the United States Federal Maritime Commission regulations, we arrange through our insurers for the provision of guarantees aggregating $48.8 million for our ship-operating companies as a condition to obtaining the required certificates. The United States Federal Maritime Commission has proposed various revisions to the financial responsibility regulations which could require us to significantly increase the amount of our bonds and accordingly increase our costs of compliance.

We are also required by the United Kingdom and other jurisdictions to establish our financial responsibility for any liability resulting from the non-performance of our obligations to passengers from these jurisdictions. In the United Kingdom, we are currently required by the United Kingdom Passenger Shipping Association and United Kingdom Civil Aviation Authority to provide performance bonds totaling approximately £37.8 million.

We are subject to various United States and international laws and regulations relating to environmental protection. Under such laws and regulations, we are prohibited from, among other things, discharging certain materials, such as petrochemicals and plastics, into the waterways. We have made, and will continue to make, capital and other expenditures to comply with environmental laws and regulations. From time to time, environmental and other regulators consider more stringent regulations which may affect our operations and increase our compliance costs. We believe that the impact of cruise ships on the global environment will continue to be an area of focus by the relevant authorities throughout the world and, accordingly, this will likely subject us to increasing compliance costs in the future.

We are required to obtain certificates from the United States Coast Guard relating to our ability to satisfy liability in cases of water pollution. Pursuant to United States Coast Guard regulations, we arrange through our insurers for the provision of guarantees aggregating $287 million as a condition to obtaining the required certificates.

We hold a permit from the National Park of Galapagos granting Xpedition the right to conduct cruises in the Galapagos Islands. The permit is subject to renewal by the National Park of Galapagos on an annual basis.

We believe that we are in material compliance with all the regulations applicable to our ships and that we have all licenses necessary to conduct our business. Health, safety, security and financial responsibility issues are, and we believe will continue to be, an area of focus by the relevant government authorities in the United States and internationally. From time to time, various regulatory and legislative changes may be proposed that could impact our operations and would likely subject us to increasing compliance costs in the future.

Taxation of the Company

The following discussion of the application of the United States federal income tax laws to us and to our subsidiaries is based on the current provisions of the United States Internal Revenue Code of 1986, as amended; Treasury Department regulations; administrative rulings; and court decisions. All of the foregoing is subject to change, and any change thereto could affect the accuracy of this discussion.

Application of Section 883 of the Internal Revenue Code

We and our subsidiary, Celebrity Cruises Inc., the operator of Celebrity Cruises, are foreign corporations engaged in a trade or business in the United States, and our ship-owning subsidiaries are foreign corporations that, in many cases, depending upon the itineraries of their ships, receive income from sources within the United States. Under Section 883 of the Internal Revenue Code, certain foreign corporations are not subject to United States income or branch profits tax on United States source income derived from or incidental to the international operation of a ship or ships, including income from the leasing of such ships.

A foreign corporation will qualify for the benefits of Section 883 if, in relevant part, (1) the foreign country in which the foreign corporation is organized grants an equivalent exemption to corporations organized in the United States and (2)(A) more than 50% of the value of the corporation’s capital stock is owned, directly or indirectly, by individuals who are residents of a foreign country that grants such an equivalent exemption to corporations organized in the United States or (B) the stock of the corporation (or the direct or indirect corporate parent thereof) is “primarily and regularly traded on an established securities market” in the United States or another qualifying country, such as Norway. In the opinion of our United States tax counsel, Drinker Biddle & Reath LLP, based on the representations and assumptions set forth in that opinion, we, Celebrity Cruises Inc. and our ship-owning subsidiaries qualify for the benefits of Section 883 because we and each of those subsidiaries are incorporated in a qualifying jurisdiction and our common stock is primarily and regularly traded on an established securities market in the United States or Norway.

In 2003, final regulations were issued under Section 883, which are consistent with the opinion of our United States tax counsel regarding the meaning of the phrase “primarily and regularly traded on an established securities market,” but which narrow the scope of activities that are considered by the Internal Revenue Service to be incidental to the international operation of ships. The activities listed in the regulations as not being incidental to the international operation of ships include income from the sale of air and land transportation such as transfers, shore excursions and pre and post cruise tours. To the extent the income from these activities is earned from sources within the United States, that

income will be subject to United States taxation. The effective date of these regulations was postponed for one year by the American Jobs Creation Act of 2004. They will now be effective for our 2005 fiscal year. We estimate the application of these new regulations will reduce our 2005 net income by approximately $9.5 million to $11.5 million.

We, Celebrity Cruises Inc. and our ship-owning subsidiaries are corporations incorporated under the laws of the Republic of Liberia. Accordingly, the existence of an exemption from Liberian tax for the international shipping income of United States companies is one of the assumptions upon which our United States tax counsel's opinion is based. The Liberian Revenue and Finance Law of 1977 provided an exemption from Liberian tax for all earnings derived from the operation, chartering or disposition of ships, aside from earnings derived from traffic exclusively within Liberia. Consistent with that law, in an exchange of diplomatic Notes in October 1987, the United States and Liberia confirmed that each of them grants an equivalent exemption for international shipping income of corporations incorporated in the other country. The Liberian tax law was amended in 2000 with the adoption of a new Reform Tax Code, which substantially superseded prior Liberian tax law as of January 1, 2001 and the text of which did not expressly reiterate the exemption for international shipping income contained in the 1977 law. The status of the exemption has recently been clarified, however, in regulations promulgated by the Minister of Finance of Liberia, dated December 7, 2004, and in an opinion issued by the Minister of Justice and Attorney General of Liberia, each of which confirm that international shipping income is currently exempt from Liberian tax and that this exemption has remained in effect continuously since 1977. We also understand that a diplomatic Note confirming the continuing existence of the reciprocal exemption by Liberia has been delivered by the Liberian Ministry of Foreign Affairs to the Liberian Embassy of the United States. We do not have any reason to believe that either the United States Department of State or the Treasury Department will contest or disagree with the Liberian government's position with respect to the continued existence of the exemption, and are awaiting further confirmation of this point in a diplomatic Note from the United States to Liberia. Based on the foregoing, we believe that the requirement in Section 883 of a reciprocal exemption provided to United States companies by Liberia is and has been satisfied, but until confirmation of this point from the United States Department of State or the Treasury Department is received, there remains the possibility that the Internal Revenue Service might dispute the conclusions regarding Liberia tax law that have been reached by the Liberian authorities, and therefore challenge our exemption under Section 883.

Under certain circumstances, changes in our stock ownership could cause our common stock not to be “regularly traded on an established securities market” within the meaning of the regulations under Section 883. To substantially reduce any such risk, in May 2000, our Articles of Incorporation were amended to prohibit any person, other than our two existing largest shareholders, from owning, as determined for purposes of Section 883(c)(3) of the Internal Revenue Code and the regulations promulgated thereunder, shares that give such person in the aggregate more than 4.9% of the relevant class or classes of our shares. Under Liberian law, this amendment may not be enforceable with respect to shares of common stock that were voted against the amendment or that were recorded as abstaining from the vote.

Also, it should be noted that Section 883 has been the subject of legislative modifications in past years that have had the effect of limiting its availability to certain taxpayers, and there can be no assurance that future legislation or certain changes in our stock ownership will not preclude us from obtaining the benefits of Section 883. At this time, however, there is no known limiting legislation pending before the United States Congress.

We believe that the majority of our income and the income of our subsidiaries is derived from or incidental to the international operation of a ship or ships and, therefore, it is exempt from taxation under Section 883. (See Outlook under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)

Taxation in the Absence of an Exemption under Section 883 of the Internal Revenue Code

In the event that we, Celebrity Cruises Inc. or our ship-owning subsidiaries were to fail to meet the requirements of Section 883 of the Internal Revenue Code, or if such provision was repealed, then, as explained below, such companies would be subject to United States income taxation on only a portion of their income.

Because we and Celebrity Cruises Inc. conduct a trade or business in the United States, we and Celebrity Cruises Inc. would be taxable at regular corporate rates on our separate Company taxable income (i.e., without regard to the income of our ship-owning subsidiaries), from United States sources, which includes 100% of income, if any, from transportation

which begins and ends in the United States (not including possessions of the United States), 50% of income from transportation that either begins or ends in the United States, and no income from transportation that neither begins nor ends in the United States. The legislative history of the transportation income source rules suggests that a cruise that begins and ends in a United States port, but that calls on more than one foreign port, will derive United States source income only from the first and last legs of such cruise. Because there are no regulations or other Internal Revenue Service interpretations of these rules, the applicability of the transportation income source rules in the aforesaid favorable manner is not free from doubt. In addition, if any of our earnings and profits effectively connected with our United States trade or business were withdrawn or were deemed to have been withdrawn from our United States trade or business, such withdrawn amounts would be subject to a “branch profits” tax at the rate of 30%. The amount of such earnings and profits would be equal to the aforesaid United States source income, with certain generally minor adjustments, less income taxes. Finally, we and Celebrity Cruises Inc. would also be potentially subject to tax on portions of certain interest paid by us at rates of up to 30%.

If Section 883 was not available to our ship-owning subsidiaries, each such subsidiary would be subject to a special 4% tax on its United States source gross transportation income, if any, each year because its income is derived from the leasing of a ship and because it does not have a fixed place of business in the United States. Such United States source gross transportation income may be determined under any reasonable method, including ratios of days traveling directly to or from United States ports to total days traveling, or of the lessee’s United States source gross income from the ship (as determined under the source rules discussed in the preceding paragraph, and subject to the assumptions and qualifications set forth therein) to the lessee’s total gross income from the ship.

Website Access to Reports

We make available, free of charge, access to our Annual Reports on Forms 10-K and 20-F, as applicable; all quarterly and current reports on Forms 10-Q, 8-K and 6-K, as applicable; and all amendments to those reports, as soon as reasonably practicable after such reports are electronically filed with or furnished to the Securities and Exchange Commission through our website at www.rclinvestor.com. The information contained on our website is not a part of the Annual Report on Form 10-K and is not incorporated by reference herein.

Executive Officers of the Company

Pursuant to Instruction 3 to Item 401(b) of Regulation S-K, the information regarding our executive officers is hereby included in Part I of this Annual Report on Form 10-K.

Our executive officers are:

Name	Age	Position
Richard D. Fain	57	Chairman, Chief Executive Officer and Director
Jack L. Williams	55	President and Chief Operating Officer
Adam M. Goldstein	45	President, Royal Caribbean International
Daniel J.Hanrahan	47	President, Celebrity Cruises
Luis E. Leon	52	Executive Vice President and Chief Financial Officer
Brian J. Rice	46	Senior Vice President, Revenue Performance

Richard D. Fain has served as a director since 1981 and as our Chairman and Chief Executive Officer since 1988. Mr. Fain is Chairman of the International Council of Cruise Lines, an industry trade organization. Mr. Fain has been involved in the shipping industry for over 25 years.

Jack L. Williams serves as President and Chief Operating Officer of Royal Caribbean Cruises Ltd., a position he has held since 1997. From 1997 until February 2005, Mr. Williams also served as President of the Royal Caribbean International brand and from November 2001 through February 2005 as President of the Celebrity Cruises brand. Prior to 1997, Mr. Williams was Vice President and General Sales Manager for American Airlines where he had been employed for 23 years in a variety of positions in finance, marketing and operations.

Adam M. Goldstein has served as President of Royal Caribbean International since February 2005. As President, Mr. Goldstein oversees fleet operations, sales and marketing for the Royal Caribbean International brand. Mr. Goldstein is also responsible for our supply chain management and for our tour company, Royal Celebrity Tours. Mr. Goldstein was responsible for overseeing these areas as Executive Vice President from November 2002 to February 2005. Mr. Goldstein has been employed with Royal Caribbean since 1988 in a variety of positions, including Senior Vice President, Total Guest Satisfaction and Senior Vice President, Marketing. Mr. Goldstein served as National Chair of the Travel Industry Association of America in 2001.

Daniel J. Hanrahan has served as President of Celebrity Cruises since February 2005 and, in such capacity, is responsible for the brand’s fleet operations, sales and marketing and brand development. From 1999 through February 2005, Mr. Hanrahan served as Senior Vice President, Sales and Marketing, for the Royal Caribbean International brand where he oversaw the brand’s marketing and sales operations. Mr. Hanrahan is currently Vice Chairman of the Cruise Line Industry Association and a member of its executive committee. Mr. Hanrahan has been employed by the Company since 1999.

Luis E. Leon has served as Executive Vice President and Chief Financial Officer since August 2003. From 2001 through August 2003, Mr. Leon was the Chief Financial Officer for Graphic Packaging International Corporation, a New York Stock Exchange-listed manufacturer of folding cartons for the food, beverage and consumer products industry. In such capacity, Mr. Leon was responsible for all financial and information technology functions of the company. From 1994 through 2001, Mr. Leon held various financial and management positions with GS Industries, Inc., a leading maker of wire rod and grinding media for the mining industry, including serving as Executive Vice President and Chief Financial Officer and as a member of the board of directors and member of its executive committee. From 1999 to 2001, Mr. Leon also served as the Chief Operating Officer for GS Industries, Inc.’s Mining Products division. Mr. Leon serves as a member of the foundation board for Miami-Dade College.

Brian J. Rice has served as Senior Vice President, Revenue Performance since 1999 and, in such capacity, is responsible for revenue management, air/sea, groups, decision support, reservations and customer service for both Royal Caribbean International and Celebrity Cruises. Mr. Rice has been employed with the Company for over 15 years.

Item 2. Properties

Information about our cruise ships, including their size and primary areas of operation, may be found within the Operating Strategies - Fleet Expansion section and the Operations - Cruise Ships and Itineraries section in Item 1. Business. Information regarding our cruise ships under construction, estimated expenditures and financing may be found within the Future Capital Commitments and Funding Sources sections of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Our principal executive office and shoreside operations are located at the Port of Miami, Florida where we lease three office buildings totaling approximately 359,000 square feet from Miami-Dade County, Florida, under long-term leases with initial terms expiring in various years in and after 2011.

We lease an office building in Wichita, Kansas totaling approximately 95,000 square feet, which is used primarily as a reservation center. We lease an office building in Miramar, Florida totaling approximately 128,000 square feet, which is used primarily as additional office space. In January 2005, we entered into an agreement providing for a developer to construct and lease to us an additional reservation center on undeveloped property in Springfield, Oregon. The new building will total approximately 163,000 square feet and it is expected to be completed at the end of 2005.

Royal Caribbean International operates two private destinations: (i) an island we own in the Bahamas which we call Cococay; and (ii) Labadee, a secluded peninsula which we lease and is located on the north coast of Haiti. From February 2004 through May 2004, our ships did not call on Labadee due to political unrest in Haiti.

We believe that our facilities are adequate for our current needs. We evaluate our needs periodically and obtain additional facilities when considered necessary.

Item 3. Legal Proceedings

We are routinely involved in claims typical within the cruise vacation industry. The majority of these claims is covered by insurance. We believe the outcome of such claims, net of expected insurance recoveries, will not have a material adverse effect upon our financial condition, results of operations or liquidity.

Item 4. Submission of Matters to a Vote of Security Holders

None.

PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

Market Information

Our common stock is listed on the New York Stock Exchange (“NYSE”) and the Oslo Stock Exchange (“OSE”) under the symbol “RCL”. The table below sets forth the intra-day high and low prices of our common stock as reported by the NYSE and the OSE for the two most recent years by quarter:

	NYSE Common Stock		OSE Common Stock(1)
	High	Low	High	Low

2004 Fourth Quarter	$55.47	$43.60	337.47	291.86
Third Quarter	44.95	39.10	311.76	263.63
Second Quarter	45.99	37.80	320.78	254.82
First Quarter	46.92	34.82	329.21	231.79
2003 Fourth Quarter	35.00	27.08	237.43	186.20
Third Quarter	32.68	22.27	243.89	159.06
Second Quarter	23.42	14.60	170.16	105.22
First Quarter	18.21	12.42	127.00	89.08

__________

(1)	Denominated in Norwegian kroner.

Holders

As of February 28, 2005 there were 1,045 record holders of our common stock. Since certain of our shares are held indirectly, the foregoing number is not representative of the number of beneficial owners.

Dividends

In each quarter of 2004 and 2003, we declared cash dividends on our common stock in the amount of $0.13 per share.

Holders of our common stock have an equal right to share in our profits in the form of dividends when declared by our board of directors out of funds legally available for the distribution of dividends. If declared, there are no relevant time limits under Liberian law pursuant to which the entitlement to the dividend would lapse. Holders of our common stock have no rights to any sinking fund.

There are no exchange control restrictions on remittances of dividends on our common stock. Since (1) we are and intend to maintain our status as a nonresident Liberian entity under the Revenue Code of Liberia (2000) and the regulations thereunder, and (2) our ship-owning subsidiaries are not now engaged, and are not in the future expected to engage, in any business in Liberia, including voyages exclusively within the territorial waters of the Republic of Liberia, we have been advised by Watson, Farley & Williams, our special Liberian counsel, that under current Liberian law, no Liberian taxes or withholding will be imposed on payments to holders of our securities other than to a holder that is a resident Liberian entity or a resident individual or an individual or entity subject to taxation in Liberia as a result of having a permanent establishment (within the meaning of the Revenue Code of Liberia (2000)) in Liberia.

The declaration of dividends shall at all times be subject to the final determination of our board of directors that a dividend is prudent at that time in consideration of the needs of the business. The shareholders agreement provides that A. Wilhelmsen AS. and Cruise Associates will from time to time consider our dividend policy with due regard for the interests of the shareholders in maximizing the return on their investment and our ability to pay such dividends. The shareholders agreement also provides that payment of dividends will depend, among other factors, upon our earnings, financial condition and capital requirements and the income and other tax liabilities of A. Wilhelmsen AS., Cruise Associates and their respective affiliates relating to their ownership of common stock.

Item 6. Selected Financial Data

The selected consolidated financial data presented below for the years 2000 through 2004 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.

	Year Ended December 31,

	2004	2003	2002	2001	2000

	(in thousands, except per share data)
Operating Data:
Total revenues	$4,555,375	$3,784,249	$3,434,347	$3,145,250	$2,865,846
Operating income	753,589	526,185	550,975	455,605	569,540
Net income	474,691	280,664	351,284	254,457	445,363
Per Share Data — Diluted:
Net income ¹	$2.26	$1.42	$1.76	$1.31	$2.31
Weighted-average shares and potentially dilutive shares ¹	234,580	211,175	209,565	202,004	192,935
Dividends declared per common share	$0.52	$0.52	$0.52	$0.52	$0.48
Balance Sheet Data:
Total assets	$11,964,084	$11,322,742	$10,538,531	$10,368,782	$7,828,465
Total debt, including 'capital leases	5,731,944	5,835,804	5,444,838	5,646,112	3,410,096
Common stock	2,012	1,961	1,930	1,923	1,921
Total shareholders’ equity	4,804,520	4,262,897	4,034,694	3,756,584	3,615,915

¹We adopted the provisions of Emerging Issues Task Force 04-8 “Accounting Issues Related to Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings Per Share,” (“EITF 04-8”) in our fourth quarter of 2004 and restated prior period diluted earnings per share amounts for comparative purposes. The implementation of EITF 04-8 did not change our previously reported 2000 and 2003 diluted earnings per share; however, it reduced our 2002 and 2001 diluted earnings per share by $0.03 and $0.01, respectively. (See Note 8. Earnings Per Share to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data.)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements under this caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this document constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. Words such as “expect,” “anticipate,” “goal,” “project,” “plan,” “believe,” “seek,” and similar expressions are intended to identify these forward looking statements. Forward-looking statements do not guarantee future performance and may involve risks, uncertainties and other factors which could cause our actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in those forward-looking statements. Examples of these risks, uncertainties and other factors include, but are not limited to those discussed under Item 1. Business - Risk Factors as well as the following:

• general economic and business conditions,

• vacation industry competition, including cruise vacation industry competition,

• changes in vacation industry capacity, including over capacity in the cruise vacation industry,

• the impact of tax laws and regulations affecting our business or our principal shareholders,

• the impact of changes in other laws and regulations affecting our business,

• the impact of pending or threatened litigation,

• the delivery of scheduled new ships,

• emergency ship repairs,

• negative incidents involving cruise ships including those involving the health and safety of passengers,

• reduced consumer demand for cruises as a result of any number of reasons, including geo-political and economic uncertainties, the unavailability of air service, armed conflict, terrorist attacks and the resulting concerns over safety and security aspects of traveling,

• our ability to obtain financing on terms that are favorable or consistent with our expectations,

• changes in our stock price or principal stockholders,

• 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, and

• weather.

The above examples are not exhaustive and new risks emerge from time to time. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. (See Note 1. General and Note 2. Summary of Significant Accounting Policies to our consolidated financial statements.) Certain of our accounting policies are deemed “critical,” as they require management’s highest degree of judgment, estimates and assumptions. We have discussed these accounting policies and estimates with the audit committee of our board of directors. We believe our most critical accounting policies are as follows:

Ship Accounting

Our ships represent our most significant assets and are stated at cost less accumulated depreciation or amortization. Depreciation of ships, which includes amortization of ships under capital leases, is computed net of a 15% projected residual value using the straight-line method over estimated service lives of primarily 30 years. Improvement costs that we believe add value to our ships are capitalized as additions to the ship and depreciated over the improvements’ estimated useful lives. The estimated cost and accumulated depreciation of refurbished or replaced ship components are written-off and any resulting gain or loss is recognized in cruise operating expenses. Repairs and maintenance activities are charged to expense as incurred and drydocking costs are accrued evenly over the period to the next scheduled drydocking.

Our service life and residual value estimates take into consideration the impact of anticipated technological changes, long-term cruise and vacation market conditions and historical useful lives of similarly-built ships. In addition, we take into consideration our estimates of the average useful lives of the ships’ major component systems, such as hull, superstructure, main electric, engines and cabins. Given the very large and complex nature of our ships, our accounting estimates related to ships and determinations of ship improvement costs to be capitalized require considerable judgment and are inherently uncertain. We do not have cost segregation studies performed to specifically componentize our ship systems; therefore, we estimate the costs of component systems based principally on general and technical information known about major ship component systems and their lives and our knowledge of the cruise vacation industry. We do not identify and track depreciation by ship component systems, but instead utilize these estimates to determine the net cost basis of assets replaced or refurbished.

We believe we have made reasonable estimates for ship accounting purposes. However, should certain factors or circumstances cause us to revise our estimates of ship service lives or projected residual values, depreciation expense could be materially higher or lower. If circumstances cause us to change our assumptions in making determinations as to whether ship improvements should be capitalized, the amounts we expense each year as repairs and maintenance costs could increase, partially offset by a decrease in depreciation expense. If we had reduced our estimated average 30-year ship service life by one year, depreciation expense for 2004 would have increased by approximately $13 million. Further, if our ships were estimated to have no residual value, depreciation expense for 2004 would have increased by approximately $70 million.

Valuation of Long-Lived Assets and Goodwill

We review 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 future cash flows were less than the carrying value of the asset, an impairment charge would be recognized for the difference between the asset’s estimated fair value and its carrying value.

The determination of fair value is based on quoted market prices in active markets, if available. Such markets are often not available for used cruise ships. Accordingly, we also base fair value on independent appraisals, sales price negotiations and projected future cash flows discounted at a rate determined by management to be commensurate with our business risk. The estimation of fair value utilizing discounted forecasted cash flows includes numerous uncertainties which require our significant judgment when making assumptions of revenues, operating costs, marketing, selling and administrative expenses, interest rates, ship additions and retirements, cruise vacation industry competition and general economic and business conditions, among other factors.

Goodwill is reviewed annually or whenever events or changes in circumstances indicate that the carrying amount of goodwill may not be fully recoverable. The impairment review consists of comparing the fair value of goodwill to the carrying value. If the carrying value exceeds the fair value, an impairment charge would be recognized for the difference between the carrying value and the fair value. We use the market capitalization method in determining the fair value of our goodwill. If, under certain circumstances, this method is not representative of fair value, we use a present value of future cash flows approach.

We believe we have made reasonable estimates and judgments in determining whether our long-lived assets and goodwill have been impaired; however, if there is a material change in the assumptions used in our determination of fair values 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 — Litigation

On an ongoing basis, we assess the potential liabilities related to any lawsuits or claims brought against us. While it is typically very difficult to determine the timing and ultimate outcome of such actions, 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 take into consideration estimates of the amount of insurance recoveries, if any. We accrue a liability when we believe a loss is probable and the amount of loss can be reasonably estimated. Due to the inherent uncertainties related to the eventual outcome of litigation and potential insurance recoveries, it is possible that certain matters may be resolved for amounts materially different from any provisions or disclosures that we have previously made.

Terminology

Available Passenger Cruise Days (“APCD”) are our measurement of capacity and represent double occupancy per cabin multiplied by the number of cruise days for the period.

Gross Cruise Costs represent the sum of total cruise operating expenses plus marketing, selling and administrative expenses.

Gross Yields represent total revenues per APCD.

Net Cruise Costs represent Gross Cruise Costs excluding commissions, transportation and other expenses and onboard and other expenses (each of which is described below under the Summary of Historical Results of Operations heading). In measuring our ability to control costs in a manner that positively impacts net income, we believe changes in Net Cruise Costs to be the most relevant indicator of our performance. We have not provided a quantitative reconciliation of projected Gross Cruise Costs to projected Net Cruise Costs due to the significant uncertainty in projecting the costs deducted to arrive at this measure. Accordingly, we do not believe that reconciling information for such projected figures would be meaningful.

Net Yields represent Gross Yields less commissions, transportation and other expenses and onboard and other expenses (each of which is described below under the Summary of Historical Results of Operations heading) per APCD. We utilize Net Yields to manage our business on a day-to-day basis and believe that it is the most relevant measure of our pricing performance. We have not provided a quantitative reconciliation of projected Gross Yields to projected Net Yields due to the significant uncertainty in projecting the costs deducted to arrive at this measure. Accordingly, we do not believe that reconciling information for such projected figures would be meaningful.

Occupancy Percentage, in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days by APCD. A percentage in excess of 100% indicates that three or more passengers occupied some cabins.

Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days of their respective cruises.

Overview

Our revenues consist of the following:

Passenger ticket revenues consist of revenue recognized from the sale of passenger tickets and the sale of air transportation to our ships.

Onboard and other revenues consist primarily of revenues from the sale of goods and/or services onboard our ships, cancellation fees, sales of vacation protection insurance and pre and post tours. Also included are revenues we receive from independent third party concessionaires that pay us a percentage of their revenues in exchange for the right to provide selected goods and/or services onboard our ships.

Our cruise operating expenses consist of the following:

Commissions, transportation and other expenses consist of those costs directly associated with passenger ticket revenues, including travel agent commissions, air and other transportation expenses, port costs that vary with passenger head counts and related credit card fees.

Onboard and other expenses consist of the direct costs associated with onboard and other revenues. These costs include the cost of products sold onboard our ships, vacation protection insurance premiums, costs associated with pre and post tours and related credit card fees. Concession revenues have minimal costs associated with them, as the costs related to these activities are incurred by the concessionaires.

Payroll and related expenses consist of costs for shipboard personnel.

Food expenses include food costs for both passengers and crew.

Other operating expenses consist of operating costs such as fuel, repairs and maintenance, port costs that do not vary with passenger head counts, insurance, entertainment and all other operating costs.

We do not allocate payroll and related costs, food costs or other operating costs to the expense categories attributable to passenger ticket revenues or onboard and other revenues since they are incurred to provide the total cruise vacation experience.

Summary of Historical Results of Operations

We reported historical total revenues, operating income, net income and earnings per share as shown in the following table (in thousands, except per share data):

	Year Ended December 31,

	2004	2003	2002

Total revenues	$ 4,555,375	$ 3,784,249	$ 3,434,347
Operating income	753,589	526,185	550,975
Net income	474,691	280,664	351,284
Basic earnings per share	$ 2.39	$ 1.45	$ 1.82
Diluted earnings per share ¹	$ 2.26	$ 1.42	$ 1.76

¹We adopted the provisions of Emerging Issues Task Force 04-8 “Accounting Issues Related to Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings Per Share,” (“EITF 04-8”) in our fourth quarter of 2004 and restated prior period diluted earnings per share amounts for comparative purposes. The implementation of EITF 04-8 did not change our previously reported 2003 diluted earnings per share; however, it reduced our previously reported 2002 diluted earnings per share by $0.03.

Unaudited selected historical statistical information is shown in the following table:

	Year Ended December 31,

	2004	2003		2002

Passengers Carried	3,405,227	2,990,607		2,768,475
Passenger Cruise Days	22,661,965	20,064,702		18,112,782
APCD	21,439,288	19,439,238		17,334,204
Occupancy Percentage	105.7%		103.2%		104.5%

The following table presents historical operating data as a percentage of total revenues for the last three years:

	Year Ended December 31,

	2004	2003	2002


Passenger ticket revenues	73.7	73.3	75.4
Onboard and other revenues	26.3	26.7	24.6

Total revenues	100.0%	100.0%	100.0%

Cruise operating expenses
Commissions, transportation and other	18.1	18.1	19.5
Onboard and other	6.6	6.6	6.1
Payroll and related	10.7	11.3	9.2
Food	5.9	6.3	7.4
Other operating	20.6	20.6	19.3

Total cruise operating expenses	61.9	62.9	61.5
Marketing, selling and administrative expenses	12.9	13.6	12.6
Depreciation and amortization expenses	8.7	9.6	9.9

Operating income	16.5	13.9	16.0
Other income (expense)	(6.1)	(6.5)	(5.8)

Net income	10.4%	7.4%	10.2%

Net income was $474.7 million or $2.26 per share on a diluted basis in 2004, compared to $280.7 million or $1.42 per share in 2003 and $351.3 million or $1.76 per share in 2002. Revenues for 2004 increased 20.4% to $4.6 billion from revenues of $3.8 billion in 2003. The increase in revenues was a result of a 10.3% increase in capacity along with increases in cruise ticket prices, occupancy levels and onboard revenues as consumer sentiment towards leisure travel improved in 2004. During 2004, Net Yields increased 9.2% compared to 2003. Cruise operating expenses increased 18.4% in 2004 compared to 2003 primarily as a result of increases in capacity, the effect of higher cruise ticket prices on commission expenses and higher fuel prices. Net Cruise Costs per APCD increased 5.6% in 2004 compared to 2003. In addition, net income in 2004 included costs of approximately $11.3 million related to the impact of hurricanes.

Revenues in 2003 increased 10.2% to $3.8 billion from revenues of $3.4 billion in 2002. The increase in revenues was a result of a 12.1% increase in capacity, partially offset by lower cruise ticket prices and occupancy levels. In 2003 and 2002, our business was adversely impacted by the terrorist attacks of September 11, 2001, the war in Iraq, the economy and the publicity surrounding Severe Acute Respiratory Syndrome and noroviruses. As a result, we experienced lower cruise ticket prices attributed to consumer apprehension towards travel. Net income in 2002 included a charge of $20.0 million recorded in connection with a litigation settlement. In 2003, we reduced the amount of the charge by approximately $5.8 million based on the actual number of claims filed. Net income in 2002 also included net proceeds of $33.0 million received in connection with the termination of our merger agreement with P&O Princess Cruises plc (“P&O Princess”). (See Note 3. Termination of Proposed Combination with P&O Princess Cruises plc to our consolidated financial statements.)

Outlook

Consumer demand is healthy across all products and for both brands. Many of the demand characteristics are similar to those we experienced in the late 1990’s. As a result, we expect Net Yields for the first quarter of 2005 to increase approximately 7% and, for the full year 2005, to increase in the range of 5% to 7%.

We also expect that in 2005 we will have a relatively small capacity increase of 1.6%, which means fewer economies of scale to absorb inflationary and other cost pressures. In addition, uncertainty about fuel costs makes forecasting difficult. We previously said that assuming the yearly average at-the-pump price of fuel in 2005 is the same as the yearly average in 2004 and adjusting for fewer fuel hedges, we expected Net Cruise Costs to increase in the range of 2% to 3% per APCD. Expected fuel prices for the first quarter of 2005 are about 11% higher than the 2004 yearly average. Assuming at-the-pump fuel prices are 11% higher for the remainder of 2005 than the 2004 average, our Net Cruise Costs per APCD would increase by an additional 1%, or approximately $23 million, as compared to the previous guidance. This increase is after taking into account the benefit of our fuel hedges. In addition, the timing of certain expenses, including marketing, has been deferred from the first quater to later in the year.

We also expect depreciation and amortization to be in the range of $410 million to $420 million and net interest expense to be in the range of $305 million to $315 million in 2005. Additionally, 2005 will be the initial year we accrue income taxes associated with the final regulations under Internal Revenue Code Section 883. We expect the application of the final regulations to reduce 2005 diluted earnings per share by approximately $0.04 to $0.05.

Other items affecting 2005 include the following:

•

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment,” (“SFAS 123R”). SFAS 123R requires the measurement and recognition of compensation expense at the fair value of employee stock awards, except for employee share purchase plans if they meet certain conditions. We expect this change to reduce diluted earnings per share by approximately $0.02.

•

Enchantment of the Seas is scheduled to undergo a lengthening in the spring of 2005 with a new 73-foot midsection. In connection with this project, the ship will be out of service from May until early July 2005. In addition to lost revenue associated with a decrease in APCD, we expect expenses associated with this project to reduce diluted earnings per share by approximately $0.04.

Including the revised assumption for fuel and our expectations concerning other items set forth above, we now expect diluted earnings per share for the first quarter of 2005 to be in the range of $0.55 to $0.60. Notwithstanding the revised assumption for fuel, our expectation for full year 2005 diluted earnings per share remains unchanged in the range of $2.70 to $2.90.

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Revenues

Gross Yields and Net Yields were calculated as follows (in thousands, except APCD and Yields):

	Year Ended December 31,

	2004	2003

Passenger ticket revenues	$3,359,201	$2,775,055
Onboard and other revenues	1,196,174	1,009,194

Total revenues	4,555,375	3,784,249

Less:
Commissions, transportation and other	822,206	684,344
Onboard and other	300,717	249,537

Net Revenues	$3,432,452	$2,850,368

APCD	21,439,288	19,439,238
Gross Yields	$212.48	$194.67
Net Yields	$160.10	$146.63

Net Revenues increased 20.4% in 2004 compared to 2003. The increase was due to a 10.3% increase in capacity and a 9.2% increase in Net Yields. The increase in capacity was primarily associated with the full year effect of the additions of Serenade of the Seas and Mariner of the Seas in 2003 and delivery of Jewel of the Seas in 2004. The increase in capacity was partially offset by the cancellation of 54 days of sailings in 2004 due to hurricanes and unscheduled drydocks. The increase in Net Yields was primarily due to higher cruise ticket prices, occupancy levels and amounts spent per passenger onboard. These increases were primarily attributable to improved consumer sentiment towards leisure travel. In 2003, we experienced lower cruise ticket prices due to consumer apprehension towards travel prior to and during the war in Iraq and economic uncertainty. Occupancy in 2004 was 105.7% compared to 103.2% in 2003. Gross Yields increased 9.1% in 2004 compared to 2003 primarily due to the same reasons discussed above for Net Yields.

Onboard and other revenues included concession revenues of $196.3 million and $163.0 million in 2004 and 2003, respectively, which increased in 2004 primarily due to the same reasons discussed above for Net Revenues.

Expenses

Gross Cruise Costs and Net Cruise Costs were calculated as follows (in thousands, except APCD and costs per APCD):

	Year Ended December 31,

	2004	2003

Total cruise operating expenses	$2,819,383	$2,381,035
Marketing, selling and administrative expenses	588,267	514,334

Gross Cruise Costs	3,407,650	2,895,369

Less:
Commissions, transportation and other	822,206	684,344
Onboard and other	300,717	249,537

Net Cruise Costs	$2,284,727	$1,961,488

APCD	21,439,288	19,439,238
Gross Cruise Costs per APCD	$158.94	$148.94
Net Cruise Costs per APCD	$106.57	$100.90

Net Cruise Costs increased 16.5% in 2004 compared to 2003. The increase was due to the 10.3% increase in capacity mentioned above and a 5.6% increase in Net Cruise Costs per APCD. The increase in Net Cruise Costs per APCD was primarily attributed to increases in fuel prices, marketing, selling and administrative expenses, crew salaries and medical expenses, port expenses and costs associated with hurricanes. The weighted-average fuel price (net of the financial impact of fuel swap agreements) for the year ended December 31, 2004 increased 14% per metric ton from the year ended December 31, 2003. As a percentage of total revenues, fuel costs were 5.5% and 5.2% for 2004 and 2003, respectively. The increase in marketing, selling and administrative expenses was primarily attributable to increases in general and administrative costs associated with the expansion of our reservations and sales force and additional information technology projects. In addition, advertising costs increased primarily due to an increase in television media spending and the launch of the Cirque du Soleil and Xpeditions marketing campaigns for Celebrity Cruises. The increase in port expenses was primarily attributed to itinerary changes. In 2004, we incurred approximately $11.3 million in costs related to the impact of hurricanes. In 2003, other operating expenses were reduced by approximately $5.8 million in connection with a litigation settlement. Gross Cruise Costs per APCD increased 6.7% in 2004 compared to 2003 primarily due to the same reasons discussed above for Net Cruise Costs per APCD.

Depreciation and amortization expenses increased 8.7% in 2004 compared to 2003. The increase was primarily due to incremental depreciation associated with the full year effect of the addition of two new ships in 2003 and one new ship in 2004.

Other Income (Expense)

Gross interest expense increased to $317.2 million in 2004 from $284.3 million in 2003. The increase was primarily attributable to a higher average debt level and higher interest rates. Interest capitalized during 2004 decreased to $7.2 million from $15.9 million in 2003 due to a lower average level of investment in ships under construction.

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Revenues

Gross Yields and Net Yields were calculated as follows (in thousands, except APCD and Yields):

	Year Ended December 31,

	2003	2002

Passenger ticket revenues	$2,775,055	$2,589,942
Onboard and other revenues	1,009,194	844,405

Total revenues	3,784,249	3,434,347

Less:
Commissions, transportation and other	684,344	669,177
Onboard and other	249,537	208,231

Net Revenues	$2,850,368	$2,556,939

APCD	19,439,238	17,334,204
Gross Yields	$194.67	$198.13
Net Yields	$146.63	$147.51

Net Revenues increased 11.5% in 2003 compared to 2002. The increase was due to a 12.1% increase in capacity, offset by a 0.6% decrease in Net Yields. The increase in capacity was primarily associated with the full year effect of the additions of Constellation, Brilliance of the Seas and Navigator of the Seas in 2002 and the addition of two new ships in 2003. The increase in capacity was partially offset by the cancellation of 46 days of sailings in 2003 due to unscheduled drydocks and the transfer of Viking Serenade to Island Cruises, our joint venture with First Choice Holidays PLC, in 2002. The decrease in Net Yields was primarily due to lower cruise ticket prices and occupancy levels attributable to consumer apprehension towards travel prior to and during the war in Iraq and economic uncertainty. The decrease was partially offset by an increase in net onboard and other revenues due to the assumption of certain onboard functions previously handled by a concessionaire. Occupancy in 2003 was 103.2% compared to 104.5% in 2002. Gross Yields decreased 1.7% in 2003 compared to 2002 primarily due to the same reasons discussed above for Net Yields.

Onboard and other revenues included concession revenues of $163.0 million and $162.0 million in 2003 and 2002, respectively, which increased in 2003 primarily due to the same reasons discussed above for Net Revenues.

Expenses

Gross Cruise Costs and Net Cruise Costs were calculated as follows (in thousands, except APCD and costs per APCD):

	Year Ended December 31,

	2003	2002

Total cruise operating expenses	$2,381,035	$2,113,217
Marketing, selling and administrative expenses	514,334	431,055

Gross Cruise Costs	2,895,369	2,544,272

Less:
Commissions, transportation and other	684,344	669,177
Onboard and other	249,537	208,231

Net Cruise Costs	$1,961,488	$1,666,864

APCD	19,439,238	17,334,204
Gross Cruise Costs per APCD	$148.94	$146.78
Net Cruise Costs per APCD	$100.90	$ 96.16

Net Cruise Costs increased 17.7% in 2003 compared to 2002 due to the 12.1% increase in capacity discussed above and a 4.9% increase in Net Cruise Costs per APCD. The increase in Net Cruise Costs per APCD was primarily attributed to the assumption of certain onboard functions previously handled by a concessionaire, fuel prices, the full year impact of the Brilliance of the Seas lease payments and new initiatives associated with the Celebrity Cruises marketing campaign. The change in the concession arrangement resulted in higher payroll and related expenses and onboard and other expenses, partially offset by a decrease in food costs. Fuel costs as a percentage of total revenues were 5.2% and 4.5% for 2003 and 2002, respectively. The increase in Net Cruise Costs per APCD in 2003 was further impacted by the fact that 2002 reflected lower spending levels as a result of business decisions taken subsequent to the events of September 11, 2001. In addition, included in other operating expenses in 2002 was a charge of $20.0 million recorded in connection with a litigation settlement. In 2003, we reduced the amount of the charge by approximately $5.8 million based on the actual number of claims filed. Gross Cruise Costs per APCD increased 1.5% in 2003 compared to 2002 primarily due to the same reasons discussed above for Net Cruise Costs per APCD.

Depreciation and amortization expenses increased 7.0% in 2003 compared to 2002. The increase was primarily due to incremental depreciation associated with the full year effect of the addition of two new ships in 2002 and two new ships in 2003.

Other Income (Expense)

Gross interest expense decreased to $284.3 million in 2003 from $290.3 million in 2002. The decrease was primarily attributable to lower interest rates. Interest capitalized during 2003 decreased to $15.9 million from $23.4 million in 2002 due to a lower average level of investment in ships under construction and lower interest rates.

Included in other income in 2002 was $33.0 million of net proceeds received in connection with the termination of the P&O Princess merger agreement and $12.3 million of compensation from shipyards related to the late delivery of ships.

Liquidity and Capital Resources

Sources and Uses of Cash

Net cash provided by operating activities was $1.1 billion in 2004 compared to $0.9 billion in both 2003 and 2002. The increase in 2004 compared to 2003 was primarily due to an increase in net income. When comparing 2003 to 2002, the decrease in net income was partially offset by an increase in customer deposits due to the timing of cash receipts.

During the year ended December 31, 2004, our capital expenditures were approximately $0.6 billion compared to approximately $1.0 billion in 2003 and $1.0 billion in 2002. Capital expenditures were primarily related to the deliveries of Jewel of the Seas in 2004; Serenade of the Seas and Mariner of the Seas in 2003; and Constellation and Navigator of the Seas in 2002, as well as progress payments for ships under construction in all years.

Interest capitalized during 2004 decreased to $7.2 million from $15.9 million in 2003 and $23.4 million in 2002 due to a lower average level of investment in ships under construction.

During 2004, we drew $225.0 million on an unsecured variable rate term loan due 2006 through 2012. During 2003, we received net cash proceeds of $590.5 million from the issuance of senior unsecured notes due through 2013. During 2002, we obtained financing of $320.0 million related to the acquisition of Constellation. (See Note 6. Long-Term Debt to our consolidated financial statements.)

In July 2002, we financed the addition of Brilliance of the Seas to our fleet by novating our original ship building contract and entering into an operating lease denominated in British pound sterling. In connection with the novation of the contract, we received $77.7 million for reimbursement of shipyard deposits previously made. (See Note 12. Commitments and Contingencies to our consolidated financial statements.)

We made principal payments totaling approximately $361.4 million, $231.1 million and $603.3 million under various term loans, senior notes, revolving credit facilities and capital leases during 2004, 2003 and 2002, respectively.

During 2004, 2003 and 2002, we received $98.3 million, $46.0 million and $6.6 million, respectively, in connection with the exercise of common stock options and we paid quarterly cash dividends on our common stock totaling $104.5 million, $98.3 million and $100.1 million, respectively.

Future Capital Commitments

As of December 31, 2004, we had two Freedom-class ships on order for an additional capacity of approximately 7,200 berths with scheduled deliveries in the second quarters of 2006 and 2007. The estimated aggregate cost of the ships is approximately $1.6 billion, of which we have deposited $137.8 million as of December 31, 2004. (See Item 7A. Quantitative and Qualitative Disclosures About Market Risk.)

We anticipate total capital expenditures, including the two Freedom-class ships on order, will be approximately $0.4 billion, $1.0 billion and $1.0 billion for 2005, 2006 and 2007, respectively.

Contractual Obligations and Off-Balance Sheet Arrangements

As of December 31, 2004, our contractual obligations were as follows (in thousands):


	Payments due by period
		Less than 1	1-3	3-5	More than 5
	Total	year	years	years	years

Long-term debt obligations(1)(2)	$5,384,284	$881,256	$1,098,588	$949,815	$2,454,625
Capital lease obligations	347,660	24,118	54,154	63,129	206,259
Operating lease obligations(3)(4)	665,984	50,770	96,860	94,228	424,126
Ship purchase obligations(5)	1,306,462	108,064	1,198,398	—	—
Other(6)	260,916	51,888	86,608	46,015	76,405

Total	$7,965,306	$1,116,096	$2,534,608	$1,153,187	$3,161,415

(1)	Amounts exclude interest, except for the accreted value of our zero coupon convertible notes and Liquid Yield Option™ Notes.

(2)

The $408.5 million accreted value of the zero coupon convertible notes at December 31, 2004 is included in the three to five years category. The $694.3 million accreted value of the Liquid Yield Option™ Notes at December 31, 2004 is included in the more than five years category. The holders of our zero coupon convertible notes and our Liquid Yield Option™ Notes may require us to purchase any notes outstanding at an accreted value of $501.7 million on May 18, 2009 and $930.8 million on February 2, 2011, respectively. These accreted values were calculated based on the number of notes outstanding at December 31, 2004. We may choose to pay any amounts in cash or common stock or a combination thereof.

(3)	We are obligated under noncancelable operating leases primarily for a ship, offices, warehouses, computer equipment and motor vehicles.

(4)

Under the Brilliance of the Seas lease agreement, we may be required to make a termination payment of approximately £126 million, or approximately $242 million based on the exchange rate at December 31, 2004, if the lease is canceled in 2012. This amount is included in more than 5 years category (see Note 12. Commitments and Contingencies to our consolidated financial statements.)

(5)	Amounts represent contractual obligations with initial terms in excess of one year.

(6)	Amounts represent future commitments with remaining terms in excess of one year to pay for our usage of certain port facilities, marine consumables, services and maintenance contracts.

Our off-balance sheet arrangements consist primarily of operating lease commitments as discussed in Note 12. Commitments and Contingencies to our consolidated financial statements. Under the Brilliance of the Seas operating lease, we have agreed to indemnify the lessor to the extent its after-tax return is negatively impacted by unfavorable changes in corporate tax rates and capital allowance deductions. These indemnifications could result in an increase in our lease payments. We are unable to estimate the maximum potential increase in such lease payments due to the various circumstances, timing or combination of events that could trigger such indemnifications. Under current circumstances we do not believe an indemnification is probable.

Some of the contracts 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, increased lender capital costs and other similar costs. The indemnification clauses are often standard contractual terms and are entered into in the normal course of business. There are no 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 an indemnification in any material amount is probable.

As a normal part of our business, depending on market conditions, pricing and our overall growth strategy, we continuously consider opportunities to enter into contracts for the building of additional ships. We may also consider the sale of ships. We continuously consider potential acquisitions and strategic alliances. If any of these were to occur, they would be financed through the incurrence of additional indebtedness, the issuance of additional shares of equity securities or through cash flows from operations.

Funding Sources

As of December 31, 2004, our liquidity was $1.6 billion consisting of approximately $0.6 billion in cash and cash equivalents and $1.0 billion available under our unsecured revolving credit facility. (See Note 6. Long-Term Debt to our consolidated financial statements.) Capital expenditures and scheduled debt payments will be funded through a combination of cash flows from operations, drawdowns under our available credit facility, the incurrence of additional indebtedness and the sales of equity or debt securities in private or public securities markets. There can be no assurances that cash flows from operations and additional financing from external sources will be available in accordance with our expectations.

Our financing agreements contain covenants that require us, among other things, to maintain minimum net worth, and fixed charge coverage ratio and limit our debt to capital ratio. We were in compliance with all covenants as of December 31, 2004.

If A. Wilhelmsen AS. and Cruise Associates, our two principal shareholders, cease to own a specified percentage of our common stock, we may be obligated to prepay indebtedness outstanding under the majority of our credit facilities, which we may be unable to replace on similar terms. If this were to occur, it could have an adverse impact on our liquidity and operations.

We believe our existing credit facility, cash flows from operations, our ability to obtain new borrowings and/or raise new capital or a combination of these sources will be sufficient to fund operations, debt payment requirements and capital expenditures over the next twelve-month period.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Financial Instruments and Other

General

We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We minimize these risks through a combination of our normal operating and financing activities and through the use of derivative financial instruments pursuant to our hedging practices and policies. The financial impacts of these hedging instruments are primarily offset by corresponding changes in the underlying exposures being hedged. We achieve this by closely matching the amount, term and conditions of the derivative instrument with the underlying risk being hedged. We do not hold or issue derivative financial instruments for trading or other speculative purposes. We monitor our derivative positions using techniques including market valuations and sensitivity analyses. (See Note 11. Financial Instruments to our consolidated financial statements.)

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates to our long-term debt obligations and our operating lease for Brilliance of the Seas. At December 31, 2004, 64% of our debt was effectively fixed and 36% was floating. We enter into interest rate swap agreements to modify our exposure to interest rate movements and to manage our interest expense and rent expense.

Market risk associated with our long-term fixed rate debt is the potential increase in fair value resulting from a decrease in interest rates. At December 31, 2004, our interest rate swap agreements effectively changed $268.8 million of fixed rate debt with a weighted-average fixed rate of 7.81% to LIBOR-based floating rate debt. The estimated fair value of our long-term fixed rate debt at December 31, 2004, excluding our Liquid Yield Option™ Notes and zero coupon convertible notes, was $3.1 billion using quoted market prices, where available, or using discounted cash flow analyses based on market rates available to us for similar debt with the same remaining maturities. The fair value of our associated interest rate swap agreements was estimated to be $21.9 million as of December 31, 2004 based on quoted market prices for similar or identical financial instruments to those we hold. A hypothetical one percentage point decrease in interest rates at December 31, 2004 would increase the fair value of our long-term fixed rate debt, excluding our Liquid Yield Option™ Notes and zero coupon convertible notes, by approximately $144.1 million, net of an increase in the fair value of the associated interest rate swap agreements.

Market risk associated with our long-term floating rate debt is the potential increase in interest expense from an increase in interest rates. A hypothetical one percentage point increase in interest rates would increase our 2005 interest expense by approximately $9.4 million. At December 31, 2004, we have an interest rate swap agreement that effectively changes $25 million of LIBOR-based floating rate debt to fixed rate debt of 4.395% beginning January 2005.

Market risk associated with our operating lease for Brilliance of the Seas is the potential increase in rent expense from an increase in sterling LIBOR rates. As of January 2005, we have effectively changed 58% of the operating lease obligation from a floating rate to a fixed rate obligation with a weighted-average rate of 4.81% through a combination of interest rate swap agreements and rate fixings with the lessor. A hypothetical one percentage point increase in sterling LIBOR rates would increase our 2005 rent expense by approximately $2.0 million, based on the exchange rate at December 31, 2004, net of the effect of interest rate swaps.

Convertible Notes

The estimated fair values of our Liquid Yield Option™ Notes and zero coupon convertible notes fluctuate with the price of our common stock and at December 31, 2004 were $962.8 million and $756.8 million, respectively. A hypothetical 10% decrease or increase in our December 31, 2004 common stock price would decrease or increase the value of our Liquid Yield Option™ Notes and zero coupon convertible notes by approximately $96.1 million and $74.3 million, respectively.

Foreign Currency Exchange Rate Risk

Our primary exposure to foreign currency exchange rate risk relates to our firm commitments under ship construction contracts (including a ship lengthening contract), denominated in euros. We entered into euro denominated forward contracts to manage this risk. The estimated fair value of such euro denominated forward contracts at December 31, 2004, was a net unrealized gain of approximately $110.9 million, based on quoted market prices for equivalent instruments with the same remaining maturities. These euro denominated forward contracts mature through 2007. At December 31, 2004, approximately 26% of the cost of the ship construction contracts was exposed to fluctuations in the euro exchange rate. A hypothetical 10% strengthening of the euro as of December 31, 2004, assuming no changes in comparative interest rates, would result in a $140.6 million increase in the United States dollar value of the foreign currency denominated ship construction contracts. This increase would be partially offset by an increase in the fair value of our euro denominated forward contracts of approximately $104.3 million.

We are also exposed to foreign currency exchange rate fluctuations on the United States dollar value of our foreign currency denominated forecasted transactions. To manage this exposure, we take advantage of any natural offsets of our foreign currency revenues and expenses and enter into foreign currency forward contracts and/or option contracts for a portion of the remaining exposure related to these forecasted transactions. Our principal net foreign currency exposure relates to the euro, the Norwegian kroner, British pound sterling and the Canadian dollar. At December 31, 2004, the estimated fair value of such contracts was an unrealized loss of approximately $6.0 million based on quoted market prices for equivalent instruments with the same remaining maturities. A hypothetical 10% strengthening of the principal foreign currencies as of December 31, 2004, assuming no changes in comparative interest rates, would result in a $5.8 million increase in the United States dollar value of the 2005 foreign currency denominated forecasted transactions. This increase would be offset by a decrease in the fair value of our 2005 foreign currency forward contracts of approximately $6.4 million.

Fuel Price Risk

Our exposure to market risk for changes in fuel prices relates to the consumption of fuel on our ships. Fuel cost, as a percentage of our total revenues, was approximately 5.5% in 2004, 5.2% in 2003 and 4.5% in 2002. Historically, we have used fuel swap agreements and zero cost collars to mitigate the financial impact of fluctuations in fuel prices. As of December 31, 2004, we had fuel swap agreements to pay fixed prices for fuel with an aggregate notional amount of approximately $35.4 million, maturing through 2005. The estimated fair value of these contracts at December 31, 2004 was an unrealized gain of $8.1 million. We estimate that a hypothetical 10% increase in our weighted-average fuel price from that experienced during the year ended December 31, 2004 would increase our 2005 fuel cost by approximately $28.2 million. This increase would be partially offset by an increase in the fair value of our fuel swap agreements of approximately $3.9 million.

Item 8. Financial Statements and Supplementary Data

Our Consolidated Financial Statements and Quarterly Selected Financial Data are included beginning on page F-1 of this report.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out under the supervision and with the participation of our management, including our Chairman and Chief Executive Officer and Executive Vice President and Chief Financial Officer, an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of the end of the period covered by this report and concluded that those controls and procedures were effective.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chairman and Chief Executive Officer and Executive Vice President and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control-Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2004. Our management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2004 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15 during the quarter ended December 31, 2004 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there is only the reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions.

Item 9B. Other Information

None.

PART III

Items 10, 11, 12, 13 and 14. Directors and Executive Officers of the Registrant, Executive Compensation, Security Ownership of Certain Beneficial Owners and Management, Certain Relationships and Related Transactions, and Principal Accounting Fees and Services.

The information required by Items 10, 11, 12, 13 and 14 is incorporated herein by reference to the Royal Caribbean Cruises Ltd. definitive proxy statement to be filed with the Securities and Exchange Commission not later than 120 days after the close of the fiscal year, except that the information concerning the executive officers called for by Item 401(b) of Regulation S-K is included in Part I of this Annual Report on Form 10-K.

We have adopted a Code of Ethics that applies to our Chief Executive Officer, Chief Financial Officer and other senior officers. This code of ethics is posted on our website at www.rclinvestor.com.

PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)	(1) Financial Statements and Schedules

Our Consolidated Financial Statements have been prepared in accordance with Item 8. Financial Statements and Supplementary Data and are included beginning on page F-1 of this report.

(2) Financial Statement Schedules

None.

(3) Exhibits

The exhibits listed on the accompanying Index to Exhibits are filed or incorporated by reference as part of this Annual Report on Form 10-K and such Index to Exhibits is hereby incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ROYAL CARIBBEAN CRUISES LTD.

(Registrant)

	By: /s/ RICHARD D. FAIN
		Richard D. Fain
		Chairman and Chief Executive Officer
March 14, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 14, 2005.

/s/ RICHARD D. FAIN
	Richard D. Fain
	Director, Chairman and Chief Executive Officer

/s/ LUIS E. LEON
	Luis E. Leon
	Executive Vice President and Chief Financial Officer

/s/ BLAIR H. GOULD
	Blair H. Gould
	Vice President and Controller

/s/ * BERNARD W. ARONSON
	Bernard W. Aronson
	Director

/s/ * JOHN D. CHANDRIS
	John D. Chandris
	Director

/s/ * ARVID GRUNDEKJOEN
	Arvid Grundekjoen
	Director

/s/ * WILLIAM L. KIMSEY
	William L. Kimsey
	Director

/s/ * LAURA LAVIADA
		Laura Laviada
	Director

/s/ * GERT W. MUNTHE
	Gert W. Munthe
	Director

/s/ * EYAL OFER
	Eyal Ofer
	Director

/s/ * THOMAS J. PRITZKER
	Thomas J. Pritzker
	Director

______________________________
	William K. Reilly
	Director

/s/ * BERNT REITAN
	Bernt Reitan
	Director

/s/ * ARNE ALEXANDER WILHELMSEN
	Arne Alexander Wilhelmsen
	Director

By: /s/ RICHARD D. FAIN*
	Richard D. Fain, as Attorney-in-Fact

		INDEX TO EXHIBITS
		Exhibits 10.8 through 10.24 represent managment compensatory plans or arrangements.
Exhibit		Description
3.1	— Restated Articles of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form F-1, File No. 33-59304, filed with the Securities and Exchange Commission (the "Commission"); Exhibit 2.2 to the Company's 1996 Annual Report on Form 20-F filed with the Commission, File No. 1-11884; Document No. 1 in the Company's Form 6-K filed with the Commission on October 14, 1999; Document No. 1 in the Company's Form 6-K filed with the Commission on May 18, 1999; and Document No. 1 in the Company's Form 6-K filed with the Commission on August 28, 2000).
3.2	— Restated By-Laws of the Company (incorporated by reference to Document No. 2 to the Company’s Form 6-K filed with the Commission on May 18, 1999).
4.1	— Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York, successor to NationsBank of Georgia, National Association, as Trustee (incorporated by reference to Exhibit 2.4 to the Company’s 1994 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.2	— Second Supplemental Indenture dated as of March 29, 1995 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York, successor to NationsBank of Georgia, National Association, as Trustee (incorporated by reference to Exhibit 2.5 to the Company’s 1995 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.3	— Fourth Supplemental Indenture dated as of August 12, 1996 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York, as Trustee (incorporated by reference to Document No. 2 in the Company’s Form 6-K filed with the Commission on February 10, 1997, File No. 1-11884).
4.4	— Fifth Supplemental Indenture dated as of October 14, 1997 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York, as Trustee (incorporated by reference to Exhibit 2.10 to the Company’s 1997 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.5	— Sixth Supplemental Indenture dated as of October 14, 1997 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York, as Trustee (incorporated by reference to Exhibit 2.11 to the Company’s 1997 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.6	— Seventh Supplemental Indenture dated as of March 16, 1998 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York, as Trustee (incorporated by reference to Exhibit 2.12 to the Company’s 1997 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.7	— Eighth Supplemental Indenture dated as of March 16, 1998 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York, as Trustee (incorporated by reference to Exhibit 2.13 to the Company’s 1997 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.8	— Ninth Supplemental Indenture dated as of February 2, 2001 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York, as Trustee (incorporated by reference to Exhibit 2.10 to the Company’s 2000 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.9	— Tenth Supplemental Indenture dated as of February 2, 2001 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York, as Trustee (incorporated by reference to Exhibit 2.11 to the Company’s 2000 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.10	— Eleventh Supplemental Indenture dated as of May 18, 2001 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York, as Trustee (incorporated by Reference to Exhibit 2.12 to the Company’s 2001 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.11	— Twelfth Supplemental Indenture dated as of May 9, 2003 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York, as Trustee (incorporated by reference to Exhibit 2.13 to the Company's 2003 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.12	— Thirteenth Supplemental Indenture dated as of November 21, 2003 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York, as Trustee (incorporated by reference to Exhibit 2.14 to the Company's 2003 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
10.1	— Amended and Restated Registration Rights Agreement dated as of July 30, 1997 among the Company, A. Wilhelmsen AS., Cruise Associates, Monument Capital Corporation, Archinav Holdings, Ltd. and Overseas Cruiseship, Inc. (incorporated by reference to Exhibit 2.20 to the Company’s 1997 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
10.2	— Credit Agreement dated as of March 27, 2003 among the Company and various financial institutions and Citibank, N.A., as Administrative Agent (incorporated by reference to Document No. 2 in the Company’s Form 6-K filed with the Commission on March 28, 2003).
10.3	— Office Building Lease Agreement dated July 25, 1989 between Miami-Dade County and the Company, as amended (incorporated by reference to Exhibits 10.116 and 10.117 to the Company’s Registration Statement on Form F-1, File No. 33-46157, filed with the Commission).
10.4	— Office Building Lease Agreement dated January 18, 1994 between Miami-Dade County and the Company (incorporated by reference to Exhibit 2.13 to the Company’s 1993 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).

10.5	— Lease by and between City of Wichita, Kansas and the Company dated as of December 1, 1997, together with First Supplemental Lease Agreement dated December 1, 2000 (incorporated by reference to Exhibit 4.7 to the Company’s 2002 Annual Report on Form 20-F filed with the Commission).
10.6	— Multi-Tenant Office Lease Agreement dated May 3, 2000 between the Company and Opus Real Estate National IV FL, L.L.C. (formerly Miramar 75, L.L.C.), together with four Amendments thereto dated June 1, 2000, November 20, 2000, October 11, 2001 and September 25, 2003 (incorporated by reference to Exhibit 4.6 to the Company’s 2003 Annual Report on Form 20-F filed with the Commission).
10.7	— Lease Agreement dated January 24, 2005 between the Company and Workstage-Oregon, L.L.C.
10.8	— 1990 Stock Option Plan of the Company, as amended (incorporated by reference to Exhibit 4 to the Company’s Registration Statement on Form S-8, File No. 333-7290, filed with the Commission).
10.9	— 1995 Incentive Stock Option Plan of the Company, as amended (incorporated by reference to Exhibit 4 to the Company’s Registration Statement on Form S-8, File No. 333-84980, filed with the Commission).
10.10	— Amended and Restated 2000 Stock Award Plan of the Company (incorporated by reference to Exhibit 4.9 to the Company’s 2003 Annual Report on Form 20-F filed with the Commission).
10.11	— Amendment No. 1 dated December 13, 2004 to the Royal Caribbean Cruises Ltd. Amended and Restated 2000 Stock Award Plan.
10.12	— Employment Agreement dated December 21, 2001 between the Company and Richard D. Fain.
10.13	— Trust Agreement for Richard D. Fain dated as of June 30, 1994 between the Company and Gary Hammond, as Trustee, together with Amendment No. 1 dated as of September 30, 1998.
10.14	— Employment Agreement dated August 26, 2002 between the Company and Jack L. Williams, as amended.
10.15	— Employment agreement dated March 10, 2005 between the Company and Luis E. Leon.
10.16	— Description of consulting arrangement between the Company and William K. Reilly.
10.17	— Royal Caribbean Cruises Ltd et. al. Board of Directors Non Qualified Deferred Compensation Plan.
10.18	— Royal Caribbean Cruises Ltd. et. al. Non Qualified Deferred Compensation Plan Rabbi Trust.
10.19	— Royal Caribbean Cruises Ltd. Executive Incentive Plan.
10.20	— Royal Caribbean Cruises Ltd. et. al. Non Qualified 401(k) Plan.
10.21	— Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan effective January 1, 1994.
10.22	— Summary of Royal Caribbean Cruises Ltd. Board of Directors Compensation.
10.23	— Form of Royal Caribbean Cruises Ltd. Amended and Restated 2000 Stock Award Plan Stock Option Certificate (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on February 16, 2005).
10.24	— Form of Royal Caribbean Cruises Ltd. Amended and Restated 2000 Stock Award Plan Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on February 16, 2005).
12.1	— Statement regarding computation of fixed charge coverage ratio.
21.1	— List of Subsidiaries.
24	— Powers of Attorney.
31	— Certifications required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
32	— Certifications pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

ROYAL CARIBBEAN CRUISES LTD.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Operations	F-4
Consolidated Balance Sheets	F-5
Consolidated Statements of Cash Flows	F-6
Consolidated Statements of Shareholders’ Equity	F-7
Notes to the Consolidated Financial Statements	F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

of Royal Caribbean Cruises Ltd.:

We have completed an integrated audit of Royal Caribbean Cruises Ltd.’s 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2004 and audits of its 2003 and 2002 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements

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 Royal Caribbean Cruises Ltd. and its subsidiaries at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements 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.

Internal control over financial reporting

Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A., that the Company maintained effective internal control over financial reporting as of December 31, 2004 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control - Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management

F-2

and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP

Miami, Florida

March 14, 2005

F-3

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS


	Year Ended December 31,
	2004	2003	2002

	(in thousands, except per share data)

Passenger ticket revenues	$ 3,359,201	$ 2,775,055	$ 2,589,942
Onboard and other revenues	1,196,174	1,009,194	844,405

Total revenues	4,555,375	3,784,249	3,434,347


Cruise operating expenses
Commissions, transportation and other	822,206	684,344	669,177
Onboard and other	300,717	249,537	208,231
Payroll and related	487,633	426,462	314,370
Food	269,436	239,483	255,703
Other operating	939,391	781,209	665,736

Total cruise operating expenses	2,819,383	2,381,035	2,113,217
Marketing, selling and administrative expenses	588,267	514,334	431,055
Depreciation and amortization expenses	394,136	362,695	339,100

	3,801,786	3,258,064	2,883,372

Operating income	753,589	526,185	550,975

Other income (expense)
Interest income	9,208	4,519	12,413
Interest expense, net of interest capitalized	(309,977)	(268,398)	(266,842)
Other income	21,871	18,358	54,738

	(278,898)	(245,521)	(199,691)

Net income	$ 474,691	$ 280,664	$ 351,284


EARNINGS PER SHARE:
Basic	$ 2.39	$ 1.45	$ 1.82
Diluted (Note 8)	$ 2.26	$ 1.42	$ 1.76

The accompanying notes are an integral part of these financial statements.

F-4

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED BALANCE SHEETS


	As of December 31,
	2004	2003

	(in thousands, except share data)
ASSETS Current assets Cash and cash equivalents	$ 628,578	$ 330,086
Trade and other receivables, net	84,899	89,489
Inventories	60,260	53,277
Prepaid expenses and other assets	86,869	101,698

Total current assets	860,606	574,550
Property and equipment — at cost less accumulated depreciation and amortization	10,193,443	9,943,495
Goodwill — less accumulated amortization of $138,606	278,561	278,561
Other assets	631,474	526,136

	$11,964,084	$11,322,742


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities Current portion of long-term debt	$ 905,374	$ 315,232
Accounts payable	162,973	187,756
Accrued expenses and other liabilities	330,073	271,944
Customer deposits	875,082	729,595

Total current liabilities	2,273,502	1,504,527
Long-term debt	4,826,570	5,520,572
Other long-term liabilities	59,492	34,746

Commitments and contingencies (Note 12)

Shareholders’ equity
Common stock ($.01 par value; 500,000,000 shares authorized; 201,253,140 and 196,106,658 shares issued)	2,012	1,961
Paid-in capital	2,206,157	2,100,612
Retained earnings	2,533,265	2,162,195
Accumulated other comprehensive income	71,363	5,846
Treasury stock (596,556 and 556,212 common shares at cost)	(8,277)	(7,717)

Total shareholders’ equity	4,804,520	4,262,897

	$11,964,084	$11,322,742

The accompanying notes are an integral part of these financial statements.

F-5

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended December 31,

	2004	2003	2002


	(in thousands)
Operating Activities Net income	$ 474,691	$ 280,664	$ 351,284
Adjustments:
Depreciation and amortization	394,136	362,695	339,100
Accretion of original issue discount on debt	52,562	48,874	46,796
Changes in operating assets and liabilities:
(Increase) decrease in trade and other receivables, net	(3,256)	10,011	(7,339)
Increase in inventories	(6,813)	(15,978)	(3,806)
(Increase) decrease in prepaid expenses and other assets	(17,196)	6,670	(8,469)
(Decrease) increase in accounts payable	(25,987)	19,756	27,083
Increase (decrease) in accrued expenses and other liabilities	53,851	(3,340)	(2,240)
Increase in customer deposits	145,273	161,640	121,870
Other, net	9,730	(13,189)	6,191


Net cash provided by operating activities	1,076,991	857,803	870,470


Investing Activities Purchases of property and equipment	(630,670)	(1,029,530)	(689,991)
Purchases of short-term investments	(732,165)	(216,450)	(21,995)
Proceeds from sale of short-term investments	732,165	216,450	21,995
Other, net	(1,840)	(73,114)	(6,275)


Net cash used in investing activities	(632,510)	(1,102,644)	(696,266)


Financing Activities Repayments of long-term debt	(361,386)	(231,100)	(603,270)
Net proceeds from issuance of long-term debt	225,000	590,536	—
Dividends	(104,521)	(98,320)	(100,127)
Proceeds from exercise of common stock options	98,316	45,960	6,626
Other, net	(3,398)	25,267	37,973


Net cash (used in) provided by financing activities	(145,989)	332,343	(658,798)

Net increase (decrease) in cash and cash equivalents	298,492	87,502	(484,594)
Cash and cash equivalents at beginning of year	330,086	242,584	727,178


Cash and cash equivalents at end of year	$ 628,578	$ 330,086	$ 242,584

Supplemental Disclosures
Cash paid during the year for:
Interest, net of amount capitalized	$ 266,037	$ 219,598	$ 236,523

Noncash investing and financing activities:
Acquisition of a ship through secured debt	$ —	$ —	$ 319,951

The accompanying notes are an integral part of these financial statements.

F-6

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY


		Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Shareholders' Equity

	(in thousands)
Balances at January 1, 2002	$	1,923	$	2,045,904	$	1,731,423	$	(16,068)	$	(6,598)	$	3,756,584
Issuance under employee related plans		7		7,745		—		—		(560)		7,192
Common stock dividends		—		—		(100,127)		—		—		(100,127)
Changes related to cash flow derivative hedges		—		—		—		19,761		—		19,761
Net income		—		—		351,284		—		—		351,284

Balances at December 31, 2002		1,930		2,053,649		1,982,580		3,693		(7,158)		4,034,694
Issuance under employee related plans		31		46,963		—		—		(559)		46,435
Common stock dividends		—		—		(101,049)		—		—		(101,049)
Changes related to cash flow derivative hedges		—		—		—		11,526		—		11,526
Minimum pension liability adjustment		—		—		—		(9,373)		—		(9,373)
Net income		—		—		280,664		—		—		280,664

Balances at December 31, 2003		1,961		2,100,612		2,162,195		5,846		(7,717)		4,262,897
Issuance under employee related plans		51		105,545		—		—		(560)		105,036
Common stock dividends		—		—		(103,621)		—		—		(103,621)
Changes related to cash flow derivative hedges		—		—		—		67,082		—		67,082
Minimum pension liability adjustment		—		—		—		(1,565)		—		(1,565)
Net income		—		—		474,691		—		—		474,691

Balances at December 31, 2004	$	2,012	$	2,206,157	$	2,533,265	$	71,363	$	(8,277)	$	4,804,520

Comprehensive income is as follows:


	Year Ended December 31,

		2004		2003		2002

	(in thousands)
Net income	$	474,691	$	280,664	$	351,284
Changes related to cash flow derivative hedges		67,082		11,526		19,761
Minimum pension liability adjustment		(1,565)		(9,373)		—

Total comprehensive income	$	540,208	$	282,817	$	371,045

The accompanying notes are an integral part of these financial statements.

F-7

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1. General

Description of Business

We are a global cruise company. We operate two cruise brands, Royal Caribbean International and Celebrity Cruises, with 19 and 10 cruise ships, respectively, at December 31, 2004. Our ships operate on a selection of worldwide itineraries that call on approximately 160 destinations.

Basis for Preparation of Consolidated Financial Statements

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and are presented in United States dollars. Estimates are required for the preparation of financial statements in accordance with generally accepted accounting principles. Actual results could differ from these estimates. All significant intercompany accounts and transactions are eliminated in consolidation.

Note 2. Summary of Significant Accounting Policies

Revenues and Expenses

Deposits received on sales of passenger cruises represent unearned revenue and are initially recorded as customer deposit liabilities on our balance sheet. Customer deposits are subsequently recognized as passenger ticket revenues, together with revenues from onboard and other goods and services and all associated direct costs of a voyage, upon completion of voyages with durations of ten days or less and on a pro rata basis for voyages in excess of ten days.

Cash and Cash Equivalents

Cash and cash equivalents include cash and marketable securities with original maturities of less than 90 days.

Inventories

Inventories consist of provisions, supplies and fuel carried at the lower of cost (weighted-average) or market.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. We capitalize interest as part of the cost of acquiring certain assets. Improvement costs that we believe add value to our ships are capitalized as additions to the ship and depreciated over the improvements’ estimated useful lives. Costs of repairs and maintenance are charged to cruise operating expenses as incurred and drydocking costs are accrued evenly over the period to the next scheduled drydocking. The estimated cost and accumulated depreciation of refurbished or replaced ship components are written-off and any resulting gain or loss is recognized in cruise operating expenses. Liquidated damages received from shipyards as a result of late delivery of new ships are deferred and amortized in other income over the period to which they relate, net of related expenses. We review long-lived assets for impairment whenever events or changes in circumstances indicate, based on estimated future cash flows, that the carrying amount of these assets may not be fully recoverable.

Depreciation of property and equipment, which includes amortization of ships under capital leases, is computed using the straight-line method over estimated useful lives of primarily 30 years for ships, net of a 15% projected residual value, the shorter of the lease term or related asset life for leasehold improvements and three to forty years for other property and equipment. (See Note 4. Property and Equipment.)

F-8

Goodwill

Goodwill represents the excess of cost over the fair value of net assets acquired. We review goodwill for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of goodwill may not be fully recoverable.

Advertising Costs

Advertising costs are expensed as incurred except those costs which result in tangible assets, such as brochures, which are treated as prepaid expenses and charged to expense as consumed. Advertising costs consist of media advertising as well as brochure, production and direct mail costs. Media advertising was $133.2 million, $119.2 million and $97.9 million, and brochure, production and direct mail costs were $82.2 million, $73.5 million and $69.5 million for the years 2004, 2003 and 2002, respectively.

Derivative Instruments

We enter into various forward, swap and option contracts to manage our interest rate exposure and to limit our exposure to fluctuations in foreign currency exchange rates and fuel prices. Generally these instruments are designated as hedges and are recorded on the balance sheet at their fair value. Our derivative instruments are not held for trading or speculative purposes.

At inception of the hedge relationship, a derivative instrument that hedges the exposure to changes in the fair value of a recognized asset or liability, or a firm commitment is designated as a fair value hedge. A derivative instrument that hedges a forecasted transaction or the variability of cash flows related to a recognized asset or liability is designated as a cash flow hedge.

Changes in the fair value of derivatives that are designated as fair value hedges are offset against changes in the fair value of the underlying hedged assets, liabilities or firm commitments. Changes in fair value of derivatives that are designated as cash flow hedges are recorded as a component of accumulated other comprehensive income until the underlying hedged transactions are recognized in earnings. On an ongoing basis, we assess whether derivatives used in hedging transactions are “highly effective” in offsetting changes in fair value or cash flow of hedged items. If it is determined that a derivative is not highly effective as a hedge, changes in fair value of the derivatives are recognized in earnings immediately.

Foreign Currency Transactions

The majority of our transactions are settled in United States dollars. Gains or losses resulting from transactions denominated in other currencies are recognized in income at each balance sheet date.

Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share incorporates the incremental shares issuable upon the assumed exercise of stock options and conversion of potentially dilutive securities. In addition, net income is adjusted to add back the amount of interest recognized in the period associated with the dilutive securities. (See Note 8. Earnings Per Share.)

F-9

Stock-Based Employee Compensation

We use the intrinsic value method to account for stock-based employee compensation. The following table illustrates the effect on net income and earnings per share as if we had applied the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” to such compensation (in thousands, except per share data):


	Year Ended December 31,
	2004	2003	2002

Net income, as reported	$474,691	$280,664	$351,284
Deduct: Total stock-based employee compensation expense determined under fair value method for all awards	(9,502)	(11,834)	(20,544)

Pro forma net income	465,189	268,830	330,740

Add: Interest on dilutive convertible notes	54,530	-	18,202

Pro forma net income for diluted earnings per share	$519,719	$268,830	$348,942

Weighted-average common shares outstanding	198,946	194,074	192,485
Dilutive effect of stock options and restricted stock awards	3,888	3,023	2,926
Dilutive effect of convertible notes	31,473	-	13,834

Diluted weighted-average shares outstanding	234,307	197,097	209,245

Earnings per share:
Basic — as reported	$ 2.39	$ 1.45	$ 1.82
Basic — pro forma	$ 2.34	$ 1.39	$ 1.72

Diluted — as reported (Note 8)	$ 2.26	$ 1.42	$ 1.76
Diluted — pro forma	$ 2.22	$ 1.36	$ 1.67

We adopted the provisions of Emerging Issues Task Force 04-8 “Accounting Issues Related to Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings Per Share,” (“EITF 04-8”) in our fourth quarter of 2004 and restated prior period diluted earnings per share amounts for comparative purposes. The implementation of EITF 04-8 did not change our previously reported 2003 pro forma diluted earnings per share; however, it reduced our previously reported 2002 pro forma diluted earnings per share by $0.02. Pro forma diluted earnings per share for the year ended December 31, 2003 did not include 13.8 million shares of our common stock issuable upon conversion of our zero coupon convertible notes because the effect of including them would have been antidilutive.

The weighted-average fair value of options granted during 2004, 2003 and 2002 was $13.10, $8.18 and $6.84 per share, respectively. Fair value information for our stock options was estimated using the Black-Scholes option-pricing model based on the following weighted-average assumptions:

	2004	2003	2002
Dividend yield	1.1%	2.7%	2.7%
Expected stock price volatility	41.6%	42.4%	42.9%
Risk-free interest rate	3%	3%	3%
Expected option life	5 years	5 years	5 years

Segment Reporting

F-10

Information by geographic area is shown in the table below. Passenger ticket revenues are attributed to geographic areas based on where the reservation was made.

	2004	2003	2002
Passenger ticket revenues:
United States	82%	81%	82%
All other countries	18%	19%	18%

Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 151, “Inventory Costs.” SFAS No. 151 amends the guidance in Accounting Research Bulletin No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of wasted material (spoilage). The provisions of SFAS No. 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The provisions of SFAS No. 151 are not expected to have an impact on our results of operations or financial position.

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment,” (“SFAS 123R”). SFAS 123R supersedes Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and amends SFAS No. 95, “Statement of Cash Flows.” SFAS 123R requires the measurement and recognition of compensation expense at fair value of employee stock awards, except for employee share purchase plans if they meet certain conditions. Compensation expense for awards and related tax effects shall be recognized as they vest. Currently, we use the intrinsic value method to measure compensation expense for stock-based awards to our employees under APB Opinion No. 25 and disclose pro forma information. SFAS 123R requires adoption in our third quarter of 2005. As a result, we will adopt SFAS 123R for all new awards and for awards modified, repurchased or cancelled after July 1, 2005. For previously issued awards, we will adopt SFAS 123R on a prospective basis and recognize compensation expense on the unvested portion of the awards over the remaining vesting period. The provisions of SFAS 123R are expected to negatively impact our results of operations by approximately $5 million for the year ended December 31, 2005.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets, an Amendment of APB Opinion No. 29.” APB Opinion No. 29, “Accounting for Nonmonetary Transactions,” is based on the principle that exchanges of nonmonetary assets should be measured on the fair value of the assets exchanged. SFAS No. 153 amends APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS No. 153 is effective for nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005. The provisions of SFAS No. 153 are not expected to have an impact on our results of operations or financial position.

Reclassifications

Reclassifications have been made to our Consolidated Statements of Cash Flows for the years ended December 31, 2003 and 2002 to reflect the gross purchases and sales of variable rate debt obligations within our investing activities. We did not hold any of these variable rate securities as of December 31, 2004, 2003 or 2002. As a result, these reclassifications did not impact our previously reported Consolidated Balance Sheets nor our previously reported net cash flows from operating, investing or financing activities in our Consolidated Statements of Cash Flows.

Note 3. Termination of Proposed Combination with P&O Princess Cruises plc

In October 2002, our proposed combination with P&O Princess Cruises plc (“P&O Princess”) was terminated prior to its consummation and P&O Princess paid us a break fee of $62.5 million. We incurred approximately $29.5 million of merger-related costs. The net proceeds of $33.0 million were included in other income. We also agreed to terminate, effective as of January 1, 2003, our joint venture with P&O Princess. The venture was terminated before it commenced business operations.

F-11

Note 4. Property and Equipment

Property and equipment consists of the following (in thousands):

	2004	2003

Land	$ 7,056	$ 7,056
Ships	11,056,851	10,536,947
Ships under capital leases	773,562	772,986
Ships under construction	153,415	121,167
Other	415,785	365,535

	12,406,669	11,803,691
Less — accumulated depreciation and amortization	(2,213,226)	(1,860,196)

	$10,193,443	$ 9,943,495

Ships under construction include progress payments for the construction of new ships as well as planning, design, interest, commitment fees and other associated costs. We capitalized interest costs of $7.2 million, $15.9 million and $23.4 million for the years 2004, 2003 and 2002, respectively. Accumulated amortization related to ships under capital leases was $206.5 million and $183.3 million at December 31, 2004 and 2003, respectively.

Note 5. Other Assets

We hold redeemable convertible preferred stock in First Choice Holidays PLC denominated in British pound sterling valued at approximately $300 million. The redeemable convertible preferred stock carries a 6.75% coupon. Dividends of $24.7 million, $21.5 million and $20.3 million were earned in 2004, 2003 and 2002, respectively and recorded in other income. If fully converted, our holding would represent approximately a 17% interest in First Choice Holidays PLC.

Variable Interest Entity

We have determined that one of our minority interests, a ship repair facility in which we invested in April 2001, is a variable interest entity; however, we are not the primary beneficiary and accordingly we do not consolidate this entity. As of December 31, 2004, our investment in this entity including equity and loans, which is also our maximum exposure to loss, was approximately $42 million.

Note 6. Long-Term Debt

Long-term debt consists of the following (in thousands):

	2004	2003

Unsecured revolving credit facilities	$ —	$ —
Unsecured senior notes and senior debentures, 6.75% to 8.75%, due 2005 through 2013, 2018 and 2027	2,258,436	2,400,284
Liquid Yield Option™ Notes with yield to maturity of 4.875%, due 2021	694,316	661,640
Zero coupon convertible notes with yield to maturity of 4.75%, due 2021	408,484	390,535
$625 million unsecured term loan, LIBOR plus 1.25%, due 2005	575,000	625,000
$360 million unsecured term loan, LIBOR plus 1.0%, due 2006	360,000	360,000
$300 million unsecured term loan, LIBOR plus 0.8%, due 2009 through 2010	200,000	200,000
$225 million unsecured term loan, LIBOR plus 1.75%, due 2006 through 2012	225,000	—
Unsecured term loan, 8.0%, due through 2006	35,694	59,919
Term loans, 7.1% to 8.0%, due through 2010, secured by certain Celebrity ships	225,964	308,842
Term loans, LIBOR plus 0.45% to 1.535%, due through 2010, secured by certain Celebrity ships	401,390	459,586
Capital lease obligations with implicit interest rates ranging from 6.5% to 7.2%, due through 2011	347,660	369,998

	5,731,944	5,835,804
Less — current portion	(905,374)	(315,232)

Long-term portion	$4,826,570	$5,520,572

During 2004, we entered into an eight-year, $225.0 million unsecured term loan, at LIBOR plus 1.75%.

F-12

During 2003, we received net proceeds of $345.6 million from the issuance, at par, of our 6.875% senior unsecured notes, due 2013 and $244.9 million from the issuance, at a price of 99.339% of par, of our 8.0% senior unsecured notes, due 2010.

During 2003, we replaced our $1.0 billion unsecured revolving credit facility due in June 2003 with a $500.0 million unsecured revolving credit facility, bearing interest at LIBOR plus 1.75%, due in March 2008. Through December 31, 2004, we increased the commitment amount to $1.0 billion. The commitment fee is 0.6% of the undrawn portion of the revolving credit facility.

The Liquid Yield Option™ Notes and the zero coupon convertible notes are unsecured zero coupon bonds with yields to maturity of 4.875% and 4.75%, respectively, due 2021. Each Liquid Yield Option™ Note and zero coupon convertible note was issued at a price of $381.63 and $391.06, respectively, and will have a principal amount at maturity of $1,000. The Liquid Yield Option™ Notes and zero coupon convertible notes are convertible at the option of the holders into 17.7 million and 13.8 million shares of common stock, respectively, if the market price of our common stock reaches certain levels. These conditions were met at December 31, 2004 for the Liquid Yield Option™ Notes and the zero coupon convertible notes.

Commencing on February 2, 2005 and May 18, 2006, we have the right to redeem the Liquid Yield Option™ Notes and the zero coupon convertible notes, respectively, at their accreted values for cash as a whole at any time, or from time to time in part. Holders may require us to purchase any outstanding Liquid Yield Option™ Notes at their accreted value on February 2, 2005 and February 2, 2011 and any outstanding zero coupon convertible notes at their accreted value on May 18, 2009 and May 18, 2014. We may choose to pay the purchase price in cash or common stock or a combination thereof. The first put on the Liquid Yield Option™ Notes expired on February 2, 2005 and, since the next put date is scheduled for the year 2011, the accreted value of the notes was not included in the schedule of annual maturities below.

We entered into a $264.0 million capital lease to finance Splendour of the Seas and a $260.0 million capital lease to finance Legend of the Seas in 1996 and 1995, respectively. The capital leases each have semi-annual payments of approximately $12.0 million over 15 years with final payments of $99.0 million and $97.5 million, respectively.

Under certain of our agreements, the contractual interest rate and commitment fee vary with our debt rating.

The unsecured senior notes and senior debentures are not redeemable prior to maturity.

Our debt agreements contain covenants that require us, among other things, to maintain minimum net worth and fixed charge coverage ratio and limit our debt to capital ratio. We are in compliance with all covenants as of December 31, 2004. Following is a schedule of annual maturities on long-term debt as of December 31, 2004 for each of the next five years (in thousands):

Year
2005	905,374
2006	755,603
2007	397,139
2008	313,452
2009(1)	699,492

(1)

The $408.5 million accreted value of the zero coupon convertible notes at December 31, 2004 is included in year 2009. The holders of our zero coupon convertible notes may require us to purchase any notes outstanding at an accreted value of $501.7 million on May 18, 2009. This accreted value was calculated based on the number of notes outstanding at December 31, 2004. We may choose to pay any amounts in cash or common stock or a combination thereof.

F-13

Note 7. Shareholders’ Equity

Our Employee Stock Purchase Plan (“ESPP”), which has been in effect since January 1, 1994, facilitates the purchase by employees of up to 800,000 shares of common stock. Offerings to employees are made on a quarterly basis. Subject to certain limitations, the purchase price for each share of common stock is equal to 90% of the average of the market prices of the common stock as reported on the New York Stock Exchange on the first business day of the purchase period and the last business day of each month of the purchase period. Shares of common stock of 13,281, 21,280 and 25,649 were issued under the ESPP at a weighted-average price of $39.34, $19.56 and $17.34 during 2004, 2003 and 2002, respectively.

Under an executive compensation program approved in 1994, we will award to a trust 10,086 shares of common stock per quarter, up to a maximum of 806,880 shares. We issued 40,344 shares each year under the program during 2004, 2003 and 2002.

We have three Employee Stock Option Plans which provide for awards to our officers, directors and key employees of options to purchase shares of our common stock. The plans consist of a 1990 Employee Stock Option Plan, a 1995 Incentive Stock Option Plan and a 2000 Stock Award Plan. The 1990 Stock Option Plan and the 1995 Incentive Stock Option Plan terminated by their terms in March 2000 and February 2005, respectively. The 2000 Stock Award Plan provides for the issuance of options and stock awards of up to 13,000,000 shares of our common stock. The 2000 Stock Award Plan provides for the issuance, in addition to nonqualifed stock options, of (i) incentive stock options, (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units and (v) performance shares. We awarded 331,756 and 14,025 restricted stock units in 2004 and 2003, respectively. Options and restricted stock units outstanding as of December 31, 2004, vest over three to five years and four to five years, respectively, from the date of grant. Generally, the shares are forfeited if the recipient ceases to be a director or employee before the shares vest. Options are granted at a price not less than the fair value of the shares on the date of grant and expire not later than ten years after the date of grant.

Stock options activity and information about stock options outstanding are summarized in the following tables:

Stock Options Activity


	2004		2003		2002

	Number of Options	Weighted-Average Exercise Price	Number of Options	Weighted-Average Exercise Price	Number of Options	Weighted-Average Exercise Price


Outstanding options at January 1	11,994,522	$23.28	15,234,577	$21.63	17,022,241	$21.49
Granted	973,769	$40.34	536,991	$25.59	617,600	$20.89
Exercised	(5,064,496)	$19.39	(3,064,355)	$14.89	(599,122)	$11.10
Canceled	(311,054)	$30.02	(712,691)	$25.72	(1,806,142)	$23.61

Outstanding options at December 31	7,592,741	$27.76	11,994,522	$23.28	15,234,577	$21.63

Exercisable options at December 31	5,368,655	$25.47	7,949,284	$23.53	7,890,128	$21.82

Available for future grants at December 31	5,766,889		6,793,185		6,744,505

Stock Options Outstanding

	As of December 31, 2004

	Outstanding				Exercisable

Exercise Price Range		Number of Options	Weighted-Average Remaining Life	Weighted-Average Exercise Price		Number of Options	Weighted-Average Exercise Price

$ 9.55 - $19.65		1,916,529	6.22 years	$10.89		1,820,456	$10.55
$19.91 - $27.02		1,982,775	5.74 years	$22.97		1,502,215	$23.46
$27.34 - $40.06		2,238,207	7.11 years	$34.45		826,784	$31.64
$41.58 - $51.23		1,455,230	5.10 years	$46.21		1,219,200	$46.02

		7,592,741	6.14 years	$27.76		5,368,655	$25.47

F-14

Note 8. Earnings Per Share

A reconciliation between basic and diluted earnings per share is as follows (in thousands, except per share data):


	Year Ended December 31,
	2004	2003	2002

Net income	$474,691	$280,664	$351,284
Interest on dilutive convertible notes	54,530	18,893	18,202

Net income for diluted earnings per share	$529,221	$299,557	$369,486

Weighted-average common shares outstanding	198,946	194,074	192,485
Dilutive effect of stock options and restricted stock awards	4,161	3,267	3,246
Dilutive effect of convertible notes	31,473	13,834	13,834

Diluted weighted-average shares outstanding	234,580	211,175	209,565

Basic earnings per share	$ 2.39	$ 1.45	$ 1.82
Diluted earnings per share	$ 2.26	$ 1.42	$ 1.76

In September 2004, the EITF reached a final consensus on EITF 04-8, which requires all shares contingently issuable under our convertible debt instruments to be included in our calculation of diluted earnings per share, if dilutive. Shares contingently issuable under our convertible debt instruments were previously included in our calculation of diluted earnings per share if the share price of our common stock exceeded the conversion trigger prices specified in the debt instruments. We adopted the provisions of EITF 04-8 in our fourth quarter of 2004 and restated prior period earnings per share amounts for comparative purposes. The implementation of EITF 04-8 did not change our previously reported 2003 diluted earnings per share; however, it reduced our previously reported 2002 diluted earnings per share by $0.03.

Options to purchase 1.3 million, 5.3 million and 8.7 million shares for the years ended December 31, 2004, 2003 and 2002, respectively, were not included in the computation of diluted earnings per share because the effect of including them would have been antidilutive. Diluted earnings per share for the years ended December 31, 2003 and 2002 did not include 17.7 million shares of our common stock issuable upon conversion of our Liquid Yield Option™ Notes because the effect of including them would have been antidilutive.

Note 9. Retirement Plan

We maintain a defined contribution pension plan covering full-time shoreside employees who have completed the minimum period of continuous service. Annual contributions to the plan are based on fixed percentages of participants’ salaries and years of service, not to exceed certain maximums. Pension cost was $12.2 million, $9.4 million and $8.5 million for the years 2004, 2003 and 2002, respectively.

Note 10. Income Taxes

We and the majority of our subsidiaries are currently exempt from United States corporate tax on income from the international operation of ships pursuant to Section 883 of the Internal Revenue Code. Income tax expense related to our remaining subsidiaries was not significant for the years ended December 31, 2004, 2003 and 2002.

Final regulations under Section 883 were published on August 26, 2003, and will be effective for the year ending December 31, 2005. These regulations confirmed that we qualify for the exemption provided by Section 883, but also narrowed the scope of activities which are considered by the Internal Revenue Service to be incidental to the international operation of ships. The activities listed in the regulations as not being incidental to the international operation of ships include income from the sale of air and other transportation such as transfers, shore excursions and pre and post tours. To the extent the income from such activities is earned from sources within the United States, such income will be subject to United States taxation. We estimate the application of these new regulations will reduce our 2005 net income by approximately $9.5 million to $11.5 million.

F-15

Note 11. Financial Instruments

The estimated fair values of our financial instruments are as follows (in thousands):

	2004	2003
Cash and cash equivalents	$ 628,578	$ 330,086
Long-term debt (including current portion of long-term debt)	(6,580,079)	(6,092,777)
Foreign currency forward contracts and purchased call options in a net gain position	104,904	14,474
Interest rate swap agreements in a net receivable position	20,267	23,945
Fuel swap and zero cost collar agreements in a net receivable position	8,130	4,016

The reported fair values are based on a variety of factors and assumptions. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of December 31, 2004 or 2003 or that will be realized in the future and do not include expenses that could be incurred in an actual sale or settlement. Our financial instruments are not held for trading or speculative purposes.

Our exposure under foreign currency contracts, interest rate and fuel swap agreements is limited to the cost of replacing the contracts in the event of non-performance by the counterparties to the contracts, all of which are currently our lending banks. To minimize this risk, we select counterparties with credit risks acceptable to us and we limit our exposure to an individual counterparty. Furthermore, all foreign currency forward contracts are denominated in primary currencies.

Cash and Cash Equivalents

The carrying amounts of cash and cash equivalents approximate their fair values due to the short maturity of these instruments.

Long-Term Debt

The fair values of our senior notes, senior debentures, Liquid Yield Option™ Notes and zero coupon convertible notes were estimated by obtaining quoted market prices. The fair values of all other debt were estimated using discounted cash flow analyses based on market rates available to us for similar debt with the same remaining maturities.

Foreign Currency Contracts

The fair values of our foreign currency forward contracts were estimated using current market prices for similar instruments. Our exposure to market risk for fluctuations in foreign currency exchange rates relates to two ship construction contracts, one ship lengthening contract and forecasted transactions. We use foreign currency forward contracts and purchased call options to mitigate the impact of fluctuations in foreign currency exchange rates. As of December 31, 2004, we had foreign currency forward contracts in a notional amount of $1.2 billion maturing through 2007. The fair value of our foreign currency forward contracts related to one ship construction contract and the lengthening contract, designated as fair value hedges, was a net unrealized gain of approximately $34.7 million and $3.8 million at December 31, 2004 and 2003, respectively. The fair value of our foreign currency forward contracts and purchased call options related to the other ship construction contract, designated as cash flow hedges, was an unrealized gain, net of option premiums, of approximately $76.2 million and $11.2 million at December 31, 2004 and 2003, respectively. At December 31, 2004, approximately 26% of the cost of the ship contracts was exposed to fluctuations in the euro exchange rate.

Interest Rate Swap Agreements

The fair values of our interest rate swap agreements were estimated based on quoted market prices for similar or identical financial instruments to those we hold. Our exposure to market risk for changes in interest rates relates to our long-term debt obligations and our operating lease for Brilliance of the Seas. We enter into interest rate swap agreements to modify our exposure to interest rate movements and to manage our interest expense and rent expense.

F-16

Market risk associated with our long-term fixed rate debt is the potential increase in fair value resulting from a decrease in interest rates. As of December 31, 2004, we had interest rate swap agreements, designated as fair value hedges, which exchanged fixed interest rates for floating interest rates in a notional amount of $268.8 million, maturing in 2006 through 2013.

Market risk associated with our long-term floating rate debt is the potential increase in interest expense from an increase in interest rates. As of December 31, 2004, we had an interest rate swap agreement, designated as a cash flow hedge, which, beginning January 2005, exchanges floating rate term debt for a fixed interest rate of 4.395% in a notional amount of $25.0 million, maturing in 2008.

Market risk associated with our operating lease for Brilliance of the Seas is the potential increase in rent expense from an increase in sterling LIBOR rates. As of January 2005, we have effectively changed 58% of the operating lease obligation from a floating rate to a fixed rate obligation with a weighted-average rate of 4.81% through a combination of interest rate swap agreements, designated as cash flow hedges, and rate fixings with the lessor, maturing in 2012.

Fuel Swap Agreements

The fair values of our fuel swap and zero cost collar agreements were estimated based on quoted market prices for similar or identical financial instruments to those we hold. Our exposure to market risk for changes in fuel prices relates to the forecasted consumption of fuel on our ships. Historically, we have used fuel swap and zero cost collar agreements to mitigate the impact of fluctuations in fuel prices. As of December 31, 2004 and 2003, we had fuel swap agreements, designated as cash flow hedges, to pay fixed prices for fuel with an aggregate notional amount of $35.4 million, maturing through 2005, and $30.2 million, maturing through 2004, respectively.

Note 12. Commitments and Contingencies

Capital Expenditures

As of December 31, 2004, we had two Freedom-class ships on order for an additional capacity of approximately 7,200 berths. The estimated aggregate cost of the ships is approximately $1.6 billion, of which we have deposited $137.8 million as of December 31, 2004. (See Note 11. Financial Instruments.) We anticipate that overall capital expenditures, including the two Freedom-class ships on order, will be approximately $0.4 billion, $1.0 billion and $1.0 billion for 2005, 2006 and 2007, respectively.

Litigation

Operating Leases

On July 5, 2002, we added Brilliance of the Seas to Royal Caribbean International’s fleet. In connection with this addition, we novated our original ship building contract and entered into an operating lease denominated in British pound sterling. In connection with the novation of the contract, we received $77.7 million for reimbursement of shipyard deposits previously made. The lease payments vary based on sterling LIBOR. The lease has a contractual life of 25 years; however, the lessor has the right to cancel the lease at years 10 and 18. Accordingly, the lease term for accounting purposes is 10 years. In the event of early termination at year 10, we have the option to cause the sale of the vessel at its fair value and use the proceeds toward the applicable termination obligation plus any unpaid amounts due under the contractual term of the lease. Alternatively, we can make a termination payment of approximately £126 million, or approximately $242 million based on the exchange rate at December 31, 2004, and relinquish our right to cause the sale of the vessel. This termination amount, which is our maximum exposure, has been included in the table below for noncancelable operating leases.

F-17

In addition, we are obligated under other noncancelable operating leases primarily for offices, warehouses, computer equipment and motor vehicles. As of December 31, 2004, future minimum lease payments under noncancelable operating leases were as follows (in thousands):

Year
2005			$ 50,770
2006			49,067
2007			47,793
2008			47,174
2009			47,054
Thereafter(1)			424,126

			$665,984


	(1)	Under the Brilliance of the Seas lease agreement, we may be required to make a termination payment of approximately £126 million, or approximately $242 million based on the exchange rate at December 31, 2004, if the lease is canceled in 2012.

Total expense for all operating leases amounted to $54.5 million, $44.1 million and $24.3 million for the years 2004, 2003 and 2002, respectively.

Under the Brilliance of the Seas operating lease, we have agreed to indemnify the lessor to the extent its after-tax return is negatively impacted by unfavorable changes in corporate tax rates and capital allowance deductions. These indemnifications could result in an increase in our lease payments. We are unable to estimate the maximum potential increase in such lease payments due to the various circumstances, timing or combination of events that could trigger such indemnifications. Under current circumstances we do not believe an indemnification in any material amount is probable.

Other

At December 31, 2004, we have future commitments to pay for our usage of certain port facilities, marine consumables, services and maintenance contracts as follows (in thousands):

Year
2005	$ 51,888
2006	49,835
2007	36,773
2008	27,155
2009	18,860
Thereafter	76,405

	$260,916

F-18

Note 13. Related Parties

A. Wilhelmsen AS. and Cruise Associates collectively own approximately 37.8% of our common stock and are parties to a shareholders’ agreement which provides that our board of directors will consist of four nominees of A. Wilhelmsen AS., four nominees of Cruise Associates and our Chief Executive Officer. They have the power to determine, among other things, our policies and the policies of our subsidiaries and actions requiring shareholder approval.

Note 14. Quarterly Data (Unaudited)


	First Quarter				Second Quarter				Third Quarter				Fourth Quarter

	2004		2003		2004		2003		2004		2003		2004		2003

	(in thousands, except per share data)
Total Revenues	$	1,061,684	$	880,164	$	1,142,999	$	905,841	$	1,386,107	$	1,120,199	$	964,585	$	878,045
Operating Income	$	160,468	$	114,942	$	194,586	$	117,203	$	358,381	$	249,161	$	40,154	$	44,879
Net Income (Loss)	$	95,846	$	53,174	$	122,159	$	55,672	$	282,471	$	191,867	$	(25,785)	$	(20,049)
Earnings (Loss) Per Share:
Basic	$	0.49	$	0.28	$	0.61	$	0.29	$	1.42	$	0.99	$	(0.13)	$	(0.10)
Diluted	$	0.47	$	0.27	$	0.58	$	0.28	$	1.26	$	0.89	$	(0.13)	$	(0.10)
Dividends Declared Per Share	$	0.13	$	0.13	$	0.13	$	0.13	$	0.13	$	0.13	$	0.13	$	0.13

We adopted the provisions of EITF 04-8 in our fourth quarter of 2004 and restated prior period earnings per share amounts for comparative purposes. (See Note 8. Earnings Per Share.) The implementation of EITF 04-8 did not change our previously reported diluted earnings per share, except for a reduction of $0.07 and $0.08 per share in our third quarters of 2004 and 2003, respectively, and a reduction of $0.01 per share in our second quarter of 2004.

F-19

Exhibit 10.7

LEASE AGREEMENT

BASIC LEASE INFORMATION

The following Basic Lease Information is hereby incorporated into and made a part of the Lease between Landlord and Tenant to which it is attached. Each reference in the Lease to any of the Basic Lease Information shall mean the respective information set forth below, and such information is incorporated as a part of the terms provided under the particular Lease Section pertaining to such information. In the event of any conflict between any Basic Lease Information and the Lease, the former shall control.

1.          Building: The approximately 162,587 square foot building (the “Building”) to be constructed by Landlord on the Premises, in accordance with the provisions of Exhibit “B” attached hereto and incorporated herein. Upon Substantial Completion (defined in Section 9.1 of this Basic Lease Information) of the Building and not later than the Rent Commencement Date, Landlord’s architect shall measure the Building to determine its usable square footage area utilizing the BOMA ANSI-Z-65.1 method of measurement (“Useable Square Footage”). Tenant may verify Landlord’s measurement utilizing its own architect.

2.

Landlord: Workstage-Oregon, LLC, a Michigan limited liability company

3.

Landlord’s Address for Giving of Notices and Payment of Rent:

Workstage-Oregon, LLC

Attention: Joe Peters

4700 60^th Street S.E.

Grand Rapids, MI 49512

4.

Tenant: Royal Caribbean Cruises Ltd., a Liberian corporation

5.

Tenant’s Address for Giving of Notices:

Royal Caribbean Cruises Ltd.

Attention: VP, Chief Human Resource Officer

1050 Caribbean Way

Miami, FL 33132

With a copy to:

Royal Caribbean Cruises Ltd.

Attention: General Counsel

1050 Caribbean Way

Miami, FL 33132

6.    Premises: The real property described on Exhibit “A” attached hereto and incorporated herein, including all improvements located thereon.

1 – LEASE AGREEMENT

pdx/112037/138180/KMP/1247874.9

7.    Use: General business, which includes, but is not limited to, infrastructure necessary for a customer contact/call center, the use of conference and computer facilities, employee cafeteria and related facilities, a wellness facility, a childcare facility, and other legally permitted uses consistent with the characteristics of a first-class office building in the Eugene-Springfield metropolitan area.

8.

Lease Document Issuance and Reference Date: January 24, 2005.

9.

Commencement Dates:

9.1        Lease Commencement Date: The Lease Commencement Date for the Premises shall be the later of the following dates: (a) Substantial Completion of the Building; or (b) December 23, 2005. As used herein, the terms “Substantial Completion” and “Substantially Complete” means that (i) a temporary Certificate of Occupancy for the Building has been issued; (ii) at least ninety-five percent (95%) of all detail work that is the responsibility of the Landlord is in place; (iii) all mechanical, electrical, HVAC, elevators, life-safety and communication systems shall be operational in the Building and on the Premises; (iv) a punch list that reflects less than five percent (5%) of the total work that is the obligation or under the control of the Landlord is left to be completed; (v) all common area improvements for the Premises shall be at least ninety-five percent (95%) complete, including, but not limited to, the roadways, parking lot, landscaping, Building lobby, and entrances thereto, corridors and restrooms; and (vi) the Premises are suitable for the conduct of Tenant’s daily business operations. Tenant may, after receipt of Landlord’s prior approval, which approval shall not be unreasonably withheld, conditioned or delayed, (and subject to local municipal approval as applicable) enter onto the Premises from time to time prior to the Lease Commencement Date for the purpose of employee training and to install its furniture, equipment and phone system, all at Tenant’s expense. Landlord covenants, represents and warrants that the data center portion of the Premises will be completed on or before August 26, 2005; Landlord shall permit Tenant to have access to the data center portion of Premises for the purpose of installing data center equipment at Tenant’s expense on or before said date. Landlord shall permit Tenant to have early access to the remainder of the Premises for the purpose of: (a) installing of furniture and equipment on or before December 13, 2005; and (b) conducting public relations events, including a job fair and related activities, on or before December 13, 2005 (both at Tenant’s expense and subject to Tenant’s receipt of municipal approval as applicable). All early access granted hereunder shall be deemed to be upon all the terms, covenants, conditions and provisions of this Lease, including specifically Section F of Exhibit “B”, except for the payment of Rent. Deadlines and performance obligations of Landlord and Tenant pursuant to this Section 9.1 are subject to Force Majeure, as defined in Section 31.

9.2        Rent Commencement Date: The Rent Commencement Date for the Premises shall be thirty (30) days after the Lease Commencement Date.

10.  Expiration Date: The day prior to the twentieth anniversary of the Lease Commencement Date. Tenant may extend the Lease Term per Section 27.

11.  Base Rent: Base Rent shall be paid monthly. Except as provided below, Base Rent shall equal $285,585.50 per month. The months referred to above are the full calendar months

2 – LEASE AGREEMENT

pdx/112037/138180/KMP/1247874.9

after any first partial month of the Lease Term. The monthly Base Rent rate for any such partial month shall be the same as the rate specified for the first full calendar month when Base Rent is payable. Base Rent shall increase two percent (2%) per year on each anniversary of the Rent Commencement Date. Each increase in Base Rent shall be cumulative. Landlord and Tenant acknowledge that pursuant to the Memorandum of Understanding between Tenant and the State of Oregon (the “State”), the State has agreed to award Tenant with up to $300,000 for roads, rights of way, sewers, storm water discharge and treatment and other qualifying uses under the Oregon Special Works Fund. Tenant shall direct the State to award the $300,000 amount directly to Landlord. Base Rent will be adjusted downward to the extent that that Landlord receives any portion of the $300,000 award. For example, if the entire $300,000 is paid to Landlord, then Base Rent shall decrease to $283,448.00 per month.

12.  Brokers: Cushman & Wakefield of Florida, Inc. in cooperation with Cushman & Wakefield of Oregon, Inc.

LANDLORD

TENANT

WORKSTAGE-OREGON, LLC, a Michigan limited liability company

By: /S/ JOHN C. COTTRELL

Its: John C. Cottrell, Member

Date: January 24, 2005

ROYAL CARIBBEAN CRUISES LTD., a Liberian corporation

By: /S/ JACK L. WILLIAMS

Its: Jack L. Williams

Date: January 24, 2005

Exhibits (6):

Exhibit “A” – Premises Description

Exhibit “B” – Landlord’s Work (Build to Suit)

Exhibit “C” – Memorandum of Lease

Exhibit “D” – Lease Commencement Agreement

Exhibit “E” – Subordination, Non-Disturbance and Attornment Agreement

Exhibit “F” – List of Initial Improvements

3 – LEASE AGREEMENT

pdx/112037/138180/KMP/1247874.9

LEASE AGREEMENT

TERMS AND CONDITIONS

SECTION 1

DEMISE AND RENT

1.1        Demise. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, upon and subject to the terms, covenants, provisions and conditions of this Lease Agreement (herein called the “Lease”), the Premises described in the Basic Lease Information.

1.2        Commencement and Expiration Dates. The term of this Lease (herein called “Lease Term”) shall be for the period specified in the Basic Lease Information (or until sooner terminated as herein provided), as the same may be renewed pursuant to Section 27. After the Lease Commencement Date has occurred, the parties shall execute the Lease Commencement Agreement attached hereto as Exhibit “D”, and incorporated herein, confirming the actual Lease Commencement Date.

1.3        Rent. The rents shall be and consist of a Base Rent (herein called “Base Rent”) and Additional Rent (herein called “Additional Rent”). For purposes of this Lease Agreement, Base Rent and Additional Rent are referred to collectively as “Rent.” Base Rent shall be the amount indicated in the Basic Lease Information. Base Rent shall be payable in equal monthly installments in advance on the first day of each and every calendar month during the term of this Lease (except to the extent otherwise specifically provided elsewhere in this Lease). Additional Rent shall consist of all other sums of money as shall become due from and payable by Tenant to Landlord or to others as instructed by Landlord pursuant to the terms of this Lease. All Rent shall be paid in lawful money of the United States of America to Landlord at its office or such other place, as Landlord shall designate by notice to Tenant. Tenant shall pay the Base Rent and Additional Rent promptly when due without notice or demand and without any abatement, deduction or offset for any reason whatsoever, except as expressly provided in this Lease. If the Lease Commencement Date occurs on a day other than the first day of a calendar month, the Base Rent for that partial calendar month shall be prorated on a daily basis.

1.4        Late Charge. Tenant recognizes that late payment of any Base Rent from Tenant to Landlord will result in administrative expense to Landlord, the extent of which additional expense is extremely difficult and economically impractical to ascertain. Tenant therefore agrees that if Base Rent from Tenant to Landlord remains unpaid ten (10) days after it is due, the amount of such unpaid Base Rent shall be increased by a late charge to be paid to Landlord by Tenant in an amount equal to $2,000.00; provided, however, that Tenant is not obligated to pay the $2,000 late charge until Tenant has been 10 days late in the payment of Base Rent more than one (1) time in each calendar year of the Lease Term. Tenant agrees that such amounts are reasonable estimates of the loss and expense to be suffered by Landlord as a result of such late payment by Tenant and may be charged by Landlord to defray such loss and expense. Overdue Rent (Base Rent and Additional Rent) shall bear interest payable to Landlord from the date due until paid at a rate equal to the lesser of (i) nine percent (9%) per annum, or (ii) three percent (3%) per annum above the “Prime Rate” as reported by the Wall Street Journal from time to

4 – LEASE AGREEMENT

pdx/112037/138180/KMP/1247874.9

time (items (i) and (ii) are collectively referred to herein as the “Rate”). The provisions of this Section in no way relieve Tenant of the obligation to pay Rent on or before the date on which it is due, nor do the terms of this Section in any way affect Landlord’s remedies pursuant to Section 19 of this Lease if Rent is past due.

1.5

Supplemental Rent.

1.5.1     Calculation. In addition to Base Rent, Tenant shall pay to Landlord the following amount monthly as “Supplemental Rent”, which shall be treated as “Additional Rent”:

(Usable Square Footage multiplied by $.30) divided by 12.

1.5.2     Purpose. The purpose of Supplemental Rent is to fund Landlord’s obligations pursuant to Section 12.1.

1.5.3    Escalation. On each anniversary of the Rent Commencement Date, Supplemental Rent shall adjust to the Consumer Price Index Rate (provided that in no event shall Supplemental Rent decrease). The term “Consumer Price Index Rate” shall be an amount calculated by adjusting the then-current Supplemental Rent amount by a percentage equal to the percentage change over the preceding twelve (12) month period of the "Consumer Price Index - U.S. City Average for all Items for All Urban Consumers (1982-84=100)" published in the Monthly Labor Review by the Bureau of Labor Statistics of the United States Department of Labor (the "CPI-U"), using the CPI-U published thirty (30) days prior to the anniversary. Notwithstanding the foregoing, annual increases in the Supplemental Rent shall be capped at two percent (2%) per year. Landlord covenants to calculate the adjustment fairly and accurately. If the CPI-U is discontinued, the "Consumer Price Index - U.S. City Average for all Items for Urban Wage Earners and Clerical Workers (1982-84=100)" published in the Monthly Labor Review by the Bureau of Labor Statistics of the United States Department of Labor shall be used for making the computation. If the Bureau of Labor Statistics no longer maintains such statistics on the purchasing power of the U.S. consumer dollar, comparable statistics published by a responsible financial periodical or recognized authority selected by the parties shall be used for making the computation. If the CPI-U base year 1982-84 (or other base year for a substituted index) is changed, the denominator figure used in making the computation in this Section 1.5.3 shall accordingly be changed so that all increases in the CPI-U from the base year are taken into account notwithstanding any such change in such CPI-U base year.

SECTION 2

USE

2.1        Generally. Tenant shall use and occupy the Premises for the use specified in the Basic Lease Information and for no other purpose without the written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. Withholding consent to a change of use shall be deemed unreasonable unless Landlord has a legitimate business purpose for withholding consent. Tenant shall not commit or allow the commission of any waste in, on, or about the Premises. Tenant shall not use the Premises or permit anything to be done in or about the Premises that will conflict with any law, statute, ordinance, or governmental rule or

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regulation now in force or which may hereafter be enacted or promulgated (the “Legal Requirements”).

2.2        ADA Law Compliance. Landlord and Tenant acknowledge that the provisions of the Americans with Disabilities Act (the “ADA”) allow allocation of responsibility for compliance with the terms and conditions of the ADA in the Lease. Landlord and Tenant agree that the responsibility for compliance with the ADA shall be allocated as set forth in this Section. Landlord shall be responsible for compliance with the applicable provisions of the ADA with respect to the Premises and Landlord represents that any improvements installed by Landlord pursuant to Exhibit “B” will conform to the ADA requirements imposed by the local governmental authorities in connection with the issuance of building permits and inspection of the Premises to verify compliance with the approved plans and specifications. Tenant shall, at Tenant’s expense, promptly comply with all requirements of any legally constituted public authorities made necessary by reason of Tenant’s specific use of the Premises, including without limitation, the ADA.

2.3        Environmental Law Compliance. For purposes of this Section the term “Hazardous Substances” means and includes all hazardous and toxic substances, waste or materials, any pollutant or contaminant, including, without limitation, PCBs, asbestos, asbestos-containing material, and raw materials that are included under or regulated by any Environmental Laws. For purposes of this Lease the term “Environmental Laws” shall mean and include all federal, state and local statutes, ordinances, regulations and rules presently in force or hereafter enacted relating to environmental quality, contamination, and clean-up of Hazardous Substances including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 § 6091 et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6091 et seq., as amended by the Hazardous and Solid Waste Amendments of 1984, and state superlien and environmental clean-up statutes and all rules and regulations presently or hereafter promulgated under said statutes as amended. Landlord represents that, to the best of Landlord’s knowledge, the Premises are in compliance with all Environmental Laws respecting Hazardous Substances, and that Landlord has received no notice of any pending or threatened lien, action or proceeding respecting any alleged violation of Environmental Laws respecting Hazardous Substances that has occurred on or near the Premises or in or about the Building. Landlord and Tenant shall each promptly comply with any future Environmental Laws to the extent applicable to the Premises. Tenant and Landlord shall not bring or permit anyone to bring Hazardous Substances onto the Premises in excess of those substances customarily used office settings; Tenant and Landlord shall comply with all Environmental Laws in conjunction with its use and disposal of the same. Landlord and Tenant are each responsible for their own acts and omissions relating to compliance with Environmental Laws and the use of Hazardous Substances at the Premises. The parties have agreed to not apportion the environmental risks between them relating to third-party acts or omissions related to Environmental Laws and Hazardous Substances and agree to defer to and avail themselves to state law and federal law with respect to the apportionment of damages related to third-party acts and omissions relating to Environmental Laws and Hazardous Substances.

2.4        Indemnity Regarding Legal Violations. Tenant shall indemnify and hold harmless Landlord from and against any and all claims arising from Tenant’s breach of its

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representations, warranties and covenants under this Lease respecting compliance with Legal Requirements including but not limited to Environmental Laws; together with all costs, expenses and liabilities incurred or in connection with each such claim, action, proceeding or appeal, including, without limitation, all reasonable attorneys’ fees and expenses. Landlord shall indemnify and hold harmless Tenant from and against any and all claims arising from Landlord’s breach of its representations, warranties and covenants under this Lease respecting compliance with Legal Requirements including but not limited to the ADA or Environmental Laws; together with all costs, expenses and liabilities incurred or in connection with each such claim, action, proceeding or appeal, including, without limitation, all reasonable attorneys’ fees and expenses.

SECTION 3

TENANT’S ACCEPTANCE AND MAINTENANCE OF PREMISES

By taking possession of the Premises on the Lease Commencement Date, Tenant accepts the Premises as being Substantially Complete. Tenant shall not be required to accept the Premises unless and until the Premises are Substantially Complete. Landlord’s obligations with respect to the Premises are as set forth in Section 12.1 hereof. Tenant’s obligations with respect to the Premises are as set forth in Section 12.2 hereof. Landlord shall provide Tenant with at least monthly updates on the status of Landlord’s Work and shall provide Tenant thirty (30) days prior notice of the exact date the Premises will be ready for Tenant to take possession. Landlord shall promptly and diligently repair any “punchlist” items and any latent defects in the Premises (except any improvements constructed by Tenant or its agents or employees) within sixty (60) days following notice by Tenant.

SECTION 4

LANDLORD’S OPERATING EXPENSES AND TAXES

4.1        Landlord’s Operating Expenses. For the purposes of this Lease, the term “Landlord’s Operating Expenses” shall mean all expenses paid or incurred by Landlord (or on Landlord’s behalf) as reasonably determined by Landlord (in accordance with generally accepted accounting principles, if applicable or appropriate) to be necessary or appropriate for the efficient operation, management (if applicable pursuant to Section 12.2), maintenance and repair of the Premises, including without limitation: (i) the cost of all charges of insurance; (ii) charges of independent contractors performing repairs or services to the Premises or wages, benefits and applicable taxes on Landlord’s employees providing management, maintenance and repair services at the Premises, to the extent such items are reasonably allocable to the Premises in accordance with generally accepted accounting principles; (iii) alterations and improvements to the Premises made by reason of changes to laws and requirements of any public authorities or the requirements of insurance bodies after the Lease Commencement Date, the cost of which shall be amortized (with interest at the Rate on the unamortized balance) over the useful life of such improvements in accordance with generally accepted accounting principles; (iv) intentionally deleted; (v) reasonable legal, accounting and other professional fees incurred in connection with operation, maintenance and management of the Premises except for Landlord’s negligence or violation of Legal Requirements; (vi) Taxes as defined in Section 4.3; (vii) all other charges properly allocable to the operation, repair and maintenance of the Premises in accordance with generally accepted accounting principles; and (viii) intentionally deleted. Notwithstanding the foregoing, Landlord’s Operating Expenses shall not include any expense for items outlined as

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Landlord’s responsibility in Section 12.1 (it being the intent of the parties that Landlord shall assume the responsibility for those items in exchange for the payment of Supplemental Rent). Landlord's Operating Expenses shall be reasonable, directly related to the Premises, and comparable to that of other Class "A" suburban customer connect call center buildings in the Eugene-Springfield, Oregon office space market. Landlord’s Operating Expenses are not a profit center for Landlord and Landlord shall only pass through to Tenant Landlord’s actual expenses incurred with respect to the Premises. Landlord will utilize its best efforts to minimize Landlord’s Operating Expenses and real estate taxes. Landlord shall pass through to Tenant the benefit of any and all economic and business incentives awarded to Landlord from state and local governments as a result of Tenant’s occupancy of the Premises, including but not limited to property tax abatements, as further referenced in Section 26.9.

4.2        Exclusions From Landlord’s Operating Expenses. Landlord’s Operating Expenses shall not include: (i) depreciation or amortization (except as provided above in Section 4.1); (ii) interest on and amortization of debts (except as provided above in Section 4.1) or any ground lease rental; (iii) intentionally deleted; (iv) leasing commissions, attorneys’ fees, costs and disbursements and other expenses (including advertising) incurred in connection with leasing the Premises for prospective tenants or occupants; (v) refinancing costs; (vi) intentionally deleted; (vii) repairs occasioned by fire, windstorm or other casualty or by condemnation or eminent domain, to the extent such repairs are paid for by insurance proceeds or condemnation proceeds; (viii) the cost of fulfilling Landlord’s obligations pursuant to Section 12.1 (except as specifically permitted in Section 4.1(iii)); (ix) any attorney’s fees incurred by Landlord where the Tenant prevails in establishing a breach of the Lease by the Landlord; (x) any fines, penalties, damages, and the like payable to third parties or governmental entities due to Landlord’s violation of the Lease or any Legal Requirements; (xi) overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for services in the Building to the extent the same exceeds the costs of such services rendered by other first class unaffiliated third parties on a competitive basis; (xii) Landlord’s general corporate overhead and general and administrative expenses; (xiii) all items and services for which Tenant reimburses Landlord; (xiii) advertising and promotional expenditures in connection with leasing the Building, and costs of the installation of signs in or on the Building identifying the owner of the Building; (xiv) costs incurred in connection with upgrading the Building to comply with handicap, life, fire and safety codes in effect and in force prior to the date the Certificate of Occupancy for the Building is obtained; (xv) the cost of any replacement or major repair of any component of the Building due to construction or design defects. A major repair means one that costs more than $5,000.00. Where repairs must be made throughout the Building to multiple units of the same component, the cost of repairing all of the units shall be considered a single repair for purposes of determining if a major repair is involved. Landlord shall use reasonable efforts to seek reimbursement for all expenses where Landlord has a valid claim against a party for causing the expense to be incurred such as damage to the Building caused by negligence of a third party. Except as provided in Section 12.2, Landlord is not entitled to a management fee relating to its management of the Premises. In no event shall Landlord’s Operating Expenses include the costs of items that are the responsibility of Landlord pursuant to Section 12.1 (it being the intent of the parties that Landlord is responsible for those items in exchange for the payment of Supplemental Rent).

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4.3        Taxes. The term “Taxes” includes (i) all real property taxes and assessments (general and special) and personal property taxes, charges, rates, duties and assessments rated, levied or imposed by any governmental authority with respect to the Premises and any improvements, fixtures and equipment located therein or thereon, and with respect to all other property of Landlord, real or personal, located in or on the Premises or the Building and used in connection with the operation of the Building; (ii) any tax in lieu of a real property tax; (iii) any tax or excise levied or assessed by any governmental authority on the rentals payable under this Lease or rentals accruing from the use of the Premises; provided that this shall not include federal or state, corporate or personal income taxes; and (iv) any tax or excise imposed or assessed against Landlord which is measured or based in whole or in part on the capital employed by Landlord to improve the Premises and construct the Building in lieu of a real property tax. Anything in this Section to the contrary notwithstanding, Taxes shall not include federal or state, corporate or personal income taxes. If Landlord receives a refund of Taxes then Landlord shall credit such refund, net of any professional fees and costs incurred by Landlord to obtain the same, against the Taxes for the Operating Year to which the refund is applicable or the current Operating Year, at Landlord’s option. Taxes shall not include any late charges, interest or penalties incurred due to late payment. Landlord shall use reasonable efforts to reduce and minimize Taxes as well as all other Landlord’s Operating Expenses throughout the Term of the Lease to the extent possible consistent with operating the Building in a first-class manner as compared to other comparable Class “A” suburban customer connect call center buildings in the Eugene-Springfield, Oregon office space market. Tenant shall pay the real property tax assessments due for the Premises directly to the taxing authority and provide Landlord with proof of payment within thirty (30) days thereof. If Tenant pays the real property tax assessment in a timely manner, Tenant shall receive all the benefits of the maximum discount available by law, whether or not Landlord has paid same timely. Tenant shall not pay any increase in the real property tax assessment resulting from a reassessment due to a transfer of ownership of the Premises by Landlord.

SECTION 5

PAYMENT OF LANDLORD’S OPERATING EXPENSES

5.1        Operating Year. As used in this Section 5, the term “Operating Year” shall mean each calendar year of the Lease Term and in the event this Lease begins or ends on any date other than the first day of the calendar year, the calculations, costs and payments referred to herein shall be prorated during the first partial calendar year.

5.2         Lease. Throughout the entire Lease Term, Tenant shall pay as Additional Rent, the Landlord’s Operating Expenses of the Premises.

5.3        Written Statement of Estimate. At least ten (10) days prior to the commencement of each Operating Year during the Lease Term, Landlord shall furnish Tenant with a written statement setting forth the estimated Landlord’s Operating Expenses for the next Operating Year. Tenant shall pay to Landlord as Additional Rent commencing on the first day of the Operating Year, and thereafter on the first day of each calendar month of each Operating Year during the Lease term, an amount equal to one-twelfth of the amount of Landlord’s written statement. If Landlord delivers the written statement late, Tenant shall continue to pay to Landlord an amount equal to one-twelfth of the estimated Landlord’s Operating Expenses for the

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immediately preceding Operating Year until Landlord does furnish the written statement, at which time Tenant shall pay the amount of any excess for the expired portion of the current Operating Year over the Tenant’s actual payments during such time and any excess payments by Tenant credited to the next due payment of Rent from Tenant refunded to Tenant within thirty (30) days following the date of such statement. The late delivery of any written statement by Landlord shall not constitute a waiver of Tenant’s obligation to pay Landlord’s Operating Expenses.

5.4        Final Written Statement. Within ninety (90) days after the close of each Operating Year during the Lease Term, Landlord shall deliver to Tenant a written statement (the “Operating Statement”) setting forth the actual increase in Landlord’s Operating Expenses for the preceding Operating Year. If the actual increase in Landlord’s Operating Expenses is in excess of the estimated increase in Landlord’s Operating Expenses, Tenant shall pay the amount of such excess to Landlord as Additional Rent within thirty (30) days after receipt of such statement by Tenant. If the actual increase in Landlord’s Operating Expenses is less than the estimated increase in Landlord’s Operating Expenses actually paid by Tenant, then the amount of the excess overpayment shall be paid by Landlord to Tenant within thirty (30) days following the date of such statement if Tenant requests full reimbursement, or otherwise Landlord may elect to apply the overpayment to Tenant’s next Rent payment, reimbursing only the excess over such next payment, if any.

5.5        Tenant Examination. The Operating Statement referred to herein shall be audited by an independent certified accountant of Landlord’s choosing (which audit costs shall be treated as Landlord’s Operating Expenses) and shall be prepared in accordance with generally accepted accounting principles, consistently applied and shall contain sufficient detail to enable Tenant or its agents to verify the calculation. Tenant shall have the right to audit Landlord's books and records with respect to the preparation of the Operating Statement. Upon at least ten (10) days’ advance written notice to Landlord and during business hours, Tenant may examine and copy any invoices, receipts, canceled checks, vouchers or other instruments used to support the figures shown on the Operating Statement. Tenant shall use reasonable efforts to complete such examination in a manner that will minimize the disruption to the Landlord’s business caused by the examination. If such audit reveals that Tenant overpaid Landlord by more than three percent (3%), Landlord shall reimburse Tenant for the cost of Tenant's audit, including its accountant and legal fees associated therewith, and immediately refund the overpayment to Tenant. Tenant’s monthly payment of increases in Landlord’s Operating Expenses in accordance with Section 5.3 shall not waive Tenant’s right to examine and dispute the correctness of the Operating Statement provided pursuant to Section 5.4. Each such Operating Statement given by Landlord pursuant to Section 5.4 shall be conclusive and binding upon Tenant and Landlord unless within one hundred twenty (120) days after the receipt of such Operating Statement, Tenant notifies Landlord that it disputes the correctness of the Operating Statement, specifying the particular respects in which the Operating Statement is claimed to be incorrect.

5.6        No Reduction in Amount of Base Rent. Nothing in the Lease shall be construed to mean the Base Rent amount specified in the Basic Lease Information shall be reduced due to any decrease in Landlord’s Operating Expenses.

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SECTION 6

SUBORDINATION, NOTICE TO SUPERIOR LESSORS AND MORTGAGEES

6.1        Subordination. Any lease to which this Lease is subject and subordinate, is herein called “Superior Lease” and the lessor of a Superior Lease or its successor in interest is herein called “Superior Lessor.” Any mortgage to which this Lease is subject and subordinate, is herein called “Superior Mortgage” and the holder of a Superior Mortgage, or its successor in interest is herein called “Superior Mortgagee.” Landlord shall cause any Superior Lessor or Superior Mortgagee to enter into the Subordination, Non-disturbance and Attornment Agreement attached hereto as Exhibit “E”, and incorporated herein.

SECTION 7

QUIET ENJOYMENT

So long as Tenant pays all of the Base Rent and Additional Rent and performs all of Tenant’s other obligations hereunder, Tenant shall peaceably and quietly have, hold and enjoy the Premises without hindrance, ejection or interference by Landlord or any person lawfully claiming through or under Landlord.

SECTION 8

ASSIGNMENT AND SUBLETTING

8.1        Generally. Except for the permitted transfers described below in this Section, Tenant shall not sell, assign, transfer, mortgage, sublet, encumber or otherwise transfer by operation of law or otherwise this Lease or any interest herein, or the Premises or any portion thereof, without the prior written consent of Landlord which consent Landlord shall not unreasonably withhold, delay, or condition. Tenant may retain any profit, which may arise from any sublet or assignment. The Tenant may recover damages if the Landlord is found either to have acted in bad faith or to have acted unreasonably in withholding, conditioning or delaying consent. No consent by Landlord to any sale, assignment, transfer, mortgage, sublease, or other encumbrance shall be construed to relieve Tenant from its obligations hereunder or from obtaining Landlord’s written consent in the future.

8.1.1     Tenant shall, by written notice, advise Landlord of its desire from and after a stated date (which shall not be less than thirty (30) days nor more than ninety (90) days after the date of Tenant’s notice), to transfer its interest in the Premises or any portion thereof for any part of the term hereof; and such notice by Tenant shall state the name and address of the proposed transferee, and Tenant shall deliver to Landlord a true and complete copy of the proposed transfer instrument summary term sheet representative of the business terms of the transfer with said notice, and reasonable financial information so that Landlord can evaluate the proposed transferee.

8.1.2     Upon any request by Tenant to transfer all or any part of the Premises, Landlord shall respond in writing to Tenant within ten (10) days after the date of Tenant’s request provided the notice contains a prominent warning of such deadline for response, and Landlord shall have the right to either: (a) permit the transfer on the conditions referred to in Section 8.2 and any other conditions Landlord may reasonably impose; or (b) reasonably deny

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Tenant’s request, in which event this Lease shall continue in full force and effect and unmodified.

8.2        Conditions of Landlord’s Consent. As a condition to Landlord’s prior written consent as provided for in this Section, the transferee(s) shall agree in writing to comply with and be bound by all of the terms, covenants, conditions, provisions and agreements of this Lease, and Tenant shall deliver to Landlord, promptly after execution, an executed copy of each transfer instrument and an agreement of said compliance by each transferee.

8.3        Permitted Transfers. Provided that Tenant is not currently in default under the Lease beyond any applicable notice and cure periods, upon thirty (30) days’ advance written notice to Landlord, Tenant may sublet the Premises or assign this Lease without the Landlord’s consent, with respect to the following types of transfers: (i) a subsidiary, affiliate, franchisee, division or corporation controlled or under common control with Tenant, so long as Tenant remains primarily liable under the Lease; (ii) a successor corporation related to Tenant by merger, consolidation, non-bankruptcy reorganization, or government action, so long as the successor corporation has a net worth and financial investment rating by a rating service (such as Standard & Poors) equal to or greater than Tenant’s net worth or financial investment rating as of the Lease Document Issuance and Reference Date; (iii) the purchaser of substantially all of the Tenant’s assets provided that Tenant has substantial assets which will be included in the sale which are in addition to those located in the Premises, so long as the successor corporation has a net worth and financial investment rating by a rating service (such as Standard & Poors) equal to or greater than Tenant’s net worth or financial investment rating as of the Lease Document Issuance and Reference Date; or (iv) a sublease of all or any portion of the Premises to any third-party sublessee, so long as Tenant remains primarily liable under the Lease.

SECTION 9

INSURANCE

9.1        Waiver of Right of Recovery. Anything to the contrary in this Lease notwithstanding, neither party, shall be liable to the other party or to any insurance company (by way of subrogation or otherwise) insuring the other party for any loss or damage to any building, structure or other tangible property normally covered under an all risk policy of property insurance or under workers’ compensation laws and benefits even though such loss or damage might have been occasioned by the negligence of such party, its agents or employees.

9.2

Public Liability Insurance.

9.2.1     Tenant’s Insurance. Tenant, at its expense, shall maintain at all times during the term of this Lease, public liability insurance in respect of the Premises and the conduct or operation of business therein, with Landlord and its managing agent, if any, and any Superior Lessor or Superior Mortgagee whose name and address shall previously have been furnished to Tenant, as additional insureds, with Five Million and No/100 Dollars ($5,000,000.00) minimum combined single limit coverage, or its equivalent. All such above-described insurance shall insure the performance by Tenant of the indemnity agreement as to liability for injury to, illness of, or death of persons and damage to property set forth in Section 15. Tenant shall deliver to Landlord certificates of insurance, in form reasonably satisfactory to Landlord issued by the insurance

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company or its authorized agent, at least ten (10) days before the Lease Commencement Date. Tenant shall procure and pay for renewals of such insurance from time to time, and Tenant shall deliver to Landlord such renewal certificate as soon as possible but not more than thirty (30) days following issuance of the same. All such policies shall contain a provision whereby the same cannot be canceled or modified unless Landlord and any additional insured is given at least twenty (20) days prior written notice of such cancellation or modification. Tenant shall forward a certificate of insurance to Landlord in a form reasonably acceptable to Landlord.

9.2.2     Landlord’s Insurance. Landlord, at its expense, shall maintain at all times during the term of this Lease, public liability insurance in respect to its activities at the Premises with Tenant named as an additional insured, with Five Million and No/100 Dollars ($5,000,000.00) minimum combined single limit coverage, or its equivalent. All such insurance shall insure the performance by Landlord of the indemnity agreement as to liability for injury to, illness of, or death of persons and damage to property set forth in Section 15. Landlord shall deliver to Tenant certificates of insurance, in form reasonably satisfactory to Tenant issued by the insurance company or its authorized agent, at least ten (10) days before the Lease Commencement Date. Landlord shall procure and pay for renewals of such insurance from time to time, and Landlord shall deliver to Tenant such renewal certificate as soon as possible but not more than thirty (30) days following issuance of the same. All such policies shall contain a provision whereby the same cannot be canceled or modified unless Tenant and any additional insured is given at least twenty (20) days prior written notice of such cancellation or modification.

9.3        Acceptable Insurance Companies. All insurance policies required to be carried by the parties hereunder shall be issued by responsible insurance companies authorized to issue insurance in the State of Oregon rated B VII or higher by Best’s Insurance Rating Service. Tenant may self insure on any of the required insurance provided that upon request Tenant shall deliver to Landlord reasonably satisfactory evidence of sufficient reserves and net worth to justify such self insurance and provided further that any other provisions of this Lease affected by the Tenant’s insurance such as the waiver of subrogation rights or indemnity provisions shall be interpreted and applied in such a manner as to avoid any adverse effect on the Landlord by allowing Tenant to self insure.

9.4        Property Insurance. Tenant shall maintain property insurance covering the Premises and the Tenant’s Property located on the Premises. Such insurance shall be written on a special form covering the full replacement cost and shall be maintained throughout the entire Lease Term, with Landlord and its managing agent, if any, and any Superior Lessor or Superior Mortgagee whose name and address shall previously have been furnished to Tenant, as additional insureds. Tenant shall deliver to Landlord certificates of insurance, in form reasonably satisfactory to Landlord issued by the insurance company or its authorized agent, at least ten (10) days before the Lease Commencement Date. Tenant shall procure and pay for renewals of such insurance from time to time, and Tenant shall deliver to Landlord such renewal certificate as soon as possible but not more than thirty (30) days following issuance of the same. All such policies shall contain a provision whereby the same cannot be canceled or modified unless Landlord and any additional insured is given at least twenty (20) days prior written notice of such cancellation or modification. A certificate of such insurance acceptable to Landlord shall be sent to Landlord. Such insurance shall have commercially reasonable deductibles. Tenant

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shall bring or keep all personal property and trade fixtures upon the Premises or in the Building solely at its own risk, and Landlord shall not under any circumstances be liable for any damages thereto or any destruction or theft thereof except that Landlord shall be responsible for damages arising from its acts or omissions. During the Lease Term, Tenant shall maintain business interruption insurance with respect to Tenant’s business operations at the Premises. Tenant may self-insure for such risk.

SECTION 10

ALTERATIONS

10.1      Requirements. Tenant shall not make or suffer to be made any alterations, additions, or improvements in, on, or to the Premises or any part thereof which would require a building permit without the prior written consent of Landlord, which shall not be reasonably withheld, conditioned or delayed; except that Tenant may replace floor coverings, wall coverings, reconfigure interior improvements and non-load bearing interior walls, and re-paint the Premises without Landlord’s consent. Subject to Section 11.2 hereof, any such alterations, additions, or improvements in, on, or to said Premises, except for Tenant’s movable furniture, trade fixtures and equipment, shall immediately become Landlord’s property and, at the end of the term hereof, shall remain on the Premises without compensation to Tenant. If Landlord consents to the making of any such alterations, additions, or improvements by Tenant, the same shall be made by Tenant, at Tenant’s sole cost and expense, in accordance with plans and specifications approved by Landlord, and any contractor or person selected by Tenant to make the same must first be approved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant shall require any party performing work on or at the Premises to comply with Landlord’s reasonable insurance requirements. Tenant shall obtain all required governmental permits and authorizations for any such work and Tenant shall cause all such work to be completed in a good and workmanlike manner, free from defective materials and in compliance with all building, zoning, and other laws, ordinances, rules, and regulations. If the alterations, additions or improvements shall be made by Landlord for Tenant’s account, Tenant shall reimburse Landlord for the cost thereof within thirty (30) days after receipt of a statement, setting forth the actual cost of such alterations, additions or improvements. At the time consent is given to Tenant to make an improvement to the Premises, Landlord shall indicate in writing whether or not removal, repair and restoration will be required with respect to such improvement upon the expiration or earlier termination of this Lease. If Landlord’s consent is not required for said alteration, upon Tenant’s request, Landlord shall state in writing whether proposed alterations, additions or improvements must be removed upon the expiration or sooner termination of the Lease Term.

Except for those items defined as Tenant’s property in Section 11.2 of this Lease, all of the initial improvements to be installed pursuant to Exhibit “B” shall immediately become Landlord’s property and, at the end of the term hereof, shall remain on the Premises without compensation to Tenant, except for removable trade fixtures and the items described in Exhibit “F” hereto, which shall be considered Tenant’s property and Tenant may remove or leave said items on the Premises at Tenant’s sole option.

After the expiration or sooner termination of the Lease Term and upon demand by Landlord made no later than thirty (30) days after such expiration or earlier termination, Tenant

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shall promptly remove any or all alterations, additions, or improvements made by or for the account of Tenant, designated by Landlord to be removed, and Tenant shall repair and restore the Premises to their original condition, subject to ordinary wear and tear, casualty and condemnation. Such removal, repair and restoration work shall be done promptly and with all due diligence at Tenant’s sole cost and expense. The provisions of this Section 10 shall not apply to the initial Tenant Improvements described in Exhibit “B” to this Lease or to alterations or improvements that Landlord has previously indicated by writing that Tenant would not have to remove.

10.2      Indemnification of Landlord. Tenant, at its expense, and with diligence and dispatch, shall procure the cancellation or discharge of all notices of violation arising from or otherwise connected with alterations, or any other work, labor, services or materials done for or supplied to Tenant at Tenant’s request, which shall be issued by any public authority having or asserting jurisdiction. Tenant shall defend, indemnify and save harmless Landlord and any Superior Lessor or Superior Mortgagee from and against any and all mechanic’s and other liens and encumbrances filed in connection with alterations, or any other work, labor, services or materials done for or supplied to Tenant (other than work performed for Tenant by Landlord pursuant to Exhibit “B”), including, without limitation, security interests in any materials, fixtures or articles so installed in and constituting part of the Premises and against all costs, expenses and liabilities incurred in connection with any such lien or encumbrance or any action or proceeding brought thereon. Tenant, at its expense, shall procure the satisfaction or discharge of record of all such liens and encumbrances within thirty (30) days after Tenant’s receipt of notice of after the filing thereof. Nothing herein contained shall prevent Tenant from contesting, in good faith and at its own expense, any notice of violation, or lien provided Tenant posts for the protection of Landlord security reasonably acceptable to Landlord.

SECTION 11

LANDLORD’S AND TENANT’S PROPERTY

11.1      Landlord’s Property. All fixtures, carpeting, equipment, improvements and appurtenances attached to or built into the Premises at the commencement of or during the term of this Lease, whether or not by or at the expense of Tenant, shall be and remain a part of the Premises, shall be deemed the property of Landlord and shall not be removed by Tenant, except as provided in Sections 10 and 11.2.

11.2      Tenant’s Property. The provisions of Section 11.1 above notwithstanding, all business and trade fixtures, custom millwork, reception desks, machinery and equipment (including but not limited to supplemental air-conditioning units and surface mounted light fixtures, if any), communications and computer equipment and office equipment may be removed by the Tenant. Tenant may remove furniture, furnishings (excluding window coverings) and other articles of movable personal property owned by Tenant and located in the Premises. All of the foregoing items which Tenant is allowed to remove from the Premises are herein collectively called “Tenant’s Property”) and shall be and remain the property of Tenant and may be removed by Tenant at any time during the term of this Lease; provided, that if any of Tenant’s Property is removed, Tenant shall promptly repair or pay the cost of repairing any damage to the Premises or to the Building resulting from the installation and/or removal thereof to Landlord’s reasonable satisfaction.

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SECTION 12

REPAIR, MAINTENANCE AND MANAGEMENT OF PREMISES

12.1      Landlord’s Capital Repair and Replacement Obligations. Except for the items specifically designated as being Tenant’s responsibility pursuant to the second sentence of Section 12.2, Landlord shall make all capital repairs and capital replacements to the Premises at its sole expense, including but not limited to: (a) the foundations, exterior walls, and other structural elements and structural components of the Building; (b) the roof and the roof membrane of the Building; and (c) the elevators, heating and air conditioning systems, UPS, ATS, and the parking lots and drive aisles. The cost of Landlord’s obligations pursuant to this Section 12.1, shall not be deemed a Landlord’s Operating Expense, it being the intent of the parties that Landlord shall assume the responsibility for these items in exchange for the payment of Supplemental Rent. With respect to any capital repairs or capital replacements to the Premises with a cost greater than $5,000, Tenant shall have the right to review and approve any proposals or contracts relating thereto. A repair or replacement shall be deemed “capital” for purposes of this Section 12, if it can be capitalized in accordance with United States generally accepted accounting principles.

12.2      Tenant’s Maintenance, Repair and Replacement Obligations. Except for the obligations of Landlord set forth in Section 12.1, Tenant, at Tenant's sole expense, shall repair, replace and maintain the Premises, and Tenant’s furniture, fixtures and equipment, in good order, condition and repair, and in a manner consistent with the standards identified by IREM for Class "A" office buildings, subject to and excepting reasonable wear and tear and damage from insured events of casualty or destruction. In addition to the foregoing, Tenant shall make all capital repairs and capital replacements of Building electrical, other electrical (including all electrical conduit, utility facilities and equipment, and generators on the Premises), the supplemental air conditioning system located in the data center portion of the Premises, plumbing fixtures and equipment, all fire/life safety facilities and equipment, and exterior surfaces and interior surfaces of all glass, including exterior windows and interior glass and all doors. Without limiting the foregoing, Tenant shall regularly schedule with a maintenance contractor or contractors service for all heating and air conditioning systems, elevators and mechanical systems and other Building Systems and equipment which service contracts shall include all service recommended by any applicable equipment manufacturer and shall otherwise be in accordance with applicable operations maintenance manuals therefor. Tenant will keep the Premises in a neat and sanitary condition, safe for human occupancy and use, and will not commit any nuisance or waste in, on or about the Premises or the Property. Tenant is solely responsible for and to the fullest extent allowable under the laws, will release, indemnify, protect and defend Landlord against (with counsel reasonably acceptable to Landlord) and hold Landlord harmless from, the cost of repairing, and any claims resulting from, any penetrations or perforations of the roof or exterior walls that the Tenant causes. Tenant will maintain the Premises in a first class condition. Tenant's repairs will be at least equal in quality and workmanship to the original work and Tenant will make the repairs in accordance with all laws and in a manner so as to avoid damage to the structural elements of the Building.

Tenant shall manage the Premises using its in-house property management personnel or an outside property management company. If Tenant ceases or intends to cease managing the Premises, Landlord shall have the right to assume (or hire an outside property

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management firm to assume) management responsibilities for the Premises at a management fee to be negotiated by the parties (at a rate that is customary in the Eugene-Springfield real estate market) and such fee shall constitute a Landlord’s Operating Expense that may be passed through to Tenant as Additional Rent pursuant to Section 4.1. Tenant shall have the right to enter into contracts with third-party service providers for discrete services. Tenant shall promptly furnish to Landlord copies of all such contracts with third-party service providers upon Landlord’s request.

If Tenant should be in default of its obligations to perform any of its obligations under this Section 12.2, following the expiration of any applicable cure period following notice, then Landlord may, if it so elects, in addition to any other remedies provided herein, effect such repair and maintenance. No entry in making such repairs or maintenance shall be deemed an eviction or disturbance of Tenant's use or possession, or render Landlord liable for damages, by abatement of rent or otherwise or relieve Tenant from any obligation herein set forth provided that any such entry will, except in emergencies, be made following reasonable notice to Tenant and such repairs will, to the extent reasonably possible, be performed in a manner to minimize impact on Tenant's use of the Premises. Any sums expended by Landlord in effecting such repairs and maintenance shall be due and payable within 30 days of written demand and shall constitute Additional Rent due hereunder.

12.3      Utilities. Tenant shall pay, before delinquency, all charges for all utility services consumed on or provided to the Premises including, without limitation, charges for water, sewer, internet, electricity, HVAC, janitorial and telecommunication services. Landlord shall not be liable in damages or otherwise for any interruptions or failure in the supply of any utilities or utility service to the Premises except such failure or interruption which results from the acts or omissions of Landlord.

12.4       Disclaimer. So long as Landlord has not acted negligently or intentionally and Landlord uses its reasonable efforts to restore any services that are reduced or interrupted, Landlord shall not be in default hereunder or be liable for any damages directly or indirectly resulting from, or by reason of (i) the installation, use or interruption of use of any equipment in connection with the furnishing of the foregoing utilities and services, (ii) failure to furnish or delay in furnishing any such utilities or services when such failure or delay is caused by acts of nature or the elements, labor disturbances of any character, any other accidents or other conditions beyond the reasonable control of Landlord, or by the making of repairs or improvements to the Premises or the Building, or (iii) the limitation, curtailment, rationing or restriction on use of water or electricity, gas or any other form of energy or any other service or utility whatsoever serving the Premises or the Building. If electricity, HVAC, water/sewer or elevator service are interrupted as a result of Landlord’s acts or omissions, in addition to Tenant’s other remedies hereunder, Tenant shall receive complete abatement of Rent after two (2) days of such stoppage and for each day thereafter until such services are restored.

SECTION 13

ACCESS

Landlord shall have reasonable access to the Premises. Landlord shall provide reasonable advance notice of its entry onto the Premises to inspect, alter, improve or repair the

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Premises. Landlord shall provide Tenant with at least three (3) business days’ prior notice before entering onto the Premises for the purpose of showing the Premises to prospective purchasers, mortgagees or tenants (but to prospective tenants for the Building only in the last nine (9) months of the Lease). Landlord shall use reasonable efforts to minimize the interference caused by such entry and shall do so at times that causes the least amount of disruption to the Tenant. Landlord will utilize after hours access or weekends, if necessary, to comply with Tenant's reasonable requests. Landlord shall not enter certain areas of the Premises (as such areas are designated from time to time by Tenant) unless accompanied by a designated representative of Tenant. If Tenant's business operation in the Premises becomes in any way inoperative as a result of Landlord's entry into and upon any part of the Premises, as determined by Tenant in its reasonable opinion, in addition to Tenant’s other remedies hereunder, Rent shall be abated during said inoperative time.

SECTION 14

NOTICE OF OCCURRENCES

Tenant shall give prompt notice to Landlord of: (i) any occurrence in or about the Premises for which Landlord might be liable; (ii) any fire or other casualty in the Premises; (iii) any damage to or defect in the Premises including the fixtures, equipment and appurtenances thereof, for the repair of which Landlord might be responsible; and (iv) damage to or defect in any part or appurtenances of the Building’s sanitary, electrical, heating, ventilating, air-conditioning, elevator or other systems of which Tenant is aware.

SECTION 15

NON-LIABILITY AND INDEMNIFICATION

15.1      Waiver. Neither party shall be liable for any insured injury, loss or damage to person or property sustained by the other party, or other persons, which may be caused by theft or by any other act or neglect of any third party. Neither party nor any partner, director, officer, agent, servant or employee of a party shall be liable to the other for any insured loss, injury or damage to any third person or to its or their property, irrespective of the cause of such injury, damage or loss except to the extent caused by or resulting from intentional torts, it being the intent of the parties that they each look to their own insurance policies for coverage of any such item resulting from an accident even if caused by the negligence of a party. Further, neither party nor any partner, director, officer, agent, servant or employee of a party shall be liable: (i) for any such insured damage caused by other occupants or persons in, upon or about the Building, or caused by operations in construction of any private, public or quasi-public work; or (ii) for consequential damages including lost profits, of a party or any person claiming through or under the party, except to the extent specifically provided otherwise in this Lease.

15.2      Indemnification. Tenant shall indemnify and hold harmless Landlord from and against third party claims for bodily injury and/or property damage arising from or in connection with any accident, injury or damage whatsoever (except those caused by Landlord’s negligence or breach of this Lease) occurring in, at or upon the Premises as a result of Tenant’s activities thereon; together with all costs, expenses and liabilities incurred or in connection with each such claim or action or proceeding brought thereon, including, without limitation, reasonable attorneys’ fees and expenses at trial and upon appeal. Landlord shall indemnify and hold harmless Tenant from and against third party claims for bodily injury and/or property damage

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arising from or in connection with any accident, injury or damage whatever (except those caused by Tenant’s negligence or breach of this Lease) occurring in, at or upon the Premises as a result of Landlord’s activities thereon; together with all costs, expenses and liabilities incurred or in connection with each such claim or action or proceeding brought thereon, including, without limitation, reasonable attorneys’ fees and expenses at trial and upon appeal.

15.3      Duty to Defend. In case any action, proceeding or claim (collectively, "Claim") is brought against either party (the "Indemnitee") and such Claim is a Claim from which the other party (the "Indemnitor") is obligated to indemnify the other for pursuant to Section 15.2, the Indemnitor shall have the right to, upon notice from the other party, (i) participate in the defense of such action with counsel of reputable standing and (ii) assume the defense of such action by agreeing to assume such defense within ten (10) days of transmittal of the notice of the claim by the Indemnitee. No Indemnitor, in the defense of any such Claim, shall, except with the consent of the Indemnitee, consent to the entry of any judgement or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability with respect to such Claim. If the Indemnitor does not accept the defense of any matter that it is entitled to assume as provide above, the Indemnitee may defend such Claim with counsel of its choice, the expense of which shall be for the account of Indemnitor.

15.4      Survival. The obligation of each party under this Section 15 shall survive termination of this Lease.

SECTION 16

DAMAGE OR DESTRUCTION

16.1      Casualty. If Premises are damaged by casualty to such extent that they are rendered untenantable by Tenant or reasonably unsuitable for the conduct of Tenant’s business thereon, Landlord shall advise Tenant of the length of time required to fully restore the Premises within thirty (30) days after the occurrence of the fire or other casualty. If it is reasonably determined by Landlord that the Premises cannot be made tenantable or otherwise suitable to the conduct of Tenant’s business within one hundred eighty (180) days of the date of casualty, Tenant may terminate this Lease by notifying the Landlord in writing of such termination within ten (10) days after Landlord shall have notified Tenant of the time required. If Landlord advises Tenant that repair or restoration shall take less than one hundred eighty (180) days after such damage, and if Landlord does not complete the repairs and restoration that is necessary for Tenant's occupancy pursuant to the definition of Substantial Completion, Tenant shall have the same rights and remedies as set forth in Section 25, below, as it had for any delay in completion of the Premises upon Lease commencement subject to Force Majeure, as defined in Section 31.

If Tenant does not terminate the Lease, the Rent shall be reasonably abated during the period of repair based on that portion of the Premises not reasonably usable by Tenant; provided, however, that if fifty percent (50%), or more, of the Premises are untenable or reasonably unsuitable for the conduct of Tenant’s business, in Tenant's reasonable opinion, all Rent shall be abated until the repair and restoration of the entire Premises is completed to Substantial Completion. Notwithstanding the foregoing, the rental abatement allowed pursuant to this Section 16.1 only applies to the extent, and for any period of time, that rental payments to

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Landlord are not covered by the business interruption insurance coverage required to be covered by Tenant pursuant to Section 9.4, it being the intent of the parties the business interruption insurance to be carried by Tenant will cover Rent for up to one hundred eighty (180) days (the time frame to restore the Premises) and Landlord shall bear the risk of rental abatement beyond that period of time. Landlord is not required to repair any damage by fire or other cause to Tenant’s Property.

16.2      Condemnation. If the whole of the Premises is taken or condemned for any public or quasi-public use or purpose by any competent authority in appropriation proceedings or by any right of eminent domain, then this Lease shall terminate as of the date title vests in the condemnor, all rents and other payments shall be paid up to that date, and Landlord and Tenant shall have no further obligations by reason of the provisions of this Lease.

If less than the whole of the Leased Premises is so taken or condemned, such that it is rendered untenantable by Tenant in the exercise of Tenant’s reasonable judgment or unsuitable for the conduct of Tenant’s business thereon in the exercise of Tenant’s reasonable judgment, then Tenant shall have the right to terminate this Lease upon written notice to Landlord given at least thirty (30) days prior to the date title vests in the condemnor, and this Lease shall terminate as of the date title vests in the condemnor, all rents and other payments shall be paid up to date, and Landlord and Tenant shall have no further obligations by reason of the provisions of this Lease. If Tenant does not elect to so terminate this Lease, Landlord, to the extent of the condemnation award, shall repair and restore the portion not affected by the taking so as to constitute the remaining premises a complete architectural unit. Thereafter, the rent to be paid by Tenant shall be adjusted proportionately and equitably by the parties, and all of the other terms of this Lease shall remain in full force and effect.

Tenant shall have no interest in any award resulting from any condemnation or eminent domain or similar proceedings whether such award be for diminution in value to the leasehold or to the fee of the Premises, except that Tenant shall be entitled to claim, prove and receive in such proceedings such award as may be allowed it for loss of business, relocation and moving expenses, and for Tenant’s trade fixtures and personal property which are removable by Tenant at the end of the term of this Lease, provided such award shall be in addition to the award for land, buildings and other improvements.

SECTION 17

SURRENDER AND HOLDING OVER

17.1      General. On the last day of the term of this Lease, or upon re-entry by Landlord upon the Premises, Tenant shall quit and surrender the Premises to Landlord “broom-clean” and in good order, condition and repair, except for ordinary wear and tear, damage by casualty and condemnation.

17.2      Surrender. No agreement relating to the surrender of the Premises by Tenant shall be valid unless in writing and signed by Landlord.

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17.3      Holding Over. Any holding over after the expiration of the Lease Term shall be deemed a tenancy from month-to-month. The terms, covenants and conditions of such tenancy shall be the same as provided herein except as modified by this Section 17.3. Landlord hereby consents to the first six (6) months of holdover by Tenant with Base Rent for this period of time calculated at the same rate as the last month of the Lease Term provided that Tenant provides notice of the intended holdover at least fifteen (15) months prior to the expiration of the Lease Term (as the same may be extended pursuant to Section 27). Thereafter, Base Rent for additional months of holdover tenancy shall be at calculated at 115% of the Base Rent for the last month of the Lease Term. Acceptance by Landlord of Rent after such expiration shall not result in any other tenancy or any renewal of the term of this Lease, and the provisions of this Section are in addition to and do not affect Landlord’s right of re-entry or other rights provided under this Lease or by applicable law. Tenant may terminate the holdover tenancy at any time upon thirty (30) days advance written notice to Landlord. After the first six (6) months of the holdover tenancy, Landlord may terminate the holdover tenancy at any time upon thirty (30) days advance written notice to Tenant.

SECTION 18

EVENTS OF DEFAULT

18.1      Events of Tenant Default. The occurrence of any one or more of the following events of default shall constitute a breach of this Lease by Tenant:

18.1.1   If Tenant shall default in the payment of Base Rent or Additional Rent, and such default shall continue for ten (10) days after Landlord shall have given Tenant a notice specifying the same (late charges and interest as provided in Section 1.4 above shall nevertheless apply); or

18.1.2   If Tenant shall, whether by action or inaction, be in default of any of its obligations under this Lease (other than a default in the payment of Base Rent or Additional Rent) and such default shall continue and not be remedied within thirty (30) days after Landlord shall have given to Tenant a notice specifying the same, or, in the case of a default which cannot with due diligence be cured within a period of thirty (30) days and the continuance of which for the period required for cure will not subject Landlord or any Superior Lessor to prosecution for a crime or termination of any Superior Lease or foreclosure of any Superior Mortgage, if Tenant shall not, (i) within said thirty (30) day period advise Landlord of Tenant’s intention to take all steps necessary to remedy such default; (ii) duly commence within said thirty (30) day period, and thereafter diligently prosecute to completion all steps necessary to remedy the default; and (iii) complete such remedy within a reasonable time after the date of said notice of Landlord; or

18.1.3   If any event shall occur or any contingency shall arise whereby this Lease or the estate hereby granted or the unexpired balance of the term hereof would, by operation of law or otherwise, devolve upon or pass to any person, firm or corporation other than Tenant, except as expressly permitted by Section 8; or

18.1.4   If Tenant makes a general assignment for the benefit of creditors, or shall be unable to pay its debts as they become due, or shall file a petition in bankruptcy, or shall be adjudicated as bankrupt or insolvent, or shall file a petition seeking any reorganization,

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arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, or shall file an answer admitting or shall fail timely to contest the material allegations of a petition filed against it in any such proceeding, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver or liquidator of Tenant or any material part of its properties; or

18.1.5   If within ninety (90) days after the commencement of any proceeding against Tenant seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, such proceeding shall not have been dismissed or if, within ninety (90) days after the appointment without the consent or acquiescence of Tenant of any trustee, receiver or liquidator of Tenant or of any material part of its properties, such appointment shall not have been vacated; or

18.1.6   If this Lease or any estate of Tenant hereunder shall be levied upon under any attachment or execution and such attachment or execution is not vacated within thirty (30) business days.

18.2      Events of Landlord Default. Landlord shall be in breach of this Lease if it shall, whether by action or inaction, be in default of any of its obligations under this Lease and such default shall continue and not be remedied within thirty (30) days after Tenant shall have given to Landlord a notice specifying the same, or, in the case of a default which cannot with due diligence be cured within a period of thirty (30) days and the continuance of which for the period required for cure will not subject Tenant to prosecution for a crime, if Landlord shall not, (i) within said thirty (30) day period advise Tenant of Landlord’s intention to take all steps necessary to remedy such default; (ii) duly commence within said thirty (30) day period, and thereafter diligently prosecute to completion all steps necessary to remedy the default; and (iii) complete such remedy within a reasonable time after the date of said notice of Tenant. Notwithstanding the foregoing, if the breach of the Lease substantially, materially and detrimentally impacts the operation of Tenant’s business conducted at the Premises and/or is an emergency, Landlord’s response period shall be shortened to that period which is reasonable under the circumstances.

SECTION 19

REMEDIES UPON DEFAULT

19.1      Landlord’s Remedies. Upon the occurrence of an event of default constituting a breach of this Lease by Tenant under Section 18, Landlord may exercise any one or more of the remedies set forth in this Section 19.1, or any other remedy available under applicable law or contained in this Lease.

19.1.1   Landlord or Landlord’s agents and employees may immediately or at any time thereafter re-enter the Premises, or any part thereof, either by summary eviction proceedings or by any suitable action or proceeding at law, or by force or otherwise, without being liable to indictment, prosecution or damages therefor, and may repossess the same, and may remove any person therefrom, to the end that Landlord may have, hold and enjoy the Premises.

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19.1.2   Landlord shall use reasonable efforts to relet the whole or any part of the Premises, either in the name of the Landlord or otherwise, to such tenants, for such terms ending before, on or after the expiration date of the Lease Term, at such rentals and upon such other conditions (including concessions, tenant improvements, and free rent periods) as Landlord may reasonably determine to be appropriate. Landlord at its option may make such physical changes to the Premises as Landlord reasonably considers advisable or necessary in connection with any such reletting or proposed reletting, without relieving Tenant of any liability under this Lease or otherwise affecting Tenant’s liability. If there is other unleased space in the Building, Landlord may lease such other space without prejudice to its remedies against Tenant.

19.1.3   Whether or not Landlord retakes possession or relets the Premises, Landlord shall have the right to recover unpaid rent and all damages caused by the default, including reasonable attorneys’ fees. Damages shall include, without limitation: (i) all rentals lost; (ii) all reasonable legal expenses and other related costs incurred by Landlord following Tenant’s default; (iii) all reasonable costs incurred by Landlord in restoring the Premises to good order and condition, or in remodeling, renovating or otherwise preparing the Premises for reletting; and (iv) all costs actually incurred by Landlord in reletting the Premises, including, without limitation, and any brokerage commissions and the value of Landlord’s time.

19.2      Tenant’s Remedies. Upon the occurrence of an event of default constituting a breach of this Lease by Landlord under Section 18, Tenant may exercise any one or more of the remedies set forth in this Section 19.2, or any other remedy available under applicable law or contained in this Lease. If any breach of this Lease by the Landlord is determined to have occurred by a court of competent jurisdiction or by an arbitration proceeding to which the Landlord is a party, Tenant shall have the right to offset any damages awarded to the Tenant in such proceedings, against the Rent payable under this Lease. Anything to the contrary in this Lease notwithstanding, such right of offset shall apply to and be binding upon a Successor Landlord (as defined in Section 6.3) if Tenant gave notice to any Superior Mortgagee or Superior Lessor of, and opportunity to intervene in, such court or arbitration proceedings. After providing Landlord notice pursuant to Section 18.2, Tenant may cure any breach by Landlord, or make maintenance or repairs, as the case may be. If Tenant does make maintenance or repairs to the Premises, Landlord shall pay upon demand all amounts paid by Tenant in doing so and all costs and expenses incurred by Tenant in connection with doing so, together with interest at the Rate from the date of Tenant's payment of such amount or incurring of each such cost or expense until the date of full repayment by Landlord.

19.3      Cumulative Remedies. The remedies provided for in this Lease are cumulative and are not intended to be exclusive of any other remedies to which Landlord and Tenant may lawfully be entitled at any time, and either party may invoke any remedy allowed at law or in equity, including an action for specific performance, as if specific remedies were not provided for herein. In the event of a breach or threatened breach by either party of any of their respective obligations under this Lease, either party shall also have the right to obtain an injunction and any other appropriate equitable relief.

19.4      Duty to Mitigate. Each party shall mitigate its damages in the event of a breach by the other party.

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SECTION 20

CURING TENANT’S DEFAULTS

All covenants and agreements to be performed by the Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any abatement of Rent except as expressly provided otherwise herein. If the Tenant shall fail to pay any sum of money, other than Rent, required to be paid by it hereunder or shall fail to perform any other act on its part to be performed hereunder, and such failure shall continue for the periods referred to in Section 18 hereof after notice thereof by the Landlord, the Landlord may make any such payment or perform any such act on the Tenant’s part to be made or performed as in this Lease provided but shall not be obligated so to do. Any such payment or performance shall not be a waiver or release of Tenant’s obligations. All reasonable sums so paid by the Landlord and all reasonably necessary incidental costs together with interest thereon at the rate of nine percent (9%) per annum from the date of such payment by the Landlord shall be payable as Additional Rent to the Landlord within thirty (30) days of demand, and the Tenant covenants to pay any such sums, and the Landlord shall have, in addition to any other right or remedy of the Landlord, the same rights and remedies in the event of the nonpayment thereof by the Tenant as in the case of default by the Tenant in the payment of the Rent.

SECTION 21

BROKER

The parties hereto covenant, warrant and represent that no broker except as provided in the Basic Lease Information (the “Broker”) was instrumental in bringing about or consummating this Lease and that neither party had conversations nor negotiations with any broker except the Broker concerning the leasing of the Premises. The parties hereto agree to indemnify and hold harmless each other against and from any claims for any brokerage commissions and all costs, expenses and liabilities in connection therewith, including, without limitation, attorneys’ fees and expenses, arising out of any conversations or negotiations had by such party with any broker other than the Broker. Landlord shall pay to, or cause to be paid to, Broker a brokerage commission pursuant to a separate agreement between Landlord and the Broker, it being agreed to that said commission has been accounted for in establishing Base Rent.

SECTION 22

NOTICES

Any notice, statement, demand, consent, approval or other communication required or permitted to be given, rendered or made by either party to the other, pursuant to this Lease or pursuant to any applicable law or requirement of public authority, shall be in writing (whether or not so stated elsewhere in this Lease). Notices shall be deemed to have been properly given when delivered at the address set forth above in the Basic Lease Information upon delivery or refusal when sent by overnight mail carrier such as Federal Express or its equivalent or by certified U.S. mail. Either party may, by notice as aforesaid, designate different addressees for notices, statements, demands, consents, approvals or other communications intended for it.

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SECTION 23

ESTOPPEL CERTIFICATES

Each party agrees, at any time and from time to time, as requested by the other party with not less than ten (10) business days’ prior notice, to execute and deliver to the other a statement certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications), certifying the dates to which the Base Rent and Additional Rent have been paid, stating whether or not, to the best knowledge of the signer, the other party is in default in performance of any of its obligations under this Lease, and, if so, specifying each such default of which the signer shall have knowledge, and stating whether or not, to the best knowledge of the signer, any event has occurred which with the giving of notice or passage of time, or both, would constitute such a default, and, if so, specifying each such event, it being intended that any such statement delivered pursuant hereto shall be deemed a representation and warranty to be relied upon by the party requesting the certificate and by others with whom such party may be dealing, regardless of independent investigation. Each party also shall include in any such statement such other information concerning this Lease as the other may reasonably request. If either party fails to respond within fifteen (15) business days of receipt by the party of a second written request for such a statement which contains a warning of the consequences of failing to respond, the party shall be deemed to have given such statement and shall be deemed to have admitted the accuracy of that statement that the Lease is unmodified and in full force and effect, that there are not uncured defaults in Landlord’s performance, and that not more than one (1) month’s Rent has been paid in advance.

SECTION 24

MEMORANDUM OF LEASE

Attached to this Lease as Exhibit “D” is a Memorandum of this Lease, which shall be executed by the parties and recorded by Landlord. Such Memorandum shall not be deemed to change or otherwise affect any of the obligations or provisions of this Lease.

SECTION 25

TERMINATION RIGHT FOR DELAYED LEASE COMMENCEMENT

If the Premises are not Substantially Complete on or before December 23, 2005 (subject to Force Majeure as defined in Section 31), Tenant may recover from Landlord its damages as a result of the delay as follows, it being fully understood that Tenant will suffer substantial injury due to the delay in possession and such damages are impossible to estimate with reasonable certainty:

Period of Time

Per Diem Liquidated Damages

Days 1-20 after December 23, 2005

$9,448.11

Days 21-100 after December 23, 2005

$14,172.17

Days 101-150 after December 23, 2005

$18,896.22

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The Per Diem Liquidated Damages shall not extend beyond the one hundred fifty (150) day time frame set forth in the table above. Except as set forth below, the Per Diem Liquidated Damages shall be credited against Base Rent due and payable pursuant to the Lease. If the Premises are not Substantially Complete within one hundred fifty (150) days of December 23, 2005 (subject to Force Majeure as defined in Section 31), Tenant may terminate this Lease by written notice to Landlord. If Tenant elects to terminate this Lease, Landlord shall pay Tenant the Per Diem Liquidated Damages upon said termination.

SECTION 26

MISCELLANEOUS

26.1      Merger. All understandings and agreements heretofore had between the parties are merged in this Lease and any other written agreement(s) made concurrently herewith, which alone fully and completely express the agreement of the parties and which are entered into after full investigation, neither party relying upon any statement or representation not embodied in this Lease or any other written agreement(s) made concurrently herewith.

26.2      Modifications. No agreement shall be effective to change, modify, waive, release, discharge, terminate or effect an abandonment of this Lease, in whole or in part, unless such agreement is in writing, refers expressly to this Lease and is signed by the party against whom enforcement is sought.

26.3      Successors and Assigns. Except as otherwise expressly provided in this Lease, the obligations of this Lease shall bind and benefit the successors and assigns of the parties hereto with the same effect as if mentioned in each instance where a party is named or referred to; provided, however, that: (i) no violation of the provisions of Section 8 shall operate to vest any rights in any successor or assignee of Tenant; and (ii) the provisions of this Section shall not be construed as modifying the provisions of Sections 8 or 18.

26.4      Governing Law. Regardless of the place of execution or performance, this Lease shall be governed by and construed in accordance with the laws of the State of Oregon. If any provision of this Lease or the application thereof to any person or circumstances shall, for any reason and to any extent, be invalid or unenforceable, the remainder of this Lease and the application of that provision to other persons or circumstances shall not be affected but rather shall be enforced to the extent permitted by law. The table of contents, captions, heading and titles in this Lease are solely for convenience or reference and shall not affect its interpretation. All terms and words used in this Lease, regardless of the number or gender in which they are used, shall be deemed to include any other number and any other gender as the context may require. Time is of the essence of this Lease and all of its provisions.

26.5      Counterparts. This Lease may be executed in one or more counterparts by separate signature, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, binding on all parties hereto, even though all parties are not signatories to the original or to the same counterpart. Any counterpart of this Lease that has attached to it separate signature pages, which together contain the signatures of all parties, shall

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for all purposes be deemed a fully executed instrument, and in making proof of this Lease, it shall not be necessary to produce or account for more than one such counterpart.

26.6

Costs and Attorney Fees:

26.6.1   No Suit or Action Filed. If this Lease is placed in the hands of an attorney due to a default in the payment or performance of any of its terms, the defaulting party shall pay, immediately upon demand, the other party’s reasonable attorney fees, collection costs even though no suit or action is filed thereon, and any other fees or expenses incurred by the non-defaulting party.

26.6.2   Arbitration or Mediation; Trial and Appeal. If any arbitration, mediation, or other proceeding is brought in lieu of litigation, or if legal action is instituted to enforce or interpret any of the terms of this Lease or if legal action is instituted in a Bankruptcy Court for a United States District Court to enforce or interpret any of the terms of this Lease, to seek relief from an automatic stay, to obtain adequate protection, or to otherwise assert the interest of Landlord in a bankruptcy proceeding, the party not prevailing shall pay the prevailing party’s costs and disbursements, the fees and expenses of expert witnesses in determining reasonable attorney fees pursuant to ORCP 68, and such sums as the court may determine to be reasonable for the prevailing party’s attorney fees connected with the trial and any appeal and by petition for review thereof.

26.6.3   Definitions. For purposes of this Lease, the term attorney fees includes all charges of the prevailing party’s attorneys and their staff (including without limitation legal assistants, paralegals, word processing, and other support personnel) and any post-petition fees in a bankruptcy court. For purposes of this Lease, the term fees and expenses includes but is not limited to long-distance telephone charges; expenses of facsimile transmission; expenses for postage (including costs of registered or certified mail and return receipts), express mail, or parcel delivery; mileage and all deposition charges, including but not limited to court reporters’ charges, appearance fees, and all costs of transcription; costs incurred in searching records.

26.7      Effect of Failure to Consent; Good Faith and Fair Dealing. The parties acknowledge that the obligation of good faith and fair dealing generally applies to this Lease requiring each party to act reasonably except to the extent explicitly and specifically provided otherwise in this Lease. Such standard shall apply whenever either party has the right or obligation to exercise discretion or make a determination unless explicitly and specifically provided otherwise. Whenever the Lease requires Landlord’s consent or approval, Landlord shall not withhold its approval or consent unreasonably or in bad faith, and Landlord will not unreasonably delay, condition or withhold its response to Tenant’s request for its approval or consent. Landlord will be deemed to have given its consent or approval to any request made by Tenant if Landlord does not respond to Tenant in writing within five (5) days after Landlord’s receipt of the second written request. If Landlord withholds its consent or approval, Landlord shall give Tenant a detailed written statement of the basis for withholding its consent or approval.

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26.8      Waiver of Landlord’s Lien. Landlord hereby waives its right to lien Tenant’s personal property located on the Premises that is provided for in Oregon Revised Statute § 87.162.

26.9      Economic Incentives. The State of Oregon, Lane County, and the City of Springfield have awarded Tenant economic and business incentives in order to locate its customer contact/call center on the Premises. Some of those incentives may be awarded to Landlord as the owner of the Premises. The parties agree that the incentives are solely for the benefit of Tenant and Landlord shall pass through to Tenant the benefit of any and all economic and business incentives awarded to Landlord from state and local governments as a result of Tenant’s occupancy of the Premises, including but not limited to real and personal property tax abatements. Landlord makes no representations or warranties as to the amount or availability of any such incentives.

26.10    Conditions Precedent to Lease. The parties’ obligations under this Lease are conditioned upon Landlord: (a) consummating the purchase of the real property upon which the Premises will be located from Chambers 2000, LLC (“Seller”) pursuant to the Purchase and Sale Agreement (“Agreement”) between Seller and Tenant which shall be assigned to Landlord contemporaneously with this execution of this Lease, and (b) Landlord obtaining a building permit for the Premises. The parties shall diligently pursue closing the purchase of the real property from Seller and obtaining a building permit as soon as reasonable practicable upon execution of this Lease. If the parties are unable to close the purchase contemplated by the Agreement on or before March 31, 2005, either party may terminate this Lease thereafter.

SECTION 27

OPTION TO RENEW

27.1      Provided Tenant is not in default of the Lease beyond applicable notice and cure periods, at the time it exercises this option, Tenant is hereby granted the option to renew this Lease for two (2) extension periods, each of which, at Tenant’s option, may be up to an additional five (5) years each. Such leasing for the renewal term shall be on the same terms and conditions as set forth in this Lease, including Rent.

27.2      If Tenant is interested in exercising the option, Tenant shall provide written notice of its interest not later than fifteen (15) full calendar months prior to the expiration of the Lease Term or the extended Lease Term (in the case of exercising the second option).

27.3      If Tenant exercises the option, Landlord shall execute and deliver to Tenant an amendment to this Lease renewing the Lease Term. Tenant shall execute and deliver the submitted document to Landlord within fifteen (15) business days.

27.4      The rights of Tenant under this Section are not assignable separately from this Lease. Such rights shall be transferable in the event of any assignment of this Lease to an affiliate of Tenant, or in connection with a merger of Tenant into another entity or the acquisition of all or substantially all of the assets of Tenant.

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SECTION 28

RIGHT OF FIRST NEGOTIATION

28.1      Except as provided in Section 29.7, Landlord shall not sell, transfer, convey, exchange, grant an option to purchase, lease or otherwise dispose of any interest in any portion of the Premises without first complying with this Section 28. The provisions of this Section 28 shall apply when Landlord contemplates selling the Premises and Section 29 does not apply.

28.2      If Landlord contemplates offering the Premises for sale, Landlord shall give written notice to Tenant prior to offering the Premises to any third-party or listing it with a commercial real estate broker.

28.3      Tenant shall reply to Landlord’s notice in writing within fourteen (14) days of receipt of Landlord’s notice and such reply shall advise Landlord of Tenant’s desire to enter into negotiations with Landlord for the purchase of the Premises or that Landlord may proceed to offer the Premises to third-parties. If Tenant provides Landlord with notice that it is interested in entering into negotiations with Landlord for the purchase of the Premises, Tenant and Landlord shall attempt in good faith to negotiate a purchase and sale contract for the Premises. Such negotiation shall be concluded within ninety (90) days of Landlord’s original notice to Tenant. If the parties are unable to reach an agreement within said ninety (90) day time frame, Landlord shall be deemed to have complied with this Section 28.

SECTION 29

RIGHT OF FIRST REFUSAL TO PURCHASE

29.1      Landlord shall not sell, transfer, convey, exchange, grant an option to purchase, lease or otherwise dispose of any portion of the Premises without first complying with this Section 29. The provisions of this Section 29 shall apply when Landlord receives from a third party a bona-fide offer to purchase a part, portion, or all of the Premises.

29.2      Landlord shall first give written notice to Tenant. Landlord’s written notice to Tenant shall contain the purchase price and all other terms or conditions of the proposed sale. The terms and conditions of any proposed purchase or sale shall be clear, complete and unambiguous. In order for a proposal by Landlord to be clear, complete, and unambiguous, the proposal must include the form of legally binding contract for the sale to the third party certified by Landlord as being a true and correct copy of the terms and conditions of said sale; such contract shall be in a customary and fair form then in common use for properties of this type in Lane County, Oregon.

29.3      Tenant may elect to accept the proposal, terms and conditions submitted by or to Landlord by giving to Landlord a written response within forty-five (45) days after Tenant’s receipt of Landlord’s notice. If Tenant elects to accept Landlord’s proposal, terms and conditions, then the transaction shall be closed as soon as reasonably practicable and after Title examination and Title Reports.

29.4      If Tenant does not accept Landlord’s proposal, terms and conditions within said forty-five (45) days, then Landlord may thereafter proceed to sell to another person or purchaser on the same terms and conditions as set forth in Section 29.2. Provided however:

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29.4.1   Landlord’s sale to or purchase by another person or purchaser must close within one hundred twenty (120) days from the time Tenant rejects or is deemed to have rejected Landlord’s proposal. If the sale/purchase does not close within said one hundred twenty (120) days, then Landlord must again resubmit the proposal for sale/purchase to Tenant for its further consideration. Tenant’s further consideration and response shall be in a like manner and within fourteen (14) days of receipt of Landlord’s subsequent request; and

29.4.2   If Landlord makes or receives any proposal, term or condition different than the proposal, terms and conditions submitted to Tenant, then Landlord shall once again submit the new/different proposal, terms and conditions to Tenant, for its further consideration. Tenant’s further consideration and responses shall be in a like manner and within a like time as described in Section 29.4.1 above.

29.5      The rights granted to Tenant pursuant to this Section 29 shall be continuous and shall terminate only upon expiration of the Lease Term as the same may be extended pursuant to Section 27. If one or more proposals are made to Tenant and Tenant does not accept the same, and the Property is, in whole or in part, transferred, the right of first refusal granted by this Agreement shall nonetheless apply to subsequent transfers of all or any portion of the Property, except that the forty-five (45) day time frame set forth in Sections 29.3 and 29.4 shall be shortened to thirty (30) days, and the one hundred twenty (120) day time frame set forth in Section 29.4.1 shall be increased to one hundred eighty (180) days.

29.6      ORS 93.040 Notice: “THIS INSTRUMENT WILL NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES AND TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN ORS 30.930.

“THE PROPERTY DESCRIBED IN THIS INSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING STRUCTURES. THE PROPERTY IS SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH, IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING OF A RESIDENCE AND WHICH LIMIT LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN ORS 30.903 IN ALL ZONES. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE PROTECTION FOR STRUCTURES.”

SECTION 30

OPTION TO PURCHASE

At the expiration of the Lease Term (as the same may be extended pursuant to Section 27), Tenant shall have the option to purchase the Premises from Landlord for a total consideration equal to the fair market value of the Premises at the time the option is exercised. If

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the parties are unable to agree on the fair market value, the option price shall be determined by appraisal. Each party shall appoint a MAI certified appraiser to appraise the Premises. The appointed appraisers shall jointly select a third MAI certified appraiser to appraise the Premises (if they cannot agree, the Lane County Circuit Court shall appoint the third-appraiser). Each appraiser shall independently appraise the Premises, based, in part, on the assumption that the remaining Lease Term is for a period of ten (10) years, and in doing so, each shall take into consideration and shall provide an appropriate discount for the costs Landlord would incur in marketing of the Premises, including but not limited to market rate terminal brokerage commissions and marketing costs, capital costs incurred in order to refurbish the Premises for sale, and the creditworthiness of Tenant. The option price shall be the average of the two closest appraisals. Each party shall pay its own appraiser and evenly split the fee for the third appraiser. Tenant may exercise such option by giving Landlord written notice of Tenant’s election to exercise the option no fewer than fifteen (15) full calendar months before the expiration of the Lease Term as the same may be extended. The acquisition shall be closed on or before the Lease Term expires. Conveyance shall be made by Landlord by means of a statutory warranty deed and shall convey title to the Premises free and clear of encumbrances except the encumbrances existing as of the date of this Lease and any lien or encumbrances Tenant may have caused, permitted, or suffered to attach to the Premises or to Tenant’s interest in the Premises since the date of this Lease. Landlord shall furnish Tenant with a standard owner’s title insurance policy issued by a reputable title insurance company, selected by Landlord and approved by Tenant, which approval shall not be unreasonably withheld. The title insurance shall be at the expense of Landlord and shall be delivered within a reasonable period of time after the closing of such conveyance. The title insurance policy shall contain only the standard printed exceptions and the exceptions permitted on the deed. Proration of taxes and other customary adjustments shall be made as of the closing of the conveyance. The closing shall be in escrow at a reputable escrow company selected by Tenant and approved by Landlord, which approval shall not be unreasonably withheld. The escrow fee and closing costs shall be shared equally by the parties.

SECTION 31

FORCE MAJEURE

As used in this Lease, the term “Force Majeure” means any unanticipated delays which are beyond the reasonable control of Landlord or Tenant, including without limitation, those caused by labor strikes, lock-outs, labor troubles, industry-wide inability to procure materials, failure of power, extraordinary governmental acts, omissions, laws or regulations (such as gas rationing), riots, war, military or usurped governmental power, acts of terrorism, sabotage, fire or other casualty, acts of God (including but not limited to severe weather, tornado or earthquake), material governmental acts, and acts or omissions by the other party, but excluding delays caused by inadequacy of insurance proceeds, financial inability, or lack of suitable financing. Except as otherwise expressly provided herein, if either party is delayed or hindered in or prevented from the performance of any obligation required hereunder by Force Majeure, the time for performance of such obligation shall be extended for the period of the delay, provided that Force Majeure will not excuse prompt and timely payments, including Rent, when due under this Lease except when (A) the Lease Commencement Date is delayed by reason of Force Majeure; or (B) such payment is excused pursuant to other provisions of this Lease. The party experiencing an event of Force Majeure shall: (1) endeavor to notify the other party in writing of the delay within fourteen (14) days of the event giving rise to such delay; (2) use

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reasonable diligence to exhaust all other resources available at reasonable costs to avoid such delay; and (3) use reasonable diligence to pursue completion of the activity that was delayed.

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease Agreement as of the date and year first above written.

LANDLORD

TENANT

WORKSTAGE-OREGON, LLC, a Michigan limited liability company

By: /s/ JOHN C. COTRELL

Its: John C. Cottrell, Member

Date: January 24, 2005

ROYAL CARIBBEAN CRUISES LTD., a Liberian corporation

By: /s/ JACK L. WILLIAMS

Its: Jack L. Williams

       President & COO

Exhibits (6):

Exhibit “A” – Legal Description for Premises

Exhibit “B” – Work Letter

Exhibit “C” – Memorandum of Lease

Exhibit “D” –Lease Commencement Agreement

Exhibit “E” – Subordination, Non-Disturbance and Attornment Agreement

Exhibit “F” – List of Initial Improvements

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EXHIBIT “A”

Legal Description for Premises

Situated in the West one-half of Section 15, Township 17 South, Range 3 West of the Willamette Meridian in the City of Springfield, Lane County, State of Oregon and described as follows:

Being (A) all of the lands conveyed to the City of Springfield in that certain Warranty Deed recorded April 3, 1992 in Reel 1753R at Reception Number 9218243 in the Official Records of Lane County, State of Oregon together with (B) a portion of the lands conveyed to the City of Springfield in that certain Deed recorded March 6, 1992 in Reel 1748R at Reception Number 9212917 in that Official Records of Lane County, State of Oregon. The perimeter of said portions being more particularly described as follows:

Beginning at the Southwest corner of said land conveyed by Reception Number 9218243 as said corner lies (A) on the East margin of Interstate Highway No. I-5, (B) on the South line of the Elijah A. Rhea Donation Land Claim No. 44, in Section 15, Township 17 South, Range 3 West of the Willamette Meridian and (C) distant North 89° 59’ 46” East (called North 89° 59’ 20” East per Reception Number 9218243) 1184.28 feet (per deed) from the Southwest corner of said Donation Land Claim; thence, leaving said true point of beginning and along the South line of said lands conveyed by Reception Number 9218243 the following on numbered course: (1) North 89° 59’ 46” East 1235.28 feet along said South line of said Donation Land Claim to the Southeast corner of said lands conveyed by Reception Number 9218243: thence, along the East line of said lands conveyed by Reception Numbers 9818243 and 9212917 the following one numbered course: (2) North 00° 25’ 00” East 689.99 feet to the South margin of Maple Island Road (a 60.00 foot wide right-of-way); thence, leaving said East line of the lands conveyed by Reception Number 9212917 and along said South margin of Maple Island Road and its Westerly prolongation (crossing Sports Way) the following one numbered course: (3) South 89° 59’ 06” West 580.13 feet to the West margin of Sports Way (a 60.00 foot wide right-of-way); thence, along said West margin of Sports Way the following one numbered course: (4) North 00° 15’ 34” East 28.44 feet to a point; thence, leaving said West margin and along the following three numbered courses: (5) North 47° 16’ 13” West 200.40 feet, (6) North 01° 47’ 55” West 99.33 feet, and (7) North 57° 42’ 13” West 480.32 feet to a point on the aforesaid East margin of Interstate Highway No. I-5; and thence, along said East margin (being common with the West lines of the lands conveyed by Reception Numbers 9218243 and 9212917) along the following one numbered course: (8) South 04° 54’ 34” West 1214.69 feet to the true point of beginning.

1 – EXHIBIT “A”

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EXHIBIT “B”

WORK LETTER

(Build to Suit/Tenant Improvements Constructed by Landlord)

A.         Landlord agrees to do all work required of Landlord hereunder (“Landlord’s Work”) at its sole cost and expense and in accordance with the approved Plans and Outline described in Schedule 1 to this Work Letter, which is incorporated herein by this reference (collectively, the “Plans”).

Landlord’s Work shall include, without limitation, all of the following:

(1)        The Premises shall be Substantially Completed in accordance with the Plans, with all utility services, equipment and systems therein fully operational.

(2)        Landlord shall deliver the Premises to Tenant in a neat and clean condition.

(3)        All improvements, without limitation, the paving and striping of parking areas and installation of light standards) shall be Substantially Completed; in addition, such street, storm drainage, traffic signalization, and other offsite improvements required for the Premises to open for business and Tenant to receive the “Certificate of Occupancy” (as defined in Paragraph E below) shall be substantially completed.

(4)        The Premises shall be in full compliance with all laws, codes, regulations and other governmental requirements including, without limitation, “The Americans with Disabilities Act,” and Tenant shall be in a position to receive the Certificate of Occupancy from the appropriate municipal authority for the use and occupancy of the Premises, subject only to completion of Tenant’s Work and any of Landlord’s Work which, by its nature, cannot be completed until Tenant’s Work has been completed.

(5)        The Premises shall be free from asbestos containing material and other Hazardous Substances.

B.         At least thirty (30) days prior to the date Landlord intends to deliver the Premises to Tenant, Landlord shall deliver to Tenant written notice stating the date by which the Premises will be Substantially Complete (which notice and the date specified therein are referred to as the “Delivery Notice” and “Delivery Date,” respectively). It is understood that such Delivery Notice is essential to the coordination and timing of Tenant’s work and pre-opening activities, including the ordering of long lead-time fixtures and equipment. Landlord’s delivery of the Delivery Notice and the passage of thirty (30) days thereafter shall be a condition precedent to the Lease Commencement Date.

C.         Landlord and Tenant agree that any changes to the Plans shall require the prior written approval of Tenant. Tenant shall further be entitled to make changes to the Plans only to the extent necessary to accommodate interior, nonstructural changes in the Premises provided (i) Tenant promptly pays to Landlord the reasonable increased cost of construction, if any, which is

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occasioned by such revisions; (ii) Tenant promptly pays to Landlord the reasonable cost of architect’s fees and engineering costs, if any, occasioned by such revisions; and (iii) if any such revisions delay completion of Landlord’s Work, then, for the purpose of determining the Lease Commencement Date, Landlord shall have one (1) additional day for each day completion of Landlord’s Work is delayed by reason of such revisions beyond December 23, 2005. All said changes shall be documented in the from of a construction change order, which shall document the change and reason for change. Any cost associated with said change shall be paid to Landlord within thirty (30) days of the execution of the change order, and shall include an amount for the general contractor of eight percent (8%) for overhead and seven percent (7%) for profit.

D.         Landlord shall, at its own sole expense, obtain all governmental permits, approvals, authorizations and entitlements required for performance of Landlord’s Work, occupancy of the Premises for the purposes permitted under the terms of this Lease (collectively “Permits”). It is understood that Landlord is solely responsible for payment of any and all fees, tariffs, taxes or other charges, howsoever denominated, which may be levied or assessed by any governmental or quasi-governmental agency or utility company in connection with issuance of such Permits, including, without limitation, building permit, plan check, inspection, utility connection, and school fees; provided, however, the term “Permits” as used herein shall not include Tenant’s business licenses, which shall be obtained by Tenant at its expense. Landlord shall furnish to Tenant copies of all Permits within fifteen (15) days after issuance of same, but in no event later than the Delivery Date.

E.         Notwithstanding (i) any provisions of this Lease to the contrary, (ii) the delivery to Tenant of an architect’s certificate of completion, and (iii) any tender of delivery of possession of the Premises, Landlord’s Work shall not be deemed substantially complete, the Delivery Date shall not be deemed to have occurred, Tenant shall have no obligation to accept possession of the Premises, nor shall Tenant be obligated to pay Base Rent or Additional Rent, until a temporary certificate of occupancy (or its equivalent) has been issued or is available for immediate issuance upon completion of Tenant’s work (“Certificate of Occupancy”).

F.         Tenant shall have the right to come onto the Premises in order to observe the performance of Landlord’s Work, take measurements and commence Tenant’s work, including fixturing, even while Landlord is completing Landlord’s Work, but such entry by Tenant shall be at Tenant’s sole risk and shall not be deemed a waiver of Landlord’s obligation fully to complete Landlord’s Work. Any such entry and work performed by Tenant prior to the Delivery Date shall be performed in a manner that does not materially interfere with the completion of Landlord’s Work. Landlord and Tenant agree, to the extent reasonably possible, to coordinate their work in the Premises to the end that Landlord’s Work and Tenant’s work may be completed on the earliest date reasonably practicable.

G.         To the extent there is a conflict in the provisions of this Work Letter and the Plans, the Plans shall govern.

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SCHEDULE 1

TO

WORK LETTER

TO

LEASE AGREEMENT BETWEEN

WORKSTAGE-OREGON, LLC (“Landlord”)

AND

ROYAL CARIBBEAN CRUISES LTD. (“Tenant”)

DATED JANAURY 24, 2005 (the “Lease”)

The parties are delivering the following materials on the date hereof. These materials constitute the “Plans and Outlines” referred to the in Work Letter and collectively comprise the work required of Landlord pursuant to the Lease:

PART A

Geotechnical Investigation for the proposed

Workstage: Royal Caribbean Cruises, Ltd. - ConnectWest Call Center in

Springfield, Oregon

Dated: December 21, 2004

Pages: 56

Prepared by: Foundation Engineering, Inc.

PART B

Phase I Environmental Site Assessment, TL1001, Lane County Map

#17-03-15

Dated: December 20, 2003

Pages: 52

Prepared by: GeoScience, Inc.

PART C

Project Manual Bidding Documents for:

Excavation/Site Utilities/Asphalt Paving/Site Concrete

Volume 1 of 1, Bid Package "A"

Includes documents within the following table of contents:

Civil Construction Documents (Private)

C1.0 – Erosion and Sediment Control Plan

C1.1 – Erosion and Sediment Control Notes and Details

C2.0 – Horizontal Control Plan

C3.0 – Site Storm Drain Plan

C4.0 – Site Sanitary Sewer, Water and Gas Distribution Plan

C5.0 – Site Paving Plan

C5.1 – Paving Details

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C6.0 – Civil Details, General Notes, Civil and Survey Legends

L1.0 – Site Plan (CMcGS)

L2.0 – Vertical Control Plan (CMcGS)

L3.0 – Tree and Soil Preparation Plan (CMcGS)

Land Drainage Alteration Permit (LDAP)

EC1.0 – Erosion and Sediment Control Plan (Same as C1.0)

EC1.1 – Erosion and Sediment Control Notes and Details (Same as

C1.1)

L1.0 – Site Plan (CMcGS)

L2.0 – Vertical Control Plan (CMcGS)

L3.0 – Tree and Soil Preparation Plan (CMcGS)

Public Improvement Plans (PIP)

C100 – Cover Sheet

C200 – Site Index Map

C300 – Public Storm Sewer Plan: Station 0+00 to 5+00

C400 – Public Storm Sewer Plan: Station 5+00 to 8+34.4

C500 – Sports Way and Maple Island Drive Modified Right-of-Way

Transition

C600 – Sports Way and Maple Island Drive Street Lighting

Modifications

C600A – Sports Way Street Lighting Modifications

C700 – Trench Sections and Details

C800 – Public Storm Swale Clearing and Maintenance Plan:

Station 0+00 to 4+00 (Work performed by others)

C900 – Public Storm Swale Clearing and Maintenance Plan:

Station 4+00 to 6+90 (Work performed by others)

EC1.0 – Erosion and Sediment Control Plan (Same as C1.0)

EC1.1 – Erosion and Sediment Control Notes and Details (Same as

C1.1)

Civil Construction Specification Sections

02200 – Earthwork

02240 – Trenching & Backfill

02430 – Storm Drain

02435 – Sanitary Sewer

02440 – Manholes

02450 – Water Distribution

02513 – Asphaltic Concrete Paving

02520 – Cast-in-place Concrete Curbs, Gutters, Walks &

Pavements

4 – EXHIBIT “B”

pdx/112037/138180/KMP/1247874.9

02525 – Extruded Concrete Curbs

PART D

Owner Review Package

Dated: January 14, 2005

Royal Caribbean Cruises, Ltd. - ConnectWest

Specifications and Drawing Index with the following table of

contents:

SPECIFICATIONS

|---------+-----------------------------------------------------|

|DIV

|SECTION TITLE

|

|---------+-----------------------------------------------------|

SERIES 0 BIDDING REQUIREMENTS

00851

DRAWING INDEX

DIVISION 1 - GENERAL REQUIREMENTS

01352

LEED REQUIREMENTS

DIVISION 3 - CONCRETE

03450

ARCHITECTURAL PRECAST CONCRETE

DIVISION 5 - METALS

05500

METAL FABRICATIONS

05511

METAL STAIRS

05521

PIPE AND TUBE RAILINGS

05716

STEEL CABLE RAILING SYSTEM

DIVISION 6 - WOOD AND PLASTICS

06105

MISCELLANEOUS CARPENTRY

06202

INTERIOR FINISH CARPENTRY

06402

INTERIOR ARCHITECTURAL WOODWORK

06650

SOLID POLYMER FABRICATIONS

06670

PERMALIFE (PVC) FABRICATIONS

DIVISION 7 - THERMAL AND MOISTURE PROTECTION

07141

COLD FLUID-APPLIED WATERPROOFING

07190

WATER REPELLENTS

07210

BUILDING INSULATION

07412

METAL WALL PANELS

07540

THERMOPLASTIC MEMBRANE ROOFING

07720

ROOF ACCESSORIES

07841

THROUGH-PENETRATION FIRESTOP SYSTEMS

5 – EXHIBIT “B”

pdx/112037/138180/KMP/1247874.9

07920

JOINT SEALANTS

DIVISION 8 - DOORS AND WINDOWS

08111

STANDARD STEEL DOORS AND FRAMES

08211

FLUSH WOOD DOORS

08311

ACCESS DOORS AND FRAMES

08620

UNIT SKYLIGHTS

08630

METAL-FRAMED SKYLIGHTS

08800

GLAZING

08816

DECORATIVE GLASS

08830

MIRRORS

08911

GLAZED ALUMINUM CURTAIN WALLS

DIVISION 9 - FINISHES

09111

NON-LOAD-BEARING STEEL FRAMING

09250

GYPSUM BOARD

09310

CERAMIC TILE

09511

ACOUSTICAL PANEL CEILINGS

09547

CURVING WOOD CEILING SYSTEM

09548

MODULAR WOOD CEILING SYSTEM

09622

RESILIENT SPORTS-FLOOR COVERINGS

09638

STONE PAVING AND FLOORING

09651

RESILIENT FLOOR TILE

09681

CARPET TILE

09720

WALL COVERINGS

09770

PREFINISHED PANELS - INTERIORS

09911

EXTERIOR PAINTING

09912

INTERIOR PAINTING

09960

HIGH-PERFORMANCE COATINGS

DIVISION 10 - SPECIALTIES

10155

TOILET COMPARTMENTS

10191

CUBICLE CURTAINS AND TRACKS

10265

IMPACT-RESISTANT WALL PROTECTION

10270

ACCESS FLOORING

10506

WOOD LOCKERS

10520

FIRE-PROTECTION SPECIALTIES

10650

AUTOMATIC VERTICALLY FOLDING ACOUSTICAL WALLS

10801

TOILET AND BATH ACCESSORIES

DIVISION 11 - EQUIPMENT

11132

PROJECTION SCREENS

11160

LOADING DOCK EQUIPMENT

DIVISION 12 - FURNISHINGS

12484

FLOOR MATS AND FRAMES

6 – EXHIBIT “B”

pdx/112037/138180/KMP/1247874.9

DIVISION 14 - CONVEYING SYSTEMS

14240

HYDRAULIC ELEVATORS

END OF TABLE OF CONTENTS

DRAWINGS

SECTION 00851 - DRAWING INDEX

T1.1

TITLE SHEET

I1.1

INDEX

STRUCTURAL

S1.0

OVERALL STRUCTURAL PLANS

S1.1A

FOUNDATION PLAN ZONE "A"

S1.1B

FOUNDATION PLAN ZONE "B"

S1.1C

FOUNDATION PLAN ZONE "C"

S1.1D

FOUNDATION PLAN ZONE "D"

S2.1A

LOWER ROOF FRAMING PLAN ZONE "A"

S2.1B

LOWER ROOF FRAMING PLAN ZONE "B"

S2.1C

LOWER ROOF FRAMING PLAN ZONE "C"

S2.1D

LOWER ROOF FRAMING PLAN ZONE "D"

S2.2A

CLERESTORY FLOOR FRAMING PLAN ZONE "A"

S2.2B

CLERESTORY FLOOR FRAMING PLAN ZONE "B"

S2.3A

HIGH ROOF FRAMING PLAN ZONE "A"

S2.3B

HIGH ROOF FRAMING PLAN ZONE "B"

S4.1

CANOPY FOUNDATION PLAN AND DETAILS

S4.2

CANOPY FRAMING AND DETAILS

S5.1

BRACING ELEVATIONS

S5.2

BRACING ELEVATIONS

S5.3

ELEVATIONS

S6.0

GENERAL STRUCTURAL NOTES

S6.1

FOUNDATION SECTIONS AND DETAILS

S6.2

FOUNDATION SECTIONS AND DETAILS

S6.3

FRAMING SECTIONS AND DETAILS

S6.4

FRAMING SECTIONS AND DETAILS

ARCHITECTURAL

A1.0

OVERALL FIRST AND MEZZANINE LEVEL FLOOR PLANS

A1.1A

FIRST LEVEL FLOOR PLAN ZONE "A"

A1.1B

FIRST LEVEL FLOOR PLAN ZONE "B"

A1.1C

FIRST LEVEL FLOOR PLAN ZONE "C"

A1.1D

FIRST LEVEL FLOOR PLAN ZONE "D"

A1.2A

MEZZANINE LEVEL FLOOR PLAN ZONE "A"

A1.2B

MEZZANINE LEVEL FLOOR PLAN ZONE "B"

A1.3A

CLERESTORY FLOOR PLAN ZONE "A"

7 – EXHIBIT “B”

pdx/112037/138180/KMP/1247874.9

A1.3B

CLERESTORY FLOOR PLAN ZONE "B"

A2.0

INTERIOR PARTITIONS

A2.1

INTERIOR PARTITIONS

A2.2

DOOR SCHEDULE AND DETAILS

A2.3

ROOM FINISH SCHEDULE

A2.4

ROOM FINISH SPECIFICATIONS AND NOTES

A3.1A

FIRST LEVEL REFLECTED CEILING PLAN ZONE "A"

A3.1B

FIRST LEVEL REFLECTED CEILING PLAN ZONE "B"

A3.1C

FIRST LEVEL REFLECTED CEILING PLAN ZONE "C"

A3.1D

FIRST LEVEL REFLECTED CEILING PLAN ZONE "D"

A3.2A

MEZZANINE LEVEL REFLECTED CEILING PLAN ZONE "A"

A3.2B

MEZZANINE LEVEL REFLECTED CEILING PLAN ZONE "B"

A3.3

CEILING DETAILS

A4.1

ROOF PLAN AND DETAILS

A4.2

ROOF DETAILS

A5.1

EXTERIOR ELEVATIONS

A5.2

EXTERIOR ELEVATIONS

A5.3

EXTERIOR ELEVATIONS

A6.0

BUILDING SECTIONS

A6.1

CENTRUM BUILDING SECTIONS

A6.2

WALL SECTIONS

A6.3

WALL SECTIONS

A6.4

WALL SECTIONS

A6.5

WALL SECTIONS

A6.9

SECTION DETAILS

A6.10

DETAILS

A7.1

ENLARGED FLOOR PLANS

A7.2

ELEVATIONS

A7.3

ELEVATIONS AND DETAILS

A8.1

INTERIOR ELEVATIONS

A8.2

INTERIOR ELEVATIONS

A8.3

INTERIOR ELEVATIONS

A8.4

INTERIOR ELEVATIONS

A8.5

INTERIOR ELEVATIONS

A8.6

INTERIOR ELEVATIONS

A8.7

INTERIOR ELEVATIONS

A8.8

INTERIOR ELEVATIONS

A8.9

INTERIOR ELEVATIONS

A9.1

ELEVATOR PLANS, SECTIONS AND DETAILS

A9.2

PASSENGER ELEVATOR SECTIONS

A9.3

STAIR NO.1 ENLARGED PLANS, SECTIONS AND DETAILS

A9.4

STAIR PLANS, SECTIONS AND DETAILS

PLUMBING

UP0.1

PLUMBING SPECIFICATIONS

8 – EXHIBIT “B”

pdx/112037/138180/KMP/1247874.9

UP0.2

PLUMBING SPECIFICATIONS, PLUMBING FIXTURE SCHEDULE

UP1.1A

UNDERGROUND PLUMBING PLAN – ZONE A

UP1.1B

UNDERGROUND PLUMBING PLAN – ZONE B

UP1.1C

UNDERGROUND PLUMBING PLAN – ZONE C

UP1.1D

UNDERGROUND PLUMBING PLAN – ZONE D

UP2.1

ENLARGED UNDERGROUND PLUMBING PLANS

P0.1

PLUMBING FIXTURE SCHEDULE, GENERAL NOTES,

LEGENDS

P1.1A

FIRST LEVEL PLUMBING PLAN – ZONE "A"

P1.1B

FIRST LEVEL PLUMBING PLAN – ZONE "B"

P1.1C

FIRST LEVEL PLUMBING PLAN – ZONE "C"

P1.1D

FIRST LEVEL PLUMBING PLAN – ZONE "D"

P1.2A

SECOND LEVEL PLUMBING PLAN – ZONE "A"

P1.2B

SECOND LEVEL PLUMBING PLAN – ZONE "B"

P2.1

ENLARGED PLUMBING FLOOR PLAN

P2.2

ENLARGED PLUMBING PLAN

P2.3

ENLARGED PLUMBING PLANS

P2.4

ENLARGED PLUMBING PLANS

P2.5

ENLARGED PLUMBING PLANS

P3.1

WASTE & VENT RISER DIAGRAMS

P3.2

WASTE & VENT RISER DIAGRAMS

P4.1

PLUMBING DETAILS

MECHANICAL

UM1.0

UNDERGROUND MECHANICAL PLAN

M0.1

MECHANICAL GENERAL NOTES AND LEGEND

M1.1A

FIRST LEVEL MECH. PLAN ZONE "A"

M1.1B

FIRST LEVEL MECH. PLAN ZONE "B"

M1.1C

FIRST LEVEL MECH. PLAN ZONE "C"

M1.1D

FIRST LEVEL MECH. PLAN ZONE "D"

M1.2A

MEZZANINE LEVEL MECH. PLAN ZONE "A"

M1.2B

MEZZANINE LEVEL MECH. PLAN ZONE "B"

ELECTRICAL

UE1.1A

UNDERGROUND ELECTRICAL PLAN – ZONE A

UE1.1B

UNDERGROUND ELECTRICAL PLAN – ZONE B

UE1.1C

UNDERGROUND ELECTRICAL PLAN – ZONE C

UE1.1D

UNDERGROUND ELECTRICAL PLAN – ZONE D

UE2.0

UNDERGROUND SITE PLAN

ES1.0

SITE LIGHTING PLAN

E0.1

ELECTRICAL LEGEND NOTES & INFORMATION

E1.1A

FIRST LEVEL LIGHTING PLAN ZONE "A"

E1.1B

FIRST LEVEL LIGHTING PLAN ZONE "B"

E1.1C

FIRST LEVEL LIGHTING PLAN ZONE "C"

E1.1D

FIRST LEVEL LIGHTING PLAN ZONE "D"

9 – EXHIBIT “B”

pdx/112037/138180/KMP/1247874.9

E1.2A

MEZZANINE LEVEL LIGHTING PLAN ZONE "A"

E1.2B

MEZZANINE LEVEL LIGHTING PLAN ZONE "B"

E2.1A

FIRST LEVEL POWER PLAN ZONE "A"

E2.1B

FIRST LEVEL POWER PLAN ZONE "B"

E2.1C

FIRST LEVEL POWER PLAN ZONE "C"

E2.1D

FIRST LEVEL POWER PLAN ZONE "D"

E2.2A

MEZZANINE LEVEL LIGHTING PLAN ZONE "A"

E2.2B

MEZZANINE LEVEL LIGHTING PLAN ZONE "B"

E3.1A

FIRST LEVEL SPECIAL SYSTEMS PLAN ZONE "A"

E3.1B

FIRST LEVEL SPECIAL SYSTEMS PLAN ZONE "B"

E3.1C

FIRST LEVEL SPECIAL SYSTEMS PLAN ZONE "C"

E3.1D

FIRST LEVEL SPECIAL SYSTEMS PLAN ZONE "D"

E4.2

ENLARGED CAFETERIA POWER PLAN

E5.1A

RISER DIAGRAM ELECTRICAL

E6.1

ELECTRICAL DETAILS

FIRE PROTECTION

F1.1A

FIRST LEVEL FIRE PLAN ZONE "A"

F1.1B

FIRST LEVEL FIRE PLAN ZONE "B"

F2.1A

MEZZANINE LEVEL FIRE PLAN ZONE "A"

END OF DRAWING INDEX

PART E

Workstage Outline Specifications

Dated: January 20, 2005

Pages: 6

Workstage Mechanical Outline Specifications

Dated: January 20, 2005

Pages: 6

Workstage Electrical Outline Specifications

Dated: January 20, 2005

Pages: 8

10 – EXHIBIT “B”

pdx/112037/138180/KMP/1247874.9

EXHIBIT “C”

MEMORANDUM OF LEASE

AFTER RECORDING RETURN TO:

Kristine M. Pizzuti

Schwabe, Williamson & Wyatt, P.C.

1211 SW Fifth Avenue, Suites 1700

Portland, Oregon 97204

MEMORANDUM OF LEASE

WORKSTAGE - OREGON, LLC, a Michigan limited liability company (“Landlord”) and ROYAL CARIBBEAN CRUISES LTD., a Liberian corporation (“Tenant”), entered into a Lease Agreement dated January 24, 2005 (the “Lease”), wherein Landlord leased to Tenant the real property described on Exhibit “A” attached hereto (the “Property”).

This Memorandum of Lease does not alter the Lease, but rather is recorded to give notice of the Lease. The terms and provisions of the Lease not described herein are more particularly set forth in the Lease, to which reference is here made for all purposes. The term of the Lease commences on or about December 23, 2005, and expires on December 22, 2025; however, at its option, Tenant may extend the Lease for two (2) successive consecutive five (5) year periods. Tenant has the following additional rights pursuant to the Lease: (a) an option to purchase the Property; (b) a right of first refusal to purchase the Property; and (c) a right of first negotiation to purchase the Property.

The parties have executed this Memorandum of Lease as of the 24th day of January, 2005.

LANDLORD

TENANT

WORKSTAGE-OREGON, LLC, a Michigan limited liability company

By: _____________________________

Its: _____________________________

Date: ___________________________

ROYAL CARIBBEAN CRUISES LTD., a Liberian corporation

By: _____________________________

Its: _____________________________

Date: ___________________________

(Notarial acknowledgments follow on next page)

1 – EXHIBIT “C”

pdx/112037/138180/KMP/1247874.9

STATE OF ______________

)

) ss.

County of _______________

)

This instrument was acknowledged before me this _________ day of ______________, 2005, by ___________________________________ as ______________________________ of Workstage-Oregon, LLC, a Michigan limited liability company.

NOTARY PUBLIC FOR _____________________

My Commission Expires: ____________________

STATE OF ______________

)

) ss.

County of ______________

)

This instrument was acknowledged before me this _________ day of _______________, 2005, by _______________________ as _____________________ of Royal Caribbean Cruises, Ltd., a Liberian corporation.

NOTARY PUBLIC FOR ___________________

My Commission Expires: __________________

2 – EXHIBIT “C”

pdx/112037/138180/KMP/1247874.9

EXHIBIT A

Legal Description

1 – EXHIBIT “A”

pdx/112037/138180/KMP/1247874.9

EXHIBIT “D”

LEASE COMMENCEMENT AGREEMENT

To lease dated the ______ day of ________________, 200___between Workstage-Oregon, LLC, “Landlord” and Royal Caribbean Cruises Ltd. “Tenant”, demising the Property described on the attached Exhibit “A”.

Pursuant to the provisions of the aforementioned lease, Landlord and Tenant intending to be legally bound hereby, agree to the following: 1) The term of said lease commenced on the ______ day ____________________ of 200___; 2) Rent commenced on the ______ day of ____________________, 200___; and 3) Said lease shall terminate on the ______ day of ____________________, 200___, unless sooner terminated or extended as therein provided.

Tenant agrees that as of and through the date hereof, Landlord has delivered the Premises Substantially Complete, as that term is defined in the lease.

IN WITNESS WHEREOF, the Landlord hereto has duly executed this supplement to said lease as of the ______ day of ____________________, 200___, and the Tenant as of the ______ day of ____________________, 200___.

LANDLORD:

Workstage-Oregon, LLC

By:_________________________

Name:_______________________

Its:_________________________

TENANT:

Royal Caribbean Cruises Ltd.

By:_________________________

Name:_______________________

Its:_________________________

1 – EXHIBIT “D”

pdx/112037/138180/KMP/1247874.9

EXHIBIT “E”

AFTER RECORDING RETURN TO:

Kristine M. Pizzuti

Schwabe, Williamson & Wyatt, P.C.

1211 SW Fifth Avenue, Suites 1700

Portland, Oregon 97204

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (“Agreement”), made as of the _____ day of ______________, 2005, by and between __________________, a _____________________ [corporation] [limited] [general] [partnership] [national banking association], having an office at ____________________ (“Mortgagee”) and ROYAL CARIBBEAN CRUISES LTD., a Liberian corporation, having an office at _________________________________________ (“Tenant”).

W I T N E S S E T H:

A.         Mortgagee is the holder of a mortgage or beneficiary of a deed of trust (“Mortgage”) covering a parcel of land owned by WORKSTAGE-OREGON, LLC, a Michigan limited liability company (“Landlord”) together with the improvements [to be] erected thereon (said parcel of land and improvements thereon being hereinafter referred to as the “Premises” and being more particularly described on Exhibit “A” attached hereto and made a part hereof); and

B.         By a certain lease heretofore entered into between Landlord and Tenant dated as of January 11, 2005 (the “Lease”), Landlord leased to Tenant the Premises;

C.         A copy of the Lease has been delivered to Mortgagee, the receipt of which is hereby acknowledged;

D.         The Lease provides that the Lease shall become subject and subordinate to a mortgage encumbering the fee interest of Landlord in and to the Premises if and when a non-disturbance agreement is entered into with respect to such mortgage; and

E.         The parties hereto desire to effect the subordination of the Lease to the Mortgage and to provide for the non-disturbance of Tenant by Mortgagee.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound hereby, agree as follows:

1.          Mortgagee hereby consents to and approves the Lease and the term thereof, including the options to extend the term as set forth in the Lease, and covenants and agrees that

2 – LEASE AGREEMENT

pdx/112037/138180/KMP/1247874.9

the exercise by Tenant of any of the rights, remedies and options therein contained shall not constitute a default under the Mortgage.

2.          Tenant covenants and agrees with Mortgagee that the Lease and all other interests of Tenant in the Premises, whether now owned or hereafter acquired, shall at all times be subject to and subordinate in all respects to the lien of the Mortgage, and to all modifications and extensions thereof, subject, however, to the provisions of this Agreement.

3.          Mortgagee agrees that so long as the Lease shall be in full force and effect, and so long as Tenant shall not be in default under the Lease beyond any applicable notice and grace period:

a.          Tenant shall not be named or joined as a party or otherwise in any suit, action or proceeding for the foreclosure of the Mortgage or to enforce any rights under the Mortgage or the bond or note or other obligation secured thereby;

b.          The possession by Tenant of the Premises and Tenant’s rights thereto shall not be disturbed, affected or impaired by, nor will the Lease or the term thereof be terminated or otherwise affected by (i) any suit, action or proceeding brought upon the Mortgage or the bond or note or other obligation secured thereby, or for the foreclosure of the Mortgage or the enforcement of any rights under the Mortgage, or by any judicial sale or execution or other sale of the Premises, or any deed given in lieu of foreclosure, or by the exercise of any other rights given to any holder of the Mortgage or other documents as a matter of law, or (ii) any default under the Mortgage or the bond or note or other obligation secured thereby; and

c.          All condemnation awards and insurance proceeds paid or payable with respect to the Premises shall be applied and paid in the manner set forth in the Lease.

4.          If Mortgagee or any future holder of the Mortgage shall become the owner of the Premises by reason of foreclosure of the Mortgage or otherwise, or if the Premises are sold as a result of any action or proceeding to foreclose the Mortgage, or transfer of ownership by deed given in lieu of foreclosure, the Lease shall continue in full force and effect, without necessity for executing any new lease, as a direct lease between Tenant and the then owner of the Premises, as “landlord”, upon all of the same terms, covenants and provisions contained in the Lease, and in such event:

a.          Tenant shall be bound to such new owner under all of the terms, covenants and provisions of the Lease for the remainder of the term thereof (including the Renewal Option Periods, if Tenant elects or has elected to exercise its options to extend the term) and Tenant hereby agrees to attorn to such new owner and to recognize such new owner as “landlord” under the Lease; and

b.          Such new owner shall be bound to Tenant under all of the terms, covenants and provisions of the Lease for the remainder of the term thereof (including the Renewal Option Periods, if Tenant elects or has elected to exercise its options to extend the term) which such new owner hereby agrees to assume and perform and Tenant shall, from and after the date such new owner succeeds to the interest of “landlord” under the Lease, have the same remedies against such new owner for the breach of any covenant contained in the Lease that

3 – LEASE AGREEMENT

pdx/112037/138180/KMP/1247874.9

Tenant might have had under the Lease against Landlord if such new owner had not succeeded to the interest of “landlord” provided, however, that such new owner shall not be:

(i)         liable for any act or omission of any prior landlord (including Landlord) occurring prior to the date of such new owner’s acquisition of Landlord’s interest in the Premises;

(ii)         subject to any defenses which Tenant may have against any prior landlord (including Landlord) unless 1) resulting from any default or breach by such prior landlord which continues following Tenant’s written notice to Mortgagee beyond any applicable cure period (which notice shall be made to Mortgagee in accordance with the terms of the Lease), and 2) such default or breach by such prior landlord continues beyond any applicable cure period from and after the date upon which the new owner succeeds to the interest of such prior landlord;

(iii)        subject to any offsets which Tenant may have against any prior landlord, except to the extent such offsets are expressly provided under the Lease and Mortgagee has received written notice thereof and the opportunity to cure within the applicable time periods set forth in the Lease (it being further agreed that offsets under the Lease that were deducted by Tenant prior to the date upon which the new owner succeeds to the interest of such prior landlord shall not be subject to challenge);

(iv)        bound by any fixed rent or additional rent which Tenant might have paid for more than one month in advance of its due date under the Lease to any prior landlord (including Landlord), unless such additional rent is paid in accordance with the applicable provisions of the Lease;

(v)        bound by any amendment or modification of the Lease made without its consent; notwithstanding the foregoing, Mortgagee acknowledges that the Lease specifically provides for amendments thereof upon the occurrence of certain events described in the Lease (such as, for example, an amendment to the Lease confirming the measurement of the Premises), and, by its execution below, Mortgagee agrees to recognize such amendments as part of the Lease, and Mortgagee further agrees that such new owner shall also be bound by such amendment(s) to the Lease, without any consent on the part of Mortgagee or such new owner;

(vi)        bound by any provision of the Lease which prohibits or limits Mortgagee’s right to sell the Premises and/or assign the Landlord’s interest in the Lease and Mortgagee shall have the right to assign its rights and interest in the Lease and this Agreement without the consent of Tenant;

(vii)       liable to Tenant under any indemnification (or for breach of any covenant, representation or warranty) contained in the Lease regarding hazardous materials or environmental matters existing or arising prior to the date of Lender’s acquisition of Landlord’s interest in the Premises;

(viii)      liable to Tenant for construction of any improvements on the Premises;

4 – LEASE AGREEMENT

pdx/112037/138180/KMP/1247874.9

(ix)        liable for any construction warranties or other warranties given by the Landlord in the Lease including, but not limited to, warranties regarding title, zoning or compliance of the Premises with applicable laws; or

(x)        bound by any agreement to assume or pay any obligations of Tenant.

5.          Tenant will notify Mortgagee in writing of any default by Landlord under the Lease which would entitle Tenant to terminate the Lease or abate the rent payable thereunder and agrees that notwithstanding any provision of the Lease, no notice of termination thereof nor any abatement shall be effective unless Mortgagee has received the aforesaid notice and has failed to cure the subject default within the same time period allowed Landlord under the Lease. It is understood that the abatement provisions of this Section relate to abatements by reason of Landlord’s default and do not apply to provisions of the Lease whereby Tenant has the automatic right to abate rentals such as, for example, abatement upon casualty or condemnation.

6.          Neither the Mortgage nor any other security instrument executed in connection therewith shall encumber or be construed as subjecting in any manner to the lien thereof, any trade fixtures, signs or other personal property at any time furnished or installed by or for Tenant or its subtenants or licensees on the aforementioned property regardless of the manner or mode of attachment thereof.

7.          Any notices of communications given under this Agreement shall be in writing and shall be given by registered or certified mail, return receipt requested, postage prepaid, (a) if to Mortgagee, at the address of Mortgagee as hereinabove set forth or at such other address or persons as Mortgagee may designate by notice in the manner herein set forth, or (b) if to Tenant, at the address of Tenant as hereinabove set forth, “Attn: VP, Chief Human Resource Officer”, with a duplicate copy to “General Counsel”, or such other address or persons as Tenant may designate by notice in the manner herein set forth. All notices given in accordance with the provisions of this Section shall be effective upon receipt (or refusal of receipt) at the address of the addressee.

8.          This Agreement shall bind and inure to the benefit of and be binding upon and enforceable by the parties hereto and their respective successors, assigns, and sublessees.

9.          This Agreement contains the entire agreement between the parties and cannot be changed, modified, waived or canceled except by an agreement in writing executed by the party against whom enforcement of such modification, change, waiver or cancellation is sought.

10.        This Agreement and the covenants herein contained are intended to run with and bind all lands affected thereby.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

MORTGAGEE:

_______________________

5 – LEASE AGREEMENT

pdx/112037/138180/KMP/1247874.9

By:

Name:

Title:

TENANT:

ROYAL CARIBBEAN CRUISES LTD., a Liberian corporation

By:

Name:

Title:

STATE OF ______________

)

)

: ss.

COUNTY OF ____________

)

This instrument was acknowledged this ___ day of ____________, 200__, by ________________________ as _______________________ of _______________________..

Notary Public

My Commission Expires:

STATE OF ______________

)

)

: ss.

COUNTY OF ____________

)

This instrument was acknowledged this ___ day of ____________, 200__, by ________________________ as _______________________ of Royal Caribbean Cruises Ltd., a Liberian corporation, on behalf of said corporation.

Notary Public

My Commission Expires:

6 – LEASE AGREEMENT

pdx/112037/138180/KMP/1247874.9

EXHIBIT “F”

List of Initial Improvements

Special light fixtures for lighting art work

Artwork attached to the building

A/V equipment

Kitchen equipment

Exterior furniture

CCTV/Security system

Card access system

Generators

1 – EXHIBIT “F”

pdx/112037/138180/KMP/1247874.9

Exhibit 10.11

AMENDMENT NO. 1

TO THE

ROYAL CARIBBEAN CRUISES LTD.

AMENDED AND RESTATED 2000 STOCK AWARD PLAN

Whereas, Royal Caribbean Cruises Ltd. (the "Company") has adopted the Amended and Restated 2000 Stock Award Plan (the “Plan”). Unless otherwise specified, capitalized terms as used in this Amendment No. 1 are defined in the Plan; and

Whereas, Section 11 of the Plan provides that the Committee may amend the Plan at any time, provided that any material amendment to the Plan will not be effective unless approved by the Company’s stockholders; and

Whereas, as a result of the recent amendment and restatement of the Plan, the Plan now includes a formula for determining the “Fair Market Value” for a Share of Stock that is inconsistent with the formula that was traditionally used by the Company in this Plan prior to its amendment and restatement and that is currently used in other Company employee stock plans; and

Whereas, the Committee desires to amend the Plan to include the formula that has traditionally been used by the Company; and

Whereas, this amendment does not constitute a material amendment to the Plan that would require shareholder approval.

Now, therefore, the Plan is hereby amended as follows:

The definition of “Fair Market Value” in Section 2 of the Plan is hereby deleted and the following new definition is inserted in lieu thereof:

“ ‘Fair Market Value’ of a Share of Stock as of any date means the mean between the highest and lowest reported sale prices of the Stock (i) on the date on the principal exchange or market on which the Stock is then listed or admitted to trading, or (ii) if the day is not a date on which such exchange or market is open, the last preceding date on which there was a sale of such Stock on such exchange or market.”

This Amendment No. 1 is effective as of December 13, 2004.

IN WITNESS WHEREOF Royal Caribbean Cruises Ltd. has caused this Amendment No. 1 to be executed as of this 13 day of December 2004.

ROYAL CARIBBEAN CRUISES LTD.

Attest: /s/BRADLEY H. STEIN

By: /s/ THOMAS F. MURRILL

Bradley H. Stein

Thomas F. Murrill

Assistant General Counsel

Vice President and Chief

Human Resources Officer

Exhibit 10.12


Royal Caribbean Cruises Ltd.
1050 Caribbean Way Miami, FL 33132.2096 USA		tel: 305.539.6000 fax: 305.539.4645 www.royalcaribbean.com

December 21, 2001

Richard D. Fain
700 Arvida Pkwy
Miami, FL 33156

Dear Richard:

Royal Caribbean Cruises Ltd. (the “Company”) is pleased to memorialize the terms and conditions of your employment as follows:

1.   Position. Except to the extent provided below you will continue to serve in a full-time capacity as Chairman and Chief Executive Officer of the Company.

2.   Compensation. You will continue to receive the compensation (“Compensation”) you are currently receiving for as long as you are employed with the Company, payable in accordance with the Company’s standard payroll practices for salaried employees. The Company may, in the sole discretion of the Company’s Compensation Committee, determine to increase your Compensation but may not lower it. Compensation includes, but is not limited to: salary, bonus (with participation and determination of amounts payable made generally in accordance with past practice), benefit plans, stock option plans, deferred compensation arrangements and pension programs. Notwithstanding the foregoing, the Company retains the right to make modifications to, or to terminate, any general company plan, arrangement or program and the foregoing is subject to any such modification or termination.

3.   Termination Benefits.

(a) Notwithstanding anything in this Agreement to the contrary, if your employment with the Company is terminated by the Company at any time and for any reason, other than for Cause (as hereinafter defined), you will be entitled to receive not less than nine months written notice.

(b) You will be considered an employee of the Company for as long as you are employed with the Company for all purposes including, but not limited to, under all stock option plans and/or deferred compensation plans, arrangements or schemes of the Company and its affiliates. All stock options granted or awarded to you by the Company or any of its affiliates shall, to the extent allowed under the terms of the relevant grant or award and subject to the approval of the Company’s Stock Option Committee, be exercisable, to the extent vested on the

Royal Caribbean International
Celebrity Cruises

    Date of Termination, as hereinafter defined, during the 12 month period beginning on such date.

(c)   To the extent available to Company employees, you shall be entitled to continued eligibility to participate in all health, medical and dental benefit plans of the Company, other than life and disability coverage, for which you were eligible immediately prior to the time the Notice of Termination is given, or comparable coverage, for two years following the Date of Termination, provided that you continue to make the required applicable contributions. For purposes of this Agreement, “Date of Termination” shall mean the date specified in the Notice of Termination (which, as set forth above, in the case of a termination of your employment by the Company will not be less than nine months after the date such Notice of Termination is given) and “Notice of Termination” shall mean a notice which will reasonably indicate the interest of the party giving the notice that your employment is, or will be, terminated, and the effective date of such termination.

(d)   In the event that you do not receive nine months written notice upon such termination by the Company, you shall be entitled to continue to receive your Compensation for nine months in lieu of such notice, it being the intent of the parties that you be no worse off financially than if you had received the required nine months’ notice.

(e)   Notwithstanding anything in this Agreement to the contrary, your employment with the Company may be terminated by the Company immediately upon Notice of Termination for the commission by you of a felony or a crime involving moral turpitude, or any habitual absenteeism, gross negligence, or willful misconduct in your performance of your duties (termination for “Cause”) in which event the Company shall have no further obligation to you for Compensation or otherwise except for any accrued obligations.

4.   Withholding Taxes. All forms of compensation referred to in this Agreement are subject to reduction to reflect applicable withholding and payroll taxes.

5.   Conflict of Interest. During the term of your employment with the Company, you shall not own more than a five percent interest in, nor serve as a director, officer or trustee of, nor serve in any other capacity for any entity which in any material way competes with the Company, its affiliates or subsidiaries except as approved by the Company’s Board of Directors or Compensation Committee.

6.   Release and Waiver of Claims. In consideration of the compensation and benefits available pursuant to this Agreement, you agree to execute a mutual release, in form and substance reasonably acceptable to the Company, releasing the Company and its affiliates from all claims and liabilities you may have against the Company relating to this Agreement or your employment by the Company, except for any accrued obligations.

7.   No Mitigation. Notwithstanding anything to the contrary in this Agreement, you shall not be required to mitigate the amount of any payment provided for in Section 3 by seekingother employment or otherwise, nor shall the amount of any payment or benefit provided for in Section 3 hereof be reduced by any compensation earned by you as a result of employment by another employer or by retirement benefits after the Date of Termination of employment, or otherwise.

8.   Legal Fees and Expenses. The Company shall pay to you as incurred all legal and accounting fees and expenses incurred by you, if any, in seeking to obtain or enforce any right or benefit provided by this Agreement or any other compensation-related plan, agreement or arrangement of the Company unless your claim is found by a tribunal of competent jurisdiction to have been frivolous.

9.   Governing Law; Arbitration. All disputes or claims arising out of or relating to this Agreement or the breach of this Agreement shall be determined under the law of the State of Florida, other than the choice of law rules thereof, in Miami, Florida in accordance with the procedures of the American Arbitration Association. The determination of the arbitrator(s) shall be conclusive and binding on you and the Company and judgment may be entered on the arbitrator(s)’ award in any court in the United States of America having jurisdiction.

10.   Entire Agreement. This Agreement and its exhibits contain all of the terms of your employment with the Company and supersede any prior understandings, whether oral or written, between you and the Company or its affiliates.

11.   Amendment. This Agreement may not be amended or modified except by an express written agreement signed by you and a duly authorized officer of the Company.


Very truly yours,

ROYAL CARIBBEAN CRUISES LTD.

By:		/s/ Thomas F. Murrill

		Name: Thomas F. Murrill Title: VP and Chief HR Officer

Agreed and accepted:

/s/ Richard D. Fain

Richard D. Fain

Exhibit 10.13

AMENDMENT NUMBER ONE
TO
TRUST AGREEMENT FOR RICHARD D. FAIN

This Amendment Number One, dated as of September 30, 1998, is by and between Royal Caribbean Cruises Ltd. (the “Company”) and Gary Hammond (the “Trustee”).

Whereas, the Company and the Trustee have entered into the Trust Agreement for Richard D. Fain dated as of June 30, 1994 (the “Trust Agreement”); and

Whereas, the parties wish to amend the Trust Agreement;

Now, therefore, in consideration of the premises, and for other good and valuable consideration the sufficiency and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section 1. The first sentence of the second paragraph of Section 5(a) of the Trust Agreement is hereby amended to read as follows:

Company shall have the right, at any time, and from time to time in its sole discretion, to substitute assets of equal fair market value for any assets held by the Trust; provided, however, that any shares of common stock of the Company contributed by the Company to the Trust in satisfaction of its liabilities under Clause 3(D) of the Agreement shall at all times remain invested in the common stock of the Company.

Section 2. Capitalized terms used herein shall have the meanings ascribed to them in the Trust Agreement. Except as set forth in Section 1 above, the Trust Agreement shall remain in full force and effect.

In witness whereof, the parties hereto have set their hands as of the date first above written.


Royal Caribbean Cruises Ltd.			Trustee

By:	/s/ Richard J. Glasier		/s/ Gary Hammond

	Name:	Richard J. Glasier	Gary Hammond
	Title:	Executive Vice President and Chief Financial Officer

In accordance with the provisions of Section 12 of the Trust Agreement, the Employee hereby consents to the foregoing Amendment Number One to Trust Agreement for Richard D. Fain.


/s/ Richard D. Fain

Richard D. Fain

TRUST AGREEMENT FOR RICHARD D. FAIN

This Trust Agreement made as of this 30th day of June, 1994, by and between Royal Caribbean Cruises Ltd. (Company) and Gary Hammond (Trustee);

WHEREAS, Company has entered into an employment agreement (Agreement) with Richard D. Fain (Employee) dated February 8, 1989, and most recently amended as of June 30, 1994.

WHEREAS, Company has incurred and expects to incur liability under Clause 3(D) of such Agreement, as amended, with respect to Employee.

WHEREAS, Company wishes to establish a trust (Trust) and to contribute to the Trust assets that shall be held therein, subject to the claims of Company’s creditors in the event of Company’s Insolvency, as herein defined, until paid to Employee and his beneficiary(ies) in such manner and at such times as specified herein;

WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Agreement as an unfunded plan maintained for the purpose of providing deferred compensation for Employee;

WHEREAS, it is the intention of Company to make contributions of shares of common stock of Company to the Trust to satisfy its liabilities under Clause 3(D) of the Agreement;

NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows:

Section 1. Establishment Of Trust.

(a) Company hereby deposits with Trustee in trust certain shares of common stock of Company, par value $0.01 per share, which shall become the principal of the Trust to be held, administered and disposed of by Trustee as provided in this Trust Agreement. Company will make additional deposits with Trustee in accordance with the terms of Clause 3(D) of the Agreement.

(b) The Trust hereby established may be revoked only in accordance with the amendment and termination procedures of Section 12 of this Trust Agreement.

(c) The Trust is intended to be a grantor trust, of which Company is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly.

(d) The principal of the Trust, and any earnings thereon, shall be held separate and apart from other funds of Company and shall be used exclusively for the uses and purposes of Employee and general creditors of Company as herein set forth. Employee and his beneficiary(ies) shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Agreement and this Trust Agreement shall be mere unsecured contractual rights of Employee and his beneficiary(ies) against Company. Any assets held by the Trust will be subject to the claims of Company’s general creditors under federal and state law in the event of Insolvency, as defined in Section 3(a) herein.

Section 2. Distribution To Employee And His Beneficiary(ies).

In the event Employee ceases to be employed by Company for any reason whatsoever, Employee will be entitled to receive prompt distribution of the Trust assets. In the event Employee ceases to be employed by Company on account of death, or Employee dies before such distribution is made, such distribution will be made to Employee’s executor if there is no other beneficiary(ies) designated by Employee pursuant to a written instrument delivered to Trustee. Trustee shall, acting upon Company’s direction, make provision for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the distribution of assets hereunder and shall pay amounts withheld to the appropriate taxing authorities, unless advised by Company that such withholding has been satisfied in some other fashion.

Section 3. Trustee Responsibility Regarding Distributions to Trust Beneficiary When Company Is Insolvent.

(a) Trustee shall not distribute the Trust assets to Employee or his beneficiary(ies) if the Company is Insolvent. Company shall be considered “Insolvent” for purposes of this Trust Agreement if (i) Company is unable to pay its debts as they become due, or (ii) Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

(b) At all times during the continuance of this Trust, the principal and income of the Trust shall be subject to claims of general creditors of Company under federal and state law as set forth below.

(1) Company shall have the duty to inform Trustee in writing of Company’s Insolvency. If a person claiming to be a creditor of Company alleges in writing to Trustee that Company has become Insolvent, Trustee shall determine

-2-

whether Company is Insolvent and, pending such determination, Trustee shall not distribute any Trust assets to Employee or his beneficiary(ies).

(2) Unless Trustee has actual knowledge of Company’s Insolvency, or has received notice from Company or a person claiming to be a creditor alleging that Company is Insolvent, Trustee shall have no duty to inquire whether Company is Insolvent. Trustee may in all events rely on such evidence concerning Company’s solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning Company’s solvency.

(3) If at any time Trustee has determined that Company is Insolvent, except as provided in paragraph (4) (iii) below, Trustee shall not distribute any Trust assets to Employee or his beneficiary(ies) and shall hold the Trust assets for the benefit of Company’s general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Employee or his beneficiary(ies) to pursue their rights as general creditors of Company with respect to benefits due under the Agreement or otherwise.

(4) Trustee may make distribution to Employee or his beneficiary(ies) in accordance with Section 2 of this Trust Agreement only after Trustee has determined that (i) Company is not Insolvent, (ii) Company is no longer Insolvent, or (iii) even though Company is Insolvent, no creditor of Company other than Employee claims any Trust assets.

Section 4. Payments To Company.

Except as provided in the last sentence of Section 2 or in Section 3 hereof, Company shall have no right or power to direct Trustee to return to Company or to divert to anyone other than Employee or his beneficiary(ies) pursuant to the terms of the Agreement and this Trust Agreement any of the Trust assets.

Section 5. Investment Authority.

(a) Trustee may hold or invest in securities (including stock or rights to acquire stock) or obligations issued by Company. All rights associated with assets of the Trust shall be exercised by Trustee or a person designated by Trustee.

Company shall have the right, at any time, and from time to time in its sole discretion, to substitute assets of equal fair market value for any asset held by the Trust. This right is exercisable by Company in a nonfiduciary

-3-

capacity without the approval or consent of any person in a fiduciary capacity.

(b) Trustee will invest and reinvest the assets of the Trust in accordance with the directions and/or investment guidelines Company may provide Trustee from time to time.

(c) Subject to the provisions of paragraphs (a) and (b) of this Section, Trustee shall have the following additional powers and duties with respect to the Trust:

(1) to sell at public or private sale, to exchange, to encumber, or to lease any real or personal property;

(2) to commence or defend suits or legal proceedings and to represent the Trust in all suits or legal proceedings; to settle, compromise or submit to arbitration any claims, debts or damages due or owing to or from the Trust;

(3) to exercise any right appurtenant to any securities or other such property;

(4) to engage any legal counsel, including counsel to Company, or any other suitable agents; to consult with such counsel or agents with respect to the construction of this Trust Agreement, the duties of Trustee hereunder, the transactions contemplated by this Trust Agreement, or any act which Trustee proposes to take or omit; to rely upon the advice of such counsel or agents; and to pay the reasonable fees, expenses and compensation thereof;

(5) to register any securities held by him in his own name or in the name of any custodian of such property or of his nominee, including the nominee of any system for the central handling of securities, with or without the addition of words indicating that such securities are held in a fiduciary capacity; to deposit or arrange for the deposit of any such securities with such a system; and to hold any securities in bearer form;

(6) to make, execute and deliver, as Trustee, any and all deeds, leases, notes, bonds, guarantees, mortgages, conveyances, contracts, waivers, releases or other instruments in writing necessary or proper for the accomplishment of any of the foregoing powers;

(7) to transfer assets of the Trust to a successor trustee as provided in Section 10(c) herein; and

and expenses) relating thereto and to be primarily liable for such payments. If Company does not pay such costs, expenses and liabilities in a reasonably timely manner, Trustee may obtain payment from the Trust.

(c) Trustee may consult with legal counsel (who may also be counsel for Company generally) with respect to any of their duties or obligations hereunder.

(d) Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist in performing any of his duties or obligations hereunder.

(e) Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise herein, provided, however, that if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee or Trustee, or to loan to any person the proceeds of any borrowing against such policy.

(f) Notwithstanding any powers granted to Trustee pursuant to this Trust Agreement or to applicable law, Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code.

Section 9. Compensation and Expenses of Trustee.

All administrative and Trustee’s fees and expenses shall be paid from the Trust.

Section 10. Death, Resignation, and Removal of Trustee.

(a) Trustee may resign at any time by written notice to Company, which shall be effective 60 days after receipt of such notice unless Company and Trustee agree otherwise; provided, however, that no such resignation shall be effective until a successor Trustee has been selected and has agreed to serve as Trustee.

(b) Trustee may be removed by Company on 90 days’ notice or upon shorter notice accepted by Trustee.

(c) Upon death, resignation, or removal of Trustee and appointment of a successor Trustee, all assets held in Trustee’s name shall subsequently be transferred to the

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successor trustee. The transfer shall be completed within 30 days after receipt of notice of death, resignation, or removal, unless Company extends the time limit.

(d) If Trustee dies, resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof. If no such appointment has been made in the event of Trustee’s resignation or removal, Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust.

Section 11. Appointment of Successor.

(a) If Trustee dies, or resigns or is removed in accordance with Section 10(a) or (b) hereof, then Oliver Stocken shall serve as Trustee. If Oliver Stocken refuses or is unable to serve as Trustee, dies, or resigns or is removed in accordance with Section 10(a) or (b) hereof, then Enrique Piccaluga shall serve as Trustee. If Enrique Piccaluga refuses or is unable to serve as Trustee, dies, or resigns or is removed in accordance with Section 10(a) or (b) hereof, then Company may appoint, subject to Employee’s approval, any third party, including a bank trust department or other party that may be granted trustee powers under state law, as successor to replace Trustee upon death, resignation, or removal. The appointment shall be effective when accepted in writing by the new Trustee (who shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust assets) and approved by Employee. The former Trustee shall execute any instrument necessary or reasonably requested by Company or any successor Trustee to evidence the transfer.

(b) Any successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existing Trust assets, subject to Sections 5 and 8 hereof. Any successor Trustee shall not be responsible for any claim or liability resulting from any action or inaction of any prior Trustee or from any other past event, or any condition existing at the time it or he becomes successor Trustee.

Section 12. Amendment or Termination.

(a) This Trust Agreement may not be amended, in whole or in part, except as follows:

(1) Company and Trustee may amend this Trust Agreement by written instrument executed by Company and Trustee, without the consent of Employee, provided such

-7-

amendment does not have an adverse effect on the rights of Employee hereunder.

(2) Company and Trustee may amend this Trust Agreement by written instrument executed by both parties and consented to in writing by Employee.

(b) Except as provided in Section 12(a), the Trust shall not terminate until the date on which the assets of the trust are distributed in full pursuant to Section 2 or Section 3(b)(3) of this Trust Agreement.

Section 13. Miscellaneous.

(a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof.

(b) Any benefit payable to Employee and his beneficiary(ies) under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process.

(d) This Trust Agreement may be executed in any number of counterparts, each of which shall be deemed to be the original although the other shall not be produced.

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[SEAL]		ROYAL CARIBBEAN CRUISES LTD.

Attest:	/s/ Michael J. Smith	By:	/s/ Richard D. Glasier

			Name:	Richard D. Glasier, Senior Vice President and Chief Financial Officer

		TRUSTEE

		/s/ Gary Hammond

		Gary Hammond

Exhibit 10.14

[CONFORMED EMPLOYMENT AGREEMENT AS AMENDED]

THIS AGREEMENT (“AGREEMENT”), dated as of August 26, 2002, [amended by First Amendment dated March 15, 2004] is entered into between Royal Caribbean Cruises Ltd., a company organized and existing under the laws of Liberia (together with its successor and assigns, the “COMPANY”), and Jack L. Williams (the “EXECUTIVE”).

RECITALS

Executive is currently employed by the Company as a senior executive officer and is an integral part of its management. The Compensation Committee of the Board of Directors of the Company (the “COMMITTEE”) recognizes Executive as a key officer of the Company, and consequently has approved the terms and conditions of the continued employment of Executive as set forth herein and has authorized the execution and delivery of this Agreement.

AGREEMENT

For and in consideration of the foregoing and of the mutual covenants of the parties herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. EMPLOYMENT. The Company hereby employs Executive to serve in the capacities described herein and Executive hereby accepts such employment and agrees to perform the services described herein upon the terms and conditions hereinafter set forth.

2. TERM. The initial term of Executive’s employment pursuant to this Agreement (the “TERM”) shall commence as of the date above written (the “COMMENCEMENT DATE”) and continue for a period of five years. The Term shall automatically and indefinitely extend for additional one year periods at the close of business on the then scheduled date of expiration of the Term unless either party hereto gives written notice of an election not to extend (“NOTICE OF NONRENEWAL”) to the other party at least 90 days prior to such scheduled date of expiration, subject to earlier termination in accordance with Section 8 hereof and the other terms, provisions, and conditions set forth herein. A Notice of Nonrenewal from the Company to the Executive pursuant to this Section 2 shall not constitute a termination of this Agreement or of Executive’s employment hereunder; EXCEPT that Executive shall be entitled to the compensation set forth in Section 9(b) hereof at the then scheduled date of expiration of the Term.

3. POSITION, DUTIES AND LOCATION. Executive shall serve as and have the title of the President and Chief Operating Officer of Royal Caribbean International and Celebrity Cruise Lines (the “EMPLOYMENT COMPANIES”). Executive’s duties will in all respects be consistent with the duties of an individual serving as the

6. FRINGE BENEFITS.

(a) GENERALLY. Executive and his eligible dependents shall be entitled to participate in all pension, welfare and fringe benefit programs or other employee perquisite programs approved by the Committee that now or hereafter may be made generally available to similarly situated executives of the Company and for which Executive or such dependents will qualify according to eligibility requirements under the provisions thereof. The Company shall provide Executive with an office, office equipment and staff assistance commensurate with his position and duties.

(b) VACATION. During the term of this Agreement, Executive shall be entitled to no less than four (4) weeks paid vacation per calendar year in accordance with Company policies regarding vacation generally.

(c) RELOCATION. If Executive is required by the Company to relocate from his principal place of employment as set forth in Section 3, he shall be eligible for relocation benefits in accordance with Company policy applicable to similarly situated executives generally.

7. EXPENSES. During the period of his employment, Executive shall be reimbursed for his business-related expenses incurred on behalf of the Company in accordance with the travel and entertainment expense policy of the Company as adopted by the Committee from time to time and in effect at the time the expense was incurred. Executive agrees to maintain such records and documentation of all such expenses to be reimbursed by the Company hereunder as the Company shall require and in such detail as the Company may reasonably request.

8. TERMINATION. Executive’s employment under this Agreement and this agreement may be terminated prior to expiration of the Term in accordance with the following paragraphs. Any termination of the Executive’s employment by the Company shall be communicated by Notice of Termination to the Executive given in accordance with Section 16 hereof. A “NOTICE OF TERMINATION” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date, which date shall not be more than sixty (60) calendar days after the giving of such notice. A Notice of Nonrenewal from the Company to the Executive pursuant to Section 2 hereof shall not constitute a termination of this Agreement or of Executive’s employment hereunder. The death or disability of Executive shall in no event be deemed a termination of employment by Executive. A voluntary resignation of his employment by the Executive, pursuant to Section 8(f) of this Agreement, shall not be deemed to be a breach of this Agreement.

(a) MUTUAL. Executive’s employment under this Agreement may be terminated upon the mutual written agreement of the Company and Executive.

Exhibit 10.15

EMPLOYMENT AGREEMENT

THIS AGREEMENT (“Agreement”), dated as of March 10, 2005, is entered into between Royal Caribbean Cruises Ltd., a company organized and existing under the laws of Liberia (together with its successor and assigns, “Company”), and _Luis E. Leon____ (“Executive”).

Recitals

Executive and Company desire to enter into this Agreement for Company's employment of Executive as a full time officer of Company, on the terms and conditions contained in this Agreement, which terms and conditions have been approved by the Compensation Committee of the Board of Directors of Company.

Agreement

1. EMPLOYMENT. Company hereby employs Executive to serve in the capacities described herein and Executive hereby accepts such employment and agrees to perform the services described herein upon the terms and conditions hereinafter set forth.

2. TERM. The term of this Agreement (the “Term”) shall commence on the date of this Agreement and shall continue until the occurrence of a “Termination Event”, as defined below, except that, until the occurrence of a Termination Event, at any date the Term shall consist of a period of two (2) years from that date. As used in this Agreement, a “Termination Event” shall mean any of the events described in Section 7 hereof.

3.	POSITION, DUTIES AND LOCATION.

(a) Position. Executive shall have the title appearing in the signature page of this Agreement.

(b) Duties and Location. Executive's employment duties and responsibilities will be those designated to him or her, from time to time, by Company and will, in all respects, be consistent with the duties and responsibilities of an individual serving as a full time officer of Company. Executive will, at all times during the Term, comply with all ethics and employment policies of Company applicable to full time officers of Company, as such policies may be amended by Company from time to time, including, but not limited to any policy requiring ownership of Company equity by officers of Company. When performing his or her duties hereunder, Executive shall report to such executive officer of Company as may be designated by

Company. Executive agrees to devote his or her entire professional time, energy, and skills to such employment during the Term. During the Term, Executive’s principal office, and principal place of employment, shall be in Southeast Florida.

(c) Permitted Activities. Subject to Company's ethics and employment policies, as from time to time constituted or amended, Executive shall with the prior written approval of Company, be permitted to (i) serve as a director of one or more other U.S. or non-U.S. companies during the Term, and (ii) engage in other charitable activities and community affairs; provided that, none of the foregoing activities shall interfere with the proper performance of his or her duties and responsibilities hereunder.

4.	COMPENSATION.

(a) Base Compensation. Company shall pay Executive, and Executive agrees to accept, base compensation (“Base Compensation”) as designated from time to time in written communication from Company setting forth such Base Compensation. Such Base Compensation shall be paid in accordance with the Company’s payroll cycle during the Term, subject to all applicable withholding taxes. The Base Compensation may be reviewed by Company and by written notice from Company to Executive, may be increased, but not decreased, at any time during the Term at the sole discretion of Company. No increase in the Base Compensation pursuant to this Section 4(a) shall at any time operate as a cancellation of this Agreement; any such increase shall operate merely as an amendment hereof, without any further action by Executive or Company. If any such increase or increases shall be so authorized, all of the terms, provisions and conditions of this Agreement shall remain in effect as herein provided, except that the Base Compensation shall be deemed amended to set forth the higher amount of such Base Compensation to Executive.

(b) Bonus Compensation. Executive shall be eligible to participate in any cash bonus compensation program available to full time officers of Company and eligible to receive an annual cash bonus during the Term on the same basis and under substantially the same terms as such similarly situated employees. The bonus award of Executive shall be established from time to time by Company, in its sole and unfettered discretion.

(c) Equity and Long-Term Incentive Awards. Executive shall be eligible to participate in any equity or long-term incentive plans available to full time officers of Company and eligible to receive awards under such plans from time to time, as determined by Company, in its sole and unfettered discretion. Any equity grant(s) held by Executive on the date of this Agreement shall be retained by Executive, subject to the terms and conditions of the plan(s) under which such equity grant(s) were awarded.

5.	FRINGE BENEFITS.

(a) Generally. Executive and his or her eligible dependents shall be entitled to participate in all pension, welfare, benefits, and fringe benefit programs or other employee perquisite programs approved by Company that now or hereafter may be made generally available to full time officers of Company and for which Executive or such dependents will qualify according to eligibility requirements under the provisions thereof. The Company shall purchase Executive a policy of insurance on the life of Executive in the amount generally

available to full time officers of Company, plus an amount equal to two (2) times Executive’s annual Base Compensation. Benefits of any such policy of insurance shall be paid to beneficiaries designated by Executive.

(b) Vacation. During the term of this Agreement, Executive shall be entitled to paid vacation per calendar year in accordance with Company policies regarding vacation generally.

(c) Relocation. If Executive is required by Company to relocate from his or her principal place of employment as set forth in Section 3(b), he or she shall be eligible for relocation benefits in accordance with Company policy regarding relocation generally available to full time officers of Company.

6. EXPENSES. During the period of his or her employment, Executive shall be reimbursed for his or her business-related expenses incurred on behalf of Company in accordance with the travel and entertainment expense policy of Company in effect at the time the expense was incurred. Executive agrees to maintain such records and documentation of all such expenses to be reimbursed by Company hereunder as Company shall require and in such detail as Company may reasonably request.

7.	TERMINATION.

(a) Generally. Executive’s employment under this Agreement may be terminated prior to expiration of the Term in accordance with the following paragraphs.

(b) Mutual. Executive’s employment under this Agreement may be terminated upon the mutual written agreement of Company and Executive.

(c) Death or Disability. In the event of the death of Executive, this Agreement shall terminate. If, during Executive’s employment under this Agreement, Executive shall become disabled, as defined by Company's then applicable and governing long term disability plan or policy, and unable to perform his or her duties as required herein (“Disability"), then Company may, upon written notice to Executive, terminate Executive’s employment under this Agreement and this Agreement shall terminate upon such termination of employment.

(d) Cause. Executive’s employment under this Agreement may be terminated by Company for Cause, as herein defined. For purposes of this Agreement, the term “Cause” shall mean the existence or occurrence of one or more of the following conditions or events:

(i) Executive's commission of an act or acts of dishonesty, including without limitation, fraud, deceit, misappropriation, theft, embezzlement, financial misrepresentation or other similar behavior or action in Executive's dealings with or with respect to Company or its subsidiaries or affiliates or any entity with which Company or its subsidiaries or affiliates shall be engaged in or be attempting to engage in commerce;

(ii) Executive being convicted of or entering a plea of guilty or nolo contendere to any crime which constitutes a felony offense or any crime involving moral turpitude;

(iii) Executive's actions or failure(s) to act constitute a material conflict of interest pursuant to Company’s ethics and employment policies, as from time to time constituted or amended;

(iv) Executive's intentional, reckless, or grossly negligent conduct results in damage of a material nature to any property or business interests of Company or its subsidiaries or affiliates;

(v) Executive's actions or failure to act constitute a material breach of his or her duties hereunder; or

(vi) Executive’s failure to follow the lawful directives of Company, with respect to his or her duties hereunder or to comply with Company policies, as from time to time constituted or amended.

In the event Executive shall become the subject of an arrest, indictment, charge, or information, or any other judicial or quasi-judicial proceeding brought by any state or federal law enforcement or administrative agency, relating to the alleged commission by Executive of any crime described in Section 7(d)(ii), Company may, at its election, immediately suspend Executive, without compensation, pending an acquittal or satisfactory (to Company in its sole discretion) dismissal or other disposition of any of the foregoing. In the event of any such acquittal or satisfactory dismissal or other disposition of charges following the suspension of Executive by Company as permitted by Section 7(d)(ii), upon reinstatement of Executive, Company's obligation to compensate Executive during the suspension shall be the lesser of Executive's unpaid annual Base Compensation during the period of suspension or Executive's annual Base Compensation for a period of two (2) years from the date of the suspension.

No termination of Executive's employment hereunder by Company for Cause shall be effective as a termination for Cause unless the provisions of this Section 7(d) shall first have been complied with. Any termination of Executive’s employment by Company under this Section 7(d) shall be communicated by Notice of Termination to Executive given in accordance with Section 13 hereof. A “Notice of Termination” means a written notice which (1) indicates the specific termination provision in this Agreement relied upon, (2) sets forth, in reasonable detail, the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (3) if the termination date is other than the date of receipt of such notice, specifies the termination date, which date shall not be more than sixty (60) calendar days after the giving of such notice.

Termination for Cause as a result of events set forth in Section 7(d) (i) through (iv) above shall be effective immediately upon delivery of the Notice of Termination pursuant to Section 7(a) hereof. In the event of a Termination for Cause as a result of the events set forth in Section 7(d)(v) or (vi) above, Executive shall have five (5) days (the "Cure Period") from the date Executive receives a Notice of Termination to remedy and cure any alleged Cause supporting any termination pursuant to this Section 7(d)(v) or (vi). If Executive fails to cure such alleged Cause within the Cure Period (during which time Company, at its sole discretion, may suspend Executive without compensation), Executive's employment hereunder and this Agreement shall then immediately terminate for Cause. If Executive cures the alleged Cause and Executive was

suspended during the Cure Period, he or she shall be promptly reinstated and any suspended compensation shall be promptly paid to Executive.

(e) Without Cause. Executive may be terminated by Company for any reason or for no reason at any time.

(f) Executive Termination for Good Reason. Executive shall have the right to terminate his or her employment with the Company for Good Reason. For purposes of this Agreement, "Good Reason" shall mean:

(i) the assignment to Executive of any duties inconsistent with Executive’s position (including status, offices, and titles), authority, duties or responsibilities as contemplated by this Agreement, or any other action by Company which results in a material diminution in such position, authority, duties or responsibilities, including without limitation, changes to Executive's position in any succeeding surviving corporate entity in comparison to the position currently held with Company, excluding for this purpose isolated, insubstantial and inadvertent actions not taken in bad faith and which are remedied by Company promptly after receipt of such notice thereof given by Executive;

(ii) any failure by Company to provide the employee with the compensation and benefits as provided for in this Agreement, other than isolated, insubstantial and inadvertent failures not occurring in bad faith and which are remedied by Company promptly after receipt of notice thereof given by Executive; or

(iii) any purported termination by Company of Executive’s employment otherwise than as expressly permitted by this Agreement.

No termination of Executive's employment hereunder by Executive for Good Reason shall be effective unless the provisions of this Section 7(f) shall first have been complied with. Any termination of Executive’s employment by Executive under this Section 7(f) shall be communicated by a Good Reason Termination Notice to Company given in accordance with Section 13 hereof. A “Good Reason Termination Notice” means a written notice which (1) indicates the specific termination provision in this Agreement relied upon, (2) sets forth, in reasonable detail, the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (3) specifies a termination date, which date shall not be less than thirty (30) nor more than sixty (60) calendar days after the giving of such notice. Company shall have thirty (30) days (the "Company's Cure Period") from the date Company receives a Good Reason Termination Notice to remedy and cure any alleged Good Reason supporting any termination pursuant to this Section 7(f). If Company fails to cure such alleged Good Reason within Company's Cure Period, Executive's employment hereunder and this Agreement shall then terminate for Good Reason as of the conclusion of Company's Cure Period or the termination date set forth in the Good Reason Termination Notice, whichever is later. If Company cures the alleged Good Reason, Executive shall then immediately resume his or her duties under this Agreement.

(g) Resignation. Executive shall have the right to terminate his or her employment with the Company at any time for any reason whatsoever.

8.	COMPENSATION UPON TERMINATION.

(a) Generally. Executive’s entitlement to compensation in the event of a Termination Event, shall be as set forth in this Section 8.

(b) Mutual. If this Agreement and Executive’s employment hereunder is terminated by mutual agreement pursuant to Section 7(b) hereof, Executive's compensation and benefits on a going forward basis shall be as agreed to by the parties at such time.

(c) Death or Disability. If this Agreement and Executive’s employment hereunder is terminated due to the death or Disability of Executive pursuant to Section 7(c), Company shall have no obligation to Executive or legal representatives of Executive other than (i) payment of termination compensation in the amount equal to two (2) times Executive's annual Base Compensation in effect on the date of such termination, subject to applicable withholding taxes, and payable, at Company's sole option, in accordance with Company’s payroll cycle or periodic lump sum(s) during the two (2) year period commencing on the date of such termination; (ii) payment of the "target bonus," as that term is used in Company's current bonus plan for full time officers of Company, or its equivalent if the term or plan should be amended, which Executive would have earned during the two (2) year period commencing on the date of such termination; (iii) payment of any accrued benefits or obligations owed to Executive; (iv) benefits (if any) provided in accordance with applicable plans, programs and arrangements of Company or as required by law; and (v) any outstanding equity grant(s) held by Executive at the time of such termination as governed by the agreement or plan pursuant to which such grant(s) was issued.

(d) Cause. If this Agreement and Executive’s employment hereunder is terminated for Cause pursuant to Section 7(d) hereof, Company shall have no obligation to Executive or legal representatives of Executive other than (i) payment of Executive’s Base Compensation through such date of termination; (ii) payment of any accrued benefits or obligations owed to Executive; (iii) benefits (if any) provided in accordance with applicable plans, programs and arrangements of Company or as required by law; (iv) any outstanding equity grant(s) held by Executive at the time of such termination as governed by the agreement or plan pursuant to which such grant(s) was issued.

(e) Without Cause. If this Agreement and Executive’s employment hereunder is terminated without Cause pursuant to Section 7(e) hereof, Company shall have no obligation to Executive or legal representatives of Executive other than (i) payment of termination compensation in the amount equal to two (2) times Executive's annual Base Compensation in effect on the date of such termination, subject to applicable withholding taxes, and payable, at Company's sole option, in accordance with Company’s payroll cycle or periodic lump sum(s) during the two (2) year period commencing on the date of such termination; (ii) payment of the " target bonus," as that term is used in Company's current bonus plan for full time officers of Company, or its equivalent if the term or plan should be amended, which Executive would have earned during the two (2) year period commencing on the date of such termination; (iii) continued payment of health and medical benefits for a period of two (2) years or until such time as Executive commences new employment, whichever occurs first; (iv) payment of any accrued benefits or obligations owed to Executive; (v) benefits (if any) provided in accordance with applicable plans, programs and arrangements of Company or as required by law; (vi) payment of reasonable professional search fees relating to Executive's outplacement; and (vii) any

outstanding equity grant(s) held by Executive at the time such termination as will be governed by the agreement or plan pursuant to which such grant(s) was issued.

(f) Executive Termination for Good Reason. If this Agreement and Executive's employment hereunder is terminated by Executive for Good Reason pursuant to Section 7(f) hereof, Company shall have no obligation to Executive or legal representatives of Executive other than (i) payment of termination compensation in the amount equal to two (2) times Executive's annual Base Compensation in effect on the date of such termination, subject to applicable withholding taxes, and payable, at Company's sole option, in accordance with Company’s payroll cycle or periodic lump sum(s) during the two (2) year period commencing on the date of such termination; (ii) payment of the " target bonus," as that term is used in Company's current bonus plan for full time officers of Company, or its equivalent if the term or plan should be amended, which Executive would have earned during the two (2) year period commencing on the date of such termination; (iii) continued payment of health and medical benefits for a period of two (2) years or until such time as Executive commences new employment, whichever occurs first; (iv) payment of any accrued benefits or obligations owed to Executive; (v) benefits (if any) provided in accordance with applicable plans, programs and arrangements of Company or as required by law; and (vi) payment of reasonable professional search fees relating to Executive's outplacement; and (vii) any outstanding equity grant(s) held by Executive at the time of such termination as governed by the agreement or plan pursuant to which such grant(s) was issued.

(g) If this Agreement and Executive’s employment hereunder is terminated due to his or her resignation pursuant to Section 7(g) hereof, Company shall have no obligation to Executive or legal representatives of Executive other than (i) the payment of Executive’s Base Compensation through such date of termination; (ii) the payment of any accrued benefits or obligations owed to Executive; and (iii) benefits (if any) provided in accordance with applicable plans, programs and arrangements of Company or as required by law; and (iv) any outstanding equity grant(s) held by Executive at such time will be governed by the agreement or plan pursuant to which such grant(s) was issued.

(h) Discretionary One Time Bonus. If this Agreement and Executive's employment hereunder is terminated (i) by the Company without Cause, pursuant to Section 7(e) hereof; or (ii) by the Executive for Good Reason, pursuant to Section 7(f) hereof; at the conclusion of the two (2) year period commencing with the date of such termination, at the sole and unfettered discretion of the Company, Executive may be awarded a one time termination bonus in an amount not to exceed one half of Executive's annual Base Compensation in effect on the date of such termination, subject to applicable withholding taxes.

9. CONFIDENTIAL INFORMATION. Executive recognizes and acknowledges that he or she will have access to certain confidential information of Company, its subsidiaries and affiliates and of corporations with whom Company does business, and that such information constitutes valuable, special and unique property of Company, its subsidiaries, affiliates and such other corporations. During the term of this Agreement and subsequent to the termination of this Agreement for any reason, Executive agrees not to disclose or use any confidential information, including without limitation, information regarding research, developments, product designs or specifications, manufacturing processes, “know-how,” prices, suppliers, customers, costs or any knowledge or information with respect to confidential or trade secrets of Company, it being

understood that such confidential information does not include information that is publicly available unless such information became publicly available as a result of a breach of this Agreement. Executive acknowledges and agrees that all notes, records, reports, sketches, plans, unpublished memoranda or other documents belonging to Company, but held by Executive, concerning any information relating to Company’s business, whether confidential or not, are the property of Company and will be promptly delivered to Company upon Executive’s leaving the employ of Company or upon the request of Company at any time.

10. INTELLECTUAL PROPERTY. As used in this Section 10 and the following Section 11, it is understood that Company’s Business is Company's actual or intended vacation cruise business, with a minimum fleet size of 3,000 berths (including Company’s ancillary vacation cruise related operations such as tours expeditions and destination vacations), as such Business is expanded or modified during the term of Executive's employment. Executive acknowledges and agrees that all discoveries, inventions, designs, improvements, formulas, formulations, ideas, devices, writings, publications, study protocols, study results, computer data or programs, or other intellectual property, whether or not subject to patent or copyright laws, which Executive shall conceive solely or jointly with others, in the course or scope of his or her employment with Company or in any way related to Company’s Business, whether during or after working hours, or with the use of Company’s equipment, materials or facilities (collectively referred to herein as “Intellectual Property”), shall be the sole and exclusive property of Company without further compensation to Executive. For purposes of this Agreement, any Intellectual Property, based upon Company’s proprietary or confidential information, developed within six (6) months after the termination of Executive’s employment, shall be presumed to be the property of Company. Executive agrees to promptly notify Company and fully disclose the nature of such Intellectual Property. Executive shall take such steps as are deemed necessary to maintain complete and current records thereof, and Executive shall assign to Company or its designees, the entire right, title and interest in said Intellectual Property.

11. NON-COMPETITION. Executive acknowledges that his or her services to be rendered hereunder are of a special and unusual character that have a unique value to Company and the conduct of its Business, the loss of which cannot adequately be compensated by damages in an action at law. In view of the unique value to Company of the services of Executive for which Company has contracted hereunder, and because of the confidential information to be obtained by or disclosed to Executive as herein above set forth, and as a material inducement to Company to enter into this Agreement and to pay and make available to Executive the compensation and other benefits referred to herein, Executive covenants and agrees that Executive will not, directly or indirectly, whether as principal, agent, trustee or through the agency of any corporation, partnership, association or agent (other than as the holder of not more than five percent (5%) of the total outstanding stock of any company the securities of which are traded on a regular basis on recognized securities exchanges):

(a) while employed under this Agreement (i) work for (in any capacity, including without limitation as a director, officer or employee) any other entity engaged in cruises, with a minimum fleet size of 3,000 berths, or cruise related businesses or affiliates of any such entity or (ii) recruit, or otherwise influence or attempt to induce employees of Company to leave the employment of Company; and

(b) for the two (2) year period immediately following the termination of Executive's employment pursuant to this Agreement (the "Non-competition Period"), for any reason, serve as or be a consultant to or employee, officer, agent, director or owner of another entity engaged in cruises, with a minimum fleet size of 3,000 berths, or cruise related businesses or affiliates of any such entity. Executive further agrees that during the Non-competition Period, he or she shall not: (i) employ or seek to employ any person who is then employed or retained by Company or its affiliates (or who was so employed or retained at any time within the six (6) month period prior to the last day of Executive’s employment with Company); or (ii) solicit, induce, or influence any proprietor, partner, stockholder, lender, director, officer, employee, joint venturer, investor, consultant, agent, lessor, supplier, customer or any other person or entity which has a business relationship with Company or its affiliates at any time during the Non-competition Period, to discontinue or reduce or modify the extent of such relationship with Company or any of its subsidiaries.

Executive has carefully read and considered the provisions of Sections 9, 10, and 11 hereof and agrees that the restrictions set forth in such sections are fair and reasonable and are reasonably required for the protection of the interests of Company, its officers, directors, shareholders, and other employees, for the protection of the business of Company, and to ensure that Executive devotes his or her entire professional time, energy, and skills to the business of Company. Executive acknowledges that he or she is qualified to engage in businesses other than that described in this Section 11. It is the belief of the parties, therefore, that the best protection that can be given to Company that does not in any way infringe upon the rights of Executive to engage in any unrelated businesses is to provide for the restrictions described above. In view of the substantial harm which would result from a breach by Executive of Sections 9, 10 and 11, the parties agree that the restrictions contained therein shall be enforced to the maximum extent permitted by law as more particularly set forth in Section 12 below. In the event that any of said restrictions shall be held unenforceable by any court of competent jurisdiction, the parties hereto agree that it is their desire that such court shall substitute a reasonable judicially enforceable limitation in place of any limitation deemed unenforceable and that as so modified, the covenant shall be as fully enforceable as if it had been set forth herein by the parties.

12. REMEDIES. The provisions of Sections 9, 10 and 11 of this Agreement shall survive the termination of this Agreement as set forth therein, regardless of the circumstances or reasons for such termination, and inure to the benefit of Company. The restrictions set forth in Sections 9, 10 and 11 are considered to be reasonable for the purposes of protecting the business of Company. Company and Executive acknowledge that Company would be irreparably harmed and that monetary damages would not provide an adequate remedy to Company if the covenants contained in Sections 9, 10 and 11 were not complied with in accordance with their terms. Accordingly, Executive agrees that Company shall be entitled to injunctive and other equitable relief to secure the enforcement of these provisions, in addition to any other remedy which may be available to Company. The Company shall be entitled to receive from Executive reimbursement for reasonable attorneys’ fees and expenses incurred by Company in successfully enforcing these provisions to final judgment and Executive shall be entitled to receive from Company reasonable attorney’s fees and expenses incurred by Executive in the event Company is found to be not entitled to enforcement of these provisions.

13. NOTICES. Any notice required or permitted to be given under this Agreement shall be in writing and sent by an overnight courier service that provides proof of receipt, mailed by

registered or certified mail (postage prepaid, return receipt requested) or telecopied to the parties at the addresses below (or to such other address as either party shall designate by like notice):

If to Executive: To the address set forth below his or her signature on the signature page hereof.

With a copy to:

7830 S.W. 48th Court

Miami, FL 33143

__________________________________

Attention: _________________
Telephone: ________________
Facsimile: _________________

If to Company:

Royal Caribbean Cruises Ltd.

1050 Caribbean Way

Miami, FL 33132

Attention: General Counsel

Telephone: (305) 539-6000

Facsimile: (305) 539-0562

With a copies to:

Royal Caribbean Cruises Ltd.		Holland & Knight, LLP
1050 Caribbean Way		701 Brickell Avenue, Suite 3000
Miami, FL 33132		Miami, FL 33131
Attention: Vice President and		Attention: Jorge L. Hernandez-Toraño
	Chief Human Resource Officer	Telephone: (305) 374-8500
Telephone: (305) 539-6000		Facsimile: (305) 789-7799

Facsimile: (305) 539-0562

14.	ENTIRE AGREEMENT; MODIFICATION.

(a) This Agreement contains the entire agreement of Company and Executive with respect to the subject matter hereof, and Company and Executive hereby acknowledge and agree that this Agreement supersedes any prior statements, writings, promises, understandings or commitments with respect to the subject matter hereof.

(b) No future oral statements, promises or commitments with respect to the subject matter hereof, or other purported modification hereof, shall be binding upon the parties hereto unless the same is reduced to writing and signed by each party hereto.

15. ASSIGNMENT. The rights and obligations of Company under this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs (in the case of Executive) and assigns. No rights or obligations of Company under this

Agreement may be assigned or transferred by Company, except that such rights or obligations may be assigned or transferred pursuant to a merger, consolidation or other combination, reconstruction or amalgamation or a sale or liquidation of all or substantially all of the business and assets of Company. Executive may not assign his or her rights and obligations under this Agreement other than his or her rights to compensation and benefits, which may be transferred only by will or operation of law.

16. LEGAL EXPENSES. Each party shall pay for all expenses incurred on its behalf in connection with this Agreement.

17. CONTINUATION OF PAYMENTS DURING DISPUTE. Pending the resolution of any dispute, controversy or claim arising out of, relating to or in connection with this Agreement, including any question regarding its existence, validity or termination, or regarding a breach thereof or indemnification thereunder, Executive (and his or her successor and heirs) shall continue to receive all payments and benefits due under this Agreement or otherwise, except: (i) to the extent a court of competent jurisdiction or arbiter, otherwise expressly provides, (ii) if the nature or basis of the dispute of any aspect thereof pertains to or involves payments or monies owed by Executive to Company (including payments or monies claimed by Company as being owed by Executive) Company may suspend payments to Executive pending resolution of such dispute, controversy or claim, or (iii) as otherwise permitted elsewhere in this Agreement.

18. DISPUTE RESOLUTION. Any dispute, controversy or claim arising out of, relating to or in connection with this Agreement, including any question regarding its existence, validity or termination, or regarding a breach thereof or indemnification thereunder (a "Dispute") shall be resolved pursuant to the following:

(a) Any party (a "Disputing Party") may initiate consideration of a Dispute hereunder by giving written notice to the other party of the existence of a Dispute (a "Dispute Notice"). Such notice shall set forth in reasonable detail the nature of the Dispute to be considered and shall be accompanied by a full disclosure of all factual evidence then available to the Disputing Party and by a statement of the applicable legal basis of the dispute; provided, however, that (i) to provide any such disclosure or to state any legal basis shall not operate as a waiver of such legal basis or operate to preclude the presentation or introduction of such factual evidence at a later time or in any subsequent proceeding or litigation or otherwise constitute a waiver of any right that a party may then or thereafter possess; and (ii) any settlement proposal made or proposed shall be deemed to have been made or proposed as part of a settlement discussion and may not be introduced in a legal proceeding without the prior written consent of the party making such proposal. The parties shall thereafter engage in good faith negotiations between themselves or their representatives for a period not to exceed thirty (30) days.

(b) Upon the giving or receipt of a Dispute Notice and the expiration of the thirty (30) day period provided in Section 18(a) hereof, during which good faith negotiations must have taken place, the parties may then commence arbitration in accordance with this Section 18(b) and subsequent subsections. Any dispute or claim arising from or relating to this Agreement, any dispute or claim arising from the rights and obligations created under this Agreement, or any dispute or claim relating to the breach of this Agreement, shall be settled by binding arbitration pursuant to the Commercial Arbitration Rules (and not the National Rules for the Resolution of Employment Disputes) of the American Arbitration Association. A party with a dispute or claim

shall provide written notice requesting dispute resolution pursuant to this Section (the "Notice"). The arbitration panel shall be composed of three (3) arbitrators. The arbitration proceedings shall be conducted in Miami, Florida. Each party shall appoint one arbitrator within fourteen (14) calendar days from the receipt of Notice. These two arbitrators shall appoint the third arbitrator by mutual agreement within fourteen (14) calendar days of their own appointment. If the two (2) arbitrators appointed by the parties cannot agree on the third arbitrator within the specified time frames, the American Arbitration Association shall appoint one or more qualified arbitrators, as the case may be, as provided for in the Commercial Arbitration Rules of the American Arbitration Association.

(c) Subject to the last sentence of this Section 18(c), each party shall be liable for 50% of the costs of the arbiters and of any other costs of the arbitration proceeding itself. If either party refuses to pay such costs and the other party makes payment of all costs which would otherwise be due, the arbitration panel shall enter an award in favor of the party which complies with its obligation to pay such costs. In accordance with Section 20(d) hereof, upon the entering of an award, the arbitration panel shall award the prevailing party all of its legal fees and costs incurred with respect to prosecuting or defending its case, including its share of the costs of the arbitration proceeding itself.

(d) The arbitration proceedings shall in all events include the right to a hearing, the right to cross-examine witnesses giving oral or written testimony, and the right to subpoena witnesses to testify at the hearing.

(e) The arbitration shall be final and binding on the parties without any right to appeal in any court of law.

(f) The covenant to arbitrate set forth in this Section 18 shall continue in effect after the expiration or termination of this Agreement.

19. INDEMNIFICATION. Company shall defend and indemnify Executive, in accordance with the then governing Articles of Incorporation, as amended, and Bylaws, as amended, of Company, for any civil or dispute resolution proceeding involving Executive, by reason of the fact that Executive is or was serving as an officer of Company or is or was otherwise serving at the request of Company.

20.	MISCELLANEOUS.

(a) This Agreement shall be subject to and governed by the laws of the State of Florida, without regard to the conflicts of laws principles thereof.

(b) The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or the interpretation of this Agreement.

(c) The failure of any party to enforce any provision of this Agreement shall in no manner affect the right to enforce the same, and the waiver by any party of any breach of any provision of this Agreement shall not be construed to be a waiver by such party of any succeeding breach of such provision or a waiver by such party of any breach of any other provision.

(d) In any dispute, arbitration and/or litigation arising out of this Agreement, including appeals, the prevailing party shall be entitled to recover all legal fees and costs incurred in such dispute, arbitration and/or litigation.

(e) In the event any one or more of the provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable, the remaining provisions of this Agreement shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced by a mutually acceptable valid, and enforceable provision which comes closest to the intent of the parties.

(f) This Agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the day and year first above written.

ROYAL CARIBBEAN CRUISES LTD.

By: /s/ Thomas Murrill

Its:

EXECUTIVE
		/s/ LUIS E. LEON

Luis E. Leon

EXECUTIVE'S TITLE: Executive Vice President and

Chief Financial Officer

7830 S.W. 48 Court
Miami, Florida 33143

# 2297613_v5

EXHIBIT 10.16

CONSULTING ARRANGEMENT WITH WILLIAM K. REILLY

We have a consulting arrangement with Mr. Reilly under which we pay him $300,000 a year in consultancy fees in exchange for his providing services with respect to, and overseeing, our environmental programs. As part of his responsibilities, Mr. Reilly serves on the Grants Committee of the Royal Caribbean Ocean Fund. This arrangement is subject to review and renewal each January.

EXHIBIT 10.17

THE ROYAL CARIBBEAN CRUISES LTD. ET AL
BOARD OF DIRECTORS NONQUALIFIED
DEFERRED COMPENSATION PLAN

THE ROYAL CARIBBEAN CRUISES LTD. ET AL
BOARD OF DIRECTORS
NONQUALIFIED DEFERRED COMPENSATION PLAN

TABLE OF CONTENTS


Article		Page
1.	PURPOSE		1

2.	DEFINITIONS		2

	2.1 Annual Retainer		2
	2.2 Beneficiary		2
	2.3 Board		2
	2.4 Code		2
	2.5 Company		2
	2.6 Effective Date		2
	2.7 Eligible Earnings		2
	2.8 ERISA		2
	2.9 Meeting Fees		2
	2.10 Participant		2
	2.11 Participant Account		2
	2.12 Participant Deferral Contributions		2
	2.13 Plan		2
	2.14 Plan Year		2
	2.15 Termination of Employment		2
	2.16 Valuation Date		3

3.	ELIGIBILITY TO PARTICIPATE		4

	3.1 Determination of Participant Status		4
	3.2 Commencement of Participation		4
	3.3 Cessation of Participation		4

4.	EMPLOYEE DEFERRALS		5

	4.1 Participant Deferral Contributions		5
	4.2 Changes in Contributions		5
	4.3 Suspension of Contributions		5

5.	INVESTMENTS AND PARTICIPANT ACCOUNTS		6

	5.1 Establishment of Accounts		6
	5.2 Obligation of the Company		6
	5.3 Establishment of Investment Funds		6
	5.4 Crediting Investment Results		6

6.	DISTRIBUTIONS		7

	6.1 Form and Timing of Distribution		7


Article		Page
	6.2 Distribution after Death		7
	6.3 Early Distribution		8

7.	ADMINISTRATION		9

	7.1 Administration		9
	7.2 Plan Expenses		9
	7.3 Liability		9
	7.4 Claims Procedure		9
	7.5 Claims Review Procedure		9
	7.6 Notices		9

8.	AMENDMENT AND TERMINATION		10

	8.1 Plan Amendment		10
	8.2 Termination of the Plan		10

9.	GENERAL PROVISIONS		11

	9.1 Non-Alienation of Benefits		11
	9.2 Limitation of Rights		11
	9.3 Participant’s Rights Unsecured		11
	9.4 Withholding		11
	9.5 Severability		11
	9.6 Controlling Law		11

SIGNATURE			12

SIGNATURE

IN WITNESS WHEREOF the undersigned has caused this instrument to be executed as of the 5 day of June, 2003.

ROYAL CARIBBEAN CRUISES LTD.

BY: /s/ Thomas F. Murrill

Attest:

/s/ Michael J. Smith

Secretary

EXHIBIT 10.18

ROYAL CARIBBEAN CRUISES LTD. ET AL

BOARD OF DIRECTORS

NONQUALIFIED DEFERRED COMPENSATION PLAN

RABBI TRUST

ROYAL CARIBBEAN CRUISES LTD. ET AL.
BOARD OF DIRECTORS
NONQUALIFIED DEFERRED COMPENSATION PLAN
RABBI TRUST

This Trust Agreement, hereafter referred to as the “Agreement,” is entered into between Royal Caribbean Cruises Ltd., having its principal place of business in Miami, Florida, hereafter referred to as the “Company,” and SunTrust Bank, its successor or successors, hereafter referred to as the “Trustee”:

WITNESSETH:

WHEREAS, the Company is obligated pursuant to Royal Caribbean Cruises, Ltd. et al Board of Directors Nonqualified Deferred Compensation Plan (the “Plan”) to pay benefits to members of the Board of Directors of Royal Caribbean Cruises Ltd. who are Participants in the Plan, hereafter referred to as the “Participants,”

WHEREAS, the Company wishes to establish a trust and to contribute to the Trust assets that shall be held therein, subject to the claims of the Company creditors in the event of the Company’s Insolvency, as herein defined, until paid to Participants and their beneficiaries in such manner and at such times as specified in the Plan;

WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”);

WHEREAS, it is the intention of the Company to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Plan;

NOW, THEREFORE, in consideration of the mutual promises contained in this Agreement, the Company and the Trustee establish this Trust Agreement as follows:


1.	INTRODUCTION	2
2.	ELIGIBILITY	2
3.	PLAN OUTLINE	2
	BONUS OPPORTUNITY	3
	PERFORMANCE METRICS	3
	BONUS CALCULATIONS	5
4.	BONUS AWARD PAYMENTS	6
5.	PLAN ADMINISTRATION AND GENERAL PROVISIONS	6
	EXTRAORDINARY EVENTS	7
6.	DEFINITIONS	8

Royal Caribbean Cruises Ltd.
February 3, 2004

•	At the end of the year, the Company, Brand, Department, and Individual results against goals will be assessed, and bonus amounts will be calculated based on results achieved in each Performance Metric.

•	The bonus award will then be modified based on the Company’s relative performance in a key financial area, determined by the COMPENSATION COMMITTEE at the beginning of the year. This PERFORMANCE KICKER may increase or decrease the bonus award amount by +/-15%, depending on the results.

BONUS OPPORTUNITY

Company management, or the Compensation Committee (when appropriate) establishes TARGET AWARD amounts for each Plan Participant, which is a percentage of the Participant’s base salary. The Target Award is the bonus award the Participant will earn if Target Performance is met for each Performance Metric, as follows:

•   THRESHOLD: The minimum acceptable performance level for any particular metric. At threshold 5% of the participant’s target award may be paid.

•   TARGET: The expected performance level for each metric. If target performance is achieved, the participant may receive 100% of his/her target bonus.

•   MAXIMUM: The highest potential award level representing superior results! Each participant may receive as much as 300% his/her target bonus at this performance level.

If results fall between the performance levels, (i.e., threshold, target and maximum), bonus percentages will increase. For example, if results fall between the target and the maximum levels, bonus percentages could be from 100% to 300%, depending on the actual results.
PERFORMANCE METRICS
Under the Plan, bonuses are based on results in different Performance Metrics: Corporate, Brand, and/or Department/Individual. The Participant’s Metric Mix depends on his/her role and level within the Company, as follows:
PERFORMANCE METRIC MIX


EMPLOYEE GROUP	CORPORATE/BRAND	DEPARTMENT/INDIVIDUAL
CEO, COO, CFO	75% Corporate	25% Individual
Corporate Chief Officers	67% Corporate	33% Department/Individual
Brand Officers	34% Corporate	33% Department/Individual
	33% Brand
Officers	50% Corporate	50% Department/Individual

Page 3


IF THE COMPANY ACHIEVES THE FOLLOWING	THE BONUS AWARD IS
RESULTS...	MODIFIED BY...
Significant relative improvement		15	%
Relative improvement		7.5	%
No improvement/no loss		0	%
Relative loss		-7.5	%
Significant relative loss		-15	%

BONUS CALCULATIONS

At the end of the year, the Company will assess the results against the goals set for each of the Plan Performance Metrics. If the Company, Brand, Department, or the Participant has met at least the threshold goal for ANY of the Performance Metrics, the Participant will be eligible to receive a bonus award. If a Participant meets the criteria for one metric but not for another, he/she may still receive a bonus.

EXAMPLE 1

•   A Corporate Officer (Vice President) with a Target Award of $50,000.

•   The Metric Mix of the bonus is 67% Corporate, 33% Department/Individual.

•   The Company achieved target goal, resulting in 100% multiplier.

•   The Participant achieved 90% of what was expected of his/her department/individual goals.

•   Company results against the Performance Kicker indicated relative improvements, which results in a 7.5% modifier.


						PERFORMANCE
	TARGET AWARD		WEIGHT			MULTIPLIER			BONUS AMOUNT
PERFORMANCE METRIC	A		B			C			A x B x C
Company	$	50,000		67	%		100	%	$	33,500
Department/Individual	$	50,000		33	%		90	%	$	14,850

TOTAL BONUS AWARD									$	48,350

PERFORMANCE KICKER ($48,350 X 7.5%)									$	3,627

ACTUAL BONUS AWARD AMOUNT									$	51,977

Because target performance was met in the Performance Metrics, the Participant earned a bonus award of $48,350. Because the Company results against the Performance Kicker resulted in relative improvement, the bonus award was modified by +7.5% or $3,627.

EXAMPLE 2

•   Brand Officer with a Target Award of $50,000.

•   The Metric Mix of the Participant’s bonus is 34% Corporate, 33% Brand, and 33% Department/Individual.

•   The Company performance fell between Target and the Maximum, resulting in a 140% multiplier.

•   The Participant’s Brand performance also fell between Target and Maximum, resulting in 110% multiplier.

•   The Participant met target against Department/Individual goals, resulting in a 100% multiplier.

•   Company results against the Performance Kicker indicated a significant gain, which results in a +15% modifier.

Page 5

Royal Caribbean Cruises Ltd.
February 3, 2004


						PERFORMANCE
	TARGET AWARD		WEIGHT			MULTIPLIER			BONUS AMOUNT
PERFORMANCE METRIC	A		B			C			A x B x C
Corporate	$	50,000		34	%		140	%	$	23,800
Brand	$	50,000		33	%		110	%	$	18,150
Department/Individual	$	50,000		33	%		100	%	$	16,500

TOTAL BONUS AWARD									$	58,450

PERFORMANCE KICKER ($58,450 X 15%)									$	8,768

ACTUAL BONUS AWARD AMOUNT										=$67,218

Because of the outstanding results achieved in all Performance Metrics, the Participant’s total bonus award, $58,450, exceeded the Target Award amount by nearly $10,000. Plus, because the Company’s results against the Performance Kicker showed a significant relative improvement, the Participant received an additional 15% of the bonus amount, resulting in an actual bonus award amount of $67,218.

4. BONUS AWARD PAYMENTS

Bonus awards will normally be payable as soon as possible after the determination of year-end audited financial results, and after approval by the Compensation Committee. Bonus awards will be paid in cash and will be calculated using the Participant’s base salary on December 31.

If the Participant voluntarily leaves the Company before the bonus award is made, he/she forfeits the bonus. In the case of involuntary termination of employment, retirement, permanent disability, death, lay-off, or transfer to an affiliate of the Company, a pro-rata share of the bonus award for the year may be made at the sole discretion of the Compensation Committee.

If the Participant is on a leave of absence (LOA) the bonus may be pro-rated for the portion of the Plan Year that he/she worked.

Notwithstanding any other provision of this plan, the issuance of bonus awards is at the sole discretion of the Compensation Committee. The Compensation Committee at its sole discretion, may increase, decrease or withhold bonus awards.

5. PLAN ADMINISTRATION AND GENERAL PROVISIONS

The Compensation Committee shall administer the Plan and make such decisions as it deems necessary or advisable, to implement the Plan. Decisions of the Compensation Committee shall be final and binding on all parties who have an interest in the Plan.

The Compensation Committee may at any time, at its discretion, amend, suspend or terminate the Plan, provided that such action shall not adversely affect rights and interests of Plan Participants to individual bonuses awarded prior to such amendment, suspension or termination.

Page 6

Royal Caribbean Cruises Ltd.
February 3, 2004

No amounts awarded or accrued under this Plan shall actually be funded, set aside, or otherwise segregated prior to payment.

No Plan Participant shall have the right to alienate, pledge or encumber his/her interest in this Plan, and such interest shall not (to the extent permitted by law) be subject in any way to the claims of the employee’s creditors or other process of law.

Neither the establishment nor administration of this Plan, nor any provision of this Plan, shall be construed to grant any person the right to remain employed by the Company or its subsidiaries. Rather, each employee will be employed “at will,” which means that either such employee or the Company may terminate the employment relationship at any time and for any reason, with or without cause.

This Plan document is the full and complete agreement between the Eligible Employees and the Company on the terms described herein.

EXTRAORDINARY EVENTS

The cruise line industry, and the performance of the Company, can be influenced by events that are clearly outside the bounds of management’s ability to control. An example of such an event is an act of war or terrorism. To the extent that extraordinary events influence Company results, the Compensation Committee may adjust bonus awards to reflect its assessment of the Company’s ability to respond to those events.

Page 7

Royal Caribbean Cruises Ltd.
February 3, 2004

6. DEFINITIONS

COMPANY: Royal Caribbean Cruises Ltd.

COMPENSATION COMMITTEE: The Compensation Committee of the Company’s Board of Directors.

CORPORATE PERFORMANCE: The financial results of the Company vis-a-vis the metrics established for the Plan Year.

EMPLOYEE: An individual who is employed by the Company, its subsidiaries, or joint ventures (“affiliate”).

MAXIMUM PERFORMANCE: The highest performance level for which funds will be set aside to pay a bonus under the Plan. The purpose for establishing a maximum is to protect the shareholders from an unforeseen windfall.

METRIC MIX: The combination of Performance Metrics that determine a Participant’s bonus award.

NET INCOME: Net income achieved by the Company in the Plan Year.

PARTICIPANT: Any employee selected to be eligible to receive a benefit from this Plan.

PERFORMANCE KICKER: Also referred to as the kicker, this is a bonus modifier that may range between +/- 15%.

PERFORMANCE METRIC: Measures used by the Plan to determine a Participant’s bonus award; includes Corporate, Brand, or Department/Individual.

PLAN: The Executive Incentive Plan.

PLAN YEAR: Each year for which the Plan is authorized; generally the Plan year runs from January 1-December 31.

SUBSIDIARY OR JOINT VENTURE (“AFFILIATE”): Any corporation of which the Company owns 50% or more of the voting shares, or joint venture in which the Company has a 50% or greater interest.

TARGET AWARD: The Participant’s anticipated level of bonus award if target performance is met for each Performance Metric. This is determined by the Compensation Committee, and is normally established as a percentage of base salary.

TARGET PERFORMANCE: The level of each Performance Metric that is expected.

THRESHOLD PERFORMANCE: The minimum acceptable performance level for consideration of a bonus for any particular metric.

WEIGHT: The percentage applied to each Performance Metric to determine the amount of the bonus award.

Page 8


THE ROYAL CARIBBEAN CRUISES LTD ET AL
NONQUALIFIED 401(K) PLAN

TABLE OF CONTENTS

Article	Page
1. PURPOSE		1

2. DEFINITIONS		2

2.1 Affiliated Company		2
2.2 Beneficiary		2
2.3 Board		2
2.4 Bonus		2
2.5 Bonus Deferral		2
2.6 Code		2
2.7 Company		2
2.8 Effective Date		2
2.9 Eligible Earnings		2
2.10 Eligible Employee		2
2.11 Employee		2
2.12 Employee Deferral Contributions		2
2.13 Employer		3
2.14 ERISA		3
2.15 Participant		3
2.16 Participant Account		3
2.17 Plan		3
2.18 Plan Year		3
2.19 Termination of Employment		3
2.20 Valuation Date		3

3. ELIGIBILITY TO PARTICIPATE		4

3.1 Determination of Eligible Employee Status		4
3.2 Commencement of Participation		4
3.3 Cessation of Participation		4

4. EMPLOYEE DEFERRALS		6

4.1 Employee Deferral Contributions		6
4.2 Changes in Contributions		6
4.3 Suspension of Contributions		6
4.4 Bonus Deferrals		6
4.5 Vesting of Employee Deferral Contributions and Bonus Deferrals		6

5. INVESTMENTS AND PARTICIPANT ACCOUNTS		7

5.1 Establishment of Accounts		7
5.2 Obligation of the Company		7
5.3 Establishment of Investment Funds		7


THE ROYAL CARIBBEAN CRUISES LTD ET AL
NONQUALIFIED 401(K) PLAN

TABLE OF CONTENTS

Article	Page
5.4 Crediting Investment Results		7

6. DISTRIBUTIONS		9

6.1 Form and Timing of Distribution		9
6.2 Distribution after Death		9
6.3 Distribution Due to Severe Financial Hardship		10
6.4 Early Distribution		10

7. ADMINISTRATION		11

7.1 Administration		11
7.2 Plan Expenses		11
7.3 Liability		11
7.4 Claims Procedure		11
7.5 Claims Review Procedure		11
7.6 Notices		11

8. AMENDMENT AND TERMINATION		12

8.1 Plan Amendment		12
8.2 Termination of the Plan		12

9. GENERAL PROVISIONS		13

9.1 Non-Alienation of Benefits		13
9.2 Adoption by Affiliated Company		13
9.3 Withdrawal		13
9.4 Limitation of Rights		13
9.5 Participant’s Rights Unsecured		13
9.6 Withholding		13
9.7 Severability		14
9.8 Controlling Law		14

SIGNATURE		14

THE ROYAL CARIBBEAN CRUISES LTD. ET AL.
NONQUALIFIED 401(K) PLAN

ARTICLE 1. PURPOSE

Royal Caribbean Cruises Ltd. has established The Royal Caribbean Cruises Ltd. et al. Nonqualified 401(k) Plan, effective January 1, 1998. This amended Plan document contains amendments through January 1, 2003. The Royal Caribbean Cruises Ltd. et al. Nonqualified 401(k) Plan is a nonqualified deferred compensation plan for a select group of management or highly compensated employees of Royal Caribbean Cruises Ltd. and its participating subsidiaries and affiliated companies as a means of sheltering a portion of an eligible individual’s income from current taxation while accumulating resources for future investments.


		(a) an authorization for the Eligible Employee’s Employer to make regular payroll deductions to cover the amount of such deferrals elected pursuant to Section 4.1;

		(b) an irrevocable authorization to defer receipt of a percentage or a dollar amount of future Bonus amounts as elected under Section 4.4;

		(c) an investment election with respect to any Employee Deferral Contributions and Bonus Deferrals;

		(d) a designation of Beneficiary; and

		(e) a designation as to the form and timing of the distribution of his or her Participant Account.


		(a) the date on which the Plan terminates, or

		(b) the date on which he or she ceases to be an Eligible Employee.


		(a) an Employee Deferral Contributions Subaccount to which shall be credited the Participant’s Employee Deferral Contributions and any earnings and losses credited thereto; and

		(b) a Bonus Deferral Subaccount to which shall be credited the Participant’s Bonus Deferrals and any earnings and losses credited thereto.


		(a) Form of Payment: The Participant’s election shall indicate the form of distribution of his or her entire Participant Account in a lump sum or in monthly installments as selected by the Participant.

		(b) Time of Payment: The Participant’s election shall indicate that payment shall be made (in the case of a lump sum election) or shall commence (in the case of an installment election):


		(1) as soon as administratively practicable following the Participant’s Termination of Employment which shall in no event exceed 21 days beyond such Termination of Employment;

		(2) as soon as administratively practicable following the calendar year of the Participant’s Termination of Employment which shall in no event exceed 21 days beyond the end of such calendar year;

		(3) in the month following the Participant’s attainment of age 65, provided that the Participant is no longer employed as of such date; or

		(4) in a specific month and year.


		Notwithstanding the foregoing, if a Participant elects his or her distribution to be made or commenced in accordance with paragraph 3 above, and such date falls before the Participant’s Termination of Employment, the Participant’s distribution shall be made or commenced in accordance with paragraph 1 above. Further, if a Participant elects his or her distribution to be made or commenced in accordance with paragraph 4 above, and such date falls before the Participant’s Termination of Employment, the Participant must complete new designations and authorizations pursuant to Section 3.2 in order to continue making Employee Deferral Contributions and/or Bonus Deferrals.


		(a) The reasons for denial, with specific reference to the Plan provisions on which the denial is based.

		(b) A description of any additional material or information required and an explanation of why it is necessary.

		(c) An explanation of the Plan’s claim review procedure.


		(a) any Participant, Beneficiary, or any other person whomsoever, any legal or equitable right against the Company or an Employer unless such right shall be specifically provided for in the Plan or conferred by affirmative action of the Administrator in accordance with the terms and provisions of the Plan; or

		(b) any Participant, or other person whomsoever, the right to be retained in the service of the Company or an Employer, and all Participants and other Employees shall remain subject to termination to the same extent as if the Plan had never been adopted.


	ROYAL	CARIBBEAN CRUISES LTD.

	BY:	/s/ Thomas F. Murrill


Attest:


Secretary

ROYAL CARIBBEAN CRUISES LTD.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

WHEREAS, Royal Caribbean Cruises Ltd. (“Company”) desires to establish the Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan (“Plan”) for a select group of management or highly compensated employees, effective January 1, 1994;

WHEREAS, the purpose of this Plan is to provide to the selected executives the benefit lost under the Royal Caribbean Cruises Ltd. et al Retirement Plan due to the change in section 401(a)(17) of the Internal Revenue Code of 1986 effective January 1, 1994;

NOW, THEREFORE, to effectuate its intentions, the Company hereby adopts this Plan as of the first day of January, 1994.


SECTION 1	DEFINITIONS	1

SECTION 2	PARTICIPATION IN THE PLAN	3
	2.1 Eligibility to Participate	3
	2.2 Procedure For and Effect of Admission	3
	2.3 Cessation of Participation	3

SECTION 3	PLAN BENEFITS AND VESTING	4
	3.1 Plan Benefits	4
	3.2 Vesting	5

SECTION 4	MAINTENANCE, INVESTMENT AND VALUATION OF PARTICIPANT ACCOUNTS	6
	4.1 Establishment of Accounts	6
	4.2 Investment Obligation of the Company	6
	4.3 Earnings	6

SECTION 5	BENEFITS	7
	5.1 Payment of Benefit	7
	5.2 Beneficiary Designation	7
	5.3 Tax Withholding	8

SECTION 6	ADMINISTRATION	9
	6.1 Appointment of Administrator	9
	6.2 Administrator's Responsibilities	9
	6.3 Records and Accounts	9
	6.4 Liability	9
	6.5 Payment of Expenses	9
	6.6 Substitute Payee	9

SECTION 7	CLAIMS PROCEDURE	10
	7.1 Claims Procedure	10

SECTION 8	AMENDMENT AND TERMINATION	11
	8.1 Plan Amendment	11
	8.2 Termination of the Plan	11


SECTION 9	MISCELLANEOUS	12
	9.1 Supplemental Benefits	12
	9.2 Governing Law	12
	9.3 Spendthrift Provision	12
	9.4 Binding Terms	12
	9.5 Headings	12
	9.6 Rule of Interpretation	12
	9.7 Limitation of Rights	12
	9.8 Severability	13

C. If no person shall be designated by the Participant, or if the designated Beneficiary shall not survive the Participant, payment of the Participant’s Account shall be made to the Participant’s estate.

5.3 Tax Withholding. To the extent required by the law in effect at the time benefits are distributed pursuant to this Section 5, the Company shall withhold any taxes that it is required to withhold by the federal or any state or local government from payments made hereunder.

SECTION 6

ADMINISTRATION

6.1   Appointment of Administrator. The Company shall serve as the Administrator.

6.2   Administrator’s Responsibilities. The Administrator is responsible for the day to day administration of the Plan. The Administrator may appoint other persons or entities to perform any of its fiduciary functions.

6.3   Records and Accounts. The Administrator shall maintain or shall cause to be maintained accurate and detailed records and accounts of Participants and of their rights under the Plan and of all investments, receipts, disbursements and other transactions.

6.4   Liability. The Company shall not be liable to any person for any action taken or omitted in connection with the administration of this Plan unless attributable to the fraud or wilful misconduct on the part of a director, officer or agent of the Company.

6.5   Payment of Expenses. All expenses incurred in the operation or administration of this Plan shall be paid by Company.

6.6   Substitute Payee. If a Participant or Beneficiary entitled to receive any benefits hereunder is in his minority, or is declared legally, physically, or mentally incapable of personally receiving and receipting any distribution, the Company may make distributions to a legally appointed guardian or to such other person or institution as, in the judgment of the Company, is then maintaining or has custody of the payee.

SECTION 8

AMENDMENT AND TERMINATION

8.1 Plan Amendment. The Plan may be amended or otherwise modified by the Board, in whole or in part, provided that no amendment or modification shall divest any Participant of any amount previously credited to his Account under Section 3.1 or of the amount and method of crediting earnings to such Account under Section 4.3 of the Plan as of the date of such amendment.

8.2 Termination of the Plan. The Board reserves the right to terminate the Plan at any time in whole or in part. In the event of any such termination, the Company shall pay a benefit to the Participant or the Beneficiary of any deceased Participant, in lieu of other benefits hereunder, equal to the value of the Participant’s Account in the form and at the benefit commencement date elected by the Participant pursuant to section 5.1 of the Plan. Earnings shall continue to be allocated under Section 4.3 of the Plan after the termination of the Plan until the Participant’s benefits have been paid in full notwithstanding the termination of the Plan.


ATTEST:		ROYAL CARIBBEAN CRUISES LTD.

		BY:


Cash Compensation	Annual
Annual Retainer	$	36,000
Board Per Meeting Fees	$	1,200
Audit Committee Chairman Retainer	$	10,000
Other Committee Chairman Retainer	$	5,000
Audit Committee Member Retainer	$	5,000
Other Committee Member Retainer	$	2,500
Committee Per Meeting Fees	$	1,200
Annual Total Cash Compensation Cap	$	100,000

Exhibit 12.1

Royal Caribbean Cruises Ltd.

Ratio of Earnings to Fixed Charges

(in thousands, except ratios)

	Years Ended December 31,
	2004	2003	2002	2001	2000

Earnings
Net income	$ 474,691	$ 280,664	$ 351,284	$ 254,457	$ 445,363
Income tax expense	2,810	2,100	1,040	-	-
(Income) loss from equity investees	(1,912)	(1,694)	6,536	1,576	(1,351)
Fixed charges	343,272	307,369	302,477	293,470	200,733
Capitalized interest	(7,228)	(15,932)	(23,425)	(36,983)	(44,200)

Earnings	$ 811,633	$ 572,507	$ 637,912	$ 512,520	$ 600,545

Fixed Charges
Interest expense (1)	$ 317,205	$ 284,328	$ 290,269	$ 290,195	$ 198,500
Interest portion of rent expense (2)	26,067	23,041	12,208	3,275	2,233

Fixed charges	$ 343,272	$ 307,369	$ 302,477	$ 293,470	$ 200,733

Ratio of Earnings to Fixed Charges (3)	2.4x	1.9x	2.1x	1.8x	3.0x

(1) Interest expense includes capitalized interest and amortization of deferred financing expenses.

(2) Interest portion of rent expense represents actual interest charges for the Brilliance of the Seas operating lease

and, for all other rentals, we have assumed that one-third of rent expense is representative of the interest factor.

(3) We had no preferred stock outstanding during the years ended December 31, 2004, 2003, 2002 and 2001.

We redeemed our preferred stock in April 2000. The ratio of earnings to combined fixed charges

and preferred stock dividends was identical to the ratio of earnings to fixed charges for the year ended

December 31, 2000.

Exhibit 21.1

LIST OF SUBSIDIARIES

The following is a list of all our subsidiaries, their jurisdiction of incorporation and the names under which they do business. This list does not include those subsidiaries that, in the aggregate, would not have been a "significant subsidiary" as of December 31, 2004.

NAME	INCORPORATION
Adventure of the Seas Inc.	Liberia
Blue Sapphire Marine Inc.	Liberia
Cape Liberty Cruise Port LLC	Delaware
Celebrity Cruise Lines Inc.	Cayman Islands
Celebrity Cruises Holdings Inc.	Liberia
Celebrity Cruises Inc., doing business as Celebrity Cruises	Liberia
Constellation Inc.	Liberia
Cruise Mar Investment Inc.	Liberia
Cruise Mar Shipping Holdings Ltd.	Liberia
Enchantment of the Seas Inc.	Liberia
Esker Marine Shipping Inc.	Liberia
Explorer of the Seas Inc.	Liberia
Fantasia Cruising Inc.	Liberia
Galapagos Cruises Inc.	Liberia
Grandeur of the Seas Inc.	Liberia
Infinity Inc.	Liberia
Islas Galapagos Turismo y Vapores CA	Ecuador
Jewel of the Seas Inc.	Liberia
Majesty of the Seas Inc.	Liberia
Mariner of the Seas Inc.	Liberia
Millennium Inc.	Liberia
Monarch of the Seas Inc.	Liberia
Navigator of the Seas Inc.	Liberia
Nordic Empress Shipping Inc.	Liberia
Radiance of the Seas Inc.	Liberia
RCL (UK) Ltd.	England
Rhapsody of the Seas Inc.	Liberia
Royal Caribbean Cruise Lines AS	Norway
Royal Celebrity Tours Inc.	Delaware
Seabrook Maritime Inc.	Liberia
Serenade of the Seas Inc.	Liberia
Sovereign of the Seas Shipping Inc.	Liberia
Summit Inc.	Liberia
Universal Cruise Holdings Limited	British Virgin Islands
Vision of the Seas Inc.	Liberia
Voyager of the Seas Inc.	Liberia
Zenith Shipping Corporation	Liberia

Exhibit 31

CERTIFICATIONS

I, Richard D. Fain, certify that:

1.	I have reviewed this annual report on Form 10-K of Royal Caribbean Cruises Ltd.;

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 company as of, and for, the periods presented in this report;

The company’s other certifying officer 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 internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

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 company, 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;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)	Evaluated the effectiveness of the company’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

Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the company’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.	The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

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 company’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 company’s internal control over financial reporting.

Date: March 14, 2005

/s/ RICHARD D. FAIN

Richard D. Fain
Chairman and
Chief Executive Officer

Exhibit 31

CERTIFICATIONS

I, Luis E. Leon, certify that:

1.	I have reviewed this annual report on Form 10-K of Royal Caribbean Cruises Ltd.;

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 company as of, and for, the periods presented in this report;

c)	Evaluated the effectiveness of the company’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

5.	The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

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 company’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 company’s internal control over financial reporting.

Date: March 14, 2005

/s/ LUIS E. LEON

Luis E. Leon

Executive Vice President and

Chief Financial Officer

Exhibit 24

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

The undersigned director of Royal Caribbean Cruises Ltd., a Liberian corporation (the “Company”), hereby constitutes and appoints Richard D. Fain and Luis E. Leon, and each of them (with full power to each of them to act alone), the true and lawful attorneys-in-fact and agents for the undersigned, and on behalf of the undersigned and in the name, place and stead of the undersigned, in any and all capacities, to sign the Annual Report on Form 10-K for the fiscal year ended December 31, 2004 to be filed by the Company with the Securities and Exchange Commission under the provisions of the Securities Exchange Act of 1934, and any and all amendments, applications, or other documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present. The undersigned hereby ratifies and confirms all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.

EXECUTED as of the 11th

day of March 2005

/s/ BERNARD W. ARONSON
Bernard W. Aronson

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

EXECUTED as of the 11th

day of March 2005

/s/ JOHN D. CHANDRIS
John D. Chandris

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

EXECUTED as of the 11th

day of March 2005

/s/ ARVID GRUNDEKJOEN
Arvid Grundekjoen

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

EXECUTED as of the 8^th day of March 2005

/s/ WILLIAM L. KIMSEY
William L. Kimsey

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

EXECUTED as of the 8^th day of March 2005

/s/ LAURA LAVIADA
Laura Laviada

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

EXECUTED as of the 14th

day of March 2005

/s/ GERT W. MUNTHE
Gert W. Munthe

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

EXECUTED as of the 11th

day of March 2005

/s/ EYAL OFER
Eyal Ofer

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

EXECUTED as of the 14th

day of March 2005

/s/ THOMAS J. PRITZKER
Thomas J. Pritzker

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

EXECUTED as of the 11^th day of March 2005

/s/ BERNT REITAN
Bernt Reitan

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

EXECUTED as of the 10th day of March 2005

/s/ ARNE ALEXANDER WILHELMSEN
Arne Alexander Wilhelmsen

Exhibit 32

In connection with the Annual Report on Form 10-K for the year ended December 31, 2004 as filed by Royal Caribbean Cruises, Ltd. with the Securities and Exchange Commission on the date hereof (the “Report”), Richard D. Fain, Chairman and Chief Executive Officer, and Luis E. Leon, Executive Vice President and Chief Financial Officer, each certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

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 Royal Caribbean Cruises Ltd.

Date: March 14, 2005

By: /s/ RICHARD D. FAIN
	Richard D. Fain
	Chairman and
	Chief Executive Officer

By: /s/ LUIS E. LEON
	Luis E. Leon
	Executive Vice President and
	Chief Financial Officer

2.	Landlord: Workstage-Oregon, LLC, a Michigan limited liability company
3.	Landlord’s Address for Giving of Notices and Payment of Rent:
	Workstage-Oregon, LLC
	Attention: Joe Peters
	4700 60^th Street S.E.
	Grand Rapids, MI 49512
4.	Tenant: Royal Caribbean Cruises Ltd., a Liberian corporation
5.	Tenant’s Address for Giving of Notices:

8.	Lease Document Issuance and Reference Date: January 24, 2005.
9.	Commencement Dates:

Period of Time	Per Diem Liquidated Damages
Days 1-20 after December 23, 2005	$9,448.11
Days 21-100 after December 23, 2005	$14,172.17
Days 101-150 after December 23, 2005	$18,896.22

Exhibit “A” – Legal Description for Premises
Exhibit “B” – Work Letter
Exhibit “C” – Memorandum of Lease
Exhibit “D” –Lease Commencement Agreement

Geotechnical Investigation for the proposed
Workstage: Royal Caribbean Cruises, Ltd. - ConnectWest Call Center in
Springfield, Oregon
Dated: December 21, 2004
Pages: 56
Prepared by: Foundation Engineering, Inc.

Phase I Environmental Site Assessment, TL1001, Lane County Map
#17-03-15
Dated: December 20, 2003
Pages: 52
Prepared by: GeoScience, Inc.

Project Manual Bidding Documents for:
Excavation/Site Utilities/Asphalt Paving/Site Concrete
Volume 1 of 1, Bid Package "A"
Includes documents within the following table of contents:

Civil Construction Documents (Private)
C1.0 – Erosion and Sediment Control Plan
C1.1 – Erosion and Sediment Control Notes and Details
C2.0 – Horizontal Control Plan
C3.0 – Site Storm Drain Plan
C4.0 – Site Sanitary Sewer, Water and Gas Distribution Plan
C5.0 – Site Paving Plan
C5.1 – Paving Details

L1.0 – Site Plan (CMcGS)
L2.0 – Vertical Control Plan (CMcGS)
L3.0 – Tree and Soil Preparation Plan (CMcGS)

Land Drainage Alteration Permit (LDAP)
EC1.0 – Erosion and Sediment Control Plan (Same as C1.0)
EC1.1 – Erosion and Sediment Control Notes and Details (Same as
C1.1)
L1.0 – Site Plan (CMcGS)
L2.0 – Vertical Control Plan (CMcGS)
L3.0 – Tree and Soil Preparation Plan (CMcGS)

Civil Construction Specification Sections
02200 – Earthwork
02240 – Trenching & Backfill
02430 – Storm Drain
02435 – Sanitary Sewer
02440 – Manholes
02450 – Water Distribution
02513 – Asphaltic Concrete Paving
02520 – Cast-in-place Concrete Curbs, Gutters, Walks &
Pavements

Owner Review Package
Dated: January 14, 2005
Royal Caribbean Cruises, Ltd. - ConnectWest
Specifications and Drawing Index with the following table of
contents:

DIVISION 5 - METALS
05500	METAL FABRICATIONS
05511	METAL STAIRS
05521	PIPE AND TUBE RAILINGS
05716	STEEL CABLE RAILING SYSTEM

DIVISION 6 - WOOD AND PLASTICS
06105	MISCELLANEOUS CARPENTRY
06202	INTERIOR FINISH CARPENTRY
06402	INTERIOR ARCHITECTURAL WOODWORK
06650	SOLID POLYMER FABRICATIONS
06670	PERMALIFE (PVC) FABRICATIONS

DIVISION 7 - THERMAL AND MOISTURE PROTECTION
07141	COLD FLUID-APPLIED WATERPROOFING
07190	WATER REPELLENTS
07210	BUILDING INSULATION
07412	METAL WALL PANELS
07540	THERMOPLASTIC MEMBRANE ROOFING
07720	ROOF ACCESSORIES
07841	THROUGH-PENETRATION FIRESTOP SYSTEMS

DIVISION 8 - DOORS AND WINDOWS
08111	STANDARD STEEL DOORS AND FRAMES
08211	FLUSH WOOD DOORS
08311	ACCESS DOORS AND FRAMES
08620	UNIT SKYLIGHTS
08630	METAL-FRAMED SKYLIGHTS
08800	GLAZING
08816	DECORATIVE GLASS
08830	MIRRORS
08911	GLAZED ALUMINUM CURTAIN WALLS

DIVISION 9 - FINISHES
09111	NON-LOAD-BEARING STEEL FRAMING
09250	GYPSUM BOARD
09310	CERAMIC TILE
09511	ACOUSTICAL PANEL CEILINGS
09547	CURVING WOOD CEILING SYSTEM
09548	MODULAR WOOD CEILING SYSTEM
09622	RESILIENT SPORTS-FLOOR COVERINGS
09638	STONE PAVING AND FLOORING
09651	RESILIENT FLOOR TILE
09681	CARPET TILE
09720	WALL COVERINGS
09770	PREFINISHED PANELS - INTERIORS
09911	EXTERIOR PAINTING
09912	INTERIOR PAINTING
09960	HIGH-PERFORMANCE COATINGS

DIVISION 10 - SPECIALTIES
10155	TOILET COMPARTMENTS
10191	CUBICLE CURTAINS AND TRACKS
10265	IMPACT-RESISTANT WALL PROTECTION
10270	ACCESS FLOORING
10506	WOOD LOCKERS
10520	FIRE-PROTECTION SPECIALTIES
10650	AUTOMATIC VERTICALLY FOLDING ACOUSTICAL WALLS
10801	TOILET AND BATH ACCESSORIES

DIVISION 11 - EQUIPMENT
11132	PROJECTION SCREENS
11160	LOADING DOCK EQUIPMENT

ARCHITECTURAL
A1.0		OVERALL FIRST AND MEZZANINE LEVEL FLOOR PLANS
A1.1A			FIRST LEVEL FLOOR PLAN ZONE "A"
A1.1B	FIRST LEVEL FLOOR PLAN ZONE "B"
A1.1C		FIRST LEVEL FLOOR PLAN ZONE "C"
A1.1D		FIRST LEVEL FLOOR PLAN ZONE "D"
A1.2A			MEZZANINE LEVEL FLOOR PLAN ZONE "A"
A1.2B		MEZZANINE LEVEL FLOOR PLAN ZONE "B"
A1.3A			CLERESTORY FLOOR PLAN ZONE "A"

MECHANICAL
UM1.0			UNDERGROUND MECHANICAL PLAN
M0.1	MECHANICAL GENERAL NOTES AND LEGEND
M1.1A			FIRST LEVEL MECH. PLAN ZONE "A"
M1.1B		FIRST LEVEL MECH. PLAN ZONE "B"
M1.1C			FIRST LEVEL MECH. PLAN ZONE "C"
M1.1D			FIRST LEVEL MECH. PLAN ZONE "D"
M1.2A			MEZZANINE LEVEL MECH. PLAN ZONE "A"
M1.2B		MEZZANINE LEVEL MECH. PLAN ZONE "B"

E1.2A		MEZZANINE LEVEL LIGHTING PLAN ZONE "A"
E1.2B	MEZZANINE LEVEL LIGHTING PLAN ZONE "B"
E2.1A	FIRST LEVEL POWER PLAN ZONE "A"
E2.1B	FIRST LEVEL POWER PLAN ZONE "B"
E2.1C	FIRST LEVEL POWER PLAN ZONE "C"
E2.1D	FIRST LEVEL POWER PLAN ZONE "D"
E2.2A		MEZZANINE LEVEL LIGHTING PLAN ZONE "A"
E2.2B	MEZZANINE LEVEL LIGHTING PLAN ZONE "B"
E3.1A	FIRST LEVEL SPECIAL SYSTEMS PLAN ZONE "A"
E3.1B	FIRST LEVEL SPECIAL SYSTEMS PLAN ZONE "B"
E3.1C	FIRST LEVEL SPECIAL SYSTEMS PLAN ZONE "C"
E3.1D	FIRST LEVEL SPECIAL SYSTEMS PLAN ZONE "D"
E4.2			ENLARGED CAFETERIA POWER PLAN
E5.1A		RISER DIAGRAM ELECTRICAL
E6.1			ELECTRICAL DETAILS

FIRE PROTECTION
F1.1A		FIRST LEVEL FIRE PLAN ZONE "A"
F1.1B	FIRST LEVEL FIRE PLAN ZONE "B"
F2.1A		MEZZANINE LEVEL FIRE PLAN ZONE "A"

By:_________________________
Name:_______________________
Its:_________________________



			By:
			Name:
			Title:


			TENANT:
			ROYAL CARIBBEAN CRUISES LTD., a Liberian corporation


			By:
			Name:
			Title:
STATE OF ______________	)
	)	: ss.
COUNTY OF ____________	)

1.	Position. Except to the extent provided below you will continue to serve in a full-time capacity as Chairman and Chief Executive Officer of the Company.

2.	Compensation. You will continue to receive the compensation (“Compensation”) you are currently receiving for as long as you are employed with the Company, payable in accordance with the Company’s standard payroll practices for salaried employees. The Company may, in the sole discretion of the Company’s Compensation Committee, determine to increase your Compensation but may not lower it. Compensation includes, but is not limited to: salary, bonus (with participation and determination of amounts payable made generally in accordance with past practice), benefit plans, stock option plans, deferred compensation arrangements and pension programs. Notwithstanding the foregoing, the Company retains the right to make modifications to, or to terminate, any general company plan, arrangement or program and the foregoing is subject to any such modification or termination.

3.	Termination Benefits.

	(a)	Notwithstanding anything in this Agreement to the contrary, if your employment with the Company is terminated by the Company at any time and for any reason, other than for Cause (as hereinafter defined), you will be entitled to receive not less than nine months written notice.

	(b)	You will be considered an employee of the Company for as long as you are employed with the Company for all purposes including, but not limited to, under all stock option plans and/or deferred compensation plans, arrangements or schemes of the Company and its affiliates. All stock options granted or awarded to you by the Company or any of its affiliates shall, to the extent allowed under the terms of the relevant grant or award and subject to the approval of the Company’s Stock Option Committee, be exercisable, to the extent vested on the

		Date of Termination, as hereinafter defined, during the 12 month period beginning on such date.

	(c)	To the extent available to Company employees, you shall be entitled to continued eligibility to participate in all health, medical and dental benefit plans of the Company, other than life and disability coverage, for which you were eligible immediately prior to the time the Notice of Termination is given, or comparable coverage, for two years following the Date of Termination, provided that you continue to make the required applicable contributions. For purposes of this Agreement, “Date of Termination” shall mean the date specified in the Notice of Termination (which, as set forth above, in the case of a termination of your employment by the Company will not be less than nine months after the date such Notice of Termination is given) and “Notice of Termination” shall mean a notice which will reasonably indicate the interest of the party giving the notice that your employment is, or will be, terminated, and the effective date of such termination.

	(d)	In the event that you do not receive nine months written notice upon such termination by the Company, you shall be entitled to continue to receive your Compensation for nine months in lieu of such notice, it being the intent of the parties that you be no worse off financially than if you had received the required nine months’ notice.

	(e)	Notwithstanding anything in this Agreement to the contrary, your employment with the Company may be terminated by the Company immediately upon Notice of Termination for the commission by you of a felony or a crime involving moral turpitude, or any habitual absenteeism, gross negligence, or willful misconduct in your performance of your duties (termination for “Cause”) in which event the Company shall have no further obligation to you for Compensation or otherwise except for any accrued obligations.

4.	Withholding Taxes. All forms of compensation referred to in this Agreement are subject to reduction to reflect applicable withholding and payroll taxes.

5.	Conflict of Interest. During the term of your employment with the Company, you shall not own more than a five percent interest in, nor serve as a director, officer or trustee of, nor serve in any other capacity for any entity which in any material way competes with the Company, its affiliates or subsidiaries except as approved by the Company’s Board of Directors or Compensation Committee.

6.	Release and Waiver of Claims. In consideration of the compensation and benefits available pursuant to this Agreement, you agree to execute a mutual release, in form and substance reasonably acceptable to the Company, releasing the Company and its affiliates from all claims and liabilities you may have against the Company relating to this Agreement or your employment by the Company, except for any accrued obligations.

7.	No Mitigation. Notwithstanding anything to the contrary in this Agreement, you shall not be required to mitigate the amount of any payment provided for in Section 3 by seekingother employment or otherwise, nor shall the amount of any payment or benefit provided for in Section 3 hereof be reduced by any compensation earned by you as a result of employment by another employer or by retirement benefits after the Date of Termination of employment, or otherwise.

8.	Legal Fees and Expenses. The Company shall pay to you as incurred all legal and accounting fees and expenses incurred by you, if any, in seeking to obtain or enforce any right or benefit provided by this Agreement or any other compensation-related plan, agreement or arrangement of the Company unless your claim is found by a tribunal of competent jurisdiction to have been frivolous.

9.	Governing Law; Arbitration. All disputes or claims arising out of or relating to this Agreement or the breach of this Agreement shall be determined under the law of the State of Florida, other than the choice of law rules thereof, in Miami, Florida in accordance with the procedures of the American Arbitration Association. The determination of the arbitrator(s) shall be conclusive and binding on you and the Company and judgment may be entered on the arbitrator(s)’ award in any court in the United States of America having jurisdiction.

10.	Entire Agreement. This Agreement and its exhibits contain all of the terms of your employment with the Company and supersede any prior understandings, whether oral or written, between you and the Company or its affiliates.

11.	Amendment. This Agreement may not be amended or modified except by an express written agreement signed by you and a duly authorized officer of the Company.