10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2005

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)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

There were 201,902,710 shares of common stock outstanding as of April 11, 2005.

ROYAL CARIBBEAN CRUISES LTD.

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements 1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 8

Item 3. Quantitative and Qualitative Disclosures About Market Risk 16

Item 4. Controls and Procedures 16

PART II. OTHER INFORMATION

Item 5. Other Information 17

Item 6. Exhibits 17

SIGNATURES 18

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

	First Quarter Ended
	March 31,
	2005	2004
Passenger ticket revenues	$ 872,672	$ 790,093
Onboard and other revenues	295,405	271,591
Total revenues	1,168,077	1,061,684
Cruise operating expenses
Commissions, transportation and other	213,572	203,904
Onboard and other	60,954	57,883
Payroll and related	127,785	115,942
Food	67,568	65,836
Other operating	237,503	210,834
Total cruise operating expenses	707,382	654,399
Marketing, selling and administrative expenses	161,530	150,238
Depreciation and amortization expenses	99,762	96,579
Operating Income	199,403	160,468
Other income (expense)
Interest income	2,447	1,449
Interest expense, net of interest capitalized	(75,289)	(75,740)
Other income	8,782	9,669
	(64,060)	(64,622)
Net Income	$ 135,343	$ 95,846
Earnings Per Share:
Basic	$ 0.67	$ 0.49
Diluted	$ 0.63	$ 0.47
Weighted-Average Shares Outstanding:
Basic	201,619	197,425
Diluted	236,209	216,000

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

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ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	As of
	March 31,	December 31,
	2005	2004
	(unaudited)
Assets Current assets Cash and cash equivalents	$      311,340	$      628,578
Trade and other receivables, net	82,239	84,899
Inventories	59,585	60,260
Prepaid expenses and other assets	109,024	86,869
Total current assets	562,188	860,606
Property and equipment — at cost less accumulated depreciation and amortization	10,172,558	10,193,443
Goodwill — less accumulated amortization of $138,606	278,561	278,561
Other assets	586,804	631,474
	$11,600,111	$11,964,084
Liabilities and Shareholders’ Equity
Current liabilities Current portion of long-term debt	$      330,419	$      905,374
Accounts payable	185,507	162,973
Accrued expenses and other liabilities	320,544	330,073
Customer deposits	1,004,507	875,082
Total current liabilities	1,840,977	2,273,502
Long-term debt	4,794,517	4,826,570
Other long-term liabilities	66,127	59,492
Commitments and contingencies (Note 5) Shareholders’ equity Common stock ($.01 par value; 500,000,000 shares authorized; 201,841,185 and 201,253,140 shares issued)	2,018	2,012
Paid-in capital	2,222,604	2,206,157
Retained earnings	2,642,387	2,533,265
Accumulated other comprehensive income	39,898	71,363
Treasury stock (606,642 and 596,556 common shares at cost)	(8,417)	(8,277)
Total shareholders’ equity	4,898,490	4,804,520
	$11,600,111	$11,964,084

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

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ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	First Quarter Ended
	March 31,
	2005	2004
Operating Activities Net income	$ 135,343	$ 95,846
Adjustments:
Depreciation and amortization	99,762	96,579
Accretion of original issue discount on debt	13,426	12,610
Changes in operating assets and liabilities:
Increase in trade and other receivables, net	(716)	(702)
Decrease (increase) in inventories	675	(3,181)
Increase in prepaid expenses and other assets	(18,846)	(35,174)
Increase in accounts payable	21,884	5,821
Decrease in accrued expenses and other liabilities	(3,411)	(9,566)
Increase in customer deposits	129,425	149,986
Other, net	4,165	1,599
Net cash provided by operating activities	381,707	313,818
Investing Activities Purchases of property and equipment	(74,928)	(79,182)
Purchases of short-term investments	(56,500)	(303,822)
Proceeds from sale of short-term investments	56,500	129,950
Other, net	(1,159)	12,326
Net cash used in investing activities	(76,087)	(240,728)
Financing Activities
Repayments of long-term debt	(600,097)	(24,961)
Dividends	(28,049)	(28,460)
Proceeds from exercise of common stock options	5,152	42,158
Other, net	136	(12,788)
Net cash used in financing activities	(622,858)	(24,051)
Net (decrease) increase in cash and cash equivalents	(317,238)	49,039
Cash and cash equivalents at beginning of period	628,578	330,086
Cash and cash equivalents at end of period	$311,340	$379,125
Supplemental Disclosure
Cash paid during the period for:
Interest, net of amount capitalized	$ 59,401	$ 62,255

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

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ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

As used in this document, 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.

Note 1. Basis for Preparation of Consolidated Financial Statements

We believe the accompanying unaudited consolidated financial statements contain all normal recurring accruals necessary for a fair presentation. Our revenues are seasonal and results for interim periods are not necessarily indicative of results for the entire year.

The interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2004.

Note 2. Summary of Significant Accounting Policies

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):

	First Quarter Ended
	March 31,
	2005	2004
Net income, as reported	$135,343	$95,846
Deduct: Total stock-based employee compensation expense determined under fair value method for all awards	(2,725)		(1,470)
Pro forma net income	132,618	94,376
Add: Interest on dilutive convertible notes	13,944	4,882
Pro forma net income for diluted earnings per share	$146,562	$99,258
Weighted-average common shares outstanding	201,619	197,425
Dilutive effect of stock options and restricted stock awards	2,857	4,256
Dilutive effect of convertible notes	31,270	13,834
Diluted weighted-average shares outstanding	235,746	215,515
Earnings per share:
Basic — as reported	$ 0.67	$ 0.49
Basic — pro forma	$ 0.66	$ 0.48
Diluted — as reported	$ 0.63	$ 0.47
Diluted — pro forma	$ 0.62	$ 0.46

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Pro forma diluted earnings per share for the quarter ended March 31, 2004 did not include 17.7 million shares of our common stock issuable upon conversion of our Liquid Yield Option™ Notes and options to purchase 1.7 million shares because the effect of including them would have been antidilutive.

Accounting Pronouncements

In April 2005, the Securities and Exchange Commission issued a rule that amends the implementation dates for SFAS No. 123 (revised 2004), “Share-Based Payment,” (“SFAS 123R”). The new rule calls for the implementation of SFAS 123R at the beginning of the first quarter of 2006, instead of the third quarter of 2005. SFAS 123R is expected to reduce our results of operations by approximately $12.1 million for the year ended December 31, 2006.

Reclassifications

Reclassifications have been made to our Consolidated Statement of Cash Flows for the first quarter ended March 31, 2004 to reflect the gross purchases and sales of variable rate debt obligations within our investing activities rather than as a component of cash and cash equivalents. We also changed the amount of our previously reported cash and cash equivalents in our Consolidated Statement of Cash Flows for the first quarter ended March 31, 2004 to $379.1 million from $553.0 million. We did not hold any of these variable rate securities as of March 31, 2005 and December 31, 2004.

Note 3. Earnings Per Share

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

	First Quarter Ended
	March 31,
	2005	2004
Net income	$135,343	$ 95,846
Interest on dilutive convertible notes	13,944	4,882
Net income for diluted earnings per share	$149,287	$100,728
Weighted-average common shares outstanding	201,619	197,425
Dilutive effect of stock options and restricted stock awards	3,320	4,741
Dilutive effect of convertible notes	31,270	13,834
Diluted weighted-average shares outstanding	236,209	216,000
Basic earnings per share	$ 0.67	$ 0.49
Diluted earnings per share	$ 0.63	$ 0.47

Diluted earnings per share for the quarter ended March 31, 2004 did not include 17.7 million shares of our common stock issuable upon conversion of our Liquid Yield Option™ Notes and options to purchase 1.7 million shares because the effect of including them would have been antidilutive.

5

Note 4. Shareholders' Equity

We declared cash dividends on common shares of $0.13 per share during each of the first quarters in 2005 and 2004.

Note 5. Commitments and Contingencies

Capital Expenditures. As of March 31, 2005, we had three Freedom-class ships on order for an additional capacity of approximately 10,800 berths. The aggregate cost of the ships is approximately $2.5 billion, of which we have deposited $171.9 million as of March 31, 2005. Approximately 19% of the aggregate cost of the ships was exposed to fluctuations in the euro exchange rate at March 31, 2005.

As of March 31, 2005, we anticipated overall capital expenditures, including the three Freedom-class ships on order, will be approximately $0.4 billion for 2005 and $1.1 billion for each of the years 2006, 2007 and 2008.

Litigation. 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.

Other. 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.

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.

6

Note 6. Comprehensive Income

Comprehensive income includes net income and changes in the fair value of derivative instruments that qualify as cash flow hedges. The cumulative changes in fair value of the derivatives are deferred and recorded as a component of accumulated other comprehensive income until the hedged transactions are realized and recognized in earnings. Comprehensive income was as follows (in thousands):

	First Quarter Ended
	March 31,
	2005	2004
Net income	$135,343	$95,846
Changes related to cash flow derivative hedges	(31,465)		(9,804)
Total comprehensive income	$103,878	$86,042

7

Item 2. 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,” 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:

• 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.

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This report should be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2004.

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 Overview 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 Overview 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, 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.

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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

Net income was $135.3 million or $0.63 per share on a diluted basis in the first quarter of 2005, compared to $95.8 million or $0.47 per share for the same period in 2004. Total revenues for the first quarter of 2005 increased 10.0% to $1.2 billion from total revenues of $1.1 billion for the same period in 2004. The increase in total revenues was a result of increases in cruise ticket prices, a 3.3% increase in capacity along with increases in occupancy levels and onboard revenues. During the first quarter of 2005, Net Yields increased 8.2% compared to the same period in 2004. Gross Cruise Costs increased 8.0% in the first quarter of 2005 compared to the same period in 2004 primarily as a result of increases in capacity, the effect of higher cruise ticket prices on commission expense and higher fuel prices. Net Cruise Costs per APCD increased 6.0% in the first quarter of 2005 compared to the same period in 2004.

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

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The following table presents historical operating data as a percentage of total revenues:

	First Quarter Ended
	March 31,
	2005	2004
Passenger ticket revenues	74.7	74.4
Onboard and other revenues	25.3	25.6
Total revenues	100.0%	100.0%
Cruise operating expenses
Commissions, transportation and other	18.3	19.2
Onboard and other	5.2	5.4
Payroll and related	11.0	10.9
Food	5.8	6.2
Other operating	20.3	19.9
Total cruise operating expenses	60.6	61.6
Marketing, selling and administrative expenses	13.8	14.2
Depreciation and amortization expenses	8.5	9.1
Operating income	17.1	15.1
Other income (expense)	(5.5)	(6.1)
Net income	11.6%	9.0%

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

	First Quarter Ended
	March 31,
	2005	2004
Passengers Carried	860,014	829,472
Passenger Cruise Days	5,772,957	5,512,049
APCD	5,462,012	5,289,536
Occupancy	105.7%	104.2%

Outlook

The pace of bookings and consumer demand remains positive and on track with our previous expectations. Our first quarter Net Yield performance allows us to narrow our full year Net Yield guidance to an increase in the range of 6% to 7%. In addition, we currently expect Net Yields for the second quarter of 2005 to increase approximately 6%.

Fuel costs continue to be the most important variable impacting Net Cruise Costs and make forecasting very difficult. In our last update, we estimated that at-the-pump fuel prices for the first quarter would increase about 11% over the average level for 2004. We also estimated that if that 11% figure continued for the full year it would cost an additional $23 million (net of hedges). Fuel prices for the first quarter were 11% higher than the 2004 yearly average. However, since then, at-the-pump fuel prices have continued to rise despite the fact that crude oil prices have actually fallen slightly. Currently, at-the-pump fuel prices are 20% higher than the 2004 yearly average. If prices for the remainder of 2005 remain at today’s level, that price increase would cost the Company $26 million in addition to the $23 million previously disclosed. Based on this assumption, Net Cruise Costs per APCD for 2005 would increase approximately 5% to 6% compared to 2004.

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The price increase in fuel accounts for approximately 3 percentage points of this increase. In addition, we currently expect interest expense to be in the range of $300 to $310 million.

Based upon the above, we expect full year 2005 earnings per share to be in the range of $2.65 to $2.85. On the same basis, second quarter 2005 earnings per share are expected to be in the range of $0.55 to $0.60.

Revenues

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

		First Quarter Ended
		March 31,
	2005		2004
Passenger ticket revenues	$ 872,672		$ 790,093
Onboard and other revenues	295,405		271,591
Total revenues	1,168,077		1,061,684
Less:
Commissions, transportation and other	213,572		203,904
Onboard and other	60,954		57,883
Net revenues	$ 893,551		$ 799,897
APCD	5,462,012		5,289,536
Gross Yields	$ 213.85		$ 200.71
Net Yields	$ 163.59		$ 151.22

Net revenues increased 11.7% in the first quarter of 2005 compared to the same period in 2004. The increase was due to an 8.2% increase in Net Yields and a 3.3% increase in capacity. The increase in Net Yields was primarily due to higher cruise ticket prices, occupancy levels and amounts spent per passenger onboard. The increase in capacity was primarily associated with the delivery of Jewel of the Seas in April 2004. Occupancy in the first quarter of 2005 was 105.7% compared to 104.2% for the same period in 2004. Gross Yields increased 6.5% in the first quarter of 2005 compared to 2004 primarily due to the same reasons discussed above for Net Yields.

Onboard and other revenues included concession revenues of $51.4 million and $46.8 million in the first quarters of 2005 and 2004, respectively, which increased in the first quarter of 2005 primarily due to the same reasons discussed above for net revenues.

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Expenses

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

	First Quarter Ended
	March 31,
	2005	2004
Total cruise operating expenses	$ 707,382	$ 654,399
Marketing, selling and administrative expenses	161,530	150,238
Gross Cruise Costs	868,912	804,637
Less:
Commissions, transportation and other	213,572	203,904
Onboard and other	60,954	57,883
Net Cruise Costs	$ 594,386	$ 542,850
APCD	5,462,012	5,289,536
Gross Cruise Costs per APCD	$ 159.08	$ 152.12
Net Cruise Costs per APCD	$ 108.82	$ 102.63

Net Cruise Costs increased 9.5% in the first quarter of 2005 compared to the same period in 2004. The increase was due to a 6.0% increase in Net Cruise Costs per APCD and the 3.3% increase in capacity mentioned above. Approximately 2.6% of the increase in Net Cruise Costs per APCD was attributed to increases in fuel prices. The average fuel price (net of the financial impact of fuel swap agreements) for the first quarter of 2005 increased 26% per metric ton from the same period in 2004. As a percentage of total revenues, fuel costs were 6.1% and 5.2% for the first quarter of 2005 and 2004, respectively. The remaining 3.4% increase in Net Cruise Costs per APCD was primarily attributed to increases in payroll costs associated with benefits and higher staffing levels. Gross Cruise Costs increased 8.0% in the first quarter of 2005 compared to the same period in 2004, which was a lower percentage increase than Net Cruise Costs primarily because of the lower proportion of passengers who purchased air transportation from us in the first quarter of 2005.

Depreciation and amortization expenses increased 3.3% in the first quarter of 2005 compared to the same period in 2004. The increase was primarily due to the incremental depreciation associated with the addition of a ship in April 2004.

Other Income (Expense)

Gross interest expense increased to $78.3 million in the first quarter of 2005 from $77.6 million for the same period in 2004. The increase was primarily attributable to higher interest rates, partially offset by a lower average debt level. Interest capitalized during the first quarter of 2005 increased to $3.0 million from $1.9 million for the same period in 2004 due to a higher average level of investment in ships under construction.

Liquidity and Capital Resources

Sources and Uses of Cash

Net cash provided by operating activities was $381.7 million for the first quarter of 2005 compared to $313.8 million for the same period in 2004. The increase was primarily due to an increase in net income.

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Our capital expenditures were $74.9 million for the first quarter of 2005 compared to $79.2 million for the same period in 2004. Capital expenditures for the first quarters of 2005 and 2004 were primarily related to ships under construction.

Interest capitalized during the first quarter of 2005 increased to $3.0 million from $1.9 million for the same period in 2004 due to a higher average level of investment in ships under construction.

In February 2005, we paid the remaining $575.0 million balance of our $625.0 million unsecured variable rate term loan. During the first quarter of 2005, we received $5.2 million in connection with the exercise of common stock options and we paid quarterly cash dividends on our common stock of $28.0 million.

Future Capital Commitments

We have three Freedom-class ships on order for additional capacity of approximately 10,800 berths with scheduled deliveries in the second quarters of 2006, 2007 and 2008. The aggregate cost of the ships is approximately $2.5 billion, of which we have deposited $171.9 million as of March 31, 2005. Approximately 19% of the aggregate cost of the ships was exposed to fluctuations in the euro exchange rate at March 31, 2005.

As of March 31, 2005, we anticipated overall capital expenditures, including the three Freedom-class ships on order, will be approximately $0.4 billion for 2005 and $1.1 billion for each of the years 2006, 2007 and 2008.

Contractual Obligations

As of March 31, 2005, 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)	$4,783,009	$305,845	$1,254,449	$794,132	$2,428,583
Capital lease obligations(3)	387,644	25,462	61,655	70,344	230,183
Operating lease obligations(4)(5)	652,464	39,418	99,246	94,208	419,592
Ship purchase obligations(6)	2,072,901	186,238	1,270,872	615,791	—
Other(7)	238,543	37,448	89,891	46,799	64,405
Total	$8,134,561	$594,411	$2,776,113	$1,621,274	$3,142,763

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

(2)

The $413.2 million accreted value of the zero coupon convertible notes at March 31, 2005 is included in the three to five years category. The $692.2 million accreted value of the Liquid Yield Option™ Notes at March 31, 2005 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 $501.6 million on May 18, 2009 and $916.8 million on February 2, 2011, respectively. These accreted values were calculated based on the number of notes outstanding at March 31, 2005. We may choose to pay any amounts in cash or common stock or a combination thereof.

(3)

Amounts exclude interest. Amounts include a capital lease for a reservation call center in Springfield, Oregon, entered into in January 2005. The lease commences on December 23, 2005.

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

(5) Under the Brilliance of the Seas lease agreement, we may be required to make a termination payment of approximately £126 million, or approximately $236 million based on the exchange rate at March 31, 2005, if the lease is canceled in 2012. This amount is included in the more than five years category.

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

(7) 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.

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Other

As of March 31, 2005, we had $5.1 billion of long-term debt of which $0.3 billion is due during the twelve-month period ending March 31, 2006.

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 March 31, 2005, our liquidity was $1.3 billion consisting of approximately $0.3 billion in cash and cash equivalents and $1.0 billion available under our unsecured revolving credit facility. 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 March 31, 2005.

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.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

For a discussion of certain market risks related to our business, see Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our annual report on Form 10-K for the year ended December 31, 2004. There have been no significant developments or material changes with respect to our exposure to the market risks previously reported in the Form 10-K.

Item 4. 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.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2005 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 reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions.

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PART II. OTHER INFORMATION

Item 5. Other Information

On April 25, 2005, the Company entered into employment agreements with each of Adam M. Goldstein, President, Royal Caribbean International, and Brian J. Rice, Executive Vice President, Revenue Performance, and Celebrity Cruises Inc. entered into an employment agreement with Daniel J. Hanrahan, President, Celebrity Cruises. Copies of these agreements are filed as exhibits to this Quarterly Report on Form 10-Q.

The Company's Compensation Committee has approved certain criteria with respect to the payment of annual bonus awards for executive officers for 2005. The amount of any award, which will be determined as a percentage of each executive officer's base salary, will be tied to the Company's overall financial results and the performance of each executive officer together with his or her area of responsibility or business unit. For 2005, the Compensation Committee has set a net income target along with threshold and maximum levels of performance. In addition, the awards will be adjusted based on the Company's performance in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) relative to the industry. The EBITDA performance will either enhance or diminish the annual bonus award by as much as +/- 15%.

Item 6. Exhibits

10.1 Employment Agreement dated April 25, 2005 between the Company and Adam M. Goldstein.

10.2 Employment Agreement dated April 25, 2005 between the Company and Brian J. Rice.

10.3 Employment Agreement dated April 25, 2005 between Celebrity Cruises Inc. and Daniel J. Hanrahan.

31 Certifications required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934.

32 Certifications pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

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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)

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

Date: April 25, 2005

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EX-31

Exhibit 31

CERTIFICATIONS

I, Richard D. Fain, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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;

4. 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:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the 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;

b) 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

d) 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 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: April 25, 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 quarterly report on Form 10-Q 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;

4. 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:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the 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;

b) 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

d) 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 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: April 25, 2005

/s/ LUIS E. LEON

Luis E. Leon

Executive Vice President and

Chief Financial Officer

EX-32

Exhibit 32

In connection with the quarterly report on Form 10-Q for the quarter ended March 31, 2005 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: April 25, 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

EX-10

Exhibit 10.1

EXECUTION COPY

EMPLOYMENT AGREEMENT

THIS AGREEMENT (“Agreement”), dated as of _April 25 ,_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 ____Adam Goldstein_______ (“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

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. 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 the CEO, President or COO 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”) at the rate of not less than Five HundredTwenty Five Thousand ($525,000) per year, subject to all applicable withholding taxes. Such Base Compensation shall be paid in accordance with the Company’s payroll cycle during the Term. 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

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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 and the Company mutually agree to relocate 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;

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(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

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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.

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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; (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; and (vi) 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.

(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

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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

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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 or cruise related businesses or affiliates of any such entity engaged in cruises, with a minimum fleet size of 3,000 berths, or (ii) recruit, or otherwise influence or attempt to induce employees of Company to leave the employment of Company; and

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(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 or cruise related businesses or affiliates of any such entity engaged in cruises, with a minimum fleet size of 3,000 berths (“Cruise Business”); provided, for purposes hereof, “Cruise Business” shall not include any company that has a stand-alone Cruise Business unit that accounts for less than 10% of the company’s total sales in each of its prior two completed fiscal years so long as Executive is not providing services to such business unit other than services consistent with parent company oversight of such business unit. 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

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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:

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.

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(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 not 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.

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(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.

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(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.


/S/ THOMAS F. MURRILL
——————————————
Its:

EXECUTIVE

/S/ ADAM GOLDSTEIN                                                    
Adam Goldstein                                                       
EXECUTIVE'S TITLE: President, Royal Caribbean International
4321 Santa Maria Street
Coral Gables, Florida  33146

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# 2496203_v2

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EX-10

Exhibit 10.2

EXECUTION COPY

EMPLOYMENT AGREEMENT

THIS AGREEMENT (“Agreement”), dated as of __April 25 _, _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 _____Brian Rice__________ (“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

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. 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 the CEO, President or COO 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”) at the rate of not less than Three HundredFifty Thousand ($350,000) per year, subject to all applicable withholding taxes. Such Base Compensation shall be paid in accordance with the Company’s payroll cycle during the Term. 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

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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 and the Company mutually agree to relocate 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;

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(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

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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.

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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; (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; and (vi) 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.

(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

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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

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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 or cruise related businesses or affiliates of any such entity engaged in cruises, with a minimum fleet size of 3,000 berths, or (ii) recruit, or otherwise influence or attempt to induce employees of Company to leave the employment of Company; and

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(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 or cruise related businesses or affiliates of any such entity engaged in cruises, with a minimum fleet size of 3,000 berths (“Cruise Business”); provided, for purposes hereof, “Cruise Business” shall not include any company that has a stand-alone Cruise Business unit that accounts for less than 10% of the company’s total sales in each of its prior two completed fiscal years so long as Executive is not providing services to such business unit other than services consistent with parent company oversight of such business unit. 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

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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

                _______________________

                _______________________

                ________________________________

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.

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(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.

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(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.

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(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.


/S/ THOMAS M. MURRILL
——————————————
Its:

EXECUTIVE

/S/ BRIAN RICE
——————————————————
Brian Rice
——————————————————————
EXECUTIVE'S TITLE: Executive Vice President, Revenue Performance
2721 Center Court Drive
Weston, Florida  33331

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# 2496203_v2

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EX-10

Exhibit 10.3

EXECUTION COPY

EMPLOYMENT AGREEMENT

THIS AGREEMENT (“Agreement”), dated as of _April 25 ,_2005 , is entered into between Celebrity Cruises, Inc., a company organized and existing under the laws of Liberia (together with its successor and assigns, “Company”), and ____Daniel Hanrahan______ (“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

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. 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 the CEO, President or COO 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”) at the rate of not less than Four HundredTwenty Five Thousand ($425,000) per year, subject to all applicable withholding taxes. Such Base Compensation shall be paid in accordance with the Company’s payroll cycle during the Term. 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

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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 and the Company mutually agree to relocate 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;

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(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

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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.

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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; (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; and (vi) 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.

(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

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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

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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 or cruise related businesses or affiliates of any such entity engaged in cruises, with a minimum fleet size of 3,000 berths, or (ii) recruit, or otherwise influence or attempt to induce employees of Company to leave the employment of Company; and

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(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 or cruise related businesses or affiliates of any such entity engaged in cruises, with a minimum fleet size of 3,000 berths (“Cruise Business”); provided, for purposes hereof, “Cruise Business” shall not include any company that has a stand-alone Cruise Business unit that accounts for less than 10% of the company’s total sales in each of its prior two completed fiscal years so long as Executive is not providing services to such business unit other than services consistent with parent company oversight of such business unit. 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

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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:

                _____________________

                _____________________

                _____________________________

                _____________________

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.

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(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 not 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.

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(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.

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(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.

CELEBRITY CRUISES INC.


/S/ THOMAS F. MURRILL
——————————————
Its:

EXECUTIVE

Daniel Hanrahan
——————————————
/S/ DANIEL HANRAHAN
——————————————
EXECUTIVE'S TITLE: President
881 San Pedro Avenue
Coral Gables, Florida  33156

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