10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

  

FORM 10-K

	(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2006
	OR
[   ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
For the transition period from ­ to

Commission file number: 1-11884

ROYAL CARIBBEAN CRUISES LTD.

(Exact name of registrant as specified in its charter)

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

1050 Caribbean Way, Miami, Florida 33132

(Address of principal executive offices) (zip code)

(305) 539-6000

(Registrant’s telephone number, including area code)

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

Title of each class	Name of each exchange on which registered
Common Stock, par value $.01 per share	New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Act).

x large accelerated filer [ ] accelerated filer [ ] non-accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [   ]   No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold was $4.9 billion as of the last business day of the registrant’s most recently completed second fiscal quarter.

There were 212,266,640 shares of common stock outstanding as of February 7, 2007.

DOCUMENTS INCORPORATED BY REFERENCE

The information required under Part III of this report is incorporated herein by reference to registrant's definitive proxy statement for the 2007 Annual Meeting of Shareholders.

 

ROYAL CARIBBEAN CRUISES LTD.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	18
Item 1B.	Unresolved Staff Comments	22
Item 2.	Properties	22
Item 3.	Legal Proceedings	22
Item 4.	Submission of Matters to a Vote of Security Holders	23
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
Item 6.	Selected Financial Data	26
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 8.	Financial Statements and Supplementary Data	42
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	42
Item 9A.	Controls and Procedures	42
Item 9B.	Other Information	43
PART III
Item 10.	Directors, Executive Officers and Corporate Governance of the Registrant	44
Item 11.	Executive Compensation	44
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	44
Item 13.	Certain Relationships and Related Transactions, and Director Independence	44
Item 14.	Principal Accounting Fees and Services	44
PART IV
Item 15.	Exhibits and Financial Statement Schedules	45
Signatures		46

PART I

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

Item 1. Business

General

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

We are the world’s second largest cruise company operating 34 cruise ships with approximately 67,550 berths.

We operate three cruise brands, Royal Caribbean International, Celebrity Cruises and Pullmantur Cruises, in the cruise vacation industry. The cruise vacation industry is comprised of the budget, contemporary, premium and luxury segments. Our ships operate on a selection of worldwide itineraries that call on approximately 310 destinations. We compete principally on the basis of quality of ships, quality of service, variety of itineraries and price.

Royal Caribbean International

Royal Caribbean International serves the contemporary and premium segments of the cruise vacation industry. The contemporary segment is served by cruises that are generally seven nights or shorter and feature a casual ambiance. The premium segment is served by cruises that are generally seven to 14 nights and appeal to the more experienced passenger who is usually more affluent. Royal Caribbean International operates 20 cruise ships with approximately 47,900 berths, offering various cruise itineraries that range from two to 15 nights.

Royal Caribbean International’s strategy is to attract an array of vacationing consumers in the contemporary segment by providing a wide variety of itineraries and cruise lengths with multiple innovative options for onboard dining, entertainment and other onboard activities. Royal Caribbean International offers a wide array of onboard activities, services and amenities, including swimming pools, sun decks, beauty salons, exercise and spa facilities, ice skating rinks, in-line skating, basketball courts, rock climbing walls, surf machines, bungee jumping trampolines, miniature golf courses, an interactive waterpark called the H2O Zone™, gaming facilities, lounges, bars, Las Vegas-style entertainment, cinemas and “Royal Promenades” which are boulevards with shopping, dining and entertainment venues. Additionally, Royal Caribbean International offers a variety of shore excursions at each port of call. We believe that the variety and quality of Royal Caribbean International’s product offerings represent excellent value to consumers, especially to couples and families traveling with children. Because of the brand’s extensive product offerings, we believe Royal Caribbean International is well positioned to attract new consumers to the cruise vacation industry and to continue to bring past passengers back for their next vacation. While the brand is positioned at the upper end of the contemporary segment, we believe that Royal Caribbean International’s quality enables it to attract consumers from the premium segment as well, thereby achieving one of the broadest market coverages of any of the major brands in the cruise vacation industry.

Celebrity Cruises

Celebrity Cruises primarily serves the premium segment of the cruise vacation industry. Celebrity Cruises operates nine cruise ships with approximately 15,150 berths. The brand offers various cruise itineraries that range from two to 17 nights.

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Celebrity Cruises’ strategy is to attract experienced cruise passengers who appreciate and want the unique experience the brand offers. Celebrity Cruises delivers a high quality experience and good value with ships that offer extensive and luxurious spa facilities, fine dining, personalized service, and a high staff-to-passenger ratio. These are the hallmarks of the premium cruise vacation segment. Celebrity Cruises provides a variety of itineraries and cruise lengths and has a high proportion of its fleet deployment in seasonal markets (i.e. Alaska, Australia, Bermuda, Europe, Hawaii, New Zealand, the Panama Canal and South America). Celebrity Cruises includes in its breadth of product offerings itineraries to the Galapagos Islands, and recently inaugurated excursions to Machu Picchu in Peru. To further enhance our passengers’ experiences, Celebrity Cruises also offers a variety of shore excursions at each port of call.

Under its Celebrity Expeditions concept, Celebrity Cruises provides passengers a more intimate experience onboard smaller, upscale ships offering cruises to premium destinations. In 2004, Celebrity Cruises introduced CelebrityXpedition, a 100-berth ship that offers cruises in the Galapagos Islands, as a Celebrity Expedition. Beginning in 2007, Celebrity Cruises will expand Celebrity Expeditions by introducing two additional ships. Blue Dream and Blue Moon, which are currently part of the recently-acquired Pullmantur fleet, will be redeployed to Celebrity and renamed Celebrity Journey and Celebrity Quest, respectively. Celebrity Journey will offer cruises from the United States to Bermuda commencing in May 2007 and Celebrity Quest will offer a series of Caribbean sailings featuring several first time ports of call as well as a series of Panama Canal itineraries commencing in October 2007. Before switching to the Celebrity Brand, each ship will undergo a revitalization to incorporate Celebrity’s signature elements.

Pullmantur Cruises

On November 14, 2006, we completed our acquisition of Pullmantur S.A., a Madrid-based cruise and tour operator. Pullmantur, formed in 1971, is the largest cruise operator in Spain. It has two primary businesses: cruises and tour operations. Since 2001, Pullmantur has operated five cruise ships in Europe and Latin America serving the contemporary cruise vacation segment with approximately 4,500 berths as of December 31, 2006. Pullmantur’s tour operations sell land-based travel packages to Spanish guests including hotel and flights primarily to Caribbean resorts, and sells land-based travel packages to Europe aimed at Latin American customers. Pullmantur also owns a minority interest in a small air business that operates three aircraft in support of its cruise and tour operations. Pullmantur has offices in Spain and Portugal, with approximately 2,600 employees, and is Royal Caribbean’s first wholly-owned European brand.

Pullmantur increases our presence in Spain and provides us with an opportunity to further grow our business in Europe and Latin America and to increase our product offerings. Pullmantur also provides us an opportunity for incremental guest, revenue and earnings growth.

In June 2007, Zenith will be redeployed from Celebrity Cruises to Pullmantur where it will begin offering cruises to the Eastern Mediterranean. Before switching to the Pullmantur brand, Zenith will undergo a revitalization to increase verandas, enlarge public areas and customize the ship for Spanish and Latin American guests.

Other

As part of our effort to develop our presence in markets outside of North America, in July 2000, we formed a joint venture with First Choice Holidays PLC (“First Choice”), one of the largest integrated tour operators in the United Kingdom. This joint venture operates a cruise brand, Island Cruises, offering itineraries designed to attract passengers from the United Kingdom and Brazil. Island Cruises operates a 1,500-berth ship sailing under the name Island Escape. Celebrity Cruises' Horizon, a 1,350-berth ship, is currently chartered under a six-year agreement through 2011 to this joint venture. Horizon is currently sailing under the name Island Star, expanding Island Cruise's presence in Europe and South America.

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Industry

Since 1970, cruising has been one of the fastest growing sectors of the vacation market, as the number of North American passengers has grown to an estimated 10.8 million in 2006 from 0.5 million in 1970, a compound annual growth rate of approximately 9%. However, from 2002 to 2006 a significant amount of growth was experienced resulting in a compound annual growth rate of approximately 12%. We have sought to capitalize on the increasing popularity of cruises through an extensive fleet expansion program.

According to our estimates, the North American cruise market was served by an estimated 112 cruise ships with approximately 156,987 berths at the beginning of 2002. We estimate that this capacity increased to approximately 229,486 berths on approximately 140 ships by the end of 2006. The increase in capacity over the last five years is net of approximately 24 ships with approximately 33,584 berths that have either been retired or moved out of the North American market. There are approximately 24 cruise ships with an estimated 68,360 berths that are expected be placed in service between 2007 and 2010.

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

Year	North American Cruise Passengers(1)	Weighted-Average Supply of Berths Marketed in North America(2)
2002	7,640,000	163,100
2003	8,195,000	182,600
2004	9,108,000	206,700
2005	9,909,000	216,300
2006	10,836,000	227,300

__________

(1) Source: Cruise Line International Association based on passengers carried for at least two consecutive nights, except for 2006, which is based on our estimates.

(2) Source: Our estimates.

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

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

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

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Operating Strategies

Our principal operating strategies are to:

• improve the awareness and market penetration of our brands,

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

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

• expand into new markets and itineraries,

• further expand our international passenger sourcing,

• utilize sophisticated revenue management systems to optimize revenue from demand for our products,

• continue to manage our costs,

• further improve our technological capabilities, and

• maintain strong relationships with travel agencies, the principal industry distribution channel, while offering direct access for consumers.

Brand Awareness

We continue to broaden the recognition of our brands among consumers. Royal Caribbean International is an established brand in the contemporary and premium segments of the cruise vacation industry. We believe we are positioning Celebrity Cruises as the best choice in the premium segment of the cruise vacation industry. Pullmantur Cruises is a widely recognized brand in the Spanish and Latin American contemporary cruise markets.

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

In order to attract the active cruiser who is seeking new experiences as well as first-time cruisers, Royal Caribbean International provides multiple choices to passengers through a wide array of itineraries, accommodations, dining options, onboard activities and shore excursions. The hallmarks of the brand include friendly and engaging service, state-of-the-art cruise ships, family programs, entertainment, health and fitness and energizing onboard and shoreside activities designed for passengers of all ages.

Celebrity Cruises communicates its brand image and message through a series of consumer and trade campaigns, products and experiences, all designed to build awareness of its high quality cruise vacations and drive brand preference. Celebrity Cruises’ communications target cruisers who seek upscale experiences and appreciate quality and value. We believe Celebrity Cruises provides a high quality cruise vacation by offering award-winning cuisine, personal service with a high staff-to-passenger ratio and spacious accommodations.

Under its Celebrity Expeditions concept, Celebrity Cruises provides passengers a more intimate experience onboard smaller, upscale ships offering cruises to premium destinations. Beginning in 2007, Celebrity Cruises will expand Celebrity Expeditions by introducing two additional ships, Celebrity Journey and Celebrity Quest.

Pullmantur Cruises operates in the Spanish market, which is one of the fastest growing cruise markets in Europe. Pullmantur’s cruise product is tailored specifically to Spanish-speaking passengers from both Spain and Latin America. All customer-facing crewmembers speak Spanish, dining times are later and onboard activities, services, shore excursions and menu offerings are designed to suit their target customers’ preferences. We will seek to broaden the awareness and market penetration of our new brand.

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Fleet Expansion

Based on the ships currently on order, our capacity is expected to increase to approximately 88,750 berths by December 31, 2010. Since our first fleet expansion program beginning in 1988, we have continued to increase our average ship size and number of available berths, which has enabled us to achieve certain economies of scale. Larger ships allow us to carry more passengers without a corresponding increase in certain operating expenses.

Royal Caribbean International. Founded in 1968, Royal Caribbean International was the first cruise line to design cruise ships especially for warm water year-round cruising. Royal Caribbean International operated a modern fleet in the 1970s and early 1980s, establishing a reputation for high quality. Between 1988 and 1992, the brand tripled its capacity by embarking on its first major capital expansion program and taking delivery of three Sovereign-class ships. From 1995 through 1998, Royal Caribbean International completed its second capital expansion program by taking delivery of six Vision-class ships, ranging in size from approximately 1,800 to 2,000 berths. During this same period, Royal Caribbean International sold four of its older ships because their age and design were no longer consistent with its image and marketing strategy.

Royal Caribbean International began its third capital expansion program with orders for five Voyager-class ships and four Radiance-class ships. The Voyager-class shipswere placedin service from 1999 through 2003. Each ship is approximately 140,000 gross tons with approximately 3,100 berths.

The brand introduced its four Radiance-class shipsfrom 2001 through 2004. The Radiance-class ships (approximately 90,000 gross tons each) are a progression from the brand’s Vision-class ships and have approximately 2,100 berths each.

In May 2006, Royal Caribbean International launched the 3,600 berth Freedom of the Seas, the first of three planned Freedom-class ships, and the largest cruise ship in the world. Royal Caribbean International expects to take delivery of two additional Freedom-class ships, Liberty of the Seas and Independence of the Seas, in 2007 and 2008, respectively.

Royal Caribbean International will introduce a new class of ship in 2009. This class of ship will have a capacity of approximately 5,400 berths, which is 50% larger than the capacity on the Freedom-class ships. At 1,180 feet long, 154 feet wide and 240 feet high, this new class of ship will give Royal Caribbean ample room to create new amenities to heighten guests’ cruise experience. We have an option to purchase an additional ship in this class, exercisable through March 2007. If ordered, the ship will be delivered in the third quarter of 2010.

Celebrity Cruises. Celebrity Cruises was founded in 1990 and operated three ships between 1992 and 1995. Between 1995 and 1997, Celebrity Cruises undertook its first capital expansion program, adding three Century-class ships, which range in size from approximately 1,750 to 1,850 berths and disposing of one of its original three ships. Celebrity Cruises completed its second capital expansion program with the delivery of four Millennium-class ships from 2000 through 2002. Each Millennium-class ship has approximately 2,050 berths and is approximately 90,000 gross tons.

In 2004, Celebrity Cruises introduced its Celebrity Expeditions cruise concept by launching CelebrityXpedition, a 100-berth ship that offers a more intimate, smaller ship experience with sailings to the Galapagos Islands. We intend to expand the Celebrity Expeditions concept with the introduction of Celebrity Journeyand Celebrity Quest in May and October 2007, respectively.

To continue its product evolution, Celebrity Cruises entered into contracts with a shipyard to build three Solstice-class ships, CelebritySolstice, Celebrity Equinox and Celebrity Eclipse. The Solstice-class ships will be approximately 118,000 gross tons each with approximately 2,850 berths, incorporating many features typically associated with luxury cruising. Celebrity Solstice,Celebrity Equinox and Celebrity Eclipse are scheduled for delivery in the fourth quarter of 2008, the third quarter of 2009 and the second quarter of 2010, respectively.

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Fleet Innovation

We place a strong focus on product innovation, not only for stimulating repeat business, but also for driving new demand for our products. The Voyager, Radiance and Millennium-class ships introduced several product innovations to the marketplace, and our brands have begun to adopt these innovations as signature elements. For example, Royal Caribbean International’s Voyager-class ships provide more diverse vacation options for families and for those seeking active sports and entertainment alternatives during their vacation experience. Each Voyager-class ship has a variety of unique features, including the cruise vacation industry’s first horizontal atrium, the “Royal Promenade” (which is four decks tall, longer than a football field and provides entertainment, shopping and dining experiences), recreational activities such as ice skating, in-line skating, rock climbing, miniature golf and full court basketball, enhanced staterooms, expanded dining venues and a variety of intimate spaces. Radiance-class ships incorporate many of the dining and entertainment options of the Voyager-class ships, as well as offer a wide array of unique features. These features include alternative dining venues, panoramic glass elevators facing outward to the sea, floor to ceiling glass windows offering sea views and a billiards club featuring gyroscopic billiard tables. During the second quarter of 2006, Freedom of the Seas began offering several new experiences to cruising including a surf machine, an interactive water park called the H2O ZoneTM and a dedicated sports pool. The Freedom-class ships are approximately 16% larger than the Voyager-class ships and have some of the largest staterooms and balconies in the industry, flat screen televisions, cell phone services and other amenities. Building upon the innovations of the Voyager-class and Freedom-class ships, Royal Caribbean International will introduce a new class of ship in 2009.

The Millennium-class ships elevated Celebrity Cruises’ position in the premium segment of the marketplace. This class of ships, which is a progression from the Century-class ships, builds on the brand’s primary strengths, including gourmet dining, luxurious spa facilities, and spacious staterooms and suites complete with verandas. On the Millennium-class ships, an entire deck is dedicated to health, fitness and the rejuvenating powers of water. Celebrity Cruises’ spas offer a variety of features, including a large hydropool with neck massage and body jets and services including “acupuncture at sea”. To further enhance the onboard experience, Celebrity Cruises offers a more intimate setting in our piano, champagne, and martini bars and lounges. In 2008, Celebrity Cruises will introduce the Solstice-class, a new wide-body construction class of ships, with large staterooms averaging 215 square feet. Approximately 90% of the ships' staterooms will be outside and 85% of the staterooms will have verandas.

In order to offer passengers a wider range of activities and amenities and to ensure consistency across our fleets, we embarked on a program of revitalizing our older ships to update and refresh their interiors and to incorporate signature brand elements. Renovations included the addition of new balconies, verandas, dining venues, lounges and teen areas as well as extensive refurbishments to staterooms and public areas.

Royal Caribbean International commenced its revitalization program in 2003 with extensive renovations to Monarch of the Seas, followed by extensive renovations to Empress of the Seas and Sovereign of the Seas in 2004. In 2005, Enchantment of the Seas underwent a lengthening with a new 73-foot midsection, which features 151 additional staterooms, suspension bridges, an overhanging bar offering panoramic views and bungee jumping trampolines. For the increasing number of young cruisers, Enchantment of the Seas introduced a new interactive splash pad with water jets on the floor, which transforms into a fiber-optic and water show at night. Majesty of the Seas is scheduled for extensive renovations in the first quarter of 2007 to include the addition of new dining venues, lounges and teen areas as well as new bedding packages for all staterooms.

Celebrity’s revitalization program began during 2006, with extensive renovations to Century, which incorporated many of the Millennium-class standards, while adding 314 new verandas, approximately 26 additional suites and staterooms, and a new specialty restaurant.

New Markets and Itineraries

Our ships operate worldwide with a selection of itineraries that call on approximately 310 ports. New ships, including both newly constructed vessels and those we acquire, allow us to expand into new destinations, itineraries and markets. Our brands have expanded their mix of itineraries in Europe, and our recent Pullmantur acquisition provides us with a brand operating in the Spanish market, while strengthening our ability to penetrate the European and Latin American markets further.

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In 2007, we will focus on the acceleration of Royal Caribbean International’s strategic position as a global cruise brand with the announced deployments of Splendour of the Seas in South America and Legend of the Seas in the Dominican Republic. In addition, Royal Caribbean International is expanding itineraries into Asia, Australia and New Zealand with Rhapsody of the Seas in December 2007, and Celebrity Cruises is expanding operations into Australia and New Zealand with Mercury in December 2007. The brands are now offering a wide variety of cruise tours from Alaska, the Canadian Rockies and Europe in order to provide vacationers with a broad range of product options.

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

International Passengers

Passenger ticket revenues generated by sales in countries outside of the United States were approximately 18%, 21%, and 18% of total passenger ticket revenues in 2006, 2005 and 2004, respectively. The percentage of passengers sourced outside of the United States was approximately 13% in 2006 compared to approximately 16% in 2005 and approximately 15% in 2004. International passengers have grown from approximately 213,000 in 1998 to approximately 586,000 in 2006.

We sell and market the Royal Caribbean International and Celebrity Cruises brands to passengers outside of North America through our offices in the United States, United Kingdom, Germany, Norway, Italy and Spain. We further extend our reach with a network of 48 independent international representatives located throughout the world. We market our product in these countries by focusing on innovation and by responding to cultural characteristics of our global passengers. Our recently acquired Pullmantur Cruises brand sells and markets its cruises to passengers primarily in Spain and Latin America through its offices in Spain.

During the summer of 2005, Royal Caribbean International dedicated Legend of the Seas to the United Kingdom passenger market, offering itineraries to the Mediterranean sailing directly from Southampton, United Kingdom and offering onboard products designed to appeal to passengers from the United Kingdom. Due to the success of this effort, we will be replacing Legend of the Seas with a Voyager-class vessel, Navigator of the Seas, to this itinerary in 2007. Also in 2007, Royal Caribbean International’s Voyager of the Seas willreturn to Barcelona, Spain offering Mediterranean itineraries. Royal Caribbean International will also introduce the Vision-class ship, Rhapsody of the Seas, to Australia, New Zealand and the South Pacific offering sailings from Singapore, Hong Kong and Shanghai. Splendour of the Seas will begin a Pan-European itinerary out of Venice, Italy beginning in May and will also sail in South America with emphasis on Brazil. At the end of 2007, Celebrity Cruises will introduce Mercury to Australia and New Zealand offering open-jaw sailings between Auckland and Sydney. In May 2008, Independence of the Seas will be introduced in the United Kingdom and will offer itineraries to the Mediterranean, the Channel Islands and the Canary Islands.

In addition to the development of our global brands, we focus on innovative ways to develop our local presence in markets outside of North America. We have a joint venture with First Choice, one of the largest integrated tour operators in the United Kingdom. This joint venture operates a cruise brand, Island Cruises, offering itineraries designed to attract passengers from the United Kingdom and Brazil. Island Cruises operates a 1,500 berth ship sailing under the name Island Escape. Celebrity Cruises’ Horizon, a 1,350 berth ship, is currently chartered under a six-year agreement through 2011 to this joint venture. Horizon is currently sailing under the name Island Star, expanding Island Cruise’s presence in Europe and South America.

Revenue Management

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

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Cost Management

We continue to prioritize the identification and implementation of shipboard and shoreside operating cost initiatives, and to foster a corporate culture focused on cost management. Examples of these ongoing efforts include continued optimization of shipboard and shoreside staffing levels, application of continuous improvement processes, and improved efficiency of fuel consumption through technology and opportunistic initiatives, including use of alternative fuel solutions, itinerary optimization, and diligent shipboard conservation efforts.

Technological Development

We continue to invest in information technology to support and improve our corporate infrastructure and passenger and travel trade relations. We have a workforce management system to schedule and manage contracts for our shipboard employees worldwide and have also automated the transmission of passenger and crew information to all relevant government agencies. Both Royal Caribbean International and Celebrity Cruises have extensive websites that are world-class marketing portals with consumer booking engines providing access to millions of Internet users throughout the world. We have streamlined our documentation process by providing our passengers with electronic documents accessible online. We also offer passengers the ability to complete their embarkation forms online prior to the embarkation date and also offer automated pierside embarkation and disembarkation to our passengers. Automation of the disembarkation process improves the travel experience for our passengers by providing airline boarding passes and luggage check-in for same-day return flights while passengers are still onboard the ship. To further enhance our customer service, we provide online access so passengers can book shore excursions and Alaska cruisetour land excursions via our websites. We offer a website for Celebrity Cruises which improves the ease of use and distribution of multimedia marketing information to our current and potential customers. Additionally, we have implemented a customer relationship management tool, which improves our ability to respond to passenger and travel agent inquiries in a timely and accurate manner. Other innovations include wireless Internet cafes and cellular phone access on selected ships to satisfy our passengers’ mobile computing and communication needs. We have interactive televisions in passenger staterooms on certain ships, enabling passengers to shop for shore excursions, select a dinner wine and monitor their onboard accounts. We have cruisingpower.com, a website dedicated to Internet communications with the travel agency community, which enables fast access to online tools and is the ultimate shared resource center for Royal Caribbean International and Celebrity Cruises information. These online tools include CruiseMatch® Online, an Internet browser-based booking system, CruisePay^SM, an online payment service, Insight, a booking summary report and Cruise Writer^SM, which provides the capability to customize brochures and flyers.

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Travel Agency Support

Travel agencies generate the majority of the bookings for our ships and we are committed to further developing and strengthening this very important distribution channel. Each of our brands has a brand-dedicated sales force. Each sales team focuses on the unique qualities of each brand and provides support to the travel agency community. The Trade Support & Services department, with branded call center operations, further supports the travel agency community in designing the cruise vacation experience. We offer an automated reservations system, CruiseMatch®Online, which allows travel agents direct access to Royal Caribbean International’s and Celebrity Cruises’ computer reservation system for direct bookings. We launched a dedicated home-based portal on cruisingpower.com, which offers home-based travel partners access to exclusive communication, education, sales and marketing tools and resources needed to grow their business with us. We have customer service representatives that are trained to assist travel agents in providing a higher level of service and Insight, the first Internet service tool of its kind in the industry, which assists agencies with productivity and enhances customer service. We currently operate reservation call centers to support our travel agent community in the United States, Canada, Spain and the United Kingdom offering flexibility and extended hours of operations. Call centers for the United States and Canada are located in Miami and Miramar, Florida, Wichita, Kansas and Springfield, Oregon. The call center for the United Kingdom is located in Addlestone, England. The call center for Pullmantur Cruises is located in Madrid, Spain. We have certified vacation planners in our call centers in Miami, Miramar, Wichita, Springfield and Addlestone offering cruise planning expertise and personal attention for direct bookings. In addition, direct booking channels for Royal Caribbean International and Celebrity Cruises are available through our Internet sites at www.royalcaribbean.com and www.celebrity.com.

Passenger Services

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

The Royal Caribbean International passenger loyalty program, “Crown & Anchor Society” has over 4.1 million members worldwide and includes benefits such as a secured dedicated section in the www.royalcaribbean.com Internet site with special cruise offers and onboard amenities. The Celebrity Cruises passenger loyalty program, “Captain's Club” has approximately 850,000 members. Captain's Club members enjoy exclusive members-only onboard programs and amenities, and are provided with a secured area on the Celebrity Cruises web site, which communicates select product offers.

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Operations

Cruise Ships and Itineraries

We operate 34 ships, under three brands, with a selection of worldwide itineraries ranging from two to 17 nights that call on approximately 310 destinations. Liberty of the Seas is expected to enter revenue service in May 2007. In addition, Pullmantur Cruises will operate Pacific and Mona Lisa under charter agreements with third parties from April through October 2007 and June through August 2007, respectively. The following table represents summary information concerning our ships and their areas of operation based on 2007 itineraries (subject to change):

Ship	Year Ship Entered Service		Approximate Berths		Primary Areas of Operation
Royal Caribbean International
Liberty of the Seas		2007		3,600		Eastern/Western Caribbean
Freedom of the Seas		2006		3,600		Eastern/Western Caribbean
Jewel of the Seas		2004		2,100		Eastern/Western Caribbean, Canada/New England, Europe
Mariner of the Seas		2003		3,100		Eastern/Western Caribbean
Serenade of the Seas		2003		2,100		Alaska, Southern Caribbean, Panama Canal, Hawaii
Navigator of the Seas		2002		3,100		Eastern/Western Caribbean, Europe
Brilliance of the Seas		2002		2,100		Caribbean, Europe, Panama Canal
Adventure of the Seas		2001		3,100		Southern Caribbean
Radiance of the Seas		2001		2,100		Eastern/Western Caribbean, Alaska, Hawaii, Panama Canal
Explorer of the Seas		2000		3,100		Eastern/Western Caribbean, Bermuda
Voyager of the Seas		1999		3,100		Eastern/Western Caribbean, Europe
Vision of the Seas		1998		2,000		Alaska, Mexican Riviera
Enchantment of the Seas1		1997		2,250		Western Caribbean
Rhapsody of the Seas		1997		2,000		Western Caribbean, Australia/NZ, Asia
Grandeur of the Seas		1996		1,950		Caribbean, Bermuda, Canada, New England
Splendour of the Seas		1996		1,800		Western Caribbean, Europe, South America
Legend of the Seas		1995		1,800		Europe, Western Caribbean, Southern Caribbean
Majesty of the Seas		1992		2,350		Bahamas
Monarch of the Seas		1991		2,350		Baja Mexico
Empress of the Seas		1990		1,600		Southern Caribbean, Bermuda
Sovereign of the Seas		1988		2,300		Bahamas
Celebrity Cruises Constellation		2002		2,050		Caribbean, Europe, Canada/New England
Summit		2001		2,050		Alaska, Panama Canal, Hawaii, Southern Caribbean
Infinity		2001		2,050		Alaska, Panama Canal, South America, Hawaii
Millennium		2000		2,050		Eastern Caribbean, Europe
Mercury		1997		1,850		Alaska, Pacific/Northwest, Mexican Riviera, Panama Canal, Hawaii, Australia/NZ
Galaxy		1996		1,850		Southern Caribbean, Europe
Century2		1995		1,800		Western Caribbean, Europe
Zenith3		1992		1,350		Caribbean, Bermuda, Mediterranean
Celebrity Xpedition4		2004		100		Galapagos Islands

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Pullmantur Cruises
Blue Moon5	2006		700	Baltic, Caribbean, Panama Canal
Sky Wonder6	2006		1,200	Eastern Mediterranean
Holiday Dream6	2005		750	Mediterranean, Caribbean
Oceanic6	2001		1,150	Western Mediterranean
Blue Dream7	2004		700	Mediterranean, Bermuda
Pacific	2007		600	Mediterranean
Mona Lisa	2007		750 ____	Mediterranean
Total		72,500

¹Enchantmentof the Seas was lengthened in 2005, resulting in approximately 300 additional berths.

²Century was revitalized in 2006, resulting in approximately 26 additional berths.

³Zenith will undergo a revitalization and will be redeployed to Pullmantur in June 2007.

⁴ Celebrity Xpedition was built in 2001.

⁵Blue Moon was built in 2000. Blue Moon will undergo a revitalization and be redeployed to Celebrity as Celebrity Quest in October of 2007.

⁶Sky Wonder, Holiday Dream and Oceanic were built in 1984, 1981 and 1965, respectively.

⁷Blue Dream was built in 2000. Blue Dream will undergo a revitalization and be redeployed to Celebrity as Celebrity Journey in May of 2007.

Celebrity Cruises’ Horizon, a 1,350 berth ship, is currently chartered under a six-year agreement through 2011 to Island Cruises, our joint venture with First Choice.

We have two Freedom-class ships and one ship of a new class on order for Royal Caribbean International. These ships are being built in Finland by Aker Finnyards. We have three Solstice-class ships on order for Celebrity Cruises. These ships are being built in Germany by Meyer Werft. The expected delivery dates and planned berths of the six ships on order are as follows:

Ship	Expected Delivery Date	Approximate Berths
Royal Caribbean International:
Freedom-class:
Liberty of the Seas	2nd Quarter 2007	3,600
Independence of the Seas	2nd Quarter 2008	3,600
New Class (unnamed)
Unnamed	3rd Quarter 2009	5,400
Celebrity Cruises:
Solstice-class:
Celebrity Solstice	4th Quarter 2008	2,850
Celebrity Equinox	3rd Quarter 2009	2,850
Celebrity Eclipse	2nd Quarter 2010	2,850

We have an option to purchase an additional ship for Royal Caribbean International, exercisable through March 2007, for an additional capacity of approximately 5,400 berths. If ordered, we expect the optional ship will be delivered in the third quarter of 2010.

Seasonality

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

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Passengers and Capacity

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

	Year Ended December 31,
	2006	2005	2004	2003	2002
Passengers Carried	3,600,807	3,476,287	3,405,227	2,990,607	2,768,475
Passenger Cruise Days	23,849,606	23,178,560	22,661,965	20,064,702	18,112,782
Available Passenger Cruise Days (APCD)	22,392,478	21,733,724	21,439,288	19,439,238	17,334,204
Occupancy	106.5%	106.6%	105.7%	103.2%	104.5%

Cruise Pricing

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

Onboard Activities and Other Revenues

Our brands offer modern fleets with a wide array of onboard activities, services and amenities, including swimming pools, sun decks, spa facilities (which include massage and exercise facilities), beauty salons, gaming facilities, lounges, bars, Las Vegas-style entertainment, retail shopping, libraries, cinemas, conference centers, Internet cafes and shore excursions at each port of call. While many onboard activities are included in the base price of a cruise, we realize additional revenues from, among other things, gaming, the sale of alcoholic and other beverages, gift shop items, shore excursions, photography, spa services and art auctions. Royal Caribbean International and Celebrity Cruises offer a catalogue gift service, which is now offered via the Internet to provide travel agents and others the opportunity to purchase “bon voyage” gifts. In 2006, both brands introduced enhanced functionality on our Internet sites for selecting shore excursions and amenities prior to embarkation. In 2007 Celebrity will continue to offer the “Savor the Caribbean” culinary themed cruises, marking the third year of this successful program. Royal Caribbean International ships offer rock climbing walls and the Voyager-class ships offer additional activities including ice skating rinks and in-line skating. In 2005, Royal Caribbean International introduced bungee jumping trampolines on the renovated Enchantment of the Seas. In 2006, Freedom of the Seas began offering several new experiences to cruising including a surf machine, an interactive water park called the H2O Zone™ and a dedicated sports pool.

In conjunction with our cruise vacations, we offer pre and post cruise hotel packages. We also offer fully escorted, premium land-tour packages in Alaska, Australia, the Canadian Rockies, New Zealand, and Europe through Royal Celebrity Tours. These land-tour itineraries include travel by deluxe motorcoach and/or Wilderness Express traincars. In addition, we sell cruise vacation protection coverage, which provides passengers with coverage for trip cancellation, medical protection and baggage protection.

Pullmantur Cruises also offers land-based travel packages to Spanish and European vacation travelers including hotels and flights to Caribbean resorts and sells land based packages to Europe aimed at Latin American customers.

Segment Reporting

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

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Employees

As of December 31, 2006, we employed approximately 4,329 full-time and 687 part-time employees worldwide in our shoreside operations. We also employed approximately 37,942 shipboard employees. As of December 31, 2006, approximately 80% of our shipboard employees were covered by collective bargaining agreements. We believe that our relationship with our employees is good.

Insurance

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

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

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

Pullmantur's liability protection, indemnity insurance and war risk insurance for its ships are maintained with the Steamship Mutual Underwriting Association (Bermuda) Limited and Assuranceforeningen SKULD.

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

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

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

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

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Trademarks

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

Regulation

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

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

We are required to obtain certificates from the United States Federal Maritime Commission relating to our ability to satisfy liability in cases of non-performance of obligations to passengers, as well as casualty and personal injury. Pursuant to the United States Federal Maritime Commission regulations, we arrange through our insurers for the provision of guarantees aggregating $45.0 million for our ship-operating companies as a condition to obtaining the required certificates. The United States Federal Maritime Commission has proposed various revisions to the financial responsibility regulations, which could require us to significantly increase the amount of our bonds and accordingly increase our costs of compliance.

We are also required by the United Kingdom and other jurisdictions to establish our financial responsibility for any liability resulting from the non-performance of our obligations to passengers from these jurisdictions. In the United Kingdom, we are currently required by the United Kingdom Passenger Shipping Association and United Kingdom Civil Aviation Authority to provide performance bonds totaling approximately £44.3 million.

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

We are required to obtain certificates from the United States Coast Guard relating to our ability to satisfy liability in cases of water pollution. Pursuant to United States Coast Guard regulations, we arrange through our insurers for the provision of guarantees aggregating $318.0 million as a condition to obtaining the required certificates.

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

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Taxation of the Company

United States Federal Income Tax

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

Application of Section 883 of the Internal Revenue Code

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

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

We believe that most of our income and the income of our ship-owning subsidiaries is derived from or incidental to the international operation of a ship or ships and, therefore, is exempt from taxation under Section 883. In 2005, final regulations became effective under Section 883, which, among other things, narrow somewhat the scope of activities that are considered by the Internal Revenue Service to be incidental to the international operation of ships. The activities listed in the regulations as not being incidental to the international operation of ships include income from the sale of air and land transportation, shore excursions and pre and post cruise tours. To the extent the income from these activities is earned from sources within the United States, that income will be subject to United States taxation; but the determination of the precise amount of such United States source income involves some uncertainties. The tax impact of these new regulations reduced our net income for the year ended December 31, 2006 by approximately $6.3 million, and we anticipate tax impacts in subsequent years on an ongoing basis.

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

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

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

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

Because we and Celebrity Cruises Inc. conduct a trade or business in the United States, we and Celebrity Cruises Inc. would be taxable at regular corporate rates on our separate company taxable income (i.e., without regard to the income of our ship-owning subsidiaries), from United States sources, which includes 100% of income, if any, from transportation that begins and ends in the United States (not including possessions of the United States), 50% of income from transportation that either begins or ends in the United States, and no income from transportation that neither begins nor ends in the United States. The legislative history of the transportation income source rules suggests that a cruise that begins and ends in a United States port, but that calls on more than one foreign port, will derive United States source income only from the first and last legs of such cruise. This conclusion is not free from doubt, however, because there are no regulations or other Internal Revenue Service interpretations of the above rules. In addition, if any of our earnings and profits effectively connected with our United States trade or business were withdrawn, or were deemed to have been withdrawn, from our United States trade or business, those withdrawn amounts would be subject to a “branch profits” tax at the rate of 30%. The amount of such earnings and profits would be equal to the aforesaid United States source income, with certain generally minor adjustments, less income taxes. We and Celebrity Cruises Inc. would also be potentially subject to tax on portions of certain interest paid by us at rates of up to 30%.

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

Maltese Income Tax

The Pullmantur ship-owning subsidiaries qualify as licensed shipping organizations in Malta. No Maltese income tax is charged on the income derived from shipping activities of a licensed shipping organization. Instead, a licensed shipping organization is liable to pay a tonnage tax based on the net tonnage of the ship or ships registered under the relevant provisions of the Merchant Shipping Act. A company qualifies as a shipping organization if it engages in qualifying activities and it obtains a license from the Registrar-General to enable it to carry on such activities. Qualifying activities include, but are not limited to, the ownership, operation (under charter or otherwise), administration and management of a ship or ships registered as a Maltese ship in terms of the Merchant Shipping Act and the carrying on of all ancillary financial, security and commercial activities in connection therewith.

Our Maltese operations that do not qualify as licensed shipping organizations, which are not considered significant, remain subject to normal Maltese corporate income tax.

United Kingdom Income Tax

The Brilliance of the Seas is operated by a company that is strategically and commercially managed in the United Kingdom, which has elected to be subject to the United Kingdom tonnage tax regime (“U.K. tonnage tax”). Companies subject to U.K. tonnage tax pay a corporate tax on a notional profit determined with reference to the net tonnage of qualifying vessels. Normal United Kingdom corporate income tax is not chargeable on the relevant shipping profits of a qualifying U.K. tonnage tax company. The requirements for a company to qualify for the U.K. tonnage tax regime include being subject to United Kingdom corporate income tax, operating qualifying ships, which are strategically and commercially managed in the United Kingdom, and fulfilling a seafarer training requirement.

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Relevant shipping profits include income from the operation of qualifying ships and from shipping related activities. Our United Kingdom income from non-shipping activities which do not qualify under the U.K. tonnage tax regime and which are not considered significant, remain subject to United Kingdom corporate income tax.

Website Access to Reports

We make available, free of charge, access to our Annual Reports, all quarterly and current reports and all amendments to those reports, as soon as reasonably practicable after such reports are electronically filed with or furnished to the Securities and Exchange Commission through our website at www.rclinvestor.com. The information contained on our website is not a part of any of these reports and is not incorporated by reference herein.

Executive Officers of the Company

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

Our executive officers are:

Name	Age	Position
Richard D. Fain	59	Chairman, Chief Executive Officer and Director
Adam M. Goldstein	47	President, Royal Caribbean International
Daniel J.Hanrahan	49	President, Celebrity Cruises
Brian J. Rice	48	Executive Vice President and Chief Financial Officer
Harri U. Kulovaara	54	Executive Vice President Maritime

Richard D. Fain has served as a director since 1979 and as our Chairman and Chief Executive Officer since 1988. Mr. Fain is Chairman of the Cruise Line International Association, an industry trade organization consisting of 16,000 travel agencies and 21 cruise lines. Mr. Fain has been involved in the shipping industry for over 25 years.

Adam M. Goldstein has served as President of Royal Caribbean International since February 2005. As President, Mr.Goldstein oversees fleet operations, sales, marketing and brand development for the Royal Caribbean International brand. Mr. Goldstein is also responsible for international sales and marketing in Europe and Asia, continuous improvement, government relations, supply chain management and our tour company, Royal Celebrity Tours. Mr. Goldstein has been employed with Royal Caribbean since 1988 in a variety of positions, including Executive Vice President, Brand Operations, Senior Vice President, Total Guest Satisfaction and Senior Vice President, Marketing. Mr. Goldstein served as National Chair of the Travel Industry Association of America in 2001.

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

Brian J. Rice has served as Executive Vice President and Chief Financial Officer since November 2006. Mr. Rice has been employed with Royal Caribbean since 1989 in a variety of positions including Executive Vice President, Revenue Performance. In such capacity, Mr. Rice was responsible for revenue performance, air/sea, groups, international operations, decision support, reservations and customer service for both Royal Caribbean International and Celebrity Cruises. In addition to serving as Executive Vice President and Chief Financial Officer, Mr. Rice will continue to oversee revenue performance.

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Harri U. Kulovaara has served as Executive Vice President, Maritime, since January 2005. Mr. Kulovaara is responsible for fleet design and newbuild operations for Royal Caribbean International and Celebrity Cruises. Mr. Kulovaara also oversees our safety and environment department and chairs our Maritime Safety Advisory Board. Mr. Kulovaara has been employed with Royal Caribbean since 1995 in a variety of positions, including Senior Vice President, Marine Operations, and Senior Vice President, Quality Assurance. Mr. Kulovaara is a naval architect and engineer.

Item 1A. Risk Factors

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

We may lose business to competitors throughout the vacation market.

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

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

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

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

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

Fears of terrorist attacks, war and other hostilities and the spread of contagious diseases could have a negative impact on our profitability.

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

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

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

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

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

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

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

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

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

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

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

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

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

Our operating costs, including fuel, food, payroll, insurance and security costs, are subject to increases due to market forces and economic or political instability or other factors beyond our control. Increases in these operating costs could adversely affect our profitability. In addition, United States state and local authorities as well as foreign authorities periodically consider increases in taxes. The implementation of these and other taxes could also cause an increase in our costs.

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Unavailability of ports of call may adversely affect our profits.

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

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

We and a number of our subsidiaries are foreign corporations that derive income from a United States trade or business and/or from sources within the United States. Drinker Biddle & Reath LLP, our United States tax counsel, has delivered to us an opinion, based on certain representations and assumptions set forth in it, to the effect that this income, to the extent derived from or incidental to the international operation of a ship or ships, is exempt from United States income tax pursuant to Section 883 of the Internal Revenue Code. We believe that most of our income (including that of our subsidiaries) is derived from or incidental to the international operation of a ship or ships.

In 2005, final regulations under Section 883 became effective, which narrowed somewhat the scope of activities that are considered by the Internal Revenue Service to be incidental to the international operation of ships. To the extent the income from non-incidental activities is earned from sources within the United States, that income will be subject to United States taxation; but the determination of the precise amount of such Untied States source income involves some uncertainties. The tax impact of these new regulations reduced our net income for the year ended December 31, 2006 by approximately $6.3 million and we anticipate tax impacts in subsequent years on an ongoing basis.

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

Finally, changes in the income tax laws affecting our cruise business in Malta, the United Kingdom or elsewhere could result in higher income taxes being charged against our cruise operations, resulting in lower net income.

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

As of February 7, 2007, A. Wilhelmsen AS., a Norwegian corporation indirectly owned by members of the Wilhelmsen family of Norway, owned approximately 20.2% of our common stock and Cruise Associates, a Bahamian general partnership indirectly owned by various trusts primarily for the benefit of certain members of the Pritzker family and various trusts primarily for the benefit of certain members of the Ofer family, owned approximately 15.7% of our common stock. A. Wilhelmsen AS. and Cruise Associates have the power to determine, among other things:

• our policies and the policies of our subsidiaries,

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

• actions requiring shareholder approval.

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

• four nominees of A. Wilhelmsen AS.,

• four nominees of Cruise Associates and

• our Chief Executive Officer.

During the term of the shareholders’ agreement, certain corporate actions require the approval of at least one director nominated by A. Wilhelmsen AS. and one director nominated by Cruise Associates. Our principal shareholders are not prohibited from engaging in a business that may compete with our business, subject to certain exceptions. If any person other than A. Wilhelmsen AS. and Cruise Associates, our two principal shareholders, acquires ownership of more than 30% of our common stock and our two principal shareholders, in the aggregate, own less of our common stock than such person and do not collectively have the right to elect, or to designate for election, at least a majority of the board of directors, 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.

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

A substantial number of shares of our common stock were either issued by us in private transactions not involving a public offering or are held by our affiliates and, therefore the sale of these securities is subject to restrictions under the Securities Act of 1933 (“Securities Act”). These shares include the 20.2% shares of our common stock held by A. Wilhelmsen AS. and the 15.7% held by Cruise Associates. No predictions can be made as to the effect, if any, that market sales of such shares, or the availability of such shares for future market sales, will have on the market price of our common stock prevailing from time to time. Sales of substantial amounts of our common stock, or the perceptions that such sales could occur, could materially adversely affect the prevailing market price for our common stock and could impair our ability to raise capital through an offering of equity securities. Each of A. Wilhelmsen AS. and Cruise Associates has the right, pursuant to a registration rights agreement, to require us, subject to certain qualifications, to effect the registration under the Securities Act of all or part of their shares of common stock which would allow these shares to be sold into the public market.

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

Our corporate affairs are governed by our Restated Articles of Incorporation and By-Laws and by the Business Corporation Act of Liberia. The provisions of the Business Corporation Act of Liberia resemble provisions of the corporation laws of a number of states in the United States. However, while most states have a fairly well developed body

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of case law interpreting their respective corporate statutes, there are very few judicial cases in Liberia interpreting the Business Corporation Act of Liberia. For example, the rights and fiduciary responsibilities of directors under Liberian law are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain United States jurisdictions. Thus, our public shareholders may have more difficulty in protecting their interests with respect to actions by management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

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

Our principal executive office and shoreside operations are located at the Port of Miami, Florida where we lease three office buildings totaling approximately 359,000 square feet from Miami-Dade County, Florida, under long-term leases with initial terms expiring in various years in and after 2011. We also lease offices in Addlestone, England, which are used primarily to administer our operations in Europe, and an office in Madrid, Spain to administer our Pullmantur operations.

We lease an office building in Springfield, Oregon totaling approximately 163,000 square feet, which is used as a call center for reservations. In addition, we lease an office building in Wichita, Kansas totaling approximately 95,000 square feet, which is used as a call center for reservations and customer service.

We lease an office building in Miramar, Florida totaling approximately 128,000 square feet, which is used primarily as additional office space.

Royal Caribbean International operates two private destinations: (i) an island we own in the Bahamas which we call Cococay; and (ii) Labadee, a secluded peninsula which we lease and is located on the north coast of Haiti.

Item 3. Legal Proceedings

In April 2005, a purported class action lawsuit was filed in the United States District Court of the Southern District of Florida alleging that Celebrity Cruises improperly requires its cabin stewards to share guest gratuities with assistant cabin stewards. The suit sought payment of damages, including penalty wages under the U.S. Seaman’s Wage Act. In March 2006, the Southern District of Florida dismissed the suit and held that the case should be arbitrated pursuant to the arbitration provision in Celebrity’s collective bargaining agreement. In April 2006, the plaintiff appealed the order to the United States 11th Circuit Court of Appeals. We are not able at this time to estimate the impact of this proceeding on us. However, we believe that we have meritorious defenses and we intend to vigorously defend against this action.

In January 2006, a purported class action lawsuit was filed in the United States District Court for the Southern District of New York alleging that we infringed rights in copyrighted works and other intellectual property by presenting performances on our cruise ships without securing the necessary licenses. The suit seeks payment of damages, disgorgement of profits and a permanent injunction against future infringement. In April 2006, we filed a motion to sever and transfer the case to the United States District Court for the Southern District of Florida. The motion is pending. We are not able at this time to estimate the impact of this proceeding on us.

In July 2006, a purported class action lawsuit was filed in the United States District Court for the Central District of California alleging that we failed to timely pay crew wages and failed to pay proper crew overtime.

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The suit seeks payment of damages, including penalty wages under the U.S. Seaman’s Wage Act and equitable relief damages under the California Unfair Competition Law. In December 2006, the District Court granted our motion to dismiss the claim and held that it should be arbitrated pursuant to the arbitration provision in Royal Caribbean’s collective bargaining agreement. In January 2007, the plaintiffs appealed the order to the United States Ninth Circuit Court of Appeals.We are not able at this time to estimate the impact of this proceeding on us. However, we believe that we have meritorious defenses and we intend to vigorously defend against this action.

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

None.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

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

	NYSE Common Stock		OSE Common Stock(1)
	High	Low	High	Low
2006 Fourth Quarter	$43.97	$38.06	282.00	243.00
Third Quarter	39.28	32.47	260.00	203.50
Second Quarter	43.86	35.00	280.00	213.00
First Quarter	46.77	40.59	316.50	271.00
2005 Fourth Quarter	$47.35	$38.59	319.94	251.52
Third Quarter	49.47	41.56	327.03	258.96
Second Quarter	49.00	40.72	320.70	257.03
First Quarter	55.23	43.05	345.47	271.14

__________

(1) Denominated in Norwegian kroner.

Holders

As of February 7, 2007 there were 1,058 record holders of our common stock. Since certain of our shares are held indirectly, the foregoing number is not representative of the number of beneficial owners.

Dividends

We declared cash dividends on our common stock of $0.15 per share in each of the quarters of 2006. Cash dividends of $0.13 per share on our common stock were declared in each of the first and second quarters of 2005 and $0.15 per share in each of the third and fourth quarters of 2005.

Holders of our common stock have an equal right to share in our profits in the form of dividends when declared by our board of directors out of funds legally available for the distribution of dividends. Holders of our common stock have no rights to any sinking fund.

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

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

Issuer Purchases of Equity Securities

None.

Performance Graph

The following graph compares the performance of the Company’s common stock with the performance of the Standard & Poor’s 500 Composite Stock Index and the Dow Jones U.S. Travel and Leisure Index for a five year period by measuring the changes in common stock prices from December 31, 2001 to December 31, 2006.

The stock performance graph assumes for comparison that the value of the Company’s Common Stock and of each index was $100 on December 31, 2001 and that all dividends were reinvested. Past performance is not necessarily an indicator of future results.

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Item 6. Selected Financial Data

The selected consolidated financial data presented below for the years 2002 through 2006 and as of the end of each such year, are derived from our audited financial statements and should be read in conjunction with those financial statements and the related notes.

	Year Ended December 31,
	2006	2005	2004	2003	2002
	(in thousands, except per share data)
Operating Data:
Total revenues	$5,229,584	$4,903,174	$4,555,375	$3,784,249	$3,434,347
Operating income	858,446	871,565	753,589	526,185	550,975
Income before cumulative      effect of a change in      accounting principle	633,922	663,465	474,691	280,664	351,284
Cumulative effect of a     change in accounting     principle1	-	52,491	-	-	-
Net income	633,922	715,956	474,691	280,664	351,284
Per Share Data — Basic:
Income before cumulative     effect of a change in     accounting principle	$3.01	$3.22	$2.39	$1.45	$1.82
Cumulative effect of a     change in accounting     principle1	$      -	$0.25	$      -	$      -	$      -
Net income	$3.01	$3.47	$2.39	$1.45	$1.82
Weighted-average shares	210,703	206,217	198,946	194,074	192,485
Per Share Data — Diluted:
Income before cumulative     effect of a change in     accounting principle	$2.94	$3.03	$2.26	$1.42	$1.76
Cumulative effect of a     change in accounting     principle1	$      -	$0.22	$      -	$      -	$      -
Net income	$2.94	$3.26	$2.26	$1.42	$1.76
Weighted-average shares and potentially dilutive shares	221,485	234,714	234,580	211,175	209,565
Dividends declared per common share	$0.60	$0.56	$0.52	$0.52	$0.52
Balance Sheet Data:
Total assets	$13,393,088	$11,255,771	$11,964,084	$11,322,742	$10,538,531
Total debt, including       capital leases	5,413,744	4,154,775	5,731,944	5,835,804	5,444,838
Common stock	2,225	2,165	2,012	1,961	1,930
Total shareholders’ equity	6,091,575	5,554,465	4,804,520	4,262,897	4,034,694

¹ In the third quarter of 2005, we changed our method of accounting for drydocking costs from the accrual in advance to the deferral method (see Note 2. Summary of Significant Accounting Policies to our consolidated financial statementsunder Item 8. Financial Statements and Supplementary Data.)

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

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

• general economic and business conditions,

• vacation industry competition and changes in industry capacity and overcapacity,

• 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 and the unavailability of air service,

• fears of terrorist attacks, armed conflict and the resulting concerns over safety and security aspects of traveling,

• the impact of the spread of contagious diseases,

• the availability under our unsecured revolving credit facility, cash flows from operations and our ability to obtain new borrowings and raise new capital on terms that are favorable or consistent with our expectations to fund operations, debt payment requirements, capital expenditures and other commitments,

• changes in our stock price or principal shareholders,

• the impact of changes in operating and financing costs, including changes in foreign currency, interest rates, fuel, food, payroll, insurance and security costs,

• 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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Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. (See Note 1. General and Note 2. Summary of Significant Accounting Policies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data.) Certain of our accounting policies are deemed “critical,” as they require management’s highest degree of judgment, estimates and assumptions. We have discussed these accounting policies and estimates with the audit committee of our board of directors. We believe our most critical accounting policies are as follows:

 

Ship Accounting

Our ships represent our most significant assets and are stated at cost less accumulated depreciation or amortization. Depreciation of ships is generally computed net of a 15% projected residual value using the straight-line method over estimated service lives of primarily 30 years. Improvement costs that we believe add value to our ships are capitalized as additions to the ship and depreciated over the improvements’ estimated useful lives. The estimated cost and accumulated depreciation of refurbished or replaced ship components are written off and any resulting losses are recognized in cruise operating expenses. Repairs and maintenance activities are charged to expense as incurred. We use the deferral method to account for drydocking costs. Under the deferral method, drydocking costs incurred are deferred and charged to expense on a straight-line basis over the period to the next scheduled drydock. (See Note 2. Summary of Significant Accounting Policies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data).

 

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

 

We believe we have made reasonable estimates for ship accounting purposes. However, should certain factors or circumstances cause us to revise our estimates of ship service lives or projected residual values, depreciation expense could be materially higher or lower. If circumstances cause us to change our assumptions in making determinations as to whether ship improvements should be capitalized, the amounts we expense each year as repairs and maintenance costs could increase, partially offset by a decrease in depreciation expense. If we had reduced our estimated average 30-year ship service life by one year, depreciation expense for 2006 would have increased by approximately $27.4 million. If our ships were estimated to have no residual value, depreciation expense for 2006 would have increased by approximately $93.9 million.

Valuation of Long-Lived Assets and Goodwill

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of our asset based on our estimate of its undiscounted future cash flows. If these estimated future cash flows were less than the carrying value of the asset, an impairment charge would be recognized for the difference between the asset’s estimated fair value and its carrying value.

 

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

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Goodwill and other intangible assets are reviewed annually or whenever events or changes in circumstances indicate that the carrying amount of the intangible asset may not be fully recoverable. The impairment review consists of comparing the fair value of our reporting units with their carrying value including the intangible asset. If the carrying value of the reporting unit exceeds its fair value, it may be an indication of possible impairment of assets. In this case we would compare the fair value of the reporting unit to the carrying value of the intangible asset. If the carrying value of the intangible asset exceeds the fair value of the reporting unit, an impairment charge would be recognized for the difference between the carrying value of the intangible asset and the fair value of the reporting unit. We use a present value of future cash flows approach to determine the fair value of our reporting units.

We believe we have made reasonable estimates and judgments in determining whether our long-lived assets and intangible assets have been impaired; however, if there is a material change in the assumptions used in our determination of fair values or if there is a material change in the conditions or circumstances influencing fair value, we could be required to recognize a material impairment charge.

Contingencies — Litigation

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

Terminology and Non-GAAP Financial Measures

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. A reconciliation of historical Gross Cruise Costs to Net Cruise Costs is provided below under Summary of Historical Results of Operations. 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 Debt-to-Capital is a ratio which represents total long-term debt, including current portion of long-term debt, less cash and cash equivalents (“Net Debt”) divided by the sum of Net Debt and shareholders' equity ("Capital"). We believe Net Debt and Net Debt-to-Capital, along with total long-term debt and shareholders' equity are useful measures of our capital structure. A reconciliation of historical Debt-to-Capital to Net Debt-to-Capital is provided below under Summary of Historical Results of Operations.

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

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our business on a day-to-day basis and believe that it is the most relevant measure of our pricing performance because it reflects the cruise revenues earned by us net of our most significant variable costs. A reconciliation of historical Gross Yields to Net Yields is provided below under Summary of Historical Results of Operations. 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 items:

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 not included in passenger ticket prices, cancellation fees, sales of vacation protection insurance and pre and post cruise hotel and air packages. Also included are revenues we receive from independent third party concessionaires that pay us a percentage of their revenues in exchange for the right to provide selected goods and/or services onboard our ships.

Our cruise operating expenses consist of the following items:

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.

Fuel expenses include fuel costs, net of the financial impact of fuel swap agreements, and fuel delivery costs.

Other operating expenses consist of operating costs such as 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, fuel costs or other operating costs to the expense categories attributable to passenger ticket revenues or onboard and other revenues since they are incurred to provide the total cruise vacation experience.

Summary of Historical Results of Operations

We achieved a 3.4% increase in Net Yields in 2006 as compared to 2005, marking the third consecutive year of positive yield growth. This increase is primarily due to a favorable pricing environment driven by a positive demand for our products. In contrast, increases in fuel costs represented a challenge for us again in 2006. Although price and consumption related initiatives partially mitigated the increase in fuel costs, fuel expenses on an APCD basis increased 26.7% in 2006 as compared to 2005. As a result, income before the cumulative effect of a change in accounting principle in 2006 decreased to $633.9 million or $2.94 per share on a fully diluted basis compared to $663.5 million or $3.03 per share on a fully diluted basis in 2005.

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Highlights for 2006 included:

• Total revenues increased 6.7% to $5.2 billion from total revenues of $4.9 billion in 2005 primarily due to a 3.5% increase in Gross Yields and a 3.0% increase in capacity.

• Net Cruise Costs per APCD increased 6.4% compared to 2005 primarily as a result of increases in the cost of fuel and marketing, selling and administrative expenses during the year.

• Our Net Debt-to-Capital ratio increased to 46.6% in 2006 from 42.0% in 2005 primarily due to the financing of our acquisition of Pullmantur. Similarly, our Debt-to-Capital ratio increased to 47.1% in 2006 from 42.8% in 2005.

• We took delivery of Freedom of the Seas, Royal Caribbean International’s first Freedom-class ship, which was financed with a $570.0 million unsecured term loan.

• We placed three additional ship orders, one for Royal Caribbean International and two for Celebrity Cruises bringing our total number of ships on order to six for an additional capacity of approximately 21,150 berths.

• We acquired Pullmantur in November 2006. For reporting purposes, however, we will be including Pullmantur’s results of operations on a two-month lag beginning with the first quarter of 2007. We have included Pullmantur’s balance sheet in our consolidated balance sheet as of December 31, 2006.

• We called for redemption all of our outstanding zero coupon convertible notes due May 18, 2021. Most note holders elected to convert their notes into shares of our common stock rather than redeem them for cash, resulting in the issuance of approximately 4.1 million shares of our common stock through the end of the redemption period.

• Under a forward sale agreement relating to an Accelerated Share Repurchase (“ASR”) transaction, we purchased 4.6 million shares of our common stock at a price of $35.99 per share. The ASR transaction was initiated to offset the dilution from the call for redemption and conversion of our zero coupon convertible notes into common shares.

• We paid $530.6 million to redeem in full the accreted balance of our outstanding Liquid Yield Option™ Notes (“LYONs”) due February 2, 2021.

• We issued at a discount, $900.0 million of senior unsecured notes to fund the redemption of our LYONs and the ASR transaction.

• We recorded a net gain of $36.0 million resulting from the partial settlement of a pending lawsuit against Rolls Royce and Alstom Power Conversion for recurring pod failures on Millennium-class ships.

Total revenues for 2005 increased 7.6% to $4.9 billion from total revenues of $4.6 billion in 2004. The increase in total revenues was primarily as a result of increases in ticket prices. During 2005, Net Yields increased 7.4% and Net Cruise Costs per APCD increased 6.3% compared to 2004. Gross Cruise Costs increased 6.5% in 2005 compared to 2004 primarily as a result of increases in fuel expenses.

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

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We reported historical total revenues, operating income, income before cumulative effect of a change in accounting principle, cumulative effect of a change in accounting principle, net income and earnings per share as shown in the following table (in thousands, except per share data):

	Year Ended December 31,
	2006	2005	2004
Total revenues	$5,229,584	$4,903,174	$4,555,375
Operating income	$858,446	$871,565	$753,589
Income before cumulative effect of a change in    accounting principle	$633,922	$663,465	$474,691
Cumulative effect of a change in accounting    principle 1	-	52,491	-
Net income	$633,922	$715,956	$474,691
Basic earnings per share:
Income before cumulative effect of a change in    accounting principle	$            3.01	$            3.22	$            2.39
Cumulative effect of a change in accounting    principle 1	$               -	$            0.25	$               -
Net income	$            3.01	$            3.47	$            2.39
Diluted earnings per share:
Income before cumulative effect of a change in    accounting principle	$            2.94	$            3.03	$            2.26
Cumulative effect of a change in accounting    principle 1	$              -	$            0.22	$               -
Net income	$            2.94	$            3.26	$            2.26

¹ In the third quarter of 2005, we changed our method of accounting for drydocking costs from the accrual in advance to the deferral method (see Note 2. Summary of Significant Accounting Policies to our consolidated financial statementsunder Item 8. Financial Statements and Supplementary Data.)

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

	Year Ended December 31,
	2006	2005	2004
Passenger ticket revenues	73.4	73.6	73.7
Onboard and other revenues	26.6	26.4	26.3
Total revenues	100.0%	100.0%	100.0%
Cruise operating expenses
Commissions, transportation and other	17.6	17.5	18.1
Onboard and other	6.3	6.3	6.6
Payroll and related	9.6	10.4	10.7
Food	5.3	5.5	5.9
Fuel	9.2	7.5	5.5
Other operating	14.1	13.8	15.1
Total cruise operating expenses	62.1	61.0	61.9
Marketing, selling and administrative expenses	13.4	13.0	12.9
Depreciation and amortization expenses	8.1	8.2	8.7
Operating income	16.4	17.8	16.5
Other income (expense)	(4.3)	(4.3)	(6.1)
Income before cumulative effect of a change in    accounting principle	12.1	13.5	-
Cumulative effect of a change in accounting principle	-	1.1	-
Net income	12.1%	14.6%	10.4%

Unaudited selected historical statistical information is shown in the following table (amounts exclude Pullmantur):

	Year Ended December 31,
	2006	2005		2004
Passengers Carried	3,600,807	3,476,287		3,405,227
Passenger Cruise Days	23,849,606	23,178,560		22,661,965
APCD	22,392,478	21,733,724		21,439,288
Occupancy	106.5%		106.6%		105.7%

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

	Year Ended December 31,
	2006	2005	2004
Passenger ticket revenues	$3,838,648	$3,609,487	$3,359,201
Onboard and other revenues	1,390,936	1,293,687	1,196,174
Total revenues	5,229,584	4,903,174	4,555,375
Less:
Commissions, transportation and other	917,929	858,606	822,206
Onboard and other	331,218	308,611	300,717
Net revenues	$3,980,437	$3,735,957	$3,432,452
APCD	22,392,478	21,733,724	21,439,288
Gross Yields	$233.54	$225.60	$212.48
Net Yields	$177.76	$171.90	$160.10

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

	Year Ended December 31,
	2006	2005	2004
Total cruise operating expenses	$3,249,629	$2,994,232	$2,819,383
Marketing, selling and administrative expenses	699,864	635,308	588,267
Gross Cruise Costs	3,949,493	3,629,540	3,407,650
Less:
Commissions, transportation and other	917,929	858,606	822,206
Onboard and other	331,218	308,611	300,717
Net Cruise Costs	$2,700,346	$2,462,323	$2,284,727
APCD	22,392,478	21,733,724	21,439,288
Gross Cruise Costs per APCD	$176.38	$167.00	$158.94
Net Cruise Costs per APCD	$120.59	$113.30	$106.57

Net Debt-to-Capital was calculated as follows (in thousands):

	As of
	December 31,
	2006	2005
Long-term debt, net of current portion	$5,040,322	$3,553,892
Current portion of long-term debt	373,422	600,883
Total debt	5,413,744	4,154,775
Less: Cash and cash equivalents	104,520	125,385
Net Debt	$5,309,224	$4,029,390
Total shareholders' equity, “Capital”	$6,091,575	$5,554,465
Debt	5,413,744	4,154,775
Debt and Capital	11,505,319	9,709,240
Debt-to-Capital	47.1%	42.8%
Net Debt	5,309,224	4,029,390
Net Debt and Capital	$11,400,799	$9,583,855
Net Debt-to-Capital	46.6%	42.0%

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Outlook

Full Year 2007

On February 5, 2007, we announced that bookings continued to be solid, while pricing appeared to be leveling off from the appreciation experienced over the last few years. We expected Net Yields to increase in a range around 3% as compared to 2006. We expected Pullmantur’s cruise brand to account for one percentage point of this change, and that its non-cruise operations would contribute an additional percentage point.

Net Cruise Costs per APCD were expected to increase in a range around 3% as compared to 2006. Pullmantur’s cruise brand was expected to decrease Net Cruise Costs per APCD by approximately one percentage point. Pullmantur’s non-cruise operations were expected to increase our costs approximately four percentage points as a result of not having the benefit of additional APCDs.

Our “at-the-pump” fuel price was $361 per metric ton. We are currently 45% hedged for 2007, and estimate that a 10% change in the market price of fuel would result in a $24 million change in fuel costs after taking into account existing hedges.

We expected a 12.2% increase in capacity driven by the acquisition of Pullmantur, the April delivery of Liberty of the Seas, and a full year of service from Freedom of the Seas.

Depreciation and amortization was expected to be in the range of $480.0 to $500.0 million and interest expense was expected to be in the range of $335.0 to $355.0 million in 2007.

Based on the expectations contained in this Outlook section, and assuming that fuel prices remain at the level mentioned herein, we expected full year 2007 earnings per share to be in the range of $3.05 to $3.20.

Our outlook has remained unchanged since our announcement on February 5, 2007.

First Quarter 2007

As announced on February 5, 2007, we expected Net Yields to decrease in a range around 3% in the first quarter of 2007 compared to the first quarter of 2006. We expected Pullmantur’s cruise brand will account for two percentage points of the change and that its non-cruise operations will contribute an additional percentage point.

Net Cruise Costs per APCD was expected to increase in the range of 4% to 5% compared to the first quarter of 2006. We estimated that approximately half of this increase will be driven by Pullmantur’s overall operations, with its cruise brand having a positive impact of approximately one percentage point.

Our “at-the-pump” fuel price was $361 per metric ton and has not changed significantly since our announcement. For the first quarter, our fuel expense is 60% hedged. We estimate that a 10% change in the market price of fuel would result in a $4.0 million impact on our first quarter results.

Based on the expectations contained in this Outlook section, and assuming that fuel prices remain at the level mentioned herein, we expected first quarter 2007 earnings per share to be in the range of $0.03 to $0.08.

Our outlook has remained unchanged since our announcement on February 5, 2007.

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

Revenues

Net Revenues increased 6.5% in 2006 compared to 2005 due to a 3.4% increase in Net Yields and a 3.0% increase in capacity. The increase in Net Yields was primarily due to higher cruise ticket prices, onboard spending and revenue associated with the charter of Horizon to Island Cruises, our joint venture with First Choice. Higher cruise ticket prices were primarily attributable to a strong demand environment. The increase in capacity was primarily attributed to the addition of Freedom of the Seas in 2006 and the lengthening of Enchantment of the Seas in 2005. This increase was partially offset by the charter of Horizon to Island Cruises.Occupancy in 2006 was 106.5% compared to 106.6% in 2005. Gross Yields increased 3.5% in 2006 compared to 2005 primarily due to the same reasons discussed above for Net Yields.

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Onboard and other revenues included concession revenues of $234.5 million and $223.0 million in 2006 and 2005, respectively. The increase in concession revenues was primarily due to the increase in capacity mentioned above and higher amounts spent per passenger onboard.

Expenses

Net Cruise Costs increased 9.7% in 2006 compared to 2005 due to a 6.4% increase in Net Cruise Costs per APCD and the 3.0% increase in capacity mentioned above. Approximately 4.0 percentage points of the increase in Net Cruise Costs per APCD were attributed to increases in fuel expenses. Total fuel expenses (net of the financial impact of fuel swap agreements) increased 28.2% per metric ton in 2006 as compared to an increase of 46.0% per metric ton in 2005. As a percentage of total revenues, fuel expenses were 9.2% and 7.5% in 2006 and 2005, respectively. The remaining 2.4 percentage points of the increase in Net Cruise Costs per APCD were primarily attributed to increases in marketing, selling and administrative expenses associated with personnel costs. Gross Cruise Costs increased 8.8% in 2006 compared to 2005, which was a lower percentage increase than Net Cruise Costs primarily due to lower trip insurance expenses a result of lower trip insurance premiums and lower commission expenses as a result of an increase in direct business.

 

Depreciation and amortization expenses increased 4.9% in 2006 compared to 2005. The increase was primarily due to the addition of Freedom of the Seas, ship improvements and shore side additions.

Other Income (Expense)

Gross interest expense increased to $295.7 million in 2006 from $287.4 million in 2005. The increase was primarily attributable to higher interest rates, partially offset by lower average debt levels. Interest capitalized increased to $27.8 million in 2006 from $17.7 million in 2005 primarily due to a higher average level of investment in ships under construction.

During 2006, we partially settled a pending lawsuit against Rolls Royce and Alstom Power Conversion, co-producers of the mermaid pod-propulsion system on Millennium-class ships, for the recurring Mermaid pod failures. Under the terms of the partial settlement, we received $38.0 million from Alstom and released them from the suit, which remains pending against Rolls Royce. The $38.0 million settlement resulted in a gain of $36.0 million, net of reimbursements to insurance companies.

In July 2005, First Choice redeemed in full its 6.75% convertible preferred shares. We received $348.1 million in cash, resulting in a net gain of $44.2 million, primarily due to foreign exchange.

Dividend income decreased approximately $14.2 million for 2006 compared to 2005 due to the redemption of our First Choice investment in the third quarter of 2005.

Cumulative Effect of a Change in Accounting Principle

In the third quarter of 2005, we changed our method of accounting for drydocking costs from the accrual in advance to the deferral method (see Note 2. Summary of Significant Accounting Policies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data). The change resulted in a one-time gain of $52.5 million, or $0.22 per share on a diluted basis, to recognize the cumulative effect of the change on prior years, which we reflected as part of our results in 2005. Other than this one-time gain, the change did not have a material impact on our consolidated statement of operations.

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Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

Revenues

Net Revenues increased 8.8% in 2005 compared to 2004 due to a 7.4% increase in Net Yields and, to a lesser extent, a 1.4% increase in capacity. The increase in Net Yields was primarily due to higher cruise ticket prices and onboard spending. Higher cruise ticket prices were primarily attributable to a strong demand environment and a decrease in capacity growth within the industry. The increase in capacity was primarily attributed to the addition of Jewel of the Seas in 2004, partially offset by Enchantment of the Seas, which was out of service for 53 days due to its lengthening. In addition, capacity in 2004 was negatively impacted by the cancellation of certain sailings primarily due to hurricanes and unscheduled drydocks. Occupancy in 2005 was 106.6% compared to 105.7% in 2004. Gross Yields increased 6.2% in 2005 compared to 2004 primarily due to the same reasons discussed above for Net Yields.

Onboard and other revenues included concession revenues of $223.0 million and $196.3 million in 2005 and 2004, respectively. The increase in concession revenues was primarily due to higher amounts spent per passenger onboard and the increase in capacity mentioned above.

Expenses

Net Cruise Costs increased 7.8% in 2005 compared to 2004 due to a 6.3% increase in Net Cruise Costs per APCD and the 1.4% increase in capacity mentioned above. Approximately 4.9 percentage points of the increase in Net Cruise Costs per APCD was attributed to increases in fuel expenses. Total fuel expenses (net of the financial impact of fuel swap agreements) increased 46.0% per metric ton in 2005 as compared to an increase of 27.5% in 2004. As a percentage of total revenues, fuel expenses were 7.5% and 5.5% in 2005 and 2004, respectively. The remaining 1.4 percentage points of the increase in Net Cruise Costs per APCD were primarily attributed to increases in personnel costs associated with benefits. In addition, Net Cruise Costs in 2004 included approximately $11.3 million in costs related to the impact of hurricanes. Gross Cruise Costs increased 6.5% in 2005 compared to 2004, which was a lower percentage increase than Net Cruise Costs primarily due to a lower proportion of passengers who purchased air transportation from us in 2005.

 

Depreciation and amortization expenses increased 2.0% in 2005 compared to 2004. The increase was primarily due to the addition of Jewel of the Seas in 2004 as well as depreciation associated with other capital expenditures, including the lengthening of Enchantment of the Seas in 2005.

Other Income (Expense)

Gross interest expense decreased to $287.4 million in 2005 from $317.2 million in 2004. The decrease was primarily attributable to lower average debt level, partially offset by higher interest rates. Interest capitalized increased to $17.7 million in 2005 from $7.2 million in 2004 due to a higher average level of investment in ships under construction.

In July 2005, First Choice redeemed in full its 6.75% convertible preferred shares. We received $348.1 million in cash, resulting in a net gain of $44.2 million, primarily due to foreign exchange.

Cumulative Effect of a Change in Accounting Principle

In the third quarter of 2005, we changed our method of accounting for drydocking costs from the accrual in advance to the deferral method (see Note 2. Summary of Significant Accounting Policies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data). The change resulted in a one-time gain of $52.5 million, or $0.22 per share on a diluted basis, to recognize the cumulative effect of the change on prior years, which we reflected as part of our results in 2005. Other than this one-time gain, the change did not have a material impact on our consolidated statement of operations.

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Liquidity and Capital Resources

Sources and Uses of Cash

Cash flow generated from operations provides us with a significant source of liquidity. Net cash provided by operating activities was $948.5 million in 2006 and $1.1 billion in each of 2005 and 2004. This decrease was primarily a result of the payment of approximately $121.2 million of accreted interest in connection with the repurchase of our LYONs, a decrease in accounts payable of approximately $25.9 million and an increase in trade and other receivables of approximately $19.5 million as compared to 2005.

Net cash used in investing activities increased to $1.8 billion in 2006, from $89.0 million in 2005 and $632.5 million in 2004. The increase was primarily due to an increase in capital expenditures which were approximately $1.2 billion for the year ended December 31, 2006 compared to approximately $429.9 million in 2005 and $630.1 million in 2004. Capital expenditures were primarily related to ships under construction including the delivery of Freedom of the Seas in 2006, the lengthening of Enchantment of the Seas in 2005, and the delivery of Jewel of the Seas in 2004 as well as progress payments for ships under construction in all years. The increase in net cash used in investing activities was also driven by the purchase of Pullmantur which resulted in a cash outlay of approximately $558.9 million.

Net cash provided by financing activities was $879.7 million in 2006 compared to net cash used in financing activities of $1.5 billion in 2005 and $146.0 million in 2004. The increase in 2006 was primarily due to net proceeds from debt issuances of approximately $2.9 billion including net proceeds of approximately $890.5 million from a public offering consisting of $550.0 million of 7.0% senior unsecured notes due 2013, and $350.0 million of 7.25% senior unsecured notes due 2016. In addition, in connection with the financing of Freedom of the Seas, we entered into and drew in full a $570.0 million unsecured term loan with an interest rate of 3.77% due through 2013. We also obtained a €750.0 million, or approximately $960.5 million, unsecured short-term bridge loan to finance the acquisition of Pullmantur on which we drew €701.0 million, or approximately $925.1 million. Net cash provided by financing activities was partially offset by payments on various term loans, senior notes, revolving credit facilities and capital leases totaling approximately $1.8 billion in 2006 compared to $1.6 billion and $361.4 million in 2005 and 2004, respectively. Debt repayments in 2006 included approximately $529.6 million toward unsecured debt, $409.4 million in connection with the repurchase of our LYONs, $345.9 million of debt repaid in connection with the acquisition of Pullmantur, $260.0 million towards our $1.0 billion revolving credit facility and $237.4 million towards loans secured by certain Celebrity ships. We also purchased 4.6 million shares of our common stock in 2006 from an investment bank at a price of $35.99 per share as part of an ASR transaction. Total consideration paid to repurchase such shares, including commissions and other fees, was approximately $164.6 million. The forward sale agreement matured in 2006. During the term of the forward sale agreement, the investment bank purchased shares of our common stock in the open market to settle its obligation related to the shares borrowed from third parties and sold to us. The shares were recorded in shareholders’ equity as a component of treasury stock (see Note 7. Shareholders’ Equity). Also in 2006 we drew $570.0 million on our revolving credit facility. In 2005, we drew $200.0 million on unsecured variable rate term loans due 2010 and $190.0 million on our revolving credit facility. In 2004, we drew $225.0 million on an unsecured variable rate term loan due 2006 through 2012. During 2006, 2005 and 2004, we received $23.0 million, $22.0 million and $98.3 million, respectively, in connection with the exercise of common stock options and we paid cash dividends on our common stock of $124.5 million, $118.8 million and $104.5 million, respectively. In 2006, we called for redemption all of our outstanding zero coupon convertible notes due May 18, 2021. Most holders of the notes elected to convert them into shares of our common stock, rather than redeem them for cash, resulting in the issuance of approximately 4.1 million shares during the redemption period. Net Debt-to-Capital increased to 46.6% in 2006 compared to 42.0% in 2005. Similarly, our Debt-to-Capital ratio increased to 47.1% in 2006 from 42.8% in 2005.

Interest capitalized during 2006 increased to $27.8 million from $17.7 million in 2005 primarily due to a higher average level of investment in ships under construction and to a lesser extent higher interest rates.

Future Capital Commitments

Our future capital commitments consist primarily of new ship orders. As of December 31, 2006, we had two Freedom-class ships and one ship of a new class designated for Royal Caribbean International and three Solstice-class ships, designated for Celebrity Cruises, on order for an aggregate additional capacity of approximately 21,150 berths.

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The aggregate cost of the six ships is approximately $5.3 billion, of which we have deposited $438.4 million as of December 31, 2006. Approximately 11% of the aggregate cost of ships was exposed to fluctuations in the euro exchange rate at December 31, 2006. (See Note 11. Financial Instruments to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data.)

As of December 31, 2006 we anticipated overall capital expenditures, including the six ships on order, will be approximately $1.3 billion for 2007, $1.8 billion for 2008, $2.0 billion for 2009, and $1.0 billion for 2010.

We have an option to purchase an additional ship for Royal Caribbean International, exercisable through March 2007, for an additional capacity of approximately 5,400 berths. If ordered, the optional ship will be delivered in the third quarter of 2010.

Contractual Obligations and Off-Balance Sheet Arrangements

As of December 31, 2006, 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)	$5,365,962	$372,211	$545,547	$1,674,881	$2,773,323
Capital lease obligations(1)	47,782	1,211	2,937	3,346	40,288
Operating lease obligations(2)(3)	570,801	58,728	107,114	97,435	307,524
Ship purchase obligations(4)	4,277,355	755,544	2,946,475	575,336	-
Other(5)	428,329	138,511	130,198	56,378	103,242
Total	$10,690,229	$1,326,205	$3,732,271	$2,407,376	$3,224,377

(1)	Amounts exclude interest.
(2)	We are obligated under noncancelable operating leases primarily for a ship, offices, warehouses and motor vehicles.

(3) Under the Brilliance of the Seas lease agreement, we may be required to make a termination payment of approximately £126.0 million, or approximately $246.8 million based on the exchange rate at December 31, 2006, if the lease is canceled in 2012. This amount is included in the more than five years category. (See Note 12. Commitments and Contingenciesto our consolidated financial statements under Item 8. Financial Statements and Supplementary Data.)

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

(5) 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.

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

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.

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Funding Sources

As of December 31, 2006, our liquidity was $0.7 billion consisting of approximately $0.1 billion in cash and cash equivalents and $0.6 billion available under our unsecured revolving credit facility. (See Note 6. Long-Term Debt to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data.) We have commitments of approximately $1.3 billion due during the twelve-month period ending December 31, 2007. These commitments will be funded through a combination of cash flows from operations, drawdowns under our available unsecured revolving credit facility, the incurrence of additional indebtedness and the sales of equity or debt securities in private or public securities markets. Although we believe our existing unsecured revolving 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, capital expenditures and other commitments over the next twelve-month period, there can be no assurances that these sources of cash will be available in accordance with our expectations.

In January 2007, we received approximately €990.9 million, or approximately $1.3 billion, of net proceeds from a €1.0 billion, or approximately $1.3 billion, bond offering. A portion of the net proceeds were used to retire the €750.0 million, or approximately $960.5 million, short-term unsecured bridge loan obtained to finance our acquisition of Pullmantur on which we drew €701.0 million, or approximately $925.1 million. The remainder of the net proceeds, approximately €289.0 million, or approximately $374.8 million, was used to repay a portion of the outstanding balance on our unsecured revolving credit facility. (See Note 14. Subsequent Events)

Our financing agreements contain covenants that require us, among other things, to maintain minimum net worth, and fixed charge coverage ratio and limit our net debt-to-capital ratio. We were in compliance with all covenants as of December 31, 2006.

If any person other than A. Wilhelmsen AS. and Cruise Associates, our two principal shareholders, acquires ownership of more than 30% of our common stock and our two principal shareholders, in the aggregate, own less of our common stock than such person and do not collectively have the right to elect, or to designate for election, at least a majority of the board of directors, 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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Financial Instruments and Other

General

We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We manage these risks through a combination of our normal operating and financing activities and through the use of derivative financial instruments pursuant to our hedging practices and policies. The financial impacts of these hedging instruments are primarily offset by corresponding changes in the underlying exposures being hedged. We achieve this by closely matching the amount, term and conditions of the derivative instrument with the underlying risk being hedged. We do not hold or issue derivative financial instruments for trading or other speculative purposes. We monitor our derivative positions using techniques including market valuations and sensitivity analyses. (See Note 11. Financial Instruments to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data.)

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates to our long-term debt obligations and our operating lease for Brilliance of the Seas. At December 31, 2006, 60% of our long-term debt was effectively fixed and 40% was floating. We enter into interest rate swap agreements to modify our exposure to interest rate movements and to manage our interest expense and rent expense.

Market risk associated with our long-term fixed rate debt is the potential increase in fair value resulting from a decrease in interest rates. At December 31, 2006, our interest rate swap agreements effectively changed $175.0 million of fixed rate debt with a weighted-average fixed rate of 8.11% to LIBOR-based floating rate debt. The estimated fair value of our long-term fixed rate debt at December 31, 2006, was $3.4 billion using quoted market prices, where available, or using discounted cash flow analyses based on market rates available to us for similar debt with the same remaining maturities. The fair value of our associated interest rate swap agreements was estimated to be $5.6 million as of December 31, 2006 based on quoted market prices for similar or identical financial instruments to those we hold. A hypothetical one percentage point decrease in interest rates at December 31, 2006 would increase the fair value of our long-term fixed rate debt, by approximately $158.7 million, net of an increase in the fair value of the associated interest rate swap agreements.

Market risk associated with our long-term floating rate debt is the potential increase in interest expense from an increase in interest rates. A hypothetical one percentage point increase in interest rates would increase our 2007 interest expense by approximately $12.1 million. At December 31, 2006, we have an interest rate swap agreement that effectively changes $25.0 million of LIBOR-based floating rate debt to fixed rate debt of 4.40%.

Market risk associated with our operating lease for Brilliance of the Seas is the potential increase in rent expense from an increase in sterling LIBOR rates. As of January 2007, we have effectively changed 50% of the operating lease obligation from a floating rate to a fixed rate obligation with a weighted-average rate of 4.76% through rate fixings with the lessor. A hypothetical one percentage point increase in sterling LIBOR rates would increase our 2007 rent expense by approximately $2.2 million, based on the exchange rate at December 31, 2006.

Foreign Currency Exchange Rate Risk

Our primary exposure to foreign currency exchange rate risk relates to our firm commitments under ship construction contracts denominated in euros. We enter into euro-denominated forward contracts to manage this risk. The estimated fair value of such euro-denominated forward contracts at December 31, 2006, was a net unrealized gain of approximately $106.3 million, based on quoted market prices for equivalent instruments with the same remaining maturities. At December 31, 2006, approximately 11% of the aggregate cost of the ships was exposed to fluctuations in the euro exchange rate. A hypothetical 10% strengthening of the euro as of December 31, 2006, assuming no changes in comparative interest rates, would result in a $433.2 million increase in the United States dollar cost of the foreign currency denominated ship construction contracts. This increase would be largely offset by an increase in the fair value of our euro-denominated forward contracts.

41

We are also exposed to foreign currency exchange rate fluctuations on the United States dollar value of our foreign currency denominated forecasted transactions. To manage this exposure, we take advantage of natural offsets of our foreign currency revenues and expenses and enter into foreign currency forward contracts for a portion of the remaining exposure related to these forecasted transactions. Our principal net foreign currency exposure relates to the euro, the British pound and the Canadian dollar. At December 31, 2006, the estimated fair value of such contracts was an unrealized loss of approximately $2.1 million based on quoted market prices for equivalent instruments with the same remaining maturities. A hypothetical 10% strengthening of the principal foreign currencies as of December 31, 2006, assuming no changes in comparative interest rates, would result in a $28.8 million increase in the United States dollar value of the 2007 foreign currency denominated forecasted transactions. This increase would be offset by a decrease in the fair value of our foreign currency forward contracts maturing in 2007 of approximately $10.1 million.

Also, we consider our investments in foreign subsidiaries to be denominated in relatively stable currencies and of a long-term nature. We partially address the exposure of our investments in foreign subsidiaries by denominating a portion of our debt in our subsidiaries’ functional currencies (generally euros). Specifically, we have assigned debt of approximately €478.8 million, or approximately $631.8 million, as a hedge of our net investment in Pullmantur and, accordingly, have included approximately $18.7 million of foreign-currency transaction losses in the cumulative translation adjustment component of accumulated other comprehensive income (loss)at December 31, 2006. A hypothetical 10% increase or decrease in the December 31, 2006 foreign currency exchange rate, would increase or decrease the fair value of our debt by $63.2 million, which would be offset by a decrease or increase of $63.2 million in the U.S. dollar value of our net investment.

Fuel Price Risk

Our exposure to market risk for changes in fuel prices relates to the consumption of fuel on our ships. Fuel cost (net of the financial impact of fuel swap agreements), as a percentage of our total revenues, was approximately 9.2% in 2006, 7.5% in 2005 and 5.5% in 2004. Historically, we have used fuel swap agreements to mitigate the financial impact of fluctuations in fuel prices. As of December 31, 2006, we had fuel swap agreements to pay fixed prices for fuel with an aggregate notional amount of approximately $205.3 million, maturing through 2008. The estimated fair value of these contracts at December 31, 2006 was an unrealized loss of $20.5 million. We estimate that a hypothetical 10% increase in our weighted-average fuel price from that experienced during the year ended December 31, 2006 would increase our 2007 fuel cost by approximately $52.5 million. This increase would be partially offset by an increase in the fair value of our fuel swap agreements maturing in 2007 of approximately $18.2 million.

Item 8. Financial Statements and Supplementary Data

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

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

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

42

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chairman and Chief Executive Officer and Executive Vice President and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-IntegratedFramework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control-Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2006. Our management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2006 has been audited by PricewaterhouseCoopers LLP, an independent registered certified public accounting firm, as stated in their report which is included herein.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15 during the quarter ended December 31, 2006 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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

Item 9B. Other Information

None.

43

PART III

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

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

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

44

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) (1) Financial Statements

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

(2) Financial Statement Schedules

None.

(3) Exhibits

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

45

SIGNATURES

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

ROYAL CARIBBEAN CRUISES LTD.

(Registrant)

	By: /s/BRIAN J.RICE
			Brian J. Rice
			Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)
February 28, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 28, 2007.

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

/s/ BRIAN J. RICE
	Brian J. Rice
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

/s/ BLAIR H. GOULD
	Blair H. Gould
	Vice President and Controller
	(Principal Accounting Officer)

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

/s/ * ARVID GRUNDEKJOEN
	Arvid Grundekjoen
	Director

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

/s/ * LAURA LAVIADA
		Laura Laviada
	Director

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

46

/s/ * EYAL OFER
	Eyal Ofer
	Director

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

/s/ * WILLIAM K. REILLY
	William K. Reilly
	Director

/s/ * BERNT REITAN
	Bernt Reitan
	Director

/s/ * ARNE ALEXANDER WILHELMSEN
	Arne Alexander Wilhelmsen
	Director

*By: /s/ BRIAN J. RICE
	Brian J. Rice, as Attorney-in-Fact

47

INDEX TO EXHIBITS

Exhibits 10.13 through 10.34 represent management compensatory plans or arrangements.

Exhibit		Description
3.1	— Restated Articles of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form F-1, File No. 33-59304, filed with the Securities and Exchange Commission (the “Commission”); Exhibit 2.2 to the Company’s 1996 Annual Report on Form 20-F filed with the Commission, File No. 1-11884; Document No. 1 in the Company’s Form 6-K filed with the Commission on October 14, 1999; Document No. 1 in the Company’s Form 6-K filed with the Commission on May 18, 1999; and Document No. 1 in the Company’s Form 6-K filed with the Commission on August 28, 2000).
3.2	— Restated By-Laws of the Company, as amended (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 31, 2006).
4.1	— Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York Trust Company, N.A., successor to NationsBank of Georgia, National Association, as Trustee (incorporated by reference to Exhibit 2.4 to the Company’s 1994 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.2	— Second Supplemental Indenture dated as of March 29, 1995 to Indenture dated as of July 15, 1994 between the Company, as issuer, and the Bank of New York Trust Company, N.A., successor to NationsBank of Georgia, National Association, as Trustee (incorporated by reference to Exhibit 2.5 to the Company's 1995 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.3	— Fourth Supplemental Indenture dated as of August 12, 1996 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Document No. 2 in the Company's Form 6-K filed with the Commission on February 10, 1997, File No. 1-11884).
4.4	— Fifth Supplemental Indenture dated as of October 14, 1997 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 2.10 to the Company’s 1997 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.5	— Sixth Supplemental Indenture dated as of October 14, 1997 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 2.11 to the Company’s 1997 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.6	— Seventh Supplemental Indenture dated as of March 16, 1998 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 2.12 to the Company’s 1997 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.7	— Eighth Supplemental Indenture dated as of March 16, 1998 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 2.13 to the Company’s 1997 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.8	— Ninth Supplemental Indenture dated as of February 2, 2001 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 2.10 to the Company’s 2000 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.9	— Tenth Supplemental Indenture dated as of February 2, 2001 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 2.11 to the Company’s 2000 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).

48

4.10	— Eleventh Supplemental Indenture dated as of May 18, 2001 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee (incorporated by Reference to Exhibit 2.12 to the Company’s 2001 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.11	— Twelfth Supplemental Indenture dated as of May 9, 2003 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 2.13 to the Company’s 2003 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
4.12	— Thirteenth Supplemental Indenture dated as of November 21, 2003 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 2.14 to the Company’s 2003 Annual Report on Form 20-F filed with the Commission, File No. 1-11884.)
4.13	—Fourteenth Supplemental Indenture dated as of June 12, 2006 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee.
4.14	—Fifteenth Supplemental Indenture dated as of June 12, 2006 to Indenture dated as of July 15, 1994 between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee.
4.15	—Form of Indenture dated as of July 31, 2006 between the Company, as issuer, and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3 (No. 333-136186) filed with the Commission on July 31, 2006).
4.16	—Indenture dated as of January 25, 2007 among the Company, as issuer, The Bank of New York, as trustee, transfer agent, principal paying agent and security registrar, and AIB/BNY Fund Management (Ireland) Limited, as Irish paying agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 26, 2007).
10.1	— Amended and Restated Registration Rights Agreement dated as of July 30, 1997 among the Company, A. Wilhelmsen AS., Cruise Associates, Monument Capital Corporation, Archinav Holdings, Ltd. and Overseas Cruiseship, Inc. (incorporated by reference to Exhibit 2.20 to the Company’s 1997 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
10.2	— Credit Agreement dated as of March 27, 2003 among the Company and various financial institutions and Citibank, N.A., as Administrative Agent and Amendment No. 1 thereto dated as of May 18, 2005 (incorporated by reference to Document No. 2 in the Company’s Form 6-K filed with the Commission on March 28, 2003 and Exhibit No. 10.1 to the Current Report on From 8-K filed with the Commission on May 24, 2005).
10.3	— Amendment No. 2 to Credit Agreement dated as of December 15, 2006, amending Credit Agreement dated as of March 27, 2003, as amended, among the Company and various financial institutions and Citibank, N.A., as Administrative Agent.
10.4	— Credit Agreement dated as of April 6, 2006 among the Company and various financial institutions and Citibank, N.A. as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 19, 2006).
10.5	— Amendment No. 1 to Credit Agreement dated as of December 15, 2006, amending Credit Agreement dated as of April 6, 2006, among the Company and various financial institutions and Citibank, N.A. as Administrative Agent.

49

10.6	—Credit Agreement dated as of November 7, 2006 among the Company, various financial institutions and Citibank, N.A. as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on November 8, 2006).
10.7	— Office Building Lease Agreement dated July 25, 1989 between Miami-Dade County and the Company, as amended (incorporated by reference to Exhibits 10.116 and 10.117 to the Company’s Registration Statement on Form F-1, File No. 33-46157, filed with the Commission).
10.8	— Office Building Lease Agreement dated January 18, 1994 between Miami-Dade County and the Company (incorporated by reference to Exhibit 2.13 to the Company’s 1993 Annual Report on Form 20-F filed with the Commission, File No. 1-11884).
10.9	— Lease by and between City of Wichita, Kansas and the Company dated as of December 1, 1997, together with First Supplemental Lease Agreement dated December 1, 2000 (incorporated by reference to Exhibit 4.7 to the Company’s 2002 Annual Report on Form 20-F filed with the Commission).
10.10	— Multi-Tenant Office Lease Agreement dated May 3, 2000 between the Company and Opus Real Estate National IV FL, L.L.C. (formerly Miramar 75, L.L.C.), together with four Amendments thereto dated June 1, 2000, November 20, 2000, October 11, 2001 and September 25, 2003 (incorporated by reference to Exhibit 4.6 to the Company’s 2003 Annual Report on Form 20-F filed with the Commission).
10.11	— Lease Agreement dated January 24, 2005 between the Company and Workstage-Oregon, LLC and Amendment No. 1 thereto dated April 19, 2005 (incorporated by reference to Exhibit 10.7 to the Company's 2004 Annual Report on Form 10-K filed with the Commission and Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2005 filed with the Commission).
10.12	— Lease dated August 30, 2006 between DV3 Addlestone Limited, Harmony Investments (Global) Limited and the Company.
10.13	— 1990 Stock Option Plan of the Company, as amended (incorporated by reference to Exhibit 4 to the Company’s Registration Statement on Form S-8, File No. 333-7290, filed with the Commission).
10.14	— 1995 Incentive Stock Option Plan of the Company, as amended (incorporated by reference to Exhibit 4 to the Company’s Registration Statement on Form S-8, File No. 333-84980, filed with the Commission).
10.15	— Royal Caribbean Cruises Ltd. 2000 Stock Award Plan, as Amended and Restated through September 18, 2006 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 8, 2005 and Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 22, 2006).
10.16	— Employment Agreement dated December 21, 2001 between the Company and Richard D. Fain (incorporated by reference to Exhibit 10.12 to the Company's 2004 Annual Report on Form 10-K filed with the Commission).
10.17	— Trust Agreement for Richard D. Fain dated as of June 30, 1994 between the Company and Gary Hammond, as Trustee, together with Amendment No. 1 dated as of September 30, 1998 (incorporated by reference to Exhibit 10.13 to the Company's 2004 Annual Report on Form 10-K filed with the Commission).
10.18	— Employment agreement dated March 10, 2005 between the Company and Luis E. Leon (incorporated by reference to Exhibit 10.15 to the Company's 2004 Annual Report on Form 10-K filed with the Commission).
10.19	— Employment Agreement dated April 25, 2005 between the Company and Adam M. Goldstein (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 filed with the Commission).

50

10.20	— Employment Agreement dated April 25, 2005 between Celebrity Cruises Inc. and Daniel J. Hanrahan (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 filed with the Commission).
10.21	— Employment Agreement dated April 25, 2005 between the Company and Brian J. Rice (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 filed with the Commission.)
10.22	— Employment Agreement dated February 12, 2006 between the Company and Harri U. Kulovaara.
10.23	— Description of consulting arrangement between the Company and William K. Reilly (incorporated by reference to Exhibit 10.16 to the Company's 2004 Annual Report on Form 10-K filed with the Commission).
10.24	— Royal Caribbean Cruises Ltd. et. al. Board of Directors Non Qualified Deferred Compensation Plan, as Amended and Restated through December 6, 2005 (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the Commission on December 8, 2005).
10.25	— Amendment to the Royal Caribbean Cruises Ltd. et. al. Board of Directors Non Qualified Deferred Compensation Plan dated as of December 12, 2006.
10.26	— Royal Caribbean Cruises Ltd. et. al. Non Qualified Deferred Compensation Plan Rabbi Trust (incorporated by reference to Exhibit 10.18 to the Company's 2004 Annual Report on Form 10-K filed with the Commission).
10.27	— Royal Caribbean Cruises Ltd. Executive Incentive Plan as amended as of December 12, 2006.
10.28	— Royal Caribbean Cruises Ltd. et. al. Non Qualified 401(k) Plan, as Amended and Restated through December 6, 2005 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the Commission on December 8, 2005).
10.29	—Amendment to the Royal Caribbean Cruises Ltd. et. al. Non Qualified 401(k) Plan, dated as of December 12, 2006.
10.30	—Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan as Amended and Restated through December 6, 2005 (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the Commission on December 8, 2005).
10.31	—Amendment to the Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan dated as of December 12, 2006.
10.32	— Summary of Royal Caribbean Cruises Ltd. Board of Directors Compensation.
10.33	— Form of Royal Caribbean Cruises Ltd. 2000 Stock Award Plan Stock Option Certificate (incorporated by reference to Exhibit 10.25 to the Company's 2005 Annual Report on Form 10-K filed with the Commission).
10.34	— Form of Royal Caribbean Cruises Ltd. 2000 Stock Award Plan Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.26 to the Company's 2005 Annual Report on Form 10-K filed with the Commission).
12.1	— Statement regarding computation of fixed charge coverage ratio.
21.1	— List of Subsidiaries.
23.1	— Consent of PricewaterhouseCoopers LLP, an independent registered certified public accounting firm.
23.2	— Consent of Drinker Biddle & Reath LLP.
24	— Powers of Attorney.

31	— Certifications required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
32	— Certifications pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

51

ROYAL CARIBBEAN CRUISES LTD.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

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

Report of Independent Registered Certified Public Accounting Firm

To the Board of Directors and Shareholders

of Royal Caribbean Cruises Ltd.:

We have completed integrated audits of Royal Caribbean Cruises Ltd.’s 2006, 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2006, in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements

In our opinion, the consolidated financial statements listed in the index appearing under Item 15 present fairly, in all material respects, the financial position of Royal Caribbean Cruises Ltd. and its subsidiaries at December 31, 2006 and December 31, 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2 of the consolidated financial statements, the Company changed its method of accounting for dry docking costs in 2005.

Internal control over financial reporting

Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reportingappearing under Item 9A., that the Company maintained effective internal control over financial reporting as of December 31, 2006 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control - Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the

F-2

company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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

/s/ PricewaterhouseCoopers LLP

Miami, Florida

February 28, 2007

F-3

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2006	2005	2004
	(in thousands, except per share data)
Passenger ticket revenues	$ 3,838,648	$ 3,609,487	$ 3,359,201
Onboard and other revenues	1,390,936	1,293,687	1,196,174
Total revenues	5,229,584	4,903,174	4,555,375
Cruise operating expenses
Commissions, transportation and other	917,929	858,606	822,206
Onboard and other	331,218	308,611	300,717
Payroll and related	501,874	510,692	487,633
Food	278,604	270,674	269,436
Fuel	480,187	367,864	251,886
Other operating	739,817	677,785	687,505
Total cruise operating expenses	3,249,629	2,994,232	2,819,383
Marketing, selling and administrative expenses	699,864	635,308	588,267
Depreciation and amortization expenses	421,645	402,069	394,136
	4,371,138	4,031,609	3,801,786
Operating Income	858,446	871,565	753,589
Other income (expense)
Interest income	15,238	9,129	9,208
Interest expense, net of interest capitalized	(267,861)	(269,750)	(309,977)
Other income	28,099	52,521	21,871
	(224,524)	(208,100)	(278,898)
Income Before Cumulative Effect of a Change in     Accounting Principle	633,922	663,465	474,691
Cumulative effect of a change in accounting     Principle  (Note 2)	-	52,491	-
Net Income	$ 633,922	$ 715,956	$ 474,691
Basic Earnings per Share:
Income before cumulative effect of a change in     accounting principle	$ 3.01	$ 3.22	$ 2.39
Cumulative effect of a change in accounting     principle  (Note 2)	$       -	$ 0.25	$       -
Net income	$ 3.01	$ 3.47	$ 2.39
Diluted Earnings per Share:
Income before cumulative effect of a change in     accounting principle	$ 2.94	$ 3.03	$ 2.26
Cumulative effect of a change in accounting     principle  (Note 2)	$       -	$ 0.22	$       -
Net income	$ 2.94	$ 3.26	$ 2.26
Pro Forma Amounts (assuming change in     accounting principle was applied retrospectively)     (Note 2) (unaudited):
Pro forma net income	$ 633,922	$ 663,465	$ 483,853
Pro forma basic earnings per share	$ 3.01	$ 3.22	$ 2.43
Pro forma diluted earnings per share	$ 2.94	$ 3.03	$ 2.30

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

F-4

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED BALANCE SHEETS

	As of December 31,
	2006	2005
	(in thousands, except share data)
Assets Current assets Cash and cash equivalents	$      104,520	$      125,385
Trade and other receivables, net	185,886	95,254
Inventories	76,969	57,803
Prepaid expenses and other assets	134,529	98,568
Total current assets	501,904	377,010
Property and equipment — at cost less accumulated depreciation and    amortization	11,429,106	10,276,948
Goodwill — less accumulated amortization of  $138,606	721,514	283,133
Other assets	740,564	318,680
	$13,393,088	$11,255,771
Liabilities and Shareholders’ Equity
Current liabilities
Current portion of long-term debt	$      373,422	$      600,883
Accounts payable	193,794	159,910
Accrued expenses and other liabilities	408,209	342,995
Customer deposits	896,943	884,994
Total current liabilities	1,872,368	1,988,782
Long-term debt	5,040,322	3,553,892
Other long-term liabilities	388,823	158,632
Commitments and contingencies (Note 12)
Shareholders’ equity
Common stock ($.01 par value; 500,000,000 shares authorized;             222,489,872 and 216,504,849 shares issued)	2,225	2,165
Paid-in capital	2,904,041	2,706,236
Retained earnings	3,639,211	3,132,286
Accumulated other comprehensive loss	(30,802)	(28,263)
Treasury stock ( 10,985,927 and 6,143,392 common shares at cost)	(423,100)	(257,959)
Total shareholders’ equity	6,091,575	5,554,465
	$13,393,088	$11,255,771

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

F-5

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2006	2005	2004
	(in thousands)
Operating Activities Net income	$     633,922	$     715,956	$   474,691
Adjustments:
Depreciation and amortization	421,645	402,069	394,136
Cumulative effect of a change in accounting principle	-	(52,491)	-
Gain on redemption of investment	-	(44,207)	-
Accretion of original issue discount on debt	17,902	45,718	52,562
Changes in operating assets and liabilities:
Increase in trade and other receivables, net	(38,855)	(19,349)	(3,256)
(Increase) decrease in inventories	(7,441)	2,457	(6,813)
Decrease (increase) in prepaid expenses and other     assets	707	(5,009)	(17,196)
Decrease in accounts payable	(29,671)	(3,741)	(25,987)
Increase in accrued expenses and other liabilities	21,815	31,772	53,851
Increase in customer deposits	9,724	9,912	145,273
Accreted interest paid on LYONs repurchase	(121,199)	-	-
Other, net	39,957	28,273	9,730
Net cash provided by operating activities	948,506	1,111,360	1,076,991
Investing Activities Purchases of property and equipment	(1,180,579)	(429,898)	(630,670)
Purchases of notes from First Choice Holidays PLC	(100,000)	-	-
Purchase of Pullmantur, net of cash acquired	(553,312)	-	-
Purchases of short-term investments	-	(56,500)	(732,165)
Proceeds from sale of short-term investments	-	56,500	732,165
Proceeds from redemption of investment	-	348,070	-
Other, net	(15,187)	(7,198)	(1,840)
Net cash used in investing activities	(1,849,078)	(89,026)	(632,510)
Financing Activities Net proceeds from issuance of debt	2,933,915	390,000	225,000
Debt issuance costs	(10,004)	(5,512)	(3,352)
Repayments of debt, net	(1,785,773)	(1,564,715)	(361,386)
Dividends	(124,460)	(118,764)	(104,521)
Proceeds from exercise of common stock options	23,026	21,996	98,316
Purchases of treasury stock	(164,582)	(249,122)	-
Other, net	7,585	590	(46)
Net cash provided by (used in) financing activities	879,707	(1,525,527)	(145,989)
Net (decrease) increase in cash and cash equivalents	(20,865)	(503,193)	298,492
Cash and cash equivalents at beginning of year	125,385	628,578	330,086
Cash and cash equivalents at end of year	$     104,520	$     125,385	$   628,578
Supplemental Disclosures
Cash paid during the year for:
Interest, net of amount capitalized	$     376,817	$     236,477	$   266,037

       

             Supplemental Schedule of Noncash Investing Activity

            The Company purchased all of the capital stock of Pullmantur for approximately $558.9 million on                 November 14, 2006. In conjuction with the acquisition, liabilities were assumed as follows:

Fair value of assets acquired	$1,111,117
Cash paid for capital stock	(558,948)
Liabilities assumed	$   552,169

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

F-6

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

		Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Shareholders' Equity
(in thousands)
Balances at January 1, 2004	$	1,961	$	2,100,612	$	2,162,195	$	5,846	$	(7,717)	$	4,262,897
Issuance under employee   related plans		51		105,545		—		—		(560)		105,036
Common stock dividends		—		—		(103,621)		—		—		(103,621)
Changes related to cash flow   derivative hedges		—		—		—		67,082		—		67,082
Minimum pension liability   adjustment		—		—		—		(1,565)		—		(1,565)
Net income		—		—		474,691		—		—		474,691
Balances at December 31, 2004		2,012		2,206,157		2,533,265		71,363		(8,277)		4,804,520
Issuance under employee   related plans		12		28,059		—		—		(560)		27,511
Purchases of treasury stock		—		—		—		—		(249,122)		(249,122)
Common stock dividends		—		—		(116,935)		—		—		(116,935)
Changes related to cash flow   derivative hedges		—		—		—		(100,472)		—		(100,472)
Minimum pension liability   adjustment		—		—		—		846		—		846
Debt converted to common   stock		141		472,020		—		—		—		472,161
Net income		—		—		715,956		—		—		715,956
Balances at December 31, 2005		2,165		2,706,236		3,132,286		(28,263)		(257,959)		5,554,465
Issuance under employee   related plans		12		42,031		—		—		(559)		41,484
Purchases of treasury stock		—		—		—		—		(164,582)		(164,582)
Common stock dividends		—		—		(126,997)		—		—		(126,997)
Changes related to cash flow   derivative hedges		—		—		—		3,507		—		3,507
Adoption of FASB Statement   No. 158		—		—		—		(6,981)		—		(6,981)
Minimum pension liability   adjustment		—		—		—		834		—		834
Equity adjustment from foreign   currency translation		—		—		—		101		—		101
Debt converted to common   stock		48		155,774		—		—		—		155,822
Net income		—		—		633,922		—		—		633,922
Balances at December 31, 2006	$	2,225	$	2,904,041	$	3,639,211	$	(30,802)	$	(423,100)	$	6,091,575

Comprehensive income is as follows (in thousands):

	Year Ended December 31,
		2006		2005		2004
Net income	$	633,922	$	715,956	$	474,691
Changes related to cash flow derivative hedges		3,507		(100,472)		67,082
Minimum pension liability adjustment		834		846		(1,565)
Currency translation adjustment		101		-		-
Total comprehensive income	$	638,364	$	616,330	$	540,208

The following tables summarize activity in accumulated other comprehensive income (loss) related to derivatives

designated as cash flow hedges, minimum pension liability adjustment, adoption of SFAS No. 158 and the equity

adjustment from foreign currency translation (in thousands):

	Year Ended December 31,
		2006		2005		2004
Accumulated net (loss) gain on cash flow derivative hedges at beginning of year	$	(18,171)	$	82,301	$	15,219
Net (loss) gain on cash flow derivative hedges		(7,483)		(86,456)		91,251
Net gain (loss) reclassified into earnings		10,990		(14,016)		(24,169)
Accumulated net (loss) gain on cash flow derivative hedges at end of year	$	(14,664)	$	(18,171)	$	82,301

	Changes related to cash flow derivative hedges	Changes related to minimum pension liability adjustment	Other	Accumulated other comprehensive income (loss)
Accumulated other comprehensive loss at beginning of the year	$ (18,171)	$ (10,092)	$         —	$ (28,263)
Current-period change	3,507	834	(6,880)	(2,539)
Accumulated other comprehensive loss at end of year	$ (14,664)	$   (9,258)	$    (6,880)	$ (30,802)

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

F-7

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1. General

Description of Business

We are a global cruise company. We operate three cruise brands, Royal Caribbean International, Celebrity Cruises and Pullmantur Cruises with 20, 9 and 5 cruise ships, respectively, at December 31, 2006. Our ships operate on a selection of worldwide itineraries that call on approximately 310 destinations. In addition, we charter one ship to Island Cruises, our joint venture with First Choice Holidays PLC (“First Choice”).

Basis for Preparation of Consolidated Financial Statements

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

Note 2. Summary of Significant Accounting Policies

Change in Accounting Principle Related to Drydocking Costs

In the third quarter of 2005, we changed our method of accounting for drydocking costs from the accrual in advance to the deferral method. Under the accrual in advance method, estimated drydocking costs are accrued evenly over the period to the next scheduled drydock. Under the deferral method, drydocking costs incurred are deferred and charged to expense on a straight-line basis over the period to the next scheduled drydock. The deferral method is preferable because it eliminates the judgment needed to estimate drydocking costs in advance. The cumulative effect of the change on prior years of $52.5 million, or $0.22 per share on a diluted basis, was included in net income for the year ended December 31, 2005. Other than this one-time gain, the change did not have a material impact on our consolidated statement of operations or balance sheet.

Revenues and Expenses

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

Cash and Cash Equivalents

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

Inventories

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

F-8

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. We capitalize interest as part of the cost of acquiring certain assets. Improvement costs that we believe add value to our ships are capitalized as additions to the ship and depreciated over the improvements’ estimated useful lives. Costs of repairs and maintenance are charged to cruise operating expenses as incurred and commencing in 2005, drydocking costs are deferred and charged to expense on a straight-line basis over the period to the next scheduled drydock. The estimated cost and accumulated depreciation of refurbished or replaced ship components are written off and any resulting gain or loss is recognized in cruise operating expenses. We review long-lived assets for impairment whenever events or changes in circumstances indicate, based on estimated future cash flows, that the carrying amount of these assets may not be fully recoverable.

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

Goodwill

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

Intangible Assets

In connection with our acquisitions, we have acquired certain intangible assets of which value has been assigned to them based on our estimates with the assistance of appraisers engaged by management. Intangible assets that are deemed to have an indefinite life are not amortized, but are subject to periodic impairment testing at future periods in accordance with SFAS No. 142 (“Goodwill and Other Intangible Assets”). We review these intangible assets for impairment at the same time we review our goodwill for impairment or more frequently if impairment indicators arise. Other intangible assets assigned certain useful lives are amortized based on either an estimated weighted cash flows over their life or a straight-line basis over the life of the related contract.

Advertising Costs

Advertising costs are expensed as incurred except those costs, which result in tangible assets, such as brochures, which are treated as prepaid expenses and charged to expense as consumed. Advertising costs consist of media advertising as well as brochure, production and direct mail costs. Media advertising was $141.3 million, $139.1 million and $133.2 million, and brochure, production and direct mail costs were $89.5 million, $86.9 million and $82.2 million for the years 2006, 2005 and 2004, respectively.

Derivative Instruments

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

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

F-9

Changes in the fair value of derivatives that are designated as fair value hedges are offset against changes in the fair value of the underlying hedged assets, liabilities or firm commitments. Changes in fair value of derivatives that are designated as cash flow hedges are recorded as a component of accumulated other comprehensive (loss) income until the underlying hedged transactions are recognized in earnings. The foreign-currency transaction gain or loss of our nonderivative financial instrument designated as a hedge of our net investment in our foreign operations are recognized as a component of accumulated other comprehensive income along with the associated cumulative translation adjustment of the foreign operation.

On an ongoing basis, we assess whether derivatives used in hedging transactions are “highly effective” in offsetting changes in fair value or cash flow of hedged items. If it is determined that a derivative is not highly effective as a hedge, changes in fair value of the derivatives are recognized in earnings immediately. The ineffective portion of hedges is recognized in earnings immediately.

Foreign Currency Translations and Transactions

We translate assets and liabilities of our foreign subsidiaries whose functional currency is the local currency, at exchange rates in effect at the balance sheet date. We translate revenues and expenses at weighted-average exchange rates for the period. Equity is translated at historical rates and the resulting cumulative foreign currency translation adjustments are included as a component of accumulated other comprehensive (loss) income, which is reflected as a separate component of shareholders’ equity. Exchange gains or losses arising from the remeasurement of monetary assets and liabilities denominated in a currency other than the functional currency of the entity involved are immediately included in our earnings, unless certain liabilities have been designated to act as a hedge of a net investment in a foreign operation. The majority of our transactions are settled in United States dollars. Gains or losses resulting from transactions denominated in other currencies are recognized in income at each balance sheet date.

Earnings Per Share

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

Stock-Based Employee Compensation

We have three stock-based compensation plans, which provide for awards to our officers, directors and key employees. The plans consist of a 1990 Employee Stock Option Plan, a 1995 Incentive Stock Option Plan and a 2000 Stock Award Plan. The 1990 Stock Option Plan and the 1995 Incentive Stock Option Plan terminated by their terms in March 2000 and February 2005, respectively. The 2000 Stock Award Plan, as amended, provides for the issuance of (i) incentive and non-qualified stock options, (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units and (v) performance shares of up to 13,000,000 shares of our common stock. During any calendar year, no one individual shall be granted awards of more than 500,000 shares. We awarded 204,154, 160,574, and 331,756 restricted stock units in 2006, 2005 and 2004 respectively. Options and restricted stock units outstanding as of December 31, 2006, vest in equal installments over three to five years and four to five years, respectively, from the date of grant. Generally, options and restricted stock units are forfeited if the recipient ceases to be a director or employee before the shares vest. Options are granted at a price not less than the fair value of the shares on the date of grant and expire not later than ten years after the date of grant.

In September 2006, the Compensation Committee amended the Company’s 2000 Stock Award Plan. The amendment extends to one year the period during which a participant must exercise non-qualified options following a termination of service. It also limits to one year the period for exercise of both qualified and non-qualified options following termination of service due to a participant’s death or disability. This amendment

F-10

is effective for options granted on or after September 18, 2006. The amendment did not have any impact on our December 31, 2006 consolidated financial statements.

We also provide an Employee Stock Purchase Plan to facilitate the purchase by employees of up to 800,000 shares of common stock. Offerings to employees are made on a quarterly basis. Subject to certain limitations, the purchase price for each share of common stock is equal to 90% of the average of the market prices of the common stock as reported on the New York Stock Exchange on the first business day of the purchase period and the last business day of each month of the purchase period. Shares of common stock of 18,116, 14,476 and 13,281 were issued under the ESPP at a weighted-average price of $36.00, $40.83 and $39.34 during 2006, 2005 and 2004, respectively.

Under an executive compensation program approved in 1994, we award to a trust 10,086 shares of common stock per quarter, up to a maximum of 806,880 shares.

Effective January 1, 2006, we adopted Statement of Financial Accounting Standard (“SFAS”) No. 123 (revised 2004), “Share-Based Payment,” (“SFAS 123R”). SFAS 123R requires the measurement and recognition of compensation expense at fair value of employee stock awards. Compensation expense for awards and related tax effects is recognized as they vest. Through December 31, 2005, we used the intrinsic value method to account for stock-based awards to our employees under APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and disclosed pro forma information as if we had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). We have adopted SFAS 123R using the modified prospective transition method in which we are recognizing compensation expense on the unvested portion of the awards over the remaining vesting period. Under this transition method, prior period results have not been restated. In addition, SFAS 123R requires us to estimate the amount of expected forfeitures in calculating compensation costs for all outstanding awards. Previously, we had accounted for forfeitures as they occurred. As of January 1, 2006, the cumulative effect of adopting the expected forfeiture method and the impact on cash flows was not significant.

The impact of adopting SFAS 123R was a reduction of our net income by approximately $11.3 million, or $0.05 on a basic and diluted earnings per share basis for the year ended December 31, 2006.

Total compensation expense recognized for employee stock based compensation for the year ended December 31, 2006 was $18.4 million, of which $13.8 million has been included within marketing, selling and administrative expenses and $4.6 million within payroll and related expenses.

The following table illustrates the effect on income before cumulative effect of a change in accounting principle, net income and earnings per share as if we had applied the fair value recognition provisions of SFAS 123 to such compensation (in thousands, except per share data):

	Year Ended December 31,
	2005	2004
Income before cumulative effect of a change in accounting principle	$663,465	$474,691
Deduct: Total stock-based employee compensation expense determined under fair value method for all awards	(9,732)	(9,502)
Pro forma income before cumulative effect of a change in accounting        principle	653,733	465,189
Add: Interest on dilutive convertible notes	48,128	54,530
Pro forma income before cumulative effect of a change in       accounting principle for diluted earnings per share	$701,861	$519,719
Net income, as reported	$715,956	$474,691
Deduct: Total stock-based employee compensation expense determined under fair value method for all awards	(9,732)	(9,502)
Pro forma net income	706,224	465,189
Add: Interest on dilutive convertible notes	48,128	54,530
Pro forma net income for diluted earnings per share	$754,352	$519,719
Weighted-average common shares outstanding	206,217	198,946
Dilutive effect of stock options and restricted stock awards	2,498	3,888
Dilutive effect of convertible notes	25,772	31,473
Diluted weighted-average shares outstanding	234,487	234,307

F-11

Earnings per share before cumulative effect of a change in       accounting principle:
Basic — as reported	$ 3.22	$ 2.39
Basic — pro forma	$ 3.17	$ 2.34
Diluted — as reported	$ 3.03	$ 2.26
Diluted — pro forma	$ 2.99	$ 2.22
Earnings per share:
Basic — as reported	$ 3.47	$ 2.39
Basic — pro forma	$ 3.42	$ 2.34
Diluted — as reported	$ 3.26	$ 2.26
Diluted — pro forma	$ 3.22	$ 2.22

Diluted earnings per share did not include options to purchase 3.2 million shares for the year ended December 31, 2006 and 1.3 million for each of the years ended December 31, 2005 and December 31, 2004 because the effect of including them would have been antidilutive. Also, diluted earnings per share in 2005 did not include 0.2 million shares we received in 2006 in connection with the settlement of an Accelerated Share Repurchase (“ASR”) transaction because the effect of including them would have been antidilutive.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The estimated fair value of stock options, less estimated forfeitures, is amortizedover the vesting period using the graded-vesting method. The assumptions used in the Black-Scholes option-pricing model are as follows:

	2006	2005	2004
Dividend yield	1.4%	1.0%	1.1%
Expected stock price volatility	33.0%	48.8%	41.6%
Risk-free interest rate	4.5%	3.5%	3.0%
Expected option life	5 years	5 years	5 years

Upon the adoption of SFAS 123R, expected volatility was based on a combination of historical and implied volatilities. The risk-free interest rate is based on U.S. Treasury zero coupon issues with a remaining term equal to the expected option life assumed at the date of grant. The expected term was calculated based on historical experience and represents the time period options actually remain outstanding. We estimated

forfeitures based on historical pre-vesting forfeitures and shall revise those estimates in subsequent periods if actual forfeitures differ from those estimates. For purposes of calculating pro forma information for periods prior to fiscal 2006, we accounted for forfeitures as they occurred.

F-12

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

Stock Options Activity	Number of Options	Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value1
			(years)	(in thousands)
Outstanding at January 1, 2006	6,858,134	$30.00	5.54	$103,283
Granted	950,243	44.03
Exercised	(1,082,792)	21.26
Canceled	(418,032)	42.35
Outstanding at December 31, 2006	6,307,553	32.85	5.41	$65,035
Options Exercisable at December 31, 2006	4,415,480	29.11		$60,370

¹The intrinsic value represents the amount by which the fair value of stock exceeds the option exercise price.

Stock Options Outstanding

	As of December 31, 2006
	Outstanding				Exercisable
Exercise Price Range		Number of Options	Weighted-Average Remaining Life	Weighted-Average Exercise Price		Number of Options	Weighted-Average Exercise Price
$  9.55 - $20.30		1,423,505	4.75 years	$12.05		1,363,355	$11.76
$21.71 - $28.88		1,200,575	3.92 years	$25.92		1,107,125	$26.23
$28.88 - $40.06		1,187,129	5.98 years	$37.41		719,186	$36.91
$40.06 - $52.95		2,496,344	6.23 years	$45.87		1,225,814	$46.43
		6,307,553	5.41 years	$32.85		4,415,480	$29.11

The weighted-average estimated fair value of stock options granted was $14.03, $20.37 and $13.10during the years ended December 31, 2006, 2005 and 2004 respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2006, 2005 and 2004 was $22.3, $24.9 and $125.3 million, respectively. As of December 31, 2006, there was approximately $11.3 million of total unrecognized compensation cost, net of estimated forfeitures, related to stock options granted under our stock incentive plans which is expected to be recognized over a weighted-average period of 1.3 years.

Restricted stock units are converted into shares of common stock upon vesting on a one-for-one basis. The cost of these awards is determined using the fair value of our common stock on the date of the grant, and compensation expense is recognized over the vesting period. Restricted stock activity is summarized in the following table:

Restricted Stock Activity	Number of Awards	Weighted-Average Grant Date Fair Value
Non-vested share units at January 1, 2006	345,530	$42.67
Granted	204,154	$43.61
Vested	100,693	$40.94
Canceled	67,524	$43.05
Non-vested share units expected to vest at December 31, 2006	381,467	$43.56

The weighted-average estimated fair value of restricted stock units granted during the year ended December 31, 2005 and 2004 were $46.56 and $40.42, respectively. As of December 31, 2006, we had $6.5 million of total unrecognized compensation expense, net of estimated forfeitures, related to restricted stock unit grants, which will be recognized over the weighted-average period of 1.3 years.

F-13

Segment Reporting

We operate three cruise brands, Royal Caribbean International, Celebrity Cruises and Pullmantur Cruises. The brands have been aggregated as a single reportable segment based on the similarity of their economic characteristics as well as products and services provided.

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

	2006	2005	2004
Passenger ticket revenues:
United States	82%	79%	82%
All other countries	18%	21%	18%

Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R)” (“SFAS 158”). SFAS 158 requires an employer to recognize the over-funded or under-funded status of a defined benefit postretirement plan (other than a multi-employer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur in comprehensive income. SFAS 158 also requires the measurement of defined benefit plan assets and obligations as of the date of the employer’s fiscal year-end statement of financial position (with limited exceptions). SFAS 158 is effective as of the end of the fiscal year ending after December 15, 2006. The impact of adopting SFAS 158 resulted in a reclassification of prior service cost from intangible assets to accumulated other comprehensive income (loss) of approximately $7.0 million in our 2006 consolidated financial statements.

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in the tax return. This interpretation is effective for fiscal years beginning after December 15, 2006. We do not expect that the adoption of FIN 48 will have a material impact on our 2007 consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS 157 defines fair value, establishes a formal framework for measuring fair value and expands disclosures about fair value measurements. We are currently evaluating the impact SFAS 157 may have on our consolidated financial statements.

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Note 3. Business Combination

On November 14, 2006, we completed our acquisition of Pullmantur S.A. (“Pullmantur”), a Madrid-based cruise and tour operator. Pullmantur increases our presence in Spain and provides us with an opportunity to further grow our business in Europe and Latin America and to increase our product offerings. Pullmantur also provides us an opportunity for incremental guest, revenue and earnings growth. We purchased all of the capital stock of Pullmantur for approximately €436.3 million or approximately $558.9 million. For reporting purposes, we will be including Pullmantur’s results of operations on a two-month lag beginning with the first quarter of 2007.We have included Pullmantur’s balance sheet as of the acquisition date in our consolidated balance sheet as of December 31, 2006.

The acquisition was accounted for as a business purchase combination using the purchase method of accounting under the provisions of Statement of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141"). The purchase price for the Pullmantur acquisition was allocated to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date, with the excess allocated to goodwill. The allocation of the purchase price requires extensive use of accounting estimates, valuation methodologies employed by appraisers and management's judgment in the determination of fair values and estimated useful lives of tangible and identifiable intangible assets acquired and liabilities assumed.

We have not finalized the allocation of the purchase price to the net assets acquired in this acquisition. The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed, with reference to Pullmantur’s balance sheet as of the acquisition date. The amounts allocated to intangible assets, estimated useful lives and amortization methodologies are preliminary and are subject to the completion of an appraisal by management, with the assistance of appraisers engaged by management.

 U.S. $ in thousands

Total current assets	57,860
Property and equipment (mostly ships)	380,600
Other non-current assets	4,526
Goodwill	425,530
Other intangible assets	242,600
Current portion of long-term debt	(14,897)
Other current liabilities	(91,221)
Long-term debt	(338,700)
Other long-term liabilities	(107,350)
Net assets acquired	558,948

Of the $242.6 million of acquired intangible assets, approximately $216.0 million was assigned to the value associated with the awareness and reputation of the Pullmantur brand among its customers and it is considered an indefinite life intangible asset. Amortizable intangible assets identified of approximately $26.6 million have a weighted-average useful life of approximately 2.2 years.

Note 4. Property and Equipment

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

	2006	2005
Land	$ 16,442	$ 7,056
Ships	13,225,184	11,952,626
Ships under construction	557,268	377,065
Other	584,641	512,904
	14,383,535	12,849,651
Less — accumulated depreciation and amortization	(2,954,429)	(2,572,703)
	$11,429,106	$10,276,948

Ships under construction include progress payments for the construction of new ships as well as planning, design, interest, commitment fees and other associated costs. We capitalized interest costs of $27.8 million, $17.7 million and $7.2 million for the years 2006, 2005 and 2004, respectively.

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Note 5. Other Assets

In March 2006, we purchased $100.0 million of notes issued by First Choice Holidays PLC (“First Choice”), our joint venture partner in Island Cruises. The notes bear interest at 6.0% and are due from First Choice in March 2009.

Variable Interest Entities

Financial Accounting Standard Board Interpretation No. 46 (Revised), Consolidation of Variable Interest Entities (“FIN46”), addresses consolidation by business enterprises of Variable Interest Entities (“VIEs”) in which an entity absorbs a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity, which have one or both of the following characteristics: (1) the equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated support from other parties, which is provided through other interests that will absorb some or all of the expected losses of the entity; or (2) the equity investors lack one or more of the following essential characteristics of a controlling financial interest: (a) the direct or indirect ability to make decisions about the

entity’s activities through voting or similar rights; or (b) the obligation to absorb the expected losses of the entity if they occur, which makes it possible for the entity to finance its activities; or (c) the right to receive the expected residual returns of the entity if they occur, which is the compensation for the risk of absorbing the expected losses.

We have determined that one of our minority interests, a ship repair facility in which we invested in April 2001, is a VIE; however, we are not the primary beneficiary and accordingly we do not consolidate this entity. As of December 31, 2006, our investment in this entity including equity and loans, which is also our maximum exposure to loss, was approximately $43.4million.

In conjunction with our acquisition of Pullmantur, we obtained a 49% minority interest in Pullmantur Air, S.A.("Pullmantur Air"), a small air business that operates three aircraft in support of Pullmantur’s operations. We have determined Pullmantur Air is a VIE for which we are the primary beneficiary and in accordance with FIN46, we have consolidated the assets and liabilities of Pullmantur Air at their fair value. The assets and liabilities of Pullmantur Air are immaterial to our December 31, 2006 consolidated financial statements.

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Note 6. Long-Term Debt

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

	2006	2005
Unsecured revolving credit facility, LIBOR plus 0.875% and a commitment       fee of 0.175% due 2010	$     445,000	$  135,000
Unsecured senior notes and senior debentures, 6.75% to 8.75%, due 2007 through 2016, 2018 and 2027	2,804,608	2,096,286
Liquid Yield Option™ Notes with yield to maturity of 4.875%, due 2021	-	531,857
Zero coupon convertible notes with yield to maturity of 4.75%, due 2021	-	137,942
€750 million unsecured Bridge Loan, EURIBOR plus 0.625%, due 2007	925,110	-
$570 million unsecured term loan, 3.77% due 2006 through 2013	529,286	-
$360 million unsecured term loan, LIBOR plus 1.0%, due 2006	-	270,000
$300 million unsecured term loan, LIBOR plus 0.8%, due 2009 through       2010	200,000	200,000
$225 million unsecured term loan, LIBOR plus 0.75%, due 2006 through       2012	192,848	225,000
€6.0 million unsecured revolving credit lines, EURIBOR plus 0.8% to       1.25% due 2007 through 2008	7,961	-
Unsecured term loans, LIBOR plus 0.7%, due 2010	200,000	200,000
Unsecured term loan, 8.0%, due through 2006	-	11,811
Term loan, 8.0%, due through 2010, secured by a certain Celebrity ship	-	172,979
Term loans, LIBOR plus 0.85%, due through 2008, secured by certain Celebrity ships	61,149	125,580
Capital lease obligations	47,782	48,320
	5,413,744	4,154,775
Less — current portion	(373,422)	(600,883)
Long-term portion	$5,040,322	$ 3,553,892

During 2006, we entered into and drew in full a $570.0 million unsecured term loan due through 2013 at a rate of 3.77%.

During 2006, we issued $550.0 million of 7.0% senior unsecured notes due 2013, at a price of 99.509% of par and $350.0 million of 7.25% senior unsecured notes due 2016, at a price of 99.690% of par.

During 2006, we paid $530.6 million to redeem in full the accreted balance of our outstanding Liquid Yield Option Notes™ (“LYONs”) due February 2, 2021. During 2006, holders our LYONs converted approximately $13.5 million of the accreted value of these notes into approximately 319,000 shares of common stock and cash for fractional shares.

During 2006, we prepaid a total of $153.8 million on an 8.0% term loan secured by a certain Celebrity ship. We borrowed $150.0 million on our unsecured revolving credit facility to prepay the term loan.

During 2006, we called for redemption all of our outstanding zero coupon convertible notes due May 18, 2021. Most holders of the notes elected to convert them into shares of our common stock, rather than redeem them for cash, resulting in the issuance of approximately 4.1 million shares during the redemption period. In addition to the 4.1 million shares issued related to the redemption, holders of our zero coupon convertible notes converted approximately $11.5 million of the accreted balance of these notes into approximately 369,000 shares of common stock and cash for fractional shares.

During 2006, we obtained a €750.0 million, or approximately $960.5 million, unsecured bridge loan, on which we drew €701.0 million, or approximately $925.1 million, to finance our acquisition of Pullmantur. The bridge loan has an original maturity of 364 days. We have classified the bridge loan as long-term debt at December 31, 2006 in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 6, Classification of Short-Term Obligations Expected to be Refinanced. We refinanced the bridge loan subsequent to year-end with a portion of the net proceeds from the €1.0 billion, or approximately $1.3, billion unsecured bond offering which occurred in January 2007. (See Note 14. Subsequent Events)

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

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

Our debt agreements contain covenants that require us, among other things, to maintain minimum net worth and fixed charge coverage ratio and limit our net debt-to-capital ratio. We are in compliance with all covenants as of December 31, 2006. Following is a schedule of annual maturities on long-term debt as of December 31, 2006 for each of the next five years (in thousands):

Year
2007	$373,422
2008	283,371
2009	265,113
2010	1,058,493
2011	619,735

Note 7. Shareholders’ Equity

In September 2005, we announced that we and an investment bank had finalized a forward sale agreement relating to an Accelerated Share Repurchase (“ASR”) transaction. The forward sale agreement matured in February 2006. As part of the ASR transaction, we purchased 5.7 million shares of our common stock from the investment bank at a price of $43.67 per share. Total consideration paid to repurchase such shares, including commissions and other fees, was approximately $249.1 million and was recorded in shareholders' equity as a component of treasury stock.

On June 2, 2006, we announced that we, and an investment bank had finalized a forward sale agreement relating to an Accelerated Share Repurchase (“ASR”) transaction. The forward sale agreement matured in August 2006. As part of the ASR transaction, we purchased 4.6 million shares of our common from the investment bank at a price of $35.99 per share. Total consideration paid to repurchase such shares, including commissions and other fees, was approximately $164.6 million and was recorded in shareholders' equity as a component of treasury stock.

We declared cash dividends on our common stock of $0.15 per share in each of the quarters of 2006. Cash dividends of $0.13 per share were declared in each of the first and second quarters of 2005 and $0.15 per share in each of the third and fourth quarters of 2005.

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Note 8. Earnings Per Share

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

	Year Ended December 31,
	2006	2005	2004
Income before cumulative effect of a change in     accounting principle	$633,922	$663,465	$474,691
Cumulative effect of a change in accounting     principle (Note 2)	-	52,491	-
Net income	633,922	715,956	474,691
Interest on dilutive convertible notes	17,237	48,128	54,530
Net income for diluted earnings per share	$651,159	$764,084	$529,221
Weighted-average common shares outstanding	210,703	206,217	198,946
Dilutive effect of stock options and restricted stock      awards	1,725	2,725	4,161
Dilutive effect of convertible notes	9,057	25,772	31,473
Diluted weighted-average shares outstanding	221,485	234,714	234,580
Basic earnings per share:
Income before cumulative effect of a change in      accounting principle	$ 3.01	$ 3.22	$ 2.39
Cumulative effect of a change in accounting principle	$       -	$ 0.25	$       -
Net income	$ 3.01	$ 3.47	$ 2.39
Diluted earnings per share:
Income before cumulative effect of a change in      accounting principle	$ 2.94	$ 3.03	$ 2.26
Cumulative effect of a change in accounting      principle	$       -	$ 0.22	$       -
Net income	$ 2.94	$ 3.26	$ 2.26

Diluted earnings per share did not include options to purchase 3.2 million shares for the year ending December 31, 2006 and 1.3 million shares for each of the years ended December 31, 2005 and 2004 because the effect of including them would have been antidilutive.

Note 9. Retirement Plan

We maintain a defined contribution pension plan covering full-time shoreside employees who have completed the minimum period of continuous service. Annual contributions to the plan are based on fixed percentages of participants’ salaries and years of service, not to exceed certain maximums. Pension cost was $13.9 million, $12.8 million and $12.2 million for the years ended December 31, 2006, 2005 and 2004, respectively.

Note 10. Income Taxes

We and the majority of our subsidiaries are currently exempt from United States corporate tax on income from the international operation of ships pursuant to Section 883 of the Internal Revenue Code. Income tax expense related to our remaining subsidiaries was not significant for the years ended December 31, 2006, 2005 and 2004.

Final regulations under Section 883 were published on August 26, 2003, and were effective for the year ended December 31, 2005. These regulations confirmed that we qualify for the exemption provided by Section 883, but also narrowed the scope of activities which are considered by the Internal Revenue Service to be incidental to the international operation of ships. The activities listed in the regulations as not being

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incidental to the international operation of ships include income from the sale of air and other transportation such as transfers, shore excursions and pre and post cruise tours. To the extent the income from such activities is earned from sources within the United States, such income will be subject to United States taxation. The application of these new regulations reduced our net income for the years ended December 31, 2006 and December 31, 2005 by approximately $6.3 million and $14.0 million, respectively.

Note 11. Financial Instruments

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

	2006	2005
Cash and cash equivalents	$ 104,520	$ 125,385
Long-term debt (including current portion of long-term debt)	(5,474,988)	(4,368,874)
Foreign currency forward contracts in a net (loss) gain position	104,159	(115,415)
Interest rate swap agreements in a net receivable position	5,856	8,456
Fuel swap agreements in a net payable position	(20,456)	(78)

The reported fair values are based on a variety of factors and assumptions. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of December 31, 2006 or 2005, or that will be realized in the future and do not include expenses that could be incurred in an actual sale or settlement. Our financial instruments are not held for trading or speculative purposes.

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

Cash and Cash Equivalents

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

Long-Term Debt

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

Foreign Currency Contracts

The fair values of our foreign currency forward contracts were estimated using current market prices for similar instruments. Our exposure to market risk for fluctuations in foreign currency exchange rates relates to six ship construction contracts and forecasted transactions. We use foreign currency forward contracts to mitigate the impact of fluctuations in foreign currency exchange rates. As of December 31, 2006, we had foreign currency forward contracts in a notional amount of $3.8 billion maturing through 2009. As of December 31, 2006, the fair value of our foreign currency forward contracts related to the six ship construction contracts, which are designated as fair value hedges, was a net unrealized gain of approximately $106.3 million. At December 31, 2005, the fair value of our foreign currency forward contracts related to three ship construction contracts, designated as fair value hedges, was a net unrealized loss of approximately $103.4 million. The fair value of our foreign currency forward contracts related to the other ship construction contract at December 31, 2005, which was designated as a cash flow hedge, was an unrealized loss, of approximately $7.8 million. At December 31, 2006, approximately 11% of the aggregate cost of the ships was exposed to fluctuations in the euro exchange rate.

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Hedge of Net Investment in a Foreign Operation

In conjunction with our acquisition of Pullmantur, we obtained a bridge loan with a notional amount of €750.0 million, or approximately $960.5 million, of which we drew €701.0 million, or approximately $925.1 million, to finance the acquisition. We have designated a portion of this bridge loan, approximately €478.8 million, or approximately $631.8 million, which is a nonderivative, as a hedge of our net investment in Pullmantur and, accordingly, have included approximately $18.7 million of foreign-currency transaction losses in the cumulative translation adjustment component of accumulated other comprehensive loss at December 31, 2006.

Interest Rate Swap Agreements

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

Market risk associated with our long-term fixed rate debt is the potential increase in fair value resulting from a decrease in interest rates. As of December 31, 2006, we had interest rate swap agreements, designated as fair value hedges, which exchanged fixed interest rates for floating interest rates in a notional amount of $175.0 million, maturing in 2010 through 2013.

Market risk associated with our long-term floating rate debt is the potential increase in interest expense from an increase in interest rates. As of December 31, 2006, we had an interest rate swap agreement, designated as a cash flow hedge, which, exchanges floating rate term debt for a fixed interest rate of 4.40% in a notional amount of $25.0 million, maturing in 2008.

Market risk associated with our operating lease for Brilliance of the Seas is the potential increase in rent expense from an increase in sterling LIBOR rates. As of January 2007, we have effectively changed 50% of the operating lease obligation from a floating rate to a fixed rate obligation with a weighted-average rate of 4.76% through rate fixings with the lessor, maturing in 2012.

Fuel Swap Agreements

The fair values of our fuel swap agreements were estimated based on quoted market prices for similar or identical financial instruments to those we hold. Our exposure to market risk for changes in fuel prices relates to the forecasted consumption of fuel on our ships. Historically, we have used fuel swap agreements to mitigate the impact of fluctuations in fuel prices. As of December 31, 2006 and 2005, we had fuel swap agreements, designated as cash flow hedges, to pay fixed prices for fuel with an aggregate notional amount of $205.3 million, maturing through 2008, and $92.4 million, maturing through 2007, respectively.

Note 12. Commitments and Contingencies

Capital Expenditures

As of December 31, 2006, we had two Freedom-class ships, and one unnamed class ship designated for Royal Caribbean International and three Solstice-class ships, on order for an additional capacity of approximately 21,150 berths. The aggregate cost of the ships is approximately $5.3 billion, of which we have deposited $438.4 million as of December 31, 2006. (See Note 11. Financial Instruments.)

As of December 31, 2006, we anticipated overall capital expenditures, including the six ships on order, will be approximately $1.3 billion for 2007, $1.8 billion for 2008, $2.0 billion for 2009, and $1.0 billion for 2010.

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Litigation

In April 2005, a purported class action lawsuit was filed in the United States District Court of the Southern District of Florida alleging that Celebrity Cruises improperly requires its cabin stewards to share guest gratuities with assistant cabin stewards. The suit sought payment of damages, including penalty wages under the U.S. Seaman’s Wage Act. In March 2006 the Southern District of Florida dismissed the suit and held that the case should be arbitrated pursuant to the arbitration provision in Celebrity’s collective bargaining agreement. In April 2006, the plaintiff appealed the order to the U.S. 11th Circuit Court of Appeals. We are not able at this time to estimate the impact of this proceeding on us. However, we believe that we have meritorious defenses and we intend to vigorously defend against this action.

In January 2006, we partially settled a pending lawsuit against Rolls Royce and Alstom Power Conversion, co-producers of the Mermaid pod-propulsion system on Millennium-class ships, for the recurring Mermaid pod failures. Under the terms of the partial settlement, we received $38.0 million from Alstom and released them from the suit, which remains pending against Rolls Royce. The $38.0 million settlement resulted in a gain of $36.0 million, net of reimbursements to insurance companies, which we have recorded within other income in our consolidated statements of operations.

In January 2006, a purported class action lawsuit was filed in the United States District Court for the Southern District of New York alleging that we infringed rights in copyrighted works and other intellectual property by presenting performances on our cruise ships without securing the necessary licenses. The suit seeks payment of damages, disgorgement of profits and a permanent injunction against future infringement. In April 2006, we filed a motion to sever and transfer the case to the United States District Court for the Southern District of Florida. The motion is pending. We are not able at this time to estimate the impact of this proceeding on us.

In June 2006, a federal court jury in New York awarded Celebrity Cruises approximately $193.0 million, exclusive of pre-judgment interest and attorneys fees, in a lawsuit against Essef Corp. for damages stemming from a 1994 outbreak of Legionnaires’ disease on one of Celebrity’s ships. The verdict is subject to appeal and, due to the ongoing nature of the proceedings, the ultimate financial benefit to Celebrity is undetermined at this time. Any gain from this verdict will only be recognized when the outcome is known with certainty.

In July 2006, a purported class action lawsuit was filed in the United States District Court for the Central District of California alleging that we failed to timely pay crew wages and failed to pay proper crew overtime. The suit seeks payment of damages, including penalty wages under the U.S. Seaman’s Wage Act and equitable relief damages under the California Unfair Competition Law. In December 2006, the District Court granted our motion to dismiss the claim and held that it should be arbitrated pursuant to the arbitration provision in Royal Caribbean’s collective bargaining agreement. In January 2007, the plaintiffs appealed the order to the United States Ninth Circuit Court of Appeals.We are not able at this time to estimate the impact of this proceeding on us. However, we believe that we have meritorious defenses and we intend to vigorously defend against this action.

We are routinely involved in other 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.

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Operating Leases

On July 5, 2002, we added Brilliance of the Seas to Royal Caribbean International’s fleet. In connection with this addition, we novated our original ship building contract and entered into an operating lease denominated in British pound sterling. In connection with the novation of the contract, we received $77.7 million for reimbursement of shipyard deposits previously made. The lease payments vary based on sterling LIBOR. The lease has a contractual life of 25 years; however, the lessor has the right to cancel the lease at years 10 and 18. Accordingly, the lease term for accounting purposes is 10 years. In the event of early termination at year 10, we have the option to cause the sale of the vessel at its fair value and use the proceeds toward the applicable termination obligation plus any unpaid amounts due under the contractual term of the lease. Alternatively, we can make a termination payment of approximately £126.0 million, or approximately $246.8 million based on the exchange rate at December 31, 2006, and relinquish our right to cause the sale of the vessel. This is analogous to a guaranteed residual value. This termination amount, which is our maximum exposure, has been included in the table below for noncancelable operating leases. Under current circumstances we do not believe early termination of this lease is probable.

In addition, we are obligated under other noncancelable operating leases primarily for offices, warehouses and motor vehicles. As of December 31, 2006, future minimum lease payments under noncancelable operating leases were as follows (in thousands):

Year
2007	$   58,728
2008	56,652
2009	50,462
2010	49,932
2011	47,504
Thereafter(1)	307,524
	$     570,802

(1) Under the Brilliance of the Seas lease agreement, we may be required to make a termination payment of approximately £126.0 million, or approximately $246.8 million based on the exchange rate at December 31, 2006, if the lease is canceled in 2012. This is analogous to a guaranteed residual value.

Total expense for all operating leases amounted to $57.0 million, $57.9 million and $54.5 million for the years 2006, 2005 and 2004, respectively.

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

Other

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 any person other than A. Wilhelmsen AS. and Cruise Associates, our two principal shareholders, acquires ownership of more than 30% of our common stock and our two principal shareholders, in the aggregate, own less of our common stock than such person and do not collectively have the right to elect, or to designate for election, at least a majority of the board of directors, 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.

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At December 31, 2006, we have future commitments to pay for our usage of certain port facilities, marine consumables, services and maintenance contracts as follows (in thousands):

Year
2007	$   138,511
2008	87,353
2009	42,846
2010	30,795
2011	25,582
Thereafter	103,242
	$   428,329

Note 13. Related Parties

A. Wilhelmsen AS. and Cruise Associates collectively own approximately 35.9% of our common stock and are parties to a shareholders’ agreement which provides that our board of directors will consist of four nominees of A. Wilhelmsen AS., four nominees of Cruise Associates and our Chief Executive Officer. They have the power to determine, among other things, our policies and the policies of our subsidiaries and actions requiring shareholder approval.

Note 14. Subsequent Events

In January 2007, we issued € 1.0 billion, or approximately $1.3 billion, of 5.63% senior unsecured notes due 2014 at a price of 99.638% of par. The net proceeds from the offering were used to retire the €701.0 million, or approximately $925.1 million, drawn on the €750.0 million, or approximately $960.5 million, unsecured bridge loan facility obtained to finance our acquisition of Pullmantur. The remainder of the net proceeds, approximately €289.0 million, or approximately $374.8 million, were used to repay a portion of the outstanding balance on our unsecured revolving credit facility.

In February 2007, we entered into interest rate swap agreements that effectively change €1.0 billion of fixed rate debt with a weighted-average fixed rate of 5.63% to EURIBOR-based floating rate debt. We also entered into cross currency swap agreements that effectively change €300.0 million of floating EURIBOR-based debt to $389.1 million of floating LIBOR-based debt.

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Note 15. Quarterly Selected Financial Data (Unaudited)

(In thousands, except per share data)

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
	2006		2005		2006		2005		2006		2005		2006			2005
	(in thousands, except per share data)
Total   revenues	$	1,146,536	$	1,168,077	$	1,292,984	$	1,203,242	$	1,636,851	$	1,502,215	$	1,153,215		$	1,029,640
Operating   income 1	$	141,051	$	201,178	$	184,244	$	214,135	$	419,609	$	400,456	$	113,542		$	55,796
Income   (loss)   before   cumulative   effect of a   change in   accounting   principle	$	119,499	$	137,118	$	122,427	$	155,240	$	345,372	$	374,711	$	46,624		$	(3,604)
Cumulative   effect of a   change in   accounting   principle 1		-		52,491		-		-		-		-		-			-
Net   income   (loss)	$	119,499	$	189,609	$	122,427	$	155,240	$	345,372	$	374,711	$	46,624		$	(3,604)
Basic earnings (loss)   per share:
Income   (loss)   before   cumulative   effect of a   change in   accounting   principle	$	0.57	$	0.68	$	0.58	$	0.76	$	1.66	$	1.79	$	0.22		$	(0.02)
Cumulative   effect of a   change in   accounting   principle 1		-		0.26		-		-		-		-			-		-
Net   income   (loss)	$	0.57	$	0.94	$	0.58	$	0.76	$	1.66	$	1.79	$	0.22		$	(0.02)
Diluted   earnings   (loss)   per   share:
Income   (loss)   before   cumulative   effect of a   change in   accounting   principle	$	0.55	$	0.64	$	0.57	$	0.72	$	1.63	$	1.64	$	0.22		$	(0.02)
Cumulative   effect of a   change in   accounting   principle 1		-		0.22		-		-		-		-		-			-
Net   income   (loss)	$	0.55	$	0.86	$	0.57	$	0.72	$	1.63	$	1.64	$	0.22		$	(0.02)
Dividends   declared   per share:	$	0.15	$	0.13	$	0.15	$	0.13	$	0.15	$	0.15	$	0.15		$	0.15

¹ In the third quarter of 2005, we changed our method of accounting for drydocking costs. (See Note 2. Summary of Significant Accounting Policies)

F-25

EX-4

Exhibit 4.13

ROYAL CARIBBEAN CRUISES LTD., as Issuer

and

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee

________________

FOURTEENTH SUPPLEMENTAL INDENTURE

Dated as of June 12, 2006

________________

SENIOR DEBT SECURITIES

Supplemental to Indenture dated as of July 15, 1994

                FOURTEENTH SUPPLEMENTAL INDENTURE, dated as of June 12, 2006 (the "Fourteenth Supplemental Indenture"), between ROYAL CARIBBEAN CRUISES LTD., a Liberian corporation (hereinafter called the "Company"), and THE BANK OF NEW YORK TRUST COMPANY, N.A. (as successor to The Bank of New York and NationsBank of Georgia, National Association), as trustee under the Indenture referred to below (hereinafter called the "Trustee").

WHEREAS, the Company entered into an Indenture dated as of July 15, 1994 (the "Basic Indenture", all capitalized terms used in this Fourteenth Supplemental Indenture and not otherwise defined being used as defined in the Basic Indenture) with the Trustee, for the purposes of issuing its unsecured and unsubordinated indebtedness in one or more series (the "Securities") in such principal amount or amounts as may from time to time be authorized by or pursuant to the authority granted in one or more resolutions of the Board of Directors of the Company; and

WHEREAS, the Company proposes to issue a series of Securities denominated its "7.00% Senior Notes due 2013" (such Securities being referred to herein as the "Senior Notes"); and

WHEREAS, Sections 901(6) and 901(10) of the Basic Indenture provide that without the consent of the Holders of the Securities of any series, the Company, when authorized by a Board Resolution, and the Trustee may enter into one or more indentures supplemental to the Basic Indenture (a) to establish the form or terms Securities of any series as contemplated by Sections 201 and 301 thereof and (b) to cure any ambiguity, to correct or supplement any provision in the Basic Indenture which may be inconsistent with any other provision of the Basic Indenture or to make any other provisions with respect to matters or questions arising under the Basic Indenture, provided that such action shall not adversely affect the interests of the Holders of the Securities of any series in any material respect; and

WHEREAS, the entry into this Fourteenth Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Basic Indenture; and

WHEREAS, all things necessary have been done to make this Fourteenth Supplemental Indenture, when executed and delivered by the Company, the legal, valid and binding agreement of the Company, in accordance with its terms.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

The parties hereto mutually covenant and agree as follows:

SECTION 1       The Basic Indenture is hereby amended solely with respect to a series of Securities that consists of Senior Notes, as follows:

(A)    By amending Section 101 to add new definitions thereto in appropriate alphabetical sequences, as follows:

"Attributable Debt" has the meaning specified in Section 1008.

"Consolidated Net Tangible Assets" has the meaning specified in Section 1008.

"Funded Debt" has the meaning specified in Section 1009.

"Mortgage" has the meaning specified in Section 1008.

"Principal Property" has the meaning specified in Section 1008.

"Restricted Subsidiary" has the meaning specified in Section 1008.

"Secured Debt" has the meaning specified in Section 1008.

"Unrestricted Subsidiary" has the meaning specified in Section 1008.

(B)   By adding the following Section 114 to Article One:

Section 114. Consent to Jurisdiction and Service of Process.

The Company agrees that any legal suit, action or proceeding brought by any party to enforce any rights under or with respect to the Indenture or the Securities may be instituted in any state or federal court in The City of New York, State of New York, and waives to the fullest extent permitted by law any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding and irrevocably submits to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding. The Company hereby irrevocably designates and appoints the Company's General Counsel as the Company's authorized agent to receive and forward on its behalf service of any and all process which may be served in any such suit, action or proceeding in any such court and agrees that service of process upon the Company's General Counsel at his office at the Company, 1050 Caribbean Way, Miami, Florida 33132 and written notice of said service to the Company, mailed or delivered to the Company's General Counsel, 1050 Caribbean Way, Miami, Florida 33132, shall be deemed in every respect effective service of process upon the Company in any such suit, action or proceeding and shall be taken and held to be valid personal service upon the Company. Said designation and appointment shall be irrevocable. Nothing in this Section 114 shall affect the right of any party to the Indenture to serve process in any manner permitted by law or limit the right of any party to

2

the Indenture to bring proceedings against the Company in the courts of any jurisdiction or jurisdictions. The Company further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of the Company's General Counsel in full force and effect so long as the Indenture or any of the Securities shall be outstanding. To the extent that the Company has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Company hereby irrevocably waives such immunity in respect of its obligations under the Indenture and the Securities, to the extent permitted by law.

(C)   By adding the following Section 115 to Article One:

Section 115. No Recourse Against Others.

A director, officer, stockholder or incorporator, as such, of the Company shall not have any liability for any obligation, covenant or agreement of the Company under this Indenture or any indenture supplemental hereto or in the Securities or for any claim based on, in respect of or by reason of such obligation, covenant or agreement or their creation under any rule of law, statute or constitutional provision or the enforcement of any assessment or by any legal or equitable proceeding or otherwise. Each Holder by accepting any of the Securities waives and releases all such liability.

(D)   By adding the following Section 311 to Article Three:

Section 311. Additional Senior Notes.

Senior Notes in the aggregate principal amount of U.S.$550,000,000 are being initially issued pursuant to this Fourteenth Supplemental Indenture. The Company may issue additional Senior Notes under this Fourteenth Supplemental Indenture (the "Additional Notes"). The Senior Notes and any Additional Notes subsequently issued shall be treated as a single class and, unless otherwise specified, all references to Senior Notes shall include the Additional Notes for all purposes under the Indenture and this Fourteenth Supplemental Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase.

3

(E)   By adding the following Section 1008 to Article Ten:

Section 1008. Restrictions on Secured Debt.

(a)    The Company covenants and agrees that it will not, and will not permit any Restricted Subsidiary to create, issue, incur, assume or guarantee any Secured Debt without making effective provision (and the Company covenants that in such case it will make or cause to be made effective provision) whereby the Senior Notes then outstanding and any other indebtedness of or guarantee by the Company or such Restricted Subsidiary then entitled thereto shall be secured by such Mortgage equally and ratably with (or prior to) any and all other obligations and indebtedness thereby secured for so long as any such other obligations and indebtedness shall be so secured, unless after giving effect thereto, the aggregate amount of all such Secured Debt plus all Attributable Debt of the Company and its Restricted Subsidiaries in respect of sale and leaseback transactions (as defined in Section 1009) involving Principal Properties (other than sale and leaseback transactions permitted by clause (a)(1) of Section 1009 in reliance upon one of the exclusions set forth in paragraphs (1) through (6) below and clause (a)(2) of Section 1009) would not exceed 10% of Consolidated Net Tangible Assets; provided, however, that this Section shall not apply to, and there shall be excluded from Secured Debt in any computation under this Section, indebtedness for money borrowed secured by:

(1)    Mortgages existing on the date of this Fourteenth Supplemental Indenture;

(2)    Mortgages on any real or personal property of any Person, which Mortgages are existing at the time such Person became a Restricted Subsidiary, which Mortgage was not incurred in contemplation of such Person becoming a Restricted Subsidiary;

(3)    Mortgages in favor of the Company or any Restricted Subsidiary;

(4)    Mortgages existing on any real or personal property at the time it is acquired by the Company or a Restricted Subsidiary or created within 18 months after the date of such acquisition, conditional sale and similar agreements;

(5)    Mortgages on any real or personal property to secure the payment of all or any part of the purchase price or construction cost thereof or to secure any indebtedness for money borrowed incurred prior to, at the time of, or within 18 months after the acquisition, the completion of any construction or the commencement of full operation of such

4

property, for the purpose of financing all or any part of the purchase price or construction cost thereof; and

(6)    Any extension, renewal or refunding (or successive extensions, renewals or refundings), as a whole or in part, of any Mortgage referred to in the foregoing clauses (1) to (5) inclusive; provided the principal amount of such extension, renewal or refunding may not exceed the principal amount of the Mortgage being extended, renewed or refunded plus the amount of any premium or other costs paid in connection with such extension, renewal or refunding.

(b)    "Attributable Debt" is defined as to any particular lease under which any Person is liable, at the time of determination, the present value (discounted at the interest rate implicit in the lease or, if not known, at the Company's incremental borrowing rate) of the obligations of the lessee of the property subject to such lease for rental payments during the remaining term of the lease included in such transaction including any period for which such lease has been extended or may, at the sole option of the lessor, be extended or until the earliest date on which the lessee may terminate such lease without penalty or upon payment of penalty (in which case the rental payments shall include such penalty), after excluding all amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water, utilities and similar charges.

(c)    "Consolidated Net Tangible Assets" is defined as (1) the total amount of assets (less applicable reserves and other properly deductible items) which under generally accepted accounting principles would be included on a consolidated balance sheet of the Company and its Restricted Subsidiaries after deducting therefrom, without duplication, the sum of (i) all current liabilities except for (A) notes and loans payable, (B) current maturities of long term debt, (C) current maturities of obligations under capital leases and (D) customer deposits and (ii) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles, which in each case under generally accepted accounting principles would be included on such consolidated balance sheet, less (2) the amount which would be so included on such consolidated balance sheet for investments (less applicable reserves) (i) in Unrestricted Subsidiaries or (ii) in corporations while they were Unrestricted Subsidiaries but which at the time of computation are not Subsidiaries of the Company.

(d)    "Mortgage" is defined as and includes any mortgage, pledge, lien, security interest, conditional sale or other title retention agreement or other similar encumbrance.

(e)    "Principal Property" is defined as any real or personal property owned or leased by the Company or any Subsidiary the net book

5

value of which on the date as of which the determination is being made exceeds 5% of the Company's Consolidated Net Tangible Assets.

(f)    "Restricted Subsidiary" is defined as any Subsidiary which owns or leases a Principal Property and any other Subsidiary which has not been designated an Unrestricted Subsidiary.

(g)    "Secured Debt" is defined as indebtedness for money borrowed which is secured by a Mortgage on a Principal Property of the Company or any Restricted Subsidiary.

(h)    "Unrestricted Subsidiary" is defined as (1) any Subsidiary of the Company which at the time of determination shall be an Unrestricted Subsidiary (as designated by the Board of Directors of the Company pursuant to a Board Resolution) and (2) any Subsidiary of an Unrestricted Subsidiary.

(F)   By adding the following Section 1009 to Article Ten:

Section 1009. Restrictions on Sales and Leasebacks.

(a)    Except for a sale or transfer between a Restricted Subsidiary and the Company or between Restricted Subsidiaries, the Company covenants and agrees that it will not and will not permit any Restricted Subsidiary to, sell or transfer any Principal Property owned by the Company or a Restricted Subsidiary, with the intention that the Company or any Restricted Subsidiary take back a lease thereof, except a lease for a period, including renewals, of less than three years, by the end of which period it is intended that the use of such Principal Property by the lessee will be discontinued (any such transaction being herein referred to as a "sale and leaseback transaction") unless either:

(1)    the Company or such Restricted Subsidiary could incur Secured Debt pursuant to Section 1008 on the Principal Property to be leased in a principal amount equal to the Attributable Debt with respect to such sale and leaseback transaction without equally and ratably securing the Senior Notes; or

(2)(A)   the gross proceeds of the sale or transfer of the Principal Property leased pursuant to such arrangement equals or exceeds the fair market value of such Principal Property and (B) within one year after such sale or transfer of such Principal Property shall have been made by the Company or by a Restricted Subsidiary, the Company applies all of the net proceeds of the sale or transfer of the Principal Property leased pursuant to such arrangement to (i) the voluntary retirement of Funded Debt of the Company or any Restricted Subsidiary or (ii) the acquisition by the Company or a Restricted Subsidiary of one or more properties

6

which on an aggregate basis have a purchase price in excess of 5% of Consolidated Net Tangible Assets (other than the Principal Property involved in such sale).

(b)    "Funded Debt" is defined as any indebtedness for money borrowed, created, issued, incurred, assumed or guaranteed, whether secured or unsecured, maturing more than one year after the date of determination thereof and any indebtedness, regardless of its terms, renewable pursuant to the terms thereof or of a revolving credit or similar agreement effective for more than 360 days after the date of the creation of indebtedness.

(G)   By adding the following Section 1010 to Article Ten:

Section 1010. Maintenance of Properties.

The Company will cause all material properties owned by the Company or any Restricted Subsidiary or used or held for use in the conduct of its business or the business of any Restricted Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment (except for ordinary wear and tear) and will cause to be made all necessary repairs, renewals and replacements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this covenant shall prevent the Company or any Restricted Subsidiary from discontinuing the operation or maintenance of any properties if such discontinuation is, in the judgment of the Company, desirable in the conduct of its business or the business of any Restricted Subsidiary and not disadvantageous in any material respect to the Holders of the Senior Notes.

(H)    By amending the table of contents of the Basic Indenture to reflect the additions described in subsections (B) through (G) of this Section 1.

SECTION 2. The Basic Indenture, as supplemented and amended by this Fourteenth Supplemental Indenture, is in all respects ratified and confirmed, and the Basic Indenture and this Fourteenth Supplemental Indenture shall be read, taken and construed as one and the same instrument.

SECTION 3. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Fourteenth Supplemental Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

7

SECTION 4. All covenants and agreements in this Fourteenth Supplemental Indenture by the Company shall bind its successors and assigns, whether so expressed or not.

SECTION 5. In case any provision in this Fourteenth Supplemental Indenture or in the Senior Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions (or of the other series of Securities) shall not in any way be affected or impaired thereby.

SECTION 6. Nothing in this Fourteenth Supplemental Indenture, expressed or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Holders of the Senior Notes any benefit or any legal or equitable right, remedy or claim under this Fourteenth Supplemental Indenture.

SECTION 7. This Fourteenth Supplemental Indenture and each Senior Note shall be deemed to a contract made under the laws of the State of New York and this Fourteenth Supplemental Indenture and each such Senior Note shall be governed by and construed in accordance with the laws of the State of New York.

SECTION 8. All terms used in this Fourteenth Supplemental Indenture not otherwise defined herein that are defined in the Basic Indenture shall have the meanings set forth therein.

SECTION 9. This Fourteenth Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.

SECTION 10. Section 403 and Section 1004 of the Basic Indenture are applicable to the Senior Notes.

8

                IN WITNESS WHEREOF, the parties hereto have caused this Fourteenth Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

ROYAL CARIBBEAN CRUISES LTD.
By:	/s/ Thomas P. Martin
Name: Thomas P. Martin
Title:   Senior Vice President and Treasurer

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee,
By:	/s/ Jason Merchant
Name: Jason Merchant
Title:   Assistant Treasurer

STATE OF NY )

) ss.:

COUNTY OF NY )

On the 9^th day of June, 2006, before me personally came Thomas P. Martin, to me known, who, being by me duly sworn, did depose and say that he is Senior Vice President and Treasurer of ROYAL CARIBBEAN CRUISES LTD., one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.

/s/ Daniel T. Roose

Name: DANIEL T. ROOSE

Notary Public, State of New York

No. 01RO6139002

Qualified in New York County

Commission Expires Dec. 27, 2009

Notary Public

State of

My Commission expires on

STATE OF GEORGIA)

) ss.:

COUNTY OF DEKALB )

On the 12th day of June, 2006, before me personally came Jason Merchant, to me known, who, being by me duly sworn, did depose and say that he/she is Assistant Treasurer of THE BANK OF NEW YORK TRUST COMPANY, N.A., one of the corporations described in and which executed the foregoing instrument; that he/she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he/she signed his/her name thereto by like authority.

[seal]

Name: D. Dawes

Notary Public

State of Georgia

My Commission expires on 8/22/06

EX-4

Exhibit 4.14

ROYAL CARIBBEAN CRUISES LTD., as Issuer

and

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee

_________________

FIFTEENTH SUPPLEMENTAL INDENTURE

Dated as of June 12, 2006

_________________

SENIOR DEBT SECURITIES

Supplemental to Indenture dated as of July 15, 1994

                FIFTEENTH SUPPLEMENTAL INDENTURE, dated as of June 12, 2006 (the "Fifteenth Supplemental Indenture"), between ROYAL CARIBBEAN CRUISES LTD., a Liberian corporation (hereinafter called the "Company"), and THE BANK OF NEW YORK TRUST COMPANY, N.A. (as successor to The Bank of New York and NationsBank of Georgia, National Association), as trustee under the Indenture referred to below (hereinafter called the "Trustee").

WHEREAS, the Company entered into an Indenture dated as of July 15, 1994 (the "Basic Indenture", all capitalized terms used in this Fifteenth Supplemental Indenture and not otherwise defined being used as defined in the Basic Indenture) with the Trustee, for the purposes of issuing its unsecured and unsubordinated indebtedness in one or more series (the "Securities") in such principal amount or amounts as may from time to time be authorized by or pursuant to the authority granted in one or more resolutions of the Board of Directors of the Company; and

WHEREAS, the Company proposes to issue a series of Securities denominated its "7.25% Senior Notes due 2016" (such Securities being referred to herein as the "Senior Notes"); and

WHEREAS, Sections 901(6) and 901(10) of the Basic Indenture provide that without the consent of the Holders of the Securities of any series, the Company, when authorized by a Board Resolution, and the Trustee may enter into one or more indentures supplemental to the Basic Indenture (a) to establish the form or terms Securities of any series as contemplated by Sections 201 and 301 thereof and (b) to cure any ambiguity, to correct or supplement any provision in the Basic Indenture which may be inconsistent with any other provision of the Basic Indenture or to make any other provisions with respect to matters or questions arising under the Basic Indenture, provided that such action shall not adversely affect the interests of the Holders of the Securities of any series in any material respect; and

WHEREAS, the entry into this Fifteenth Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Basic Indenture; and

WHEREAS, all things necessary have been done to make this Fifteenth Supplemental Indenture, when executed and delivered by the Company, the legal, valid and binding agreement of the Company, in accordance with its terms.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

The parties hereto mutually covenant and agree as follows:

                SECTION 1. The Basic Indenture is hereby amended solely with respect to a series of Securities that consists of Senior Notes, as follows:

(A)       By amending Section 101 to add new definitions thereto in appropriate alphabetical sequences, as follows:

"Attributable Debt" has the meaning specified in Section 1008.

"Consolidated Net Tangible Assets" has the meaning specified in Section 1008.

"Funded Debt" has the meaning specified in Section 1009.

"Mortgage" has the meaning specified in Section 1009.

"Principal Property" has the meaning specified in Section 1008.

"Restricted Subsidiary" has the meaning specified in Section 1008.

"Secured Debt" has the meaning specified in Section 1008.

"Unrestricted Subsidiary" has the meaning specified in Section 1008.

(B) By adding the following Section 114 to Article One:

Section 114. Consent to Jurisdiction and Service of Process.

The Company agrees that any legal suit, action or proceeding brought by any party to enforce any rights under or with respect to the Indenture or the Securities may be instituted in any state or federal court in The City of New York, State of New York, and waives to the fullest extent permitted by law any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding and irrevocably submits to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding. The Company hereby irrevocably designates and appoints the Company's General Counsel as the Company's authorized agent to receive and forward on its behalf service of any and all process which may be served in any such suit, action or proceeding in any such court and agrees that service of process upon the Company's General Counsel at his office at the Company, 1050 Caribbean Way, Miami, Florida 33132 and written notice of said service to the Company, mailed or delivered to the Company's General Counsel, 1050 Caribbean Way, Miami, Florida 33132, shall be deemed in every respect effective service of process upon the Company in any such suit, action or proceeding and shall be taken and held to be valid personal service upon the Company. Said designation and appointment shall be irrevocable. Nothing in this

2

Section 114 shall affect the right of any party to the Indenture to serve process in any manner permitted by law or limit the right of any party to the Indenture to bring proceedings against the Company in the courts of any jurisdiction or jurisdictions. The Company further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of the Company's General Counsel in full force and effect so long as the Indenture or any of the Securities shall be outstanding. To the extent that the Company has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Company hereby irrevocably waives such immunity in respect of its obligations under the Indenture and the Securities, to the extent permitted by law.

(C) By adding the following Section 115 to Article One:

Section 115. No Recourse Against Others.

A director, officer, stockholder or incorporator, as such, of the Company shall not have any liability for any obligation, covenant or agreement of the Company under this Indenture or any indenture supplemental hereto or in the Securities or for any claim based on, in respect of or by reason of such obligation, covenant or agreement or their creation under any rule of law, statute or constitutional provision or the enforcement of any assessment or by any legal or equitable proceeding or otherwise. Each Holder by accepting any of the Securities waives and releases all such liability.

(D) By adding the following Section 311 to Article Three:

Section 311. Additional Senior Notes

Senior Notes in the aggregate principal amount of U.S.$350,000,000 are being initially issued pursuant to this Fifteenth Supplemental Indenture. The Company may issue additional Senior Notes under this Fifteenth Supplemental Indenture (the "Additional Notes"). The Senior Notes and any Additional Notes subsequently issued shall be treated as a single class and, unless otherwise specified, all references to Senior Notes shall include the Additional Notes for all purposes under the Indenture and this Fifteenth Supplemental Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase.

(E) By adding the following Section 1008 to Article Ten:

Section 1008. Restrictions on Secured Debt.

3

(a)          The Company covenants and agrees that it will not, and will not permit any Restricted Subsidiary to create, issue, incur, assume or guarantee any Secured Debt without making effective provision (and the Company covenants that in such case it will make or cause to be made effective provision) whereby the Senior Notes then outstanding and any other indebtedness of or guarantee by the Company or such Restricted Subsidiary then entitled thereto shall be secured by such Mortgage equally and ratably with (or prior to) any and all other obligations and indebtedness thereby secured for so long as any such other obligations and indebtedness shall be so secured, unless after giving effect thereto, the aggregate amount of all such Secured Debt plus all Attributable Debt of the Company and its Restricted Subsidiaries in respect of sale and leaseback transactions (as defined in Section 1009) involving Principal Properties (other than sale and leaseback transactions permitted by clause (a)(1) of Section 1009 in reliance upon one of the exclusions set forth in paragraphs (1) through (6) below and clause (a)(2) of Section 1009) would not exceed 10% of Consolidated Net Tangible Assets; provided, however, that this Section shall not apply to, and there shall be excluded from Secured Debt in any computation under this Section, indebtedness for money borrowed secured by:

(1)        Mortgages existing on the date of this Fifteenth Supplemental Indenture;

(2)        Mortgages on any real or personal property of any Person, which Mortgages are existing at the time such Person became a Restricted Subsidiary, which Mortgage was not incurred in contemplation of such Person becoming a Restricted Subsidiary;

(3)        Mortgages in favor of the Company or any Restricted Subsidiary;

(4)        Mortgages existing on any real or personal property at the time it is acquired by the Company or a Restricted Subsidiary or created within 18 months after the date of such acquisition, conditional sale and similar agreements;

(5)        Mortgages on any real or personal property to secure the payment of all or any part of the purchase price or construction cost thereof or to secure any indebtedness for money borrowed incurred prior to, at the time of, or within 18 months after the acquisition, the completion of any construction or the commencement of full operation of such property, for the purpose of financing all or any part of the purchase price or construction cost thereof; and

(6)        Any extension, renewal or refunding (or successive extensions, renewals or refundings), as a whole or in part, of any

4

Mortgage referred to in the foregoing clauses (1) to (5) inclusive; provided the principal amount of such extension, renewal or refunding may not exceed the principal amount of the Mortgage being extended, renewed or refunded plus the amount of any premium or other costs paid in connection with such extension, renewal or refunding.

(b)          "Attributable Debt" is defined as to any particular lease under which any Person is liable, at the time of determination, the present value (discounted at the interest rate implicit in the lease or, if not known, at the Company's incremental borrowing rate) of the obligations of the lessee of the property subject to such lease for rental payments during the remaining term of the lease included in such transaction including any period for which such lease has been extended or may, at the sole option of the lessor, be extended or until the earliest date on which the lessee may terminate such lease without penalty or upon payment of penalty (in which case the rental payments shall include such penalty), after excluding all amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water, utilities and similar charges.

(c)          "Consolidated Net Tangible Assets" is defined as (1) the total amount of assets (less applicable reserves and other properly deductible items) which under generally accepted accounting principles would be included on a consolidated balance sheet of the Company and its Restricted Subsidiaries after deducting therefrom, without duplication, the sum of (i) all current liabilities except for (A) notes and loans payable, (B) current maturities of long term debt, (C) current maturities of obligations under capital leases and (D) customer deposits and (ii) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles, which in each case under generally accepted accounting principles would be included on such consolidated balance sheet, less (2) the amount which would be so included on such consolidated balance sheet for investments (less applicable reserves) (i) in Unrestricted Subsidiaries or (ii) in corporations while they were Unrestricted Subsidiaries but which at the time of computation are not Subsidiaries of the Company.

(d)          "Mortgage" is defined as and includes any mortgage, pledge, lien, security interest, conditional sale or other title retention agreement or other similar encumbrance.

(e)          "Principal Property" is defined as any real or personal property owned or leased by the Company or any Subsidiary the net book value of which on the date as of which the determination is being made exceeds 5% of the Company's Consolidated Net Tangible Assets.

5

(f)           "Restricted Subsidiary" is defined as any Subsidiary which owns or leases a Principal Property and any other Subsidiary which has not been designated an Unrestricted Subsidiary.

(g)          "Secured Debt" is defined as indebtedness for money borrowed which is secured by a Mortgage on a Principal Property of the Company or any Restricted Subsidiary.

(h)          "Unrestricted Subsidiary" is defined as (1) any Subsidiary of the Company which at the time of determination shall be an Unrestricted Subsidiary (as designated by the Board of Directors of the Company pursuant to a Board Resolution) and (2) any Subsidiary of an Unrestricted Subsidiary.

(F) By adding the following Section 1009 to Article Ten:

Section 1009. Restrictions on Sales and Leasebacks.

(a)          Except for a sale or transfer between a Restricted Subsidiary and the Company or between Restricted Subsidiaries, the Company covenants and agrees that it will not and will not permit any Restricted Subsidiary to, sell or transfer any Principal Property owned by the Company or a Restricted Subsidiary, with the intention that the Company or any Restricted Subsidiary take back a lease thereof, except a lease for a period, including renewals, of less than three years, by the end of which period it is intended that the use of such Principal Property by the lessee will be discontinued (any such transaction being herein referred to as a "sale and leaseback transaction") unless either:

(1)          the Company or such Restricted Subsidiary could incur Secured Debt pursuant to Section 1008 on the Principal Property to be leased in a principal amount equal to the Attributable Debt with respect to such sale and leaseback transaction without equally and ratably securing the Senior Notes; or

(2)(A)   the gross proceeds of the sale or transfer of the Principal Property leased pursuant to such arrangement equals or exceeds the fair market value of such Principal Property and (B) within one year after such sale or transfer of such Principal Property shall have been made by the Company or by a Restricted Subsidiary, the Company applies all of the net proceeds of the sale or transfer of the Principal Property leased pursuant to such arrangement to (i) the voluntary retirement of Funded Debt of the Company or any Restricted Subsidiary or (ii) the acquisition by the Company or a Restricted Subsidiary of one or more properties which on an aggregate basis have a purchase price in excess of 5% of Consolidated Net Tangible Assets (other than the Principal Property involved in such sale).

6

(b)          "Funded Debt" is defined as any indebtedness for money borrowed, created, issued, incurred, assumed or guaranteed, whether secured or unsecured, maturing more than one year after the date of determination thereof and any indebtedness, regardless of its terms, renewable pursuant to the terms thereof or of a revolving credit or similar agreement effective for more than 360 days after the date of the creation of indebtedness.

(G) By adding the following Section 1010 to Article Ten:

Section 1010. Maintenance of Properties.

The Company will cause all material properties owned by the Company or any Restricted Subsidiary or used or held for use in the conduct of its business or the business of any Restricted Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment (except for ordinary wear and tear) and will cause to be made all necessary repairs, renewals and replacements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this covenant shall prevent the Company or any Restricted Subsidiary from discontinuing the operation or maintenance of any properties if such discontinuation is, in the judgment of the Company, desirable in the conduct of its business or the business of any Restricted Subsidiary and not disadvantageous in any material respect to the Holders of the Senior Notes.

(H)       By amending the table of contents of the Basic Indenture to reflect the additions described in subsections (B) through (G) of this Section 1.

SECTION 2.   The Basic Indenture, as supplemented and amended by this Fifteenth Supplemental Indenture, is in all respects ratified and confirmed, and the Basic Indenture and this Fifteenth Supplemental Indenture shall be read, taken and construed as one and the same instrument.

SECTION 3.   If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Fifteenth Supplemental Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

SECTION 4.   All covenants and agreements in this Fifteenth Supplemental Indenture by the Company shall bind its successors and assigns, whether so expressed or not.

SECTION 5.   In case any provision in this Fifteenth Supplemental Indenture or in the Senior Notes shall be invalid, illegal or unenforceable, the validity,

7

legality and enforceability of the remaining provisions (or of the other series of Securities) shall not in any way be affected or impaired thereby.

SECTION 6.   Nothing in this Fifteenth Supplemental Indenture, expressed or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Holders of the Senior Notes any benefit or any legal or equitable right, remedy or claim under this Fifteenth Supplemental Indenture.

SECTION 7.   This Fifteenth Supplemental Indenture and each Senior Note shall be deemed to a contract made under the laws of the State of New York and this Fifteenth Supplemental Indenture and each such Senior Note shall be governed by and construed in accordance with the laws of the State of New York.

SECTION 8.   All terms used in this Fifteenth Supplemental Indenture not otherwise defined herein that are defined in the Basic Indenture shall have the meanings set forth therein.

SECTION 9.   This Fifteenth Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.

SECTION 10.               Section 403 and Section 1004 of the Basic Indenture are applicable to the Senior Notes.

8

IN WITNESS WHEREOF, the parties hereto have caused this Fifteenth Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

ROYAL CARIBBEAN CRUISES LTD.

By:/s/ Thomas P. Martin

Name: Thomas P. Martin

Title: Senior Vice President and Treasurer

THE BANK OF NEW YORK TRUST

COMPANY, N.A., as Trustee,

By: /s/ Jason Merchant

Name: Jason Merchant

Title: Assistant Treasurer

STATE OF NY)

) ss.:

COUNTY OF NY )

On the 9^th day of June, 2006, before me personally came Thomas P. Martin, to me

known, who, being by me duly sworn, did depose and say that he is Senior Vice President and Treasurer of ROYAL CARIBBEAN CRUISES LTD., one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.

/s/ Daniel Roose

Name: DANIEL T. ROOSE

Notary Public, State of New York

No. 01RO6139002

Qualified in New York County

Commission Expires Dec. 27, 2009

Notary Public

State of

My Commission expires on

STATE OF GEORGIA)

) ss.:

COUNTY OF DEKALB )

On the 12th day of June, 2006, before me personally came Jason Merchant, to me known, who, being by me duly sworn, did depose and say that he/she is Assistant Treasurer of THE BANK OF NEW YORK TRUST COMPANY, N.A., one of the corporations described in and which executed the foregoing instrument; that he/she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he/she signed his/her name thereto by like authority.

[SEAL]

__________________________________

Name: D. Dawes

Notary Public

State of Georgia

My Commission expires on 8/22/06

EX-10

Exhibit 10.3

EXECUTION COPY

AMENDMENT NO. 2 TO CREDIT AGREEMENT

     This AMENDMENT NO. 2 TO CREDIT AGREEMENT, dated as of December 15, 2006, is among ROYAL CARIBBEAN CRUISES LTD., a Liberian corporation (the “Borrower”), the various financial institutions as are parties to the Credit Agreement referred to below (collectively, the “Lenders”) and CITIBANK, N.A., as Administrative Agent (the “Administrative Agent”) for the Lenders.

PRELIMINARY STATEMENTS

     (1) The Borrower, the Lenders and the Administrative Agent are parties to a Credit Agreement dated as of March 27, 2003, as amended by Amendment No. 1 dated as of May 18, 2005 (as further amended, restated, modified, supplemented or renewed from time to time, the “Credit Agreement”); and

     (2) The Borrower, the Lenders and the Administrative Agent have agreed to amend the Credit Agreement as hereinafter set forth herein;

     NOW, THEREFORE, the parties hereto hereby agree as follows:

     SECTION 1. Amendments to the Credit Agreement. The Credit Agreement is, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2, hereby amended in its entirety to read as set forth in Annex A hereto.

     SECTION 2. Conditions of Effectiveness. This Amendment shall become effective as of the date first above written (the “Amendment Effective Date”) when and only if the Administrative Agent shall have received counterparts of this Amendment executed by the Borrower and the Required Lenders or, as to any of the Lenders, advice satisfactory to the Administrative Agent that such Lender has executed this Amendment.

     SECTION 3. Representation and Warranty. To induce the Lenders to enter into this Amendment, the Borrower represents and warrants that, as of the Amendment Effective Date:

     (a) The representations and warranties contained in Article VI of the Credit Agreement, as amended hereby (excluding, however the representations and warranties contained in Sections 6.10 and 6.13 of the Credit Agreement) are true and correct in all material respects except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct, on and as of the Amendment Effective Date, and

     (b) No Default and no Prepayment Event and no event which (with notice or lapse of time or both) would become a Prepayment Event has occurred and is continuing.

     SECTION 3. Reference to and Effect on the Credit Agreement and the Notes. (a) On and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the Notes to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Amendment.

     (b) The Credit Agreement and the Notes, as specifically amended by this Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.

     (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under the Credit Agreement, nor constitute a waiver of any provision of the Credit Agreement.

     SECTION 4. Costs and Expenses. The Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery and administration, modification and amendment of this Amendment and the other documents to be delivered hereunder (including the reasonable and documented fees and expenses of counsel for the Administrative Agent with respect hereto and thereto as agreed with the Administrative Agent) in accordance with the terms of Section 11.3 of the Credit Agreement.

     SECTION 5. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

     SECTION 6. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

     SECTION 7. Defined Terms. Capitalized terms not otherwise defined in the Amendment shall have the same meanings as specified in the Credit Agreement.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

THE BORROWER

ROYAL CARIBBEAN CRUISES LTD.
By	/s/ Antje M. Gibson
	Title: Vice President & Acting Treasurer
CITIBANK, N.A.,    as Administrative Agent and as a Lender
By	/s/ Anish M. Shah
	Title: Vice President
DnB NOR BANK ASA
By	/s/ Sanjiv Nayar
	Title: Senior Vice President

2

ROYAL BANK OF SCOTLAND PLC
By	/s/ Timothy J. McNaught
	Title: Managing Director
BNP PARIBAS
By	/s/ Duane Helkowski
	Title: Managing Director
By	/s/ Shayn March
	Title: Director
BANK OF AMERICA, N.A.
By	/s/ Justin Lien
	Title: Vice President
BARCLAYS BANK PLC (did not sign) COMMERZBANK AG, NEW YORK AND GRAND CAYMAN ISLANDS BRANCHES
By	/s/ Edward C.a. Forsberg, Jr.
	Title: Senior Vice President & Manager
By	/s/ Birgit Pacek
	Title: Assistant Cashier
HSH NORDBANK AG
By	/s/ S. Berger
	Title: Vice President
By	/s/ Hay
	Title: Vice President
JPMORGAN CHASE BANK, N.A.
By	/s/ Donald S. Shokrian
	Title: Managing Director
NORDEA BANK NORGE ASA
By	/s/ Hans Chr. Kjelsrud
	Title: Executive Vice President
By	/s/ Anne Engen
	Title: Vice President

3

THE BANK OF NOVA SCOTIA
By	/s/ Mark Sparrow
	Title: Director
SCOTIABANC INC.
By	/s/ William E. Zarrett
	Title: Managing Director
KfW (formerly known as KREDITANSTALT FÜR WIEDERAUFBAU)
By	/s/
	Title: Vice President
By	/s/ Senior Project Manager
BAYERISCHE HYPO AND VEREINSBANK AG
By	/s/ Trennt
	Title:
By	/s/ Gohning
CREDIT SUISSE, CAYMAN ISLANDS BRANCH
By	/s/ Ian Nalitt
	Title: Vice President
By	/s/ Denise L. Alvarez
	Title: Associate
GOLDMAN SACHS CREDIT PARTNERS L.P.
By	/s/ Pedro Ramirez
	Title: Authorized Signatory
MIZUHO CORPORATE BANK LTD.
By	/s/
	Title: Deputy General Manager
MORGAN STANLEY BANK (did not sign) REGIONS BANK
By	/s/ Stephen hanas
	Title: Senior Vice President

4

U.S. BANK NATIONAL ASSOCIATION
By	/s/ Patrick H. McGraw, Jr.
	Title: Vice President

5

Annex A

EXECUTION COPY

U.S. $1,000,000,000

CREDIT AGREEMENT,

dated as of March 27, 2003

amended and restated as of December 15, 2006

ROYAL CARIBBEAN CRUISES LTD.,
as the Borrower,

and

CITIGROUP GLOBAL MARKETS INC. and NORDEA
as Co-Lead Arrangers

and

CITIBANK, N.A.
as Administrative Agent

and

NORDEA
as Syndication Agent

and

DNB NOR BANK ASA
as Documentation Agent

TABLE OF CONTENTS

		PAGE
	ARTICLE I
	DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1.	Defined Terms		1
SECTION 1.2.	Use of Defined Terms		11
SECTION 1.3.	Cross-References		11
SECTION 1.4.	Accounting and Financial Determinations		11
	ARTICLE II
	COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1.	Commitment Amounts		12
SECTION 2.1.1.	Commitment of Each Lender		12
SECTION 2.1.2.	Lenders Not Permitted or Required To Make Loans Under Certain Circumstances		12
SECTION 2.1.3.	Defaulting Lenders		12
SECTION 2.2.	Reduction of Commitments		12
SECTION 2.2.1.	Optional		12
SECTION 2.2.2.	Mandatory		13
SECTION 2.3.	Borrowing Procedure		13
SECTION 2.4.	Election of Interest Periods		13
SECTION 2.5.	Funding		13
SECTION 2.6.	Notes		14
SECTION 2.7.	Increase in Combined Commitments		14
	ARTICLE III
	REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

i

		PAGE
SECTION 3.1.	Repayments and Prepayments		15
SECTION 3.2.	Interest Provisions		15
SECTION 3.2.1.	Rates		15
SECTION 3.2.2.	Post-Maturity Rates		16
SECTION 3.2.3.	Payment Dates		16
SECTION 3.2.4.	Interest Rate Determination; Replacement Reference Lenders		16
SECTION 3.3.	Commitment Fees		17
SECTION 3.3.1.	Payment		17
SECTION 3.3.2.	Applicable Percentage		17
	ARTICLE IV
	CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1.	LIBO Rate Lending Unlawful		18
SECTION 4.2.	Deposits Unavailable		18
SECTION 4.3.	Increased LIBO Rate Loan Costs, etc.		19
SECTION 4.4.	Funding Losses		20
SECTION 4.5.	Increased Capital Costs		21
SECTION 4.6.	Taxes		21
SECTION 4.7.	Reserve Costs		23
SECTION 4.8.	Replacement Lenders, etc.		24
SECTION 4.9.	Payments, Computations, etc.		24
SECTION 4.10.	Sharing of Payments		25
SECTION 4.11.	Setoff		25
SECTION 4.12.	Use of Proceeds		25
	ARTICLE V
	CONDITIONS TO BORROWING

ii 

		PAGE
SECTION 5.1.	Initial Borrowing		26
SECTION 5.1.1.	Resolutions, etc.		26
SECTION 5.1.2.	Delivery of Notes		26
SECTION 5.1.3.	Ownership, etc. of Vessels		26
SECTION 5.1.4.	Opinions of Counsel		27
SECTION 5.1.5.	Closing Fees, Expenses, etc.		27
SECTION 5.2.	All Borrowings		27
SECTION 5.2.1.	Compliance with Warranties, No Default, etc.		27
SECTION 5.2.2.	Borrowing Request		27
SECTION 5.3.	All Borrowings		27
	ARTICLE VI
	REPRESENTATIONS AND WARRANTIES
SECTION 6.1.	Organization, etc.		28
SECTION 6.2.	Due Authorization, Non-Contravention, etc.		28
SECTION 6.3.	Government Approval, Regulation, etc.		28
SECTION 6.4.	Compliance with Environmental Laws		29
SECTION 6.5.	Validity, etc.		29
SECTION 6.6.	Financial Information		29
SECTION 6.7.	Intentionally Omitted		29
SECTION 6.8.	No Default, Event of Default or Prepayment Event		29
SECTION 6.9.	Litigation		29
SECTION 6.10.	Vessels		29
SECTION 6.11.	Subsidiaries		30
SECTION 6.12.	Obligations rank pari passu		30
SECTION 6.13.	Withholding, etc.		30

iii 

		PAGE
SECTION 6.14.	No Filing, etc. Required		30
SECTION 6.15.	No Immunity		30
SECTION 6.16.	Pension Plans		30
SECTION 6.17.	Investment Company Act		31
SECTION 6.18.	Regulation U		31
SECTION 6.19.	Accuracy of Information		31
	ARTICLE VII
	COVENANTS
SECTION 7.1.	Affirmative Covenants		31
SECTION 7.1.1.	Financial Information, Reports, Notices, etc.		31
SECTION 7.1.2.	Approvals and Other Consents		32
SECTION 7.1.3.	Compliance with Laws, etc.		32
SECTION 7.1.4.	Vessels		33
SECTION 7.1.5.	Insurance		33
SECTION 7.1.6.	Books and Records		33
SECTION 7.2.	Negative Covenants		34
SECTION 7.2.1.	Business Activities		34
SECTION 7.2.2.	Indebtedness		34
SECTION 7.2.3.	Liens		34
SECTION 7.2.4.	Financial Condition		36
SECTION 7.2.5.	Investments		36
SECTION 7.2.6.	Consolidation, Merger, etc.		36
SECTION 7.2.7.	Asset Dispositions, etc.		37
SECTION 7.2.8.	Transactions with Affiliates		38

iv 

		PAGE
	ARTICLE VIII
	EVENTS OF DEFAULT
SECTION 8.1.	Listing of Events of Default		38
SECTION 8.1.1.	Non-Payment of Obligations		38
SECTION 8.1.2.	Breach of Warranty		38
SECTION 8.1.3.	Non-Performance of Certain Covenants and Obligations		38
SECTION 8.1.4.	Default on Other Indebtedness		38
SECTION 8.1.5.	Pension Plans		39
SECTION 8.1.6.	Bankruptcy, Insolvency, etc.		39
SECTION 8.1.7.	Ownership of Principal Subsidiaries		40
SECTION 8.2.	Action if Bankruptcy		40
SECTION 8.3.	Action if Other Event of Default		40
	ARTICLE IX
	PREPAYMENT EVENTS
SECTION 9.1.	Listing of Prepayment Events		40
SECTION 9.1.1.	Change in Ownership		40
SECTION 9.1.2.	Change in Board		41
SECTION 9.1.3.	Unenforceability		41
SECTION 9.1.4.	Approvals		41
SECTION 9.1.5.	Non-Performance of Certain Covenants and Obligations		41
SECTION 9.1.6.	Judgments		41
SECTION 9.1.7.	Condemnation, etc.		42
SECTION 9.1.8.	Arrest		42
SECTION 9.2.	Mandatory Prepayment		42

v 

		PAGE
	ARTICLE X
	THE AGENTS
SECTION 10.1.	Actions		42
SECTION 10.2.	Funding Reliance, etc.		43
SECTION 10.3.	Exculpation		43
SECTION 10.4.	Successor		44
SECTION 10.5.	Loans by the Agents		44
SECTION 10.6.	Credit Decisions		45
SECTION 10.7.	Copies, etc.		45
SECTION 10.8.	Agency Fee		45
	ARTICLE XI
	MISCELLANEOUS PROVISIONS
SECTION 11.1.	Waivers, Amendments, etc.		45
SECTION 11.2.	Notices		46
SECTION 11.3.	Payment of Costs and Expenses		47
SECTION 11.4.	Indemnification		48
SECTION 11.5.	Survival		49
SECTION 11.6.	Severability		49
SECTION 11.7.	Headings		49
SECTION 11.8.	Execution in Counterparts, Effectiveness, etc.		49
SECTION 11.9.	Governing Law; Entire Agreement		50
SECTION 11.10.	Successors and Assigns		50
SECTION 11.11.	Sale and Transfer of Loans and Note; Participations in Loans and Note		50
SECTION 11.11.1.	Assignments		50
SECTION 11.11.2.	Participations		51

vi 

				PAGE
	SECTION 11.12.		Other Transactions			52
SECTION 11.13.		Forum Selection and Consent to Jurisdiction			52
SECTION 11.14.		Process Agent			53
SECTION 11.15.		Judgment			53
SECTION 11.16.		Waiver of Jury Trial			53

SHCEDULES
SCHEDULE I	—	Disclosure Schedule
EXHIBITS
Exhibit A	—	Form of Note
Exhibit B	—	Form of Borrowing Request
Exhibit C	—	Form of Interest Period Notice
Exhibit D-1	—	Form of Opinion of Michael. J. Smith, Esq.
Exhibit D-2	—	Form of Opinion of Watson, Farley & Williams
Exhibit E	—	Form of Lender Assignment Agreement
Exhibit F	—	Form of Commitment Increase Agreement
Exhibit G	—	Form of Added Lender Agreement
Exhibit H	—	Form of Opinion of Shearman & Sterling LLP

vii 

CREDIT AGREEMENT

     THIS CREDIT AGREEMENT, dated as of March 27, 2003 and amended and restated as of December 15, 2006, is among ROYAL CARIBBEAN CRUISES LTD., a Liberian corporation (the “Borrower”), the various financial institutions as are or shall become parties hereto (collectively, the “Lenders”) and CITIBANK, N.A. (“Citibank”), as administrative agent (in such capacity, the “Administrative Agent”) for the Lenders.

WITNESSETH:

     WHEREAS, the Borrower desires to obtain Commitments from the Lenders pursuant to which Loans, in a maximum aggregate principal amount at any one time outstanding not to exceed $1,000,000,000 (subject to adjustment as provided herein), will be made to the Borrower from time to time prior to the Commitment Termination Date; and

     WHEREAS, the Lenders are willing, on the terms and subject to the conditions hereinafter set forth (including Article V), to extend such Commitments and make such Loans to the Borrower; and

     WHEREAS, the proceeds of such Loans will be used for general corporate purposes, including capital expenditures, of the Borrower and its Subsidiaries but excluding use for the purpose of financing hostile acquisitions by the Borrower;

     NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

     SECTION 1.1. Defined Terms. The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall, when capitalized, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof):

     “Accumulated Other Comprehensive Income (Loss)” means at any date the Borrower’s accumulated other comprehensive income (loss) on such date, determined in accordance with GAAP.

     “Added Lender” is defined in Section 2.7.

     “Administrative Agent” is defined in the preamble and includes each other Person as shall have subsequently been appointed as the successor Administrative Agent, and as shall have accepted such appointment, pursuant to Section 10.4.

     “Affiliate” of any Person means any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person. A Person shall be deemed to be “controlled by” any other Person if such other Person possesses, directly or indirectly, power to

1

direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

     “Agents” means (a) the Administrative Agent and (b) Nordea and DnB in their respective capacities as agents under Article X, together with their respective successors (if any) in such capacity.

     “Agreement” means, on any date, this Credit Agreement as originally in effect on the Effective Date and as thereafter from time to time amended, supplemented, amended and restated, or otherwise modified and in effect on such date.

     “Applicable Jurisdiction” means the jurisdiction or jurisdictions under which the Borrower is organized, domiciled or resident or from which any of its business activities are conducted or in which any of its properties are located and which has jurisdiction over the subject matter being addressed.

     “Applicable Margin” means, as of any date, the percentage per annum set forth below opposite the Senior Debt Rating on such date provided by S&P and Moody’s:

Senior Debt Rating
		Applicable
(S&P)	(Moody's)	Margin
BBB+ or higher	Baa1 or higher		0.50	%
BBB	Baa2		0.625	%
BBB-	Baa3		0.75	%
BB+	Ba1		1.00	%
BB	Ba2		1.25	%
BB- or lower	Ba3 or lower		1.75	%

provided that:

     (a) if at any time the Senior Debt Rating provided by Moody’s differs from the Senior Debt Rating provided by S&P by one level, the Applicable Margin shall be the percentage per annum set forth opposite the higher of such two Senior Debt Ratings, except if the higher rating is BBB- or Baa3, then the Applicable Margin shall be 0.875%;

     (b) if at any time the Senior Debt Rating provided by Moody’s differs from the Senior Debt Rating provided by S&P by more than one level, the Applicable Margin shall be the percentage per annum set forth opposite the rating one level below the higher of such two Senior Debt Ratings, except if the higher rating is BBB or Baa2, then the Applicable Margin shall be 0.875%;

     (c) if at any time a Senior Debt Rating is provided by one of but not both Moody’s and S&P, the Applicable Margin shall be determined by reference to the Senior Debt Rating provided by the agency which gives such rating, except if the rating given is BBB- or Baa3, then the Applicable Margin shall be 0.875%; and

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     (d) if at any time no Senior Debt Rating is provided by Moody’s and no Senior Debt Rating is provided by S&P, the Applicable Margin shall be 1.75% per annum unless (i) within 21 days of being notified by the Administrative Agent that both Moody’s and S&P have ceased to give a Senior Debt Rating, the Borrower has obtained from at least one of such agencies a private implied rating for its senior debt or (ii) having failed to obtain such private rating within such 21-day period, the Borrower and the Lenders shall have agreed within a further 15-day period (during which period the Borrower and the Agents shall consult in good faith to find an alternative method of providing an implied rating of the Borrower’s senior debt) on an alternative rating method, which agreed alternative shall apply for the purposes of this Agreement.

     “Applicable Percentage” is defined in Section 3.3.2.

     “Approved Appraiser” means any of the following: Barry Rogliano Salles, Paris, H Clarkson & Co. Ltd., London, R.S. Platou Shipbrokers, Norway, or Fearnley AS, Norway.

     “Assignee Lender” is defined in Section 11.11.1.

     “Authorized Officer” means those officers of the Borrower authorized to act with respect to the Loan Documents and whose signatures and incumbency shall have been certified to the Administrative Agent by the Secretary or an Assistant Secretary of the Borrower.

     “Borrower” is defined in the preamble.

     “Borrowing” means Loans having the same Interest Period made on the same Business Day and pursuant to the same Borrowing Request in accordance with Section 2.1.

     “Borrowing Request” means a loan request and certificate duly executed by an Authorized Officer of the Borrower, substantially in the form of Exhibit B-1 hereto.

     “Business Day” means any day which is neither a Saturday or Sunday nor a legal holiday on which banks are authorized or required to be closed in New York City, London or Frankfurt, and if the applicable Business Day relates to a Borrowing, Interest Period, prepayment or conversion, in each case with respect to any Loan bearing interest by reference to the LIBO Rate, on which dealings in deposits in Dollars are carried on in the London interbank market.

     “Capital Lease Obligations” means obligations of the Borrower or any Subsidiary of the Borrower under any leasing or similar arrangement which, in accordance with GAAP, would be classified as capitalized leases.

     “Capitalization” means, as at any date, the sum of (a) Net Debt on such date, plus (b) Stockholders’ Equity on such date.

     “Capitalized Lease Liabilities” means the principal portion of all monetary obligations of the Borrower or any of its Subsidiaries under any leasing or similar arrangement which, in accordance with GAAP, would be classified as capitalized leases, and, for purposes of this Agreement and each other Loan Document, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

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     “Cash Equivalents” means all amounts other than cash that are included in the “cash and cash equivalents” shown on the Borrower’s balance sheet prepared in accordance with GAAP.

     “Closing Date” is defined in Section 5.1.

     “Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.

     “Commitment” means, relative to any Lender, such Lender’s obligation to make Loans pursuant to Section 2.1.1.

     “Commitment Amount” means, on any date, $1,000,000,000, as such amount shall be reduced from time to time pursuant to Section 2.2 or increased from time to time pursuant to Section 2.7.

     “Commitment Fees” is defined in Section 3.3.

     “Commitment Termination Date” means the earliest of:

     (a) the Stated Maturity Date;

     (b) the date on which the Commitment Amount is terminated in full or reduced to zero pursuant to Section 2.2; and

     (c) the date on which any Commitment Termination Event occurs.

Upon the occurrence of any event described in clause (b) or (c), the Commitments shall terminate automatically and without further action.

     “Commitment Termination Event” means:

     (a) any Default described in clauses (b) through (d) of Section 8.1.6 shall occur with respect to the Borrower;

     (b) the occurrence and continuance of any Event of Default (other than as described in clause (a) above) and the giving of notice by the Administrative Agent, acting at the direction of the Required Lenders, to the Borrower that the Commitments have been terminated; or

     (c) the occurrence and continuance of a Prepayment Event and the giving of notice by the Administrative Agent, acting at the direction of the Required Lenders, to the Borrower that the Commitments have been terminated.

     “Controlled Group” means all members of a controlled group of corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.

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     “Default” means any Event of Default or any condition, occurrence or event which, after notice or lapse of time or both, would constitute an Event of Default.

     “Disclosure Schedule” means the Disclosure Schedule attached hereto as Schedule I.

     “DnB” means DnB NOR Bank ASA.

     “Dollar” and the sign “$” mean lawful money of the United States.

     “Effective Date” means the date this Agreement becomes effective pursuant to Section 11.8.

     “Environmental Laws” means all applicable federal, state, local or foreign statutes, laws, ordinances, codes, rules and regulations (including consent decrees and administrative orders) relating to the protection of the environment.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections.

     “Event of Default” is defined in Section 8.1.

     “Existing Debt” means the obligations of the Borrower or its Subsidiaries in connection with (i) the Lease Agreement, with respect to the vessel LEGEND OF THE SEAS, dated March 3, 1993 between G.I.E. Cruise Vision One and the Borrower, (ii) the Lease Agreement, with respect to the vessel SPLENDOUR OF THE SEAS, dated March 3, 1993 between G.I.E. Cruise Vision Two and the Borrower, (iii) the Loan Facility Agreement with respect to the vessel CENTURY, dated November 29, 1993 between KfW and Blue Sapphire Marine Inc., (iv) the Loan Facility Agreement with respect to the vessel GALAXY, dated November 29, 1993 between KfW and Esker Marine Shipping Inc,(v) the Loan Facility Agreement with respect to the vessel MERCURY, dated December 12, 1997 between KfW and Seabrook Maritime Inc., (vi) the Buyer Credit Agreement with respect to the vessel SUMMIT dated March 31, 2001 between Summit Inc., Societe Generale and Credit Agricole Indosuez, (vii) the Buyer Credit Agreement with respect to the vessel CONSTELLATION dated December 18, 2001 between Constellation Inc., Societe Generale and Credit Agricole Indosuez and (viii) the Bareboat Charterparty with respect to the vessel BRILLIANCE OF THE SEAS dated July 5, 2002 between Halifax Leasing (September) Limited and RCL (UK) LTD, and the replacement, extension, renewal or amendment of the foregoing without increase in the amount or change in any direct or contingent obligor of such obligations.

     “Existing Group” means the following Persons: (a) A. Wilhelmsen AS., a Norwegian corporation (“Wilhelmsen”); (b) Cruise Associates, a Bahamian general partnership (“Cruise”); and (c) any Affiliate of either or both of Wilhelmsen and Cruise.

     “Existing Principal Subsidiaries” means each Subsidiary of the Borrower that is a Principal Subsidiary on the Closing Date.

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     “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

     “Fiscal Quarter” means any quarter of a Fiscal Year.

     “Fiscal Year” means any annual fiscal reporting period of the Borrower.

     “Fixed Charge Coverage Ratio” means, as of the end of any Fiscal Quarter, the ratio computed for the period of four consecutive Fiscal Quarters ending on the close of such Fiscal Quarter of:

     (a) net cash from operating activities (determined in accordance with GAAP) for such period, as shown in the Borrower’s consolidated statement of cash flow for such period, to

     (b) the sum of:

     (i) dividends actually paid by the Borrower during such period (including, without limitation, dividends in respect of preferred stock of the Borrower); plus

     (ii) scheduled payments of principal of all debt less New Financings (determined in accordance with GAAP, but in any event including Capitalized Lease Liabilities) of the Borrower and its Subsidiaries for such period.

     “F.R.S. Board” means the Board of Governors of the Federal Reserve System or any successor thereto.

     “GAAP” is defined in Section 1.4.

     “Government-related Obligations” means obligations of the Borrower or any Subsidiary of the Borrower under, or Indebtedness incurred by the Borrower or any Subsidiary of the Borrower to satisfy obligations under, any governmental requirement imposed by any Applicable Jurisdiction that must be complied with to enable the Borrower and its Subsidiaries to continue their business in such Applicable Jurisdiction, excluding, in any event, any taxes imposed on the Borrower or any Subsidiary of the Borrower.

     “Hedging Instruments” means options, caps, floors, collars, swaps, forwards, futures and any other agreements, options or instruments substantially similar thereto or any series or combination thereof used to hedge interest, foreign currency and commodity exposures.

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     “herein”, “hereof”, “hereto”, “hereunder” and similar terms contained in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular Section, paragraph or provision of this Agreement or such other Loan Document.

     “Increased Commitment Date” is defined in Section 2.7.

     “Increasing Lenders” is defined in Section 2.7.

     “Indebtedness” means, for any Person: (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within 180 days of the date the respective goods are delivered or the respective services are rendered; (c) Indebtedness of others secured by a Lien on the property of such Person, whether or not the respective indebtedness so secured has been assumed by such Person; (d) obligations of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for the account of such Person; (e) Capital Lease Obligations of such Person; (f) Indebtedness of others guaranteed by such Person; (g) obligations of such Person in respect of surety bonds and similar obligations; and (h) Hedging Instruments.

     “Indemnified Liabilities” is defined in Section 11.4.

     “Indemnified Parties” is defined in Section 11.4.

     “Interest Payment Date” means any date on which interest is payable with respect to Loans pursuant to clause (c) of Section 3.2.3.

     “Interest Period” means, relative to any Loans, the period beginning on (and including) the date on which such Loan is made or continued pursuant to Section 2.3 or 2.4 and shall end on (but exclude) the day which numerically corresponds to such date one, three, six or twelve months thereafter or longer (provided that any Interest Period longer than twelve months duration shall be subject to availability and the agreement of all the Lenders) or, if such month has no numerically corresponding day, on the last Business Day of such month, in either case as the Borrower may select in its relevant notice pursuant to Section 2.3 or 2.4; provided that:

     (a) the Borrower shall not be permitted (i) to select Interest Periods to be in effect at any one time which have expiration dates occurring on more than 15 different dates or (ii) except to the extent provided in Section 2.4, to have outstanding more than six one-month Interest Periods with respect to any Loan in any 12-month period (unless otherwise agreed to by the Required Lenders);

     (b) Interest Periods commencing on the same date for Loans comprising part of the same Borrowing shall be of the same duration (without limiting the ability of the Borrower to have more than one Borrowing on the same date); and

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     (c) if such Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next following Business Day (unless such next following Business Day is the first Business Day of a calendar month, in which case such Interest Period shall end on the Business Day next preceding the first Business Day of such calendar month).

     “Interest Period Notice” means a certificate duly executed by an Authorized Officer of the Borrower, substantially in the form of Exhibit C hereto.

     “Investment” means, relative to any Person,

     (a) any loan or advance made by such Person to any other Person (excluding commission, travel, expense and similar advances to officers and employees made in the ordinary course of business); and

     (b) any ownership or similar interest held by such Person in any other Person.

     “Lender Assignment Agreement” means a Lender Assignment Agreement substantially in the form of Exhibit F.

     “Lenders” is defined in the preamble.

     “Lending Office” means, relative to any Lender, the office of such Lender designated as such below its signature hereto or designated in a Lender Assignment Agreement or Assumption Agreement or such other office of a Lender as designated from time to time by notice from such Lender to the Borrower and the Administrative Agent, whether or not outside the United States, which shall be making or maintaining Loans of such Lender hereunder.

     “LIBO Rate” means, relative to any Interest Period, the rate per annum of the offered quotation for deposits in Dollars for delivery on the first day of such Interest Period and for the duration thereof which appears on Telerate Page 3750 at or about 11:00 a.m. (London time) two Business Days before the commencement of such Interest Period; provided that:

     (a) subject to Section 3.2.4, if no such offered quotation appears on Telerate Page 3750 at the relevant time, the LIBO Rate shall be the rate per annum certified by the Administrative Agent to be the average of the rates quoted by the Reference Lenders as the rate at which each of the Reference Lenders was (or would have been) offered deposits of Dollars by prime banks in the London interbank eurocurrency market in an amount approximately equal to the amount of each such Reference Lender’s Loan for the relevant Borrowing and for a period approximately equal to such Interest Period; and

     (b) for the purposes of determining the post-maturity rate of interest under Section 3.2.2, the LIBO Rate shall be determined by reference to deposits on an overnight or call basis or for such other period or periods as the Administrative Agent may determine after consultation with the Lenders.

     “Lien” means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or interest in property to

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secure payment of a debt or performance of an obligation or other priority or preferential arrangement of any kind or nature whatsoever.

     “Loan” is defined in Section 2.1.1.

     “Loan Document” means this Agreement and the Notes.

     “Material Adverse Effect” means a material adverse effect on (a) the business, operations or financial condition of the Borrower and its Subsidiaries taken as a whole, (b) the rights and remedies of the Administrative Agent or any Lender under the Loan Documents or (c) the ability of the Borrower to perform its payment Obligations under the Loan Documents.

     “Material Litigation” is defined in Section 6.9.

     “Moody’s” means Moody’s Investors Service, Inc.

     “Net Debt” means, at any time, the aggregate outstanding principal amount of all debt (including, without limitation, the principal portion of all capitalized leases) of the Borrower and its Subsidiaries (determined on a consolidated basis in accordance with GAAP) less the sum of (without duplication);

     (a) all cash on hand of the Borrower and its Subsidiaries; plus

     (b) all Cash Equivalents.

     “Net Debt to Capitalization Ratio” means, as at any date, the ratio of (a) Net Debt on such date to (b) Capitalization on such date.

     “New Financings” means proceeds from:

     (a) borrowed money (whether by loan or issuance and sale of debt securities), including drawings under this Agreement, and

     (b) the issuance and sale of equity securities.

     “Note” means a promissory note of the Borrower payable to any Lender, in the form of Exhibit A hereto (as such promissory note may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of the Borrower to such Lender resulting from the outstanding Loans made by such Lender, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof.

     “Obligations” means all obligations (monetary or otherwise) of the Borrower arising under or in connection with this Agreement and the Notes.

     “Organic Document” means, relative to the Borrower, its certificate of incorporation and its by-laws.

     “Participant” is defined in Section 11.11.2.

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     “Pension Plan” means a “pension plan”, as such term is defined in section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the Borrower or any corporation, trade or business that is, along with the Borrower, a member of a Controlled Group, may have liability, including any liability by reason of being deemed to be a contributing sponsor under section 4069 of ERISA.

     “Percentage” means, relative to any Lender, the percentage set forth opposite its signature hereto or as set forth in the applicable Lender Assignment Agreement, as such percentage may be adjusted from time to time pursuant to Section 2.7 or Section 4.8 or pursuant to Lender Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and delivered pursuant to Section 11.11.1.

     “Person” means any natural person, corporation, partnership, firm, association, trust, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity.

     “Prepayment Event” is defined in Section 9.1.

     “Principal Subsidiary” means any Subsidiary of the Borrower that owns a Vessel.

     “Quarterly Payment Date” means the last day of each March, June, September, and December or, if any such day is not a Business Day, the next succeeding Business Day.

     “Reference Lenders” means Citibank, DnB and Nordea and includes each replacement Reference Lender appointed by the Administrative Agent pursuant to Section 3.2.4.

     “Required Lenders” means, at any time, Lenders that, in the aggregate, hold more than 50% of the aggregate unpaid principal amount of the Loans or, if no such principal amount is then outstanding, Lenders that in the aggregate have more than 50% of the Commitments.

     “S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

     Senior Debt Rating” means, as of any date, (a) the implied senior debt rating of the Borrower for debt pari passu in right of payment and in right of collateral security with the Obligations as given by Moody’s and S&P or (b) in the event the Borrower receives an actual unsecured senior debt rating (apart from an implied rating) from Moody’s and/or S&P, such actual rating or ratings, as the case may be (and in such case the Senior Debt Rating shall not be determined by reference to any implied senior debt rating from either agency).

     “Stated Maturity Date” means March 27, 2010.

     “Stockholders’ Equity” means, as at any date, the Borrower’s stockholders’ equity on such date, excluding Accumulated Other Comprehensive Income (Loss), determined in accordance with GAAP, provided that any non-cash charge to Stockholders’ Equity resulting (directly or indirectly) from a change after the Effective Date in GAAP or in the interpretation thereof shall be disregarded in the computation of Stockholders’ Equity such that the amount of any reduction thereof resulting from such change shall be added back to Stockholders’ Equity.

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     “Subsidiary” means, with respect to any Person, any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person.

     “Taxes” is defined in Section 4.6.

     “Telerate Page 3750” means the display designated as “Page 3750” on the Moneyline Telerate Service (or such other page as may replace Page 3750 on that service or such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for deposits in Dollars).

     “United States” or “U.S.” means the United States of America, its fifty States and the District of Columbia.

     “Vessel” means a passenger cruise vessel owned by the Borrower or one of its Subsidiaries.

     “Voting Stock” means shares of capital stock of the Borrower of any class or classes (however designated) that have by the terms thereof normal voting power to elect the members of the Board of Directors of the Borrower (other than voting power upon the occurrence of a stated contingency, such as the failure to pay dividends).

     SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Agreement shall, when capitalized, have such meanings when used in the Disclosure Schedule and in each Note, Borrowing Request, notice and other communication delivered from time to time in connection with this Agreement or any other Loan Document.

     SECTION 1.3. Cross-References. Unless otherwise specified, references in this Agreement and in each other Loan Document to any Article or Section are references to such Article or Section of this Agreement or such other Loan Document, as the case may be, and, unless otherwise specified, references in any Article, Section or definition to any clause are references to such clause of such Article, Section or definition.

     SECTION 1.4. Accounting and Financial Determinations. Unless otherwise specified, all accounting terms used herein or in any other Loan Document shall be interpreted, all accounting determinations and computations hereunder or thereunder (including under Section 7.2.4) shall be made, and all financial statements required to be delivered hereunder or thereunder shall be prepared, in accordance with United States generally accepted accounting principles (“GAAP”) consistently applied (or, if not consistently applied, accompanied by details of the inconsistencies); provided that if, as a result of any change in GAAP or in the interpretation thereof after the date of the financial statements referred to in Section 6.6, there is a change in the manner of determining any of the items referred to herein that are to be determined by reference to GAAP, and the effect of such change would (in the reasonable opinion of the Borrower or the

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Agents) be such as to affect the basis or efficacy of the covenants contained in Section 7.2.4 in ascertaining the financial condition of the Borrower or the consolidated financial condition of the Borrower and its Subsidiaries and the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate such change occurring after the date hereof in GAAP or the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), then such item shall for the purposes of such Sections of this Agreement continue to be determined in accordance with GAAP relating thereto as GAAP were applied immediately prior to such change in GAAP or in the interpretation thereof until such notice shall have been withdrawn or such provision amended in accordance herewith.

ARTICLE II

COMMITMENTS, BORROWING PROCEDURES AND NOTES

     SECTION 2.1. Commitment Amounts. On the terms and subject to the conditions of this Agreement (including Article V), each Lender severally agrees to make Loans pursuant to the Commitments described in this Section 2.1.

          SECTION 2.1.1. Commitment of Each Lender. From time to time on any Business Day occurring prior to the Commitment Termination Date, each Lender will make loans (relative to such Lender, its “Loans”) to the Borrower equal to such Lender’s Percentage of the aggregate amount of the Borrowing requested by the Borrower to be made on such day. The commitment of each Lender described in this Section 2.1.1 is herein referred to as its “Commitment”. On the terms and subject to the conditions hereof, the Borrower may from time to time borrow, prepay and reborrow Loans.

          SECTION 2.1.2. Lenders Not Permitted or Required To Make Loans Under Certain Circumstances. No Lender shall be permitted or required to make any Loan if, after giving effect thereto, the aggregate outstanding principal amount of all Loans

     (a) of all Lenders would exceed the Commitment Amount, or

     (b) of such Lender would exceed such Lender’s Percentage of the Commitment Amount.

     SECTION 2.1.3. Defaulting Lenders. If any Lender shall default in its obligations under Section 2.1, the Agents shall, at the request of the Borrower, use reasonable efforts to find a bank or other financial institution acceptable to the Borrower to replace such Lender on terms acceptable to the Borrower and to have such bank or other financial institution replace such Lender.

     SECTION 2.2. Reduction of Commitments. The Commitment Amount is subject to reduction from time to time pursuant to this Section 2.2.

     SECTION 2.2.1. Optional. The Borrower may, from time to time on any Business Day occurring after the time of the initial Borrowing hereunder, voluntarily

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reduce the Commitment Amount; provided that all such reductions shall be made pro rata among the Lenders and shall require at least three Business Days’ prior notice to the Administrative Agent and be permanent, and any partial reduction of the Commitment Amount shall be in a minimum amount of $10,000,000 and in a multiple of $1,000,000. The Commitment Amount may not be reduced below the outstanding principal amount of the Loans.

     SECTION 2.2.2. Mandatory. On and after the Commitment Termination Date, the Commitment Amount shall be zero.

     SECTION 2.3. Borrowing Procedure. By delivering a Borrowing Request to the Administrative Agent on or before 11:00 a.m., New York time, on a Business Day, the Borrower may from time to time irrevocably request, on not less than two Business Days’ notice, that a Borrowing be made in a minimum amount of $10,000,000 and a multiple of $1,000,000, or in the unused amount of the Commitments. On the terms and subject to the conditions of this Agreement, each Borrowing shall be made on the Business Day specified in such Borrowing Request. On or before 11:00 a.m., New York time, on the Business Day specified in such Borrowing Request, each Lender shall, without any set-off or counterclaim, deposit with the Administrative Agent same day funds in an amount equal to such Lender’s Percentage of the requested Borrowing. Such deposit will be made to an account which the Administrative Agent shall specify from time to time by notice to the Lenders. To the extent funds are so received from the Lenders, the Administrative Agent shall, without any set-off or counterclaim, make such funds available to the Borrower on the Business Day specified in the relevant Borrowing Request by wire transfer of same day funds to the accounts the Borrower shall have specified in its Borrowing Request. No Lender’s obligation to make any Loan shall be affected by any other Lender’s failure to make any Loan.

     SECTION 2.4. Election of Interest Periods. By delivering an Interest Period Notice to the Administrative Agent on or before 11:00 a.m., New York time, on a Business Day, the Borrower may from time to time irrevocably elect, on not less than two Business Days’ notice that all, or any portion in an aggregate minimum amount of $10,000,000 and a multiple of $1,000,000 (or the remaining amount of any Borrowing), of Loans be continued as Loans with an Interest Period of one, three, six or twelve months duration (or a longer duration, subject to availability and the agreement of all the Lenders); provided that each such continuation shall be pro rated among the applicable outstanding Loans of all Lenders. In the absence of delivery of an Interest Period Notice with respect to any Loan at least two Business Days before the last day of the then current Interest Period with respect thereto, such Loan shall, on such last day, automatically be continued as a Loan with an Interest Period of three-months’ duration.

     SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its obligation to make or continue Loans hereunder by causing one of its foreign branches or Affiliates (or an international banking facility created by such Lender) to make or maintain such Loan; provided that such Loan shall nonetheless be deemed to have been made and to be held by such Lender, and the obligation of the Borrower to repay such Loan shall nevertheless be to such Lender for the account of such foreign branch, Affiliate or international banking facility.

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     SECTION 2.6. Notes. Each Lender’s Loans under its Commitment shall be evidenced by a Note payable to the order of such Lender in a maximum principal amount equal to such Lender’s Percentage of the original Commitment Amount. The Borrower hereby irrevocably authorizes each Lender to make (or cause to be made) appropriate notations on the grid attached to such Lender’s Note (or on any continuation of such grid), which notations, if made, shall evidence, inter alia, the date of, the outstanding principal of, and the interest rate and Interest Period applicable to the Loans evidenced thereby, provided that the failure of any Lender to make any such notations shall not limit or otherwise affect any Obligations of the Borrower.

     SECTION 2.7. Increase in Combined Commitments(a) The Borrower shall have the right up to six months prior to the Stated Maturity Date, without the consent of the Lenders, by notice to the Administrative Agent, to effectuate from time to time an increase in the combined Commitments under this Agreement by adding to this Agreement one or more commercial banks or financial institutions (who shall, upon completion of the requirements of this Section 2.7 constitute “Lenders” hereunder) (an “Added Lender”), or by allowing one or more Lenders in their sole discretion to increase their respective Commitments hereunder (each an “Increasing Lender”), so that such added and increased Commitments shall equal the increase in the Commitment Amount effectuated pursuant to this Section 2.7; provided that (i) no added Commitment shall be less than $10,000,000, (ii) no increase in or added Commitments pursuant to this Section 2.7 shall result in combined Commitments exceeding $1,000,000,000, and (iii) no Lender’s Commitment shall be increased under this Section 2.7 without the consent of such Lender. The Borrower shall deliver to the Administrative Agent on or before the effective date of any increase in the Commitment Amount each of the following items with respect to each Added Lender and Increasing Lender:

     (i) a written notice of the Borrower’s intention to increase the combined Commitments pursuant to this Section 2.7, which shall specify each new Lender, if any, the changes in amounts of Commitments that will result, and such other information as is reasonably requested by the Administrative Agent;

     (ii) documents in the form of Exhibit F or Exhibit G, as applicable, executed and delivered by each new Lender and each Lender agreeing to increase its Commitment, pursuant to which it becomes a party hereto or increases its Commitment, as the case may be; and

     (iii) if requested by the applicable Lender, Notes or replacement Notes, as the case may be, executed and delivered by the Borrower.

     (b) Upon receipt of any notice referred to in clause (a)(i) above, the Administrative Agent shall promptly notify each Lender thereof. Upon execution and delivery of such documents (the “Increased Commitment Date”), such new Lender shall constitute a “Lender” hereunder with a Commitment as specified therein, or such Lender’s Commitment shall increase as specified therein, as the case may be. Immediately upon the effectiveness of the addition of such Added Lender or the increase in the Commitment of such Increasing Lender under this Section 2.7 (i) the respective Percentages of the Lenders shall be deemed modified as appropriate to correspond to such changed combined Commitments, and (ii) if there are at such time outstanding any Loans, each Lender whose Percentage has been decreased as a result of the

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increase in the combined Commitments shall be deemed to have assigned, without recourse, to each Added Lender and Increasing Lender such portion of such Lender’s Loans as shall be necessary to effectuate such adjustment in Percentages. Each Increasing Lender and Added Lender (A) shall be deemed to have assumed such portion of such Loans and (B) shall fund to each other Lender on the Increased Commitment Date the amount of Loans assigned by it to such Lender.

ARTICLE III

REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

     SECTION 3.1. Repayments and Prepayments. The Borrower shall repay in full the unpaid principal amount of each Loan upon the Stated Maturity Date. Prior thereto, the Borrower

     (a) may, from time to time on any Business Day, make a voluntary prepayment, in whole or in part, of the outstanding principal amount of any Loans; provided that

     (i) any such prepayment shall be made pro rata among all Loans included in the same Borrowing;

     (ii) all such voluntary prepayments shall require at least three Business Days’ (or, if such prepayment is to be made on the last day of an Interest Period for such Loans, two Business Days’) prior written notice to the Administrative Agent; and

     (iii) all such voluntary partial prepayments shall be in an aggregate minimum amount of $10,000,000 and a multiple of $1,000,000 (or the remaining amount of the Loans being prepaid);

     (b) shall, on each date when any reduction in the Commitment Amount shall become effective, including pursuant to Section 2.2, make a mandatory prepayment of all Loans equal to the excess, if any, of the aggregate outstanding principal amount of all Loans over the Commitment Amount as so reduced; and

     (c) shall, immediately upon any acceleration of the Stated Maturity Date of any Loans pursuant to Section 8.2 or 8.3 or the mandatory repayment of any Loans pursuant to Section 9.2, repay all Loans.

Each prepayment of any Loans made pursuant to this Section shall be without premium or penalty, except as may be required by Section 4.4. No voluntary prepayment of principal of any Loans shall cause a reduction in the Commitment Amount.

     SECTION 3.2. Interest Provisions. Interest on the outstanding principal amount of Loans shall accrue and be payable in accordance with this Section 3.2.

     SECTION 3.2.1. Rates. Loans shall accrue interest at a rate per annum during each Interest Period applicable thereto, equal to the sum of the LIBO Rate for such Interest Period plus the Applicable Margin. All Loans shall bear interest from and

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including the first day of the applicable Interest Period to (but not including) the last day of such Interest Period at the interest rate determined as applicable to such Loan.

     SECTION 3.2.2. Post-Maturity Rates. After the date any principal amount of any Loan is due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise), or after any other monetary Obligation of the Borrower shall have become due and payable, the Borrower shall pay, but only to the extent permitted by law, interest (after as well as before judgment) on such amounts for each day during the period of such default at a rate per annum certified by the Administrative Agent to the Borrower (which certification shall be conclusive in the absence of manifest error) to be equal to the sum of (a) the Applicable Margin plus (b) the LIBO Rate plus (c) 2% per annum.

     SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be payable, without duplication:

     (a) on the Stated Maturity Date therefor;

     (b) on the date of any payment or prepayment, in whole or in part, of principal outstanding on such Loan (but only on the principal so paid or prepaid);

     (c) on the last day of each applicable Interest Period (and, if such Interest Period shall exceed three months, on each date occurring at three-month intervals after the commencement of such Interest Period); and

     (d) on that portion of any Loans the Stated Maturity Date of which is accelerated pursuant to Section 8.2 or Section 8.3, immediately upon such acceleration.

Interest accrued on Loans or other monetary Obligations arising under this Agreement or any other Loan Document after the date such amount is due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise) shall be payable upon demand.

     SECTION 3.2.4. Interest Rate Determination; Replacement Reference Lenders. Each Reference Lender agrees to furnish to the Administrative Agent timely information for the purpose of determining the LIBO Rate in the event that no offered quotation appears on Telerate Page 3750 and the LIBO Rate is to be determined by reference to quotations supplied by the Reference Lenders. If any one or more of the Reference Lenders shall fail to furnish in a timely manner such information to the Administrative Agent for any such interest rate, the Administrative Agent shall determine such interest rate on the basis of the information furnished by the remaining Reference Lenders (provided, that, if all of the Reference Lenders other than the Administrative Agent fail to supply the relevant quotations, the interest rate will be fixed by reference only to the quotation obtained by the Administrative Agent in its capacity as a Reference Lender). If a Reference Lender ceases for any reason to be able and willing to act as such, the Administrative Agent shall, at the direction of the Required Lenders and after consultation with the Borrower and the Lenders, appoint a replacement for such Reference Lender reasonably acceptable to the Borrower, and such replaced Reference Lender shall cease to be a Reference Lender hereunder. The Administrative Agent shall

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furnish to the Borrower and to the Lenders each determination of the LIBO Rate made by reference to quotations of interest rates furnished by Reference Lenders.

     SECTION 3.3. Commitment Fees. The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee (the “Commitment Fees”) on such Lender’s Percentage of the average daily unused portion of the Commitment Amount, for the period (including any portion thereof when its Commitment is suspended by reason of the Borrower’s inability to satisfy any condition of Article V) commencing on the Effective Date and continuing through the Commitment Termination Date, as set forth in this Section 3.3.

     SECTION 3.3.1. Payment.

     (a) The Commitment Fees shall be payable by the Borrower in arrears on each Quarterly Payment Date, commencing with the first such date following the Effective Date and on the Commitment Termination Date.

     (b) Each Commitment Fee shall be in an amount equal to the product of the Applicable Percentage for Commitment Fees, multiplied by the average daily unused portion of the Commitment Amount, multiplied by the actual number of days elapsed since the previous Quarterly Payment Date, divided by 360. Each payment of Commitment Fee shall be allocated by the Administrative Agent on the basis of each Lender’s Percentage of the unused portion of the Commitment Amount for the actual number of days elapsed since the previous Quarterly Payment Date.

     SECTION 3.3.2. Applicable Percentage. On any Quarterly Payment Date (and subject to adjustment as provided below), the Applicable Percentage shall be the percentage per annum set forth below opposite the Senior Debt Rating on such date provided by S&P and Moody’s:

Senior Debt Rating		Applicable
(S&P)	(Moody’s)	Percentage
BBB+ or higher	Baa1 or higher	0.10%
BBB	Baa2	0.125%
BBB-	Baa3	0.15%
BB+	Ba1	0.20%
BB	Ba2	0.25%
BB- or lower	Ba3 or lower	0.375%

     provided that:

     (a) if at any time the Senior Debt Rating provided by Moody’s differs from the Senior Debt Rating provided by S&P by one level, the Applicable Percentage shall be the percentage per annum set forth opposite the higher of such two Senior Debt Ratings, except if the higher rating is BBB- or Baa3, then the Applicable Percentage shall be 0.175%;

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     (b) if at any time the Senior Debt Rating provided by Moody’s differs from the Senior Debt Rating provided by S&P by more than one level, the Applicable Percentage shall be the percentage per annum set forth opposite the rating one level below the higher of such two Senior Debt Ratings, except if the higher rating is BBB or Baa2, then the Applicable Percentage shall be 0.175%;

     (c) if at any time a Senior Debt Rating is provided by one of but not both Moody’s and S&P, the Applicable Percentage shall be determined by reference to the Senior Debt Rating provided by the agency which gives such rating, except if the rating given is BBB- or Baa3, then the Applicable Percentage shall be 0.175%; and

     (d) if at any time no Senior Debt Rating is provided by Moody’s and no Senior Debt Rating is provided by S&P, the Applicable Percentage shall be 0.375% per annum unless (i) within 21 days of being notified by the Administrative Agent that both Moody’s and S&P have ceased to give a Senior Debt Rating, the Borrower has obtained from at least one of such agencies a private implied rating for its senior debt or (ii) having failed to obtain such private rating within such 21-day period, the Borrower and the Lenders shall have agreed within a further 15-day period (during which period the Borrower and the Agents shall consult in good faith to find an alternative method of providing an implied rating of the Borrower’s senior debt) on an alternative rating method, which agreed alternative shall apply for the purposes of this Agreement.

ARTICLE IV

CERTAIN LIBO RATE AND OTHER PROVISIONS

     SECTION 4.1. LIBO Rate Lending Unlawful. If the introduction of or any change in or in the interpretation of any law makes it unlawful, or any central bank or other governmental authority having jurisdiction over such Lender asserts that it is unlawful, for such Lender to make, continue or maintain any Loan bearing interest at a rate based on the LIBO Rate, the obligations of such Lender to make, continue or maintain any Loans bearing interest at a rate based on the LIBO Rate shall, upon notice thereof to the Borrower, the Administrative Agent and each other Lender, forthwith be suspended until the circumstances causing such suspension no longer exist, provided that such Lender’s obligation to make, continue and maintain Loans hereunder shall be automatically converted into an obligation to make, continue and maintain Loans bearing interest at a rate to be negotiated between such Lender and the Borrower that is the equivalent of the sum of the LIBO Rate for the relevant Interest Period plus the Applicable Margin or, if such negotiated rate is not agreed upon by the Borrower and such Lender within fifteen Business Days, a rate equal to the Federal Funds Rate from time to time in effect plus the Applicable Margin.

     SECTION 4.2. Deposits Unavailable. If the Administrative Agent shall have determined that:

     (a) Dollar deposits in the relevant amount and for the relevant Interest Period are not available to the Reference Lenders in their relevant market; or

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     (b) by reason of circumstances affecting the Reference Lenders’ relevant market, adequate means do not exist for ascertaining the interest rate applicable hereunder to LIBO Rate Loans,

then the Administrative Agent shall give notice of such determination (hereinafter called a “Determination Notice”) to the Borrower and each of the Lenders. The Borrower, the Lenders and the Administrative Agent shall then negotiate in good faith in order to agree upon a mutually satisfactory interest rate and interest period (or interest periods) to be substituted for those which would otherwise have applied under this Agreement. If the Borrower, the Lenders and the Administrative Agent are unable to agree upon an interest rate (or rates) and interest period (or interest periods) prior to the date occurring fifteen Business Days after the giving of such Determination Notice, the interest rate to take effect at the end of the Interest Period current at the date of the Determination Notice shall be equal to the sum of the Applicable Margin plus the Federal Funds Rate in effect from time to time.

     SECTION 4.3. Increased LIBO Rate Loan Costs, etc. If a change in any applicable treaty, law, regulation or regulatory requirement or in the interpretation thereof or in its application to the Borrower, or if compliance by any Lender with any applicable direction, request, requirement or guideline (whether or not having the force of law) of any governmental or other authority insofar as it may be changed or imposed after the date hereof, shall:

     (a) subject any Lender to any taxes, levies, duties, charges, fees, deductions or withholdings of any nature with respect to its Commitment or any part thereof imposed, levied, collected, withheld or assessed by any jurisdiction or any political subdivision or taxing authority thereof (other than taxation on overall net income and, to the extent such taxes are described in Section 4.6, withholding taxes); or

     (b) change the basis of taxation to any Lender (other than a change in taxation on the overall net income of such Lender) of payments of principal or interest or any other payment due or to become due pursuant to this Agreement; or

     (c) impose, modify or deem applicable any reserve or capital adequacy requirements (other than the reserve costs described in Section 4.7) or other banking or monetary controls or requirements which affect the manner in which a Lender shall allocate its capital resources to its obligations hereunder or require the making of any special deposits against or in respect of any assets or liabilities of, deposits with or for the account of, or loans by, any Lender (provided that such Lender shall, unless prohibited by law, allocate its capital resources to its obligations hereunder in a manner which is consistent with its present treatment of the allocation of its capital resources); or

     (d) impose on any Lender any other condition affecting its Commitment or any part thereof,

and the result of any of the foregoing is either (i) to increase the cost to such Lender of making Loans or maintaining its Commitment or any part thereof, (ii) to reduce the amount of any payment received by such Lender or its effective return hereunder or on its capital or (iii) to cause such Lender to make any payment or to forego any return based on any amount received or

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receivable by such Lender hereunder, then and in any such case if such increase or reduction in the opinion of such Lender materially affects the interests of such Lender, (A) the Lender concerned shall (through the Administrative Agent) notify the Borrower of the occurrence of such event and use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Lending Office if the making of such a designation would avoid the effects of such law, regulation or regulatory requirement or any change therein or in the interpretation thereof and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender and (B) the Borrower shall forthwith upon demand pay to the Administrative Agent for the account of such Lender such amount as is necessary to compensate such Lender for such additional cost or such reduction and ancillary expenses, including taxes, incurred as a result of such adjustment. Such notice shall (i) describe in reasonable detail the event leading to such additional cost, together with the approximate date of the effectiveness thereof, (ii) set forth the amount of such additional cost, (iii) describe the manner in which such amount has been calculated, (iv) certify that the method used to calculate such amount is the Lender’s standard method of calculating such amount, (v) certify that such request is consistent with its treatment of other borrowers that are subject to similar provisions, and (vi) certify that, to the best of its knowledge, such change in circumstance is of general application to the commercial banking industry in such Lender’s jurisdiction of organization or in the relevant jurisdiction in which such Lender does business. Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than three months prior to the date that such Lender notifies the Borrower of the circumstance giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the circumstance giving rise to such increased costs or reductions is retroactive, then the three-month period referred to above shall be extended to include the period of retroactive effect thereof, but not more than six months prior to the date that such Lender notifies the Borrower of the circumstance giving rise to such cost or reductions and of such Lender’s intention to claim compensation therefor.

     SECTION 4.4. Funding Losses. In the event any Lender shall incur any loss or expense by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to make, continue or maintain any portion of the principal amount of any Loan as a LIBO Rate Loan as a result of:

     (a) any conversion or repayment or prepayment of the principal amount of any Loans on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to Section 3.1 or otherwise; or

     (b) any Loans not being made in accordance with the Borrowing Request therefor due to the fault of the Borrower or as a result of any of the conditions precedent set forth in Article V not being satisfied,

then, upon the written notice of such Lender to the Borrower (with a copy to the Administrative Agent), the Borrower shall, within five Business Days of its receipt thereof, pay directly to such Lender such amount as will reimburse such Lender for such loss or expense. Such written notice shall include calculations in reasonable detail setting forth the loss or expense to such Lender.

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     SECTION 4.5. Increased Capital Costs. If any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other governmental authority increases the amount of capital required to be maintained by any Lender or any Person controlling such Lender, and the rate of return on its or such controlling Person’s capital as a consequence of its Commitment or the Loans made by such Lender is reduced to a level below that which such Lender or such controlling Person would have achieved but for the occurrence of any such change in circumstance, then, in any such case upon notice from time to time by such Lender to the Borrower, the Borrower shall immediately pay directly to such Lender additional amounts sufficient to compensate such Lender or such controlling Person for such reduction in rate of return. Any such notice shall (i) describe in reasonable detail the capital adequacy requirements which have been imposed, together with the approximate date of the effectiveness thereof, (ii) set forth the amount of such lowered return, (iii) describe the manner in which such amount has been calculated, (iv) certify that the method used to calculate such amount is such Lender’s standard method of calculating such amount, (v) certify that such request for such additional amounts is consistent with its treatment of other borrowers that are subject to similar provisions and (vi) certify that, to the best of its knowledge, such change in circumstances is of general application to the commercial banking industry in the jurisdictions in which such Lender does business. In determining such amount, such Lender may use any method of averaging and attribution that it shall, subject to the foregoing sentence, deem applicable. Each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Lending Office if the making of such a designation would avoid such reduction in such rate of return and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender. Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than three months prior to the date that such Lender notifies the Borrower of the circumstance giving rise to such reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the circumstance giving rise to such reductions is retroactive, then the three-month period referred to above shall be extended to include the period of retroactive effect thereof, but not more than six months prior to the date that such Lender notifies the Borrower of the circumstance giving rise to such reductions and of such Lender’s intention to claim compensation therefor.

     SECTION 4.6. Taxes. All payments by the Borrower of principal of, and interest on, the Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by any Lender’s net income or receipts of such Lender and franchise taxes imposed in lieu of net income taxes or receipts, by the jurisdiction under the laws of which such Lender is organized or any political subdivision thereof or the jurisdiction of such Lender’s Lending Office or any political subdivision thereof or any other jurisdiction unless such net income taxes are imposed solely as a result of the Borrower’s activities in such other jurisdiction (such non-excluded items being called “Taxes”). In the event that any withholding or deduction from any payment to be made by the Borrower

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hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the Borrower will:

     (a) pay directly to the relevant authority the full amount required to be so withheld or deducted;

     (b) promptly forward to the Administrative Agent an official receipt or other documentation satisfactory to the Administrative Agent evidencing such payment to such authority; and

     (c) pay to the Administrative Agent for the account of the Lenders such additional amount or amounts as is necessary to ensure that the net amount actually received by each Lender will equal the full amount such Lender would have received had no such withholding or deduction been required.

Moreover, if any Taxes are directly asserted against the Administrative Agent or any Lender with respect to any payment received by the Administrative Agent or such Lender hereunder, the Administrative Agent or such Lender may pay such Taxes and the Borrower will promptly pay such additional amounts (including any penalties, interest or expenses) as is necessary in order that the net amount received by such person after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such person would have received had not such Taxes been asserted.

     Any Lender claiming any additional amounts payable pursuant to this Section agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.

     If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent, for the account of the respective Lenders, the required receipts or other required documentary evidence, the Borrower shall indemnify the Lenders for any incremental withholding Taxes, interest or penalties that may become payable by any Lender as a result of any such failure (so long as such amount did not become payable as a result of the failure of such Lender to provide timely notice to the Borrower of the assertion of a liability related to the payment of Taxes). For purposes of this Section 4.6, a distribution hereunder by the Administrative Agent or any Lender to or for the account of any Lender shall be deemed a payment by the Borrower.

     If any Lender is entitled to any refund, credit, deduction or other reduction in tax by reason of any payment made by the Borrower in respect of any tax under this Section 4.6 or by reason of any payment made by the Borrower pursuant to Section 4.3, such Lender shall use reasonable efforts to obtain such refund, credit, deduction or other reduction and, promptly after receipt thereof, will pay to the Borrower such amount (plus any interest received by such Lender in connection with such refund, credit, deduction or reduction) as is equal to the net after-tax value to such Lender of such part of such refund, credit, deduction or reduction as such Lender

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reasonably determines is allocable to such tax or such payment (less out-of-pocket expenses incurred by such Lender), provided that no Lender shall be obligated to disclose to the Borrower any information regarding its tax affairs or tax computations.

     Each Lender (and each Participant) that is organized under the laws of a jurisdiction other than the United States agrees with the Borrower and the Administrative Agent that it will (a) provide to the Administrative Agent and the Borrower an appropriately executed copy of Internal Revenue Service Form W-8ECI certifying that any payments made to or for the benefit of such Lender or such Participant are effectively connected with a trade or business in the United States (or, alternatively, Internal Revenue Service Form W-8BEN, but only if the applicable treaty described in such form provides for a complete exemption from U.S. federal income tax withholding), or any successor form, on or prior to the date hereof (or, in the case of any assignee Lender or Participant, on or prior to the date of the relevant assignment or participation), and (b) notify the Administrative Agent and the Borrower if the certifications made on any form provided pursuant to this paragraph are no longer accurate and true in all material respects. For any period with respect to which a Lender (or Participant) has failed to provide the Borrower with the foregoing forms (other than if such failure is due to a change in law occurring after the date on which a form originally was required to be provided or if such form otherwise is not required hereunder) such Lender (or Participant) shall not be entitled to the benefits of this Section 4.6 with respect to Taxes imposed by reason of such failure.

     SECTION 4.7. Reserve Costs. Without in any way limiting the Borrower’s obligations under Section 4.3, the Borrower shall pay to each Lender on the last day of each Interest Period, so long as the relevant Lending Office of such Lender is required to maintain reserves against “Eurocurrency liabilities” under Regulation D of the F.R.S. Board, upon notice from such Lender, an additional amount equal to the product of the following for each Loan for each day during such Interest Period:

     (i) the principal amount of such Loan outstanding on such day; and

     (ii) the remainder of (x) a fraction the numerator of which is the rate (expressed as a decimal) at which interest accrues on such Loan for such Interest Period as provided in this Agreement (less the Applicable Margin) and the denominator of which is one minus any increase after the Effective Date in the effective rate (expressed as a decimal) at which such reserve requirements are imposed on such Lender minus (y) such numerator; and

     (iii) 1/360.

Such notice shall (i) describe in reasonable detail the reserve requirement that has been imposed, together with the approximate date of the effectiveness thereof, (ii) set forth the applicable reserve percentage, (iii) certify that such request is consistent with such Lender’s treatment of other borrowers that are subject to similar provisions and (iv) certify that, to the best of its knowledge, such requirements are of general application in the commercial banking industry in the United States.

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     Each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to avoid the requirement of maintaining such reserves (including by designating a different Lending Office) if such efforts would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.

     SECTION 4.8. Replacement Lenders, etc. If the Borrower shall be required to make any payment to any Lender pursuant to Section 4.3, 4.4, 4.5, 4.6 or 4.7, the Borrower shall be entitled at any time (so long as no Default and no Prepayment Event shall have occurred and be continuing) within 180 days after receipt of notice from such Lender of such required payment to (a) terminate such Lender’s Commitment and such Lender’s right to receive any Commitment Fee accruing after such termination and that portion of the Commitment Amount represented by such Lender’s Commitment (whereupon the Percentages of each other Lender shall automatically be adjusted to an amount equal to each such Lender’s ratable share of the remaining Commitment Amount), (b) prepay the affected portion of such Lender’s Loans in full, together with accrued interest thereon through the date of such prepayment (provided that the Borrower shall not prepay any such Lender pursuant to this clause (b) without replacing such Lender pursuant to the following clause (c) until a 30-day period shall have elapsed during which the Borrower and the Agents shall have attempted in good faith to replace such Lender), and/or (c) replace such Lender with another bank reasonably acceptable to the Agents, provided that (i) each such assignment shall be either an assignment of all of the rights and obligations of the assigning Lender under this Agreement or an assignment of a portion of such rights and obligations made concurrently with another such assignment or other such assignments that together cover all of the rights and obligations of the assigning Lender under this Agreement and (ii) no Lender shall be obligated to make any such assignment as a result of a demand by the Borrower pursuant to this Section unless and until such Lender shall have received one or more payments from either the Borrower or one or more Assignee Lenders in an aggregate amount at least equal to the aggregate outstanding principal amount of the Loans owing to such Lender, together with accrued interest thereon to the date of payment of such principal amount and all other amounts payable to such Lender under this Agreement. Each Lender represents and warrants to the Borrower that, as of the date of this Agreement (or, with respect to any Lender not a party hereto on the date hereof, on the date that such Lender becomes a party hereto), there is no existing treaty, law, regulation, regulatory requirement, interpretation, directive, guideline, decision or request pursuant to which such Lender would be entitled to request any payments under any of Sections 4.3, 4.4, 4.5, 4.6 and 4.7 to or for account of such Lender.

     SECTION 4.9. Payments, Computations, etc. Unless otherwise expressly provided, all payments by the Borrower pursuant to this Agreement, the Notes or any other Loan Document shall be made by the Borrower to the Administrative Agent for the pro rata account of the Lenders entitled to receive such payment. All such payments required to be made to the Administrative Agent shall be made, without setoff, deduction or counterclaim, not later than 11:00 a.m., New York time, on the date due, in same day or immediately available funds through the New York Clearing House Interbank Payments System (or such other funds as may be customary for the settlement of international banking transactions in Dollars), to such account as the Administrative Agent shall specify from time to time by notice to the Borrower. Funds received after that time shall be deemed to have been received by the Administrative Agent on the next succeeding Business Day. The Administrative Agent shall promptly (but in any event on the same Business Day that the same are received or, as contemplated in the immediately

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preceding sentence, deemed received) remit in same day funds to each Lender its share, if any, of such payments received by the Administrative Agent for the account of such Lender without any setoff, deduction or counterclaim. All interest and fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such interest or fee is payable over a year comprised of 360 days. Whenever any payment to be made shall otherwise be due on a day which is not a Business Day, such payment shall (except as otherwise required by clause (c) of the definition of the term “Interest Period”) be made on the next succeeding Business Day and such extension of time shall be included in computing interest and fees, if any, in connection with such payment.

     SECTION 4.10. Sharing of Payments. If any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of setoff or otherwise) on account of any Loan (other than pursuant to the terms of Sections 4.3, 4.4, 4.5 4.6 and 4.7) in excess of its pro rata share of payments then or therewith obtained by all Lenders, such Lender shall purchase from the other Lenders such participations in Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and each Lender which has sold a participation to the purchasing Lender shall repay to the purchasing Lender the purchase price to the ratable extent of such recovery together with an amount equal to such selling Lender’s ratable share (according to the proportion of (a) the amount of such selling Lender’s required repayment to the purchasing Lender to (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section may, to the fullest extent permitted by law, exercise all its rights of payment (including pursuant to Section 4.9) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section to share in the benefits of any recovery on such secured claim.

     SECTION 4.11. Setoff. Upon the occurrence and during continuance of an Event of Default or Prepayment Event, each Lender shall have, to the extent permitted by applicable law, the right to appropriate and apply to the payment of the Obligations owing to it any and all balances, credits, deposits, accounts or moneys of the Borrower then or thereafter maintained with such Lender; provided that any such appropriation and application shall be subject to the provisions of Section 4.10. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff under applicable law or otherwise) which such Lender may have.

     SECTION 4.12. Use of Proceeds. The Borrower shall apply the proceeds of each Borrowing in accordance with the fourth recital; without limiting the foregoing, no proceeds of any Loan will be used to acquire any equity security of a class which is registered pursuant to

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Section 12 of the Securities Exchange Act of 1934 or any “margin stock”, as defined in F.R.S. Board Regulation U.

ARTICLE V

CONDITIONS TO BORROWING

     SECTION 5.1. Initial Borrowing. The obligations of the Lenders to fund the initial Borrowing shall be effective on and as of the first date (the “Closing Date”) on which each of the conditions precedent set forth in this Section 5.1 shall have been satisfied.

          SECTION 5.1.1. Resolutions, etc. The Administrative Agent shall have received from the Borrower:

     (a) a certificate, dated the Closing Date, of its Secretary or Assistant Secretary as to the incumbency and signatures of those of its officers authorized to act with respect to this Agreement and each other Loan Document and as to the truth and completeness of the attached:

     (x) resolutions of its Board of Directors then in full force and effect authorizing the execution, delivery and performance of this Agreement and each other Loan Document, and

     (y) Organic Documents of the Borrower,

and upon which certificate each Lender may conclusively rely until it shall have received a further certificate of the Secretary of the Borrower canceling or amending such prior certificate; and

     (b) a Certificate of Good Standing issued by the relevant Liberian authorities in respect of the Borrower.

          SECTION 5.1.2. Delivery of Notes. The Administrative Agent shall have received, for the account of the respective Lenders, the Notes duly executed and delivered by the Borrower.

          SECTION 5.1.3. Ownership, etc. of Vessels. The Administrative Agent shall have received the following with respect to each Vessel:

     (a) evidence as to the ownership of such Vessel by the Borrower or a Principal Subsidiary;

     (b) disclosure of all recorded Liens on such Vessel;

     (c) evidence of the class of such Vessel; and

     (d) evidence as to all required insurance being in effect with respect to such Vessel.

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          SECTION 5.1.4. Opinions of Counsel. The Administrative Agent shall have received opinions, dated the Closing Date and addressed to the Agents and each Lender, from:

     (a) Michael J. Smith, Esq., counsel to the Borrower, substantially in the form of Exhibit D-1 hereto;

     (b) Watson, Farley & Williams, counsel to the Borrower, as to Liberian Law and New York Law, substantially in the form of Exhibit D-2 hereto;

     (c) Shearman & Sterling LLP, counsel to the Administrative Agent, substantially in the form of Exhibit H hereto.

          SECTION 5.1.5. Closing Fees, Expenses, etc. The Administrative Agent shall have received for its own account, or for the account of each Lender, as the case may be, all fees that the Borrower shall have agreed in writing to pay to the Administrative Agent (whether for its own account or for account of any of the Lenders) and all invoiced expenses of the Administrative Agent (including the agreed fees and expenses of counsel to the Administrative Agent) on or prior to the Closing Date.

     SECTION 5.2. All Borrowings. The obligation of each Lender to fund any Loan on the occasion of any Borrowing (including the initial Borrowing) shall be subject to the satisfaction of each of the conditions precedent set forth in this Section 5.2.

          SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both before and after giving effect to any Borrowing the following statements shall be true and correct:

     (a) the representations and warranties set forth in Article VI (excluding, however, those contained in Sections 6.10 and 6.13) shall be true and correct in all material respects except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct, with the same effect as if then made; and

     (b) no Default and no Prepayment Event and no event which (with notice or lapse of time or both) would become a Prepayment Event shall have then occurred and be continuing.

          SECTION 5.2.2. Borrowing Request. The Administrative Agent shall have received a Borrowing Request for such Borrowing. Each of the delivery of a Borrowing Request and the acceptance by the Borrower of the proceeds of such Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Borrowing (both immediately before and after giving effect to such Borrowing and the application of the proceeds thereof) the statements made in Section 5.2.1 are true and correct.

     SECTION 5.3. All Borrowings. For purposes of determining compliance with the conditions specified in Section 5.1, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Administrative Agent responsible for the transactions contemplated by this Agreement shall have

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received notice from such Lender prior to the date that the Borrower, by notice to the Lenders, designates as the proposed Closing Date, specifying its objection thereto. The Administrative Agent shall promptly notify the Lenders of the occurrence of the Closing Date.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

     To induce the Lenders and the Administrative Agent to enter into this Agreement and to make Loans hereunder, the Borrower represents and warrants to the Administrative Agent and each Lender as set forth in this Article VI as of the Closing Date and, except with respect to the representations and warranties in Section 6.10 and 6.13, as of the date of each Borrowing after the Closing Date.

     SECTION 6.1. Organization, etc. The Borrower and each of the Principal Subsidiaries is a corporation validly organized and existing and in good standing under the laws of its jurisdiction of incorporation; the Borrower is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the nature of its business requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect; and the Borrower has full power and authority, has taken all corporate action and holds all governmental and creditors’ licenses, permits, consents and other approvals necessary to enter into each Loan Document and to perform the Obligations.

     SECTION 6.2. Due Authorization, Non-Contravention, etc. The execution, delivery and performance by the Borrower of this Agreement and each other Loan Document, are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action, and do not:

     (a) contravene the Borrower’s Organic Documents;

     (b) contravene any law or governmental regulation of any Applicable Jurisdiction except as would not reasonably be expected to result in a Material Adverse Effect;

     (c) contravene any court decree or order binding on the Borrower or any of its property except as would not reasonably be expected to result in a Material Adverse Effect;

     (d) contravene any contractual restriction binding on the Borrower or any of its property except as would not reasonably be expected to result in a Material Adverse Effect; or

     (e) result in, or require the creation or imposition of, any Lien on any of the Borrower’s properties except as would not reasonably be expected to result in a Material Adverse Effect.

     SECTION 6.3. Government Approval, Regulation, etc. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or

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other Person is required for the due execution, delivery or performance by the Borrower of this Agreement or any other Loan Document (except for authorizations or approvals not required to be obtained on or prior to the Closing Date that have been obtained or actions not required to be taken on or prior to the Closing Date that have been taken). Each of the Borrower and each Principal Subsidiary holds all governmental licenses, permits and other approvals required to conduct its business as conducted by it on the Closing Date, except to the extent the failure to hold any such licenses, permits or other approvals would not have a Material Adverse Effect.

     SECTION 6.4. Compliance with Environmental Laws. The Borrower and each Principal Subsidiary is in compliance with all applicable Environmental Laws, except to the extent that the failure to so comply would not have a Material Adverse Effect.

     SECTION 6.5. Validity, etc. This Agreement constitutes, and the Notes will, on the due execution and delivery thereof, constitute, the legal, valid and binding obligations of the Borrower enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles.

     SECTION 6.6. Financial Information. The consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2005, and the related consolidated statements of operations and cash flows of the Borrower and its Subsidiaries, copies of which have been furnished to the Administrative Agent and each Lender, have been prepared in accordance with GAAP, and present fairly in all material respects the consolidated financial condition of the Borrower and its Subsidiaries as at December 31, 2005 and the results of their operations for the Fiscal Year then ended. Since December 31, 2005 there has been no material adverse change in the business, operations or financial condition of the Borrower and its Subsidiaries taken as a whole.

     SECTION 6.7. Intentionally Omitted.

     SECTION 6.8. No Default, Event of Default or Prepayment Event. No Default, Event of Default or Prepayment Event has occurred and is continuing.

     SECTION 6.9. Litigation. There is no action, suit, litigation, investigation or proceeding pending or, to the knowledge of the Borrower, threatened against the Borrower or any Principal Subsidiary, that (i) except as set forth in filings made by the Borrower with the Securities and Exchange Commission in the Borrower’s reasonable opinion might reasonably be expected to materially adversely affect the business, operations or financial condition of the Borrower and its Subsidiaries (taken as a whole) (collectively, “Material Litigation”) or (ii) purports to affect the legality, validity or enforceability of the Loan Documents or the consummation of the transactions contemplated hereby.

     SECTION 6.10. Vessels. Each Vessel is

     (a) legally and beneficially owned by the Borrower or a Principal Subsidiary,

     (b) registered in the name of the Borrower or such Principal Subsidiary under the flag identified in Item 6.10(b) of the Disclosure Schedule,

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     (c) classed as required by Section 7.1.4(b),

     (d) free of all recorded Liens, other than Liens permitted by Section 7.2.3,

     (e) insured against loss or damage in compliance with Section 7.1.5, and

     (f) except for Island Star, chartered exclusively to or operated exclusively by the Borrower or one of the Borrower’s wholly-owned Subsidiaries, except as otherwise permitted pursuant to Section 7.1.4.

     SECTION 6.11. Subsidiaries. The Borrower has no Subsidiaries on the Closing Date, except those Subsidiaries which are identified in Item 6.11 of the Disclosure Schedule. All Existing Principal Subsidiaries are designated with an asterisk in Item 6.11 of the Disclosure Schedule. All Existing Principal Subsidiaries are direct or indirect wholly-owned Subsidiaries of the Borrower, except to the extent any such Existing Principal Subsidiary or an interest therein has been sold in accordance with clause (b) of Section 7.2.7 or such Existing Principal Subsidiary no longer owns a Vessel.

     SECTION 6.12. Obligations rank pari passu . The Obligations rank at least pari passu in right of payment and in all other respects with all other unsecured unsubordinated Indebtedness of the Borrower.

     SECTION 6.13. Withholding, etc. As of the Closing Date, no payment to be made by the Borrower under any Loan Document is subject to any withholding or like tax imposed by any Applicable Jurisdiction.

     SECTION 6.14. No Filing, etc. Required. No filing, recording or registration and no payment of any stamp, registration or similar tax is necessary under the laws of any Applicable Jurisdiction to ensure the legality, validity, enforceability, priority or admissibility in evidence of this Agreement or the other Loan Documents (except for filings, recordings, registrations or payments not required to be made on or prior to the Closing Date that have been made).

     SECTION 6.15. No Immunity. The Borrower is subject to civil and commercial law with respect to the Obligations. Neither the Borrower nor any of its properties or revenues is entitled to any right of immunity in any Applicable Jurisdiction from suit, court jurisdiction, judgment, attachment (whether before or after judgment), set-off or execution of a judgment or from any other legal process or remedy relating to the Obligations (to the extent such suit, court jurisdiction, judgment, attachment, set-off, execution, legal process or remedy would otherwise be permitted or exist).

     SECTION 6.16. Pension Plans. To the extent that, at any time after the Effective Date, there are any Pension Plans, no steps will have been taken to terminate any Pension Plan, and no contribution failure will have occurred with respect to any Pension Plan, in each case which could (a) give rise to a Lien under section 302(f) of ERISA and (b) result in the incurrence by the Borrower or any member of the Controlled Group of any material liability, fine or penalty.

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     SECTION 6.17. Investment Company Act. The Borrower is not an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.

     SECTION 6.18. Regulation U. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock, and no proceeds of any Loans will be used for a purpose which violates, or would be inconsistent with, F.R.S. Board Regulation U. Terms for which meanings are provided in F.R.S. Board Regulation U or any regulations substituted therefor, as from time to time in effect, are used in this Section with such meanings.

     SECTION 6.19. Accuracy of Information. The financial and other information (other than financial projections or other forward looking information) furnished to the Administrative Agent and the Lenders in writing by or on behalf of the Borrower by its chief financial officer, treasurer or corporate controller in connection with the negotiation of this Agreement is, when taken as a whole, to the best knowledge and belief of the Borrower, true and correct and contains no misstatement of a fact of a material nature. All financial projections, if any, that have been furnished to the Administrative Agent and the Lenders in writing by or on behalf of the Borrower by its chief financial officer, treasurer or corporate controller in connection with this Agreement have been or will be prepared in good faith based upon assumptions believed by the Borrower to be reasonable at the time made (it being understood that such projections are subject to significant uncertainties and contingencies, many of which are beyond the Borrower’s control, and that no assurance can be given that the projections will be realized). All financial and other information furnished to the Administrative Agent and the Lenders in writing by or on behalf of the Borrower by its chief financial officer, treasurer or corporate controller after the date of this Agreement shall have been prepared by the Borrower in good faith.

ARTICLE VII

COVENANTS

     SECTION 7.1. Affirmative Covenants. The Borrower agrees with the Administrative Agent and each Lender that, until all Commitments have terminated and all Obligations have been paid in full, the Borrower will perform the obligations set forth in this Section 7.1.

          SECTION 7.1.1. Financial Information, Reports, Notices, etc. The Borrower will furnish, or will cause to be furnished, to the Administrative Agent (with sufficient copies for distribution to each Lender) the following financial statements, reports, notices and information:

     (a) as soon as available and in any event within 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of the Borrower, a copy of the Borrower’s report on Form 10-Q (or any successor form) as filed by the Borrower with the Securities and Exchange Commission for such Fiscal Quarter, containing unaudited consolidated financial statements of the Borrower for such Fiscal Quarter (including a balance sheet and profit and loss statement) prepared in accordance with GAAP, subject to normal year-end audit adjustments;

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     (b) as soon as available and in any event within 120 days after the end of each Fiscal Year of the Borrower, a copy of the Borrower’s annual report on Form 10-K (or any successor form) as filed by the Borrower with the Securities and Exchange Commission for such Fiscal Year, containing audited consolidated financial statements of the Borrower for such Fiscal Year prepared in accordance with GAAP (including a balance sheet and profit and loss statement) and audited by PricewaterhouseCoopers LLC or another firm of independent public accountants of similar standing;

     (c) together with each of the statements delivered pursuant to the foregoing clause (a) or (b), a certificate, executed by the chief financial officer, the treasurer or the corporate controller of the Borrower, showing, as of the last day of the relevant Fiscal Quarter or Fiscal Year compliance with the covenants set forth in Section 7.2.4 (in reasonable detail and with appropriate calculations and computations in all respects reasonably satisfactory to the Administrative Agent);

     (d) as soon as possible after the occurrence of a Default or Prepayment Event, a statement of the chief financial officer of the Borrower setting forth details of such Default or Prepayment Event (as the case may be) and the action which the Borrower has taken and proposes to take with respect thereto;

     (e) as soon as the Borrower becomes aware thereof, notice of any Material Litigation except to the extent that such Material Litigation is disclosed by the Borrower in filings with the SEC;

     (f) as soon as the Borrower becomes aware thereof, notice of any event which, in its reasonable opinion, would be expected to materially adversely affect the business, operations or financial condition of the Borrower and its Subsidiaries taken as a whole;

     (g) promptly after the sending or filing thereof, copies of all reports which the Borrower sends to all holders of each security issued by the Borrower, and all registration statements which the Borrower or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange; and

     (h) such other information respecting the condition or operations, financial or otherwise, of the Borrower or any of its Subsidiaries as any Lender through the Administrative Agent may from time to time reasonably request.

          SECTION 7.1.2. Approvals and Other Consents. The Borrower will obtain (or cause to be obtained) all such governmental licenses, authorizations, consents, permits and approvals as may be required for (a) the Borrower to perform its obligations under this Agreement and the other Loan Documents and (b) except to the extent that failure to obtain (or cause to be obtained) such governmental licenses, authorizations, consents, permits and approvals would not be expected to have a Material Adverse Effect, the operation of each Vessel in compliance with all applicable laws.

          SECTION 7.1.3. Compliance with Laws, etc. The Borrower will, and will cause each of its Subsidiaries to, comply in all material respects with all applicable laws, rules,

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regulations and orders, except (other than as described in clause (a) below) to the extent that the failure to so comply would not have a Material Adverse Effect, which compliance shall in any case include (but not be limited to):

     (a) in the case of each of the Borrower and the Principal Subsidiaries, the maintenance and preservation of its corporate existence (subject to the provisions of Section 7.2.6);

     (b) in the case of the Borrower, maintenance of its qualification as a foreign corporation in the State of Florida;

     (c) the payment, before the same become delinquent, of all taxes, assessments and governmental charges imposed upon it or upon its property, except to the extent being diligently contested in good faith by appropriate proceedings; and

     (d) compliance with all applicable Environmental Laws.

          SECTION 7.1.4. Vessels. The Borrower will (or will cause the applicable Principal Subsidiary to):

     (a) cause each Vessel, except for Island Star, to be chartered exclusively to or operated exclusively by the Borrower or one of the Borrower’s wholly-owned Subsidiaries, provided that the Borrower or such Subsidiary may charter out (i) any Vessels representing not more than 25% of the berths of all Vessels to entities other than the Borrower and the Borrower’s wholly-owned Subsidiaries and (ii) any Vessel for a time charter not to exceed one year in duration; and

     (b) cause each Vessel to be kept in such condition as will entitle her to classification by a classification society of recognized standing.

          SECTION 7.1.5. Insurance. The Borrower will, or will cause one or more of its Subsidiaries to, maintain or cause to be maintained with responsible insurance companies insurance with respect to all of the material properties and operations of the Borrower and each Principal Subsidiary against such casualties, third-party liabilities and contingencies and in such amounts as is customary for other businesses of similar size in the passenger cruise line industry (provided that in no event will the Borrower or any Subsidiary be required to obtain any business interruption, loss of hire or delay in delivery insurance) and will, upon request of the Administrative Agent, furnish to the Administrative Agent (with sufficient copies for distribution to each Lender) at reasonable intervals a certificate of a senior officer of the Borrower setting forth the nature and extent of all insurance maintained by the Borrower and the Subsidiaries and certifying as to compliance with this Section.

          SECTION 7.1.6. Books and Records. The Borrower will, and will cause each of its Principal Subsidiaries to, keep books and records that accurately reflect all of its business affairs and transactions and permit the Administrative Agent and each Lender or any of their respective representatives, at reasonable times and intervals, to visit each of its offices, to discuss its financial matters with its officers and to examine any of its books or other corporate records.

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     SECTION 7.2. Negative Covenants. The Borrower agrees with the Administrative Agent and each Lender that, until all Commitments have terminated and all Obligations have been paid and performed in full, the Borrower will perform the obligations set forth in this Section 7.2.

          SECTION 7.2.1. Business Activities. The Borrower will not, and will not permit any of its Subsidiaries to, engage in any business activity other than those engaged in by the Borrower and its Subsidiaries on the date hereof and other business activities reasonably related thereto.

          SECTION 7.2.2. Indebtedness. The Borrower will not permit any of the Existing Principal Subsidiaries to create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness, other than, without duplication, the following:

     (a) Indebtedness secured by Liens of the type described in Section 7.2.3;

     (b) Indebtedness owing to the Borrower or a wholly owned direct or indirect Subsidiary of the Borrower;

     (c) Indebtedness incurred to finance, refinance or refund the cost (including the cost of construction) of assets acquired after the Closing Date; and

     (d) Indebtedness in an aggregate principal amount not to exceed the amount specified therefor in Section 7.2.3(c) at any time outstanding.

          SECTION 7.2.3. Liens. The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of its property, revenues or assets, whether now owned or hereafter acquired, except:

     (a) Liens on the vessels SPLENDOUR OF THE SEAS, LEGEND OF THE SEAS, CENTURY, GALAXY, SUMMIT, CONSTELLATION and BRILLIANCE OF THE SEAS existing as of the Effective Date and securing the Existing Debt (and any Lien on SPLENDOUR OF THE SEAS, LEGEND OF THE SEAS, CENTURY, GALAXY, SUMMIT, CONSTELLATION or BRILLIANCE OF THE SEAS securing any refinancing of the Existing Debt, so long as such Vessel was subject to a Lien securing the Indebtedness being refinanced immediately prior to such refinancing);

     (b) Liens on assets (including, without limitation, shares of capital stock of corporations and assets owned by any corporation that becomes a Subsidiary of the Borrower after the Effective Date) acquired after the Effective Date (whether by purchase, construction or otherwise) by the Borrower or any of its Subsidiaries (other than (x) an Existing Principal Subsidiary or (y) any other Principal Subsidiary which, at any time, after three months after the acquisition of a Vessel, owns a Vessel free of any mortgage Lien), which Liens were created solely for the purpose of securing Indebtedness representing, or incurred to finance, refinance or refund, the cost (including the cost of construction) of such assets, so long as (i) the acquisition of such assets is not otherwise prohibited by the terms of this Agreement and (ii) each such Lien is created within three months after the acquisition of the relevant assets;

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     (c) in addition to other Liens permitted under this Section 7.2.3, Liens securing Indebtedness in an aggregate principal amount, together with (but without duplication of) Indebtedness permitted under Section 7.2.2(d), at any one time outstanding not exceeding the greater of (determined at the time of creation of such Lien or the incurrence by any Existing Principal Subsidiary of such indebtedness, as applicable) (x) 3.5% of the total assets of the Borrower and its Subsidiaries taken as a whole as determined in accordance with GAAP as at the last day of the most recent ended Fiscal Quarter or (y) $225,000,000, provided that, with respect to each such item of Indebtedness, the fair market value of the assets subject to Liens securing such Indebtedness (determined at the time of the creation of such Lien) shall not exceed two times the aggregate principal amount of such Indebtedness (and for purposes of this clause (c), the fair market value of any assets shall be determined by (i) in the case of any Vessel, by an Approved Appraiser selected by the Borrower and (ii) in the case of any other assets, by an officer of the Borrower or by the board of directors of the Borrower);

     (d) Liens on assets acquired after the Effective Date by the Borrower or any of its Subsidiaries (other than by (x) any Subsidiary that is an Existing Principal Subsidiary or (y) any other Principal Subsidiary which, at any time, owns a Vessel free of any mortgage Lien) so long as (i) the acquisition of such assets is not otherwise prohibited by the terms of this Agreement and (ii) each of such Liens existed on such assets before the time of its acquisition and was not created by the Borrower or any of its Subsidiaries in anticipation thereof;

     (e) Liens on any asset of any corporation that becomes a Subsidiary of the Borrower (other than a corporation that also becomes a Subsidiary of an Existing Principal Subsidiary) after the Effective Date so long as (i) the acquisition or creation of such corporation by the Borrower is not otherwise prohibited by the terms of this Agreement and (ii) such Liens are in existence at the time such corporation becomes a Subsidiary of the Borrower and were not created by the Borrower or any of its Subsidiaries in anticipation thereof;

     (f) Liens securing Government-related Obligations;

     (g) Liens for taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable without penalty or being diligently contested in good faith by appropriate proceedings;

     (h) Liens of carriers, warehousemen, mechanics, materialmen and landlords incurred in the ordinary course of business for sums not overdue or being diligently contested in good faith by appropriate proceedings;

     (i) Liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance or other forms of governmental insurance or benefits;

     (j) Liens for current crew’s wages and salvage;

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     (k) Liens arising by operation of law as the result of the furnishing of necessaries for any Vessel so long as the same are discharged in the ordinary course of business or are being diligently contested in good faith by appropriate proceedings; and

     (l) Liens on Vessels that:

     (i) secure obligations covered (or reasonably expected to be covered) by insurance;

     (ii) were incurred in the course of or incidental to trading such Vessel in connection with repairs or other work to such Vessel; or

     (iii) were incurred in connection with work to such Vessel that is required to be performed pursuant to applicable law, rule, regulation or order;

provided that, in each case described in this clause (l), such Liens are either (x) discharged in the ordinary course of business or (y) being diligently contested in good faith by appropriate proceedings.

          SECTION 7.2.4. Financial Condition. The Borrower will not permit:

     (a) Net Debt to Capitalization Ratio, as at the end of any Fiscal Quarter, to be greater than 0.625 to 1.

     (b) Fixed Charge Coverage Ratio to be less than 1.25 to 1 as at the last day of any Fiscal Quarter.

     (c) Stockholders’ Equity to be less than, as at the last day of any Fiscal Quarter, the sum of (i) $4,150,000,000 plus (ii) 50% of the consolidated net income of the Borrower and its Subsidiaries for the period commencing on January 1, 2006 and ending on the last day of the Fiscal Quarter most recently ended (treated for these purposes as a single accounting period, but in any event excluding any Fiscal Quarters for which the Borrower and its Subsidiaries have a consolidated net loss).

          SECTION 7.2.5. Investments. The Borrower will not permit any of the Principal Subsidiaries to make, incur, assume or suffer to exist any Investment in any other Person other than

     (a) the Borrower or any direct or indirect wholly owned Subsidiary of the Borrower; and

     (b) other Investments by the Principal Subsidiaries in an aggregate amount not to exceed $25,000,000 at any time outstanding.

          SECTION 7.2.6. Consolidation, Merger, etc. The Borrower will not, and will not permit any of its Subsidiaries to, liquidate or dissolve, consolidate with, or merge into or with, any other corporation, or purchase or otherwise acquire all or substantially all of the assets of any Person except:

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     (a) any such Subsidiary may liquidate or dissolve voluntarily into, and may merge with and into, the Borrower or any other Subsidiary, and the assets or stock of any Subsidiary may be purchased or otherwise acquired by the Borrower or any other Subsidiary; and

     (b) so long as no Default has occurred and is continuing or would occur after giving effect thereto, the Borrower or any of its Subsidiaries may merge into any other Person, or any other Person may merge into the Borrower or any such Subsidiary, or the Borrower or any of its Subsidiaries may purchase or otherwise acquire all or substantially all of the assets of any Person, in each case so long as:

     (i) after giving effect thereto, the Stockholders’ Equity of the Borrower and its Subsidiaries is at least equal to 90% of such Stockholders’ Equity immediately prior thereto; and

     (ii) in the case of a merger involving the Borrower where the Borrower is not the surviving corporation, the surviving corporation shall have assumed in a writing, delivered to the Administrative Agent, all of the Borrower’s obligations hereunder and under the other Loan Documents.

          SECTION 7.2.7. Asset Dispositions, etc. The Borrower will not, and will not permit any of its Subsidiaries to, sell, transfer, contribute or otherwise convey, or grant options, warrants or other rights with respect to, any material asset (including accounts receivable and capital stock of Principal Subsidiaries) to any Person, except:

     (a) sales of assets (including, without limitation, Vessels) so long as:

     (i) the aggregate net book value of all such assets sold during each 12-month period commencing on the Closing Date, and each anniversary of the Closing Date, does not exceed an amount equal to the greater of (x) 7.5% of Stockholders’ Equity as at the end of the last Fiscal Quarter, and (y) $250,000,000, provided however, that in no event shall the aggregate net book value of fixed assets disposed over the life of the Agreement (determined as of the date of any such sale) exceed 25% of Stockholders’ Equity as at the end of the most recently completed fiscal quarter; and

     (ii) to the extent any asset has a fair market value in excess of $25,000,000 the Borrower or Subsidiary selling such asset receives consideration therefor at least equal to the fair market value thereof (as determined in good faith by (x) in the case of any Vessel, the board of directors of the Borrower and (y) in the case of any other asset, an officer of the Borrower or its board of directors);

     (b) sales of capital stock of any Principal Subsidiary of the Borrower so long as a sale of all of the assets of such Subsidiary would be permitted under the foregoing clause (a);

     (c) sales of capital stock of any Subsidiary other than a Principal Subsidiary;

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     (d) sales of other assets in the ordinary course of business; and

     (e) sales of assets between or among the Borrower and Subsidiaries of the Borrower.

          SECTION 7.2.8. Transactions with Affiliates. The Borrower will not, and will not permit any of the Principal Subsidiaries to, enter into, or cause, suffer or permit to exist any arrangement or contract with any of its Affiliates (other than arrangements or contracts among the Borrower and its wholly-owned Subsidiaries) unless such arrangement or contract is on an arms’-length basis, provided that, to the extent that the aggregate fair value of the goods furnished or to be furnished or the services performed or to be performed under all such contracts or arrangements in any one Fiscal Year does not exceed $25,000,000, such contracts or arrangements shall not be subject to this Section 7.2.8.

ARTICLE VIII

EVENTS OF DEFAULT

     SECTION 8.1. Listing of Events of Default. Each of the following events or occurrences described in this Section 8.1 shall constitute an “Event of Default”.

          SECTION 8.1.1. Non-Payment of Obligations. The Borrower shall default in the payment when due of any principal of or interest on any Loan, any Commitment Fee or the agency fee provided for in Section 10.8, provided that, in the case of any default in the payment of any interest on any Loan or of any Commitment Fee, such default shall continue unremedied for a period of at least two Business Days after notice thereof shall have been given to the Borrower by any Lender; and provided further that, in the case of any default in the payment of such agency fee, such default shall continue unremedied for a period of at least ten days after notice thereof shall have been given to the Borrower by the Administrative Agent.

          SECTION 8.1.2. Breach of Warranty. Any representation or warranty of the Borrower made or deemed to be made hereunder (including any certificates delivered pursuant to Article V) is or shall be incorrect when made in any material respect.

          SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations. The Borrower shall default in the due performance and observance of any other agreement contained herein or in any other Loan Document (other than the covenants set forth in Section 7.2.4) and such default shall continue unremedied for a period of five days after notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender (or, if (a) such default is capable of being remedied within 30 days (commencing on the first day following such five-day period) and (b) the Borrower is actively seeking to remedy the same during such period, such default shall continue unremedied for at least 35 days after such notice to the Borrower).

          SECTION 8.1.4. Default on Other Indebtedness. The Borrower or any of its Principal Subsidiaries shall fail to pay any Indebtedness that is outstanding in a principal amount of at least $50,000,000 (or the equivalent in other currencies) in the aggregate (but excluding Indebtedness hereunder) when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall

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continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument evidencing, securing or relating to any such Indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to cause or permit the holder or holders of such Indebtedness to cause such Indebtedness to become due and payable prior to its scheduled maturity; or any such Indebtedness shall be declared to be due and payable or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption or by voluntary agreement), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness is required to be made, in each case prior to the scheduled maturity thereof. For purposes of determining Indebtedness for any Hedging Instrument, the principal amount of the obligations under any such instrument at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or any Principal Subsidiary would be required to pay if such instrument were terminated at such time.

          SECTION 8.1.5. Pension Plans. Any of the following events shall occur with respect to any Pension Plan:

     (a) the institution of any steps by the Borrower, any member of its Controlled Group or any other Person to terminate a Pension Plan if, as a result of such termination, the Borrower or any such member could be required to make a contribution to such Pension Plan, or could reasonably expect to incur a liability or obligation to such Pension Plan, in excess of $50,000,000; or

     (b) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA

and, in each case, such event shall continue unremedied for a period of five Business Days after notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender (or, if (a) such default is capable of being remedied within 15 days (commencing on the first day of such five-Business-Day period) and (b) the Borrower is actively seeking to remedy the same during such period, such default shall continue unremedied for at least 15 days).

          SECTION 8.1.6. Bankruptcy, Insolvency, etc.(a) The Borrower or any of the Principal Subsidiaries (or any of its other Subsidiaries to the extent that the relevant event described below would have a Material Adverse Effect) shall:

     (a) generally fail to pay, or admit in writing its inability to pay, its debts as they become due;

     (b) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for it or any of its property, or make a general assignment for the benefit of creditors;

     (c) in the absence of such application, consent or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for it or for a substantial part of its property, and such trustee, receiver, sequestrator or other custodian shall not be discharged within 30 days, provided that the Borrower hereby expressly

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authorizes the Administrative Agent and each Lender to appear in any court conducting any relevant proceeding during such 30-day period to preserve, protect and defend their respective rights under the Loan Documents;

     (d) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Borrower or any of such Subsidiaries, and, if any such case or proceeding is not commenced by the Borrower or such Subsidiary, such case or proceeding shall be consented to or acquiesced in by the Borrower or such Subsidiary or shall result in the entry of an order for relief or shall remain for 30 days undismissed, provided that the Borrower hereby expressly authorizes the Administrative Agent and each Lender to appear in any court conducting any such case or proceeding during such 30-day period to preserve, protect and defend their respective rights under the Loan Documents; or

     (e) take any corporate action authorizing, or in furtherance of, any of the foregoing.

          SECTION 8.1.7. Ownership of Principal Subsidiaries. Except as a result of a disposition permitted pursuant to clauses (a) or (b) of Section 7.2.7, the Borrower shall cease to own beneficially and of record all of the capital stock of each Existing Principal Subsidiary.

     SECTION 8.2. Action if Bankruptcy. If any Event of Default described in clauses (b) through (d) of Section 8.1.6 shall occur with respect to the Borrower, the Commitments (if not theretofore terminated) shall automatically terminate and the outstanding principal amount of all outstanding Loans and all other Obligations shall automatically be and become immediately due and payable, without notice or demand.

     SECTION 8.3. Action if Other Event of Default. If any Event of Default (other than any Event of Default described in clauses (b) through (d) of Section 8.1.6 with respect to the Borrower) shall occur for any reason, whether voluntary or involuntary, and be continuing, the Administrative Agent, upon the direction of the Required Lenders, shall by notice to the Borrower declare all of the outstanding principal amount of the Loans and other Obligations to be due and payable and/or the Commitments (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of such Loans and other Obligations shall be and become immediately due and payable, without further notice, demand or presentment, and/or, as the case may be, the Commitments shall terminate.

ARTICLE IX

PREPAYMENT EVENTS

     SECTION 9.1. Listing of Prepayment Events. Each of the following events or occurrences described in this Section 9.1 shall constitute a “Prepayment Event”.

          SECTION 9.1.1. Change in Ownership. Any Person other than a member of the Existing Group (a “New Shareholder”) shall acquire (whether through legal or beneficial

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ownership of capital stock, by contract or otherwise), directly or indirectly, effective control over more than 30% of the Voting Stock and:

     (a) the members of the Existing Group have (whether through legal or beneficial ownership of capital stock, by contract or otherwise) in the aggregate, directly or indirectly, effective control over fewer shares of Voting Stock than does such New Shareholder; and

     (b) the members of the Existing Group do not collectively have (whether through legal or beneficial ownership of capital stock, by contract or otherwise) the right to elect, or to designate for election, at least a majority of the Board of Directors of the Borrower.

          SECTION 9.1.2. Change in Board. During any period of 24 consecutive months, a majority of the Board of Directors of the Borrower shall no longer be composed of individuals:

     (a) who were members of said Board on the first day of such period; or

     (b) whose election or nomination to said Board was approved by a vote of at least two-thirds of the members of said Board who were members of said Board on the first day of such period; or

     (c) whose election or nomination to said Board was approved by a vote of at least two-thirds of the members of said Board referred to in the foregoing clauses (a) and (b).

          SECTION 9.1.3. Unenforceability. Any Loan Document shall cease to be the legally valid, binding and enforceable obligation of the Borrower (in each case, other than with respect to provisions of any Loan Document (i) identified as unenforceable in the form of the opinion of the Borrower’s counsel set forth as Exhibit D-1 or (ii) that a court of competent jurisdiction has determined are not material) and such event shall continue unremedied for 15 days after notice thereof has been given to the Borrower by any Lender.

          SECTION 9.1.4. Approvals. Any material license, consent, authorization, registration or approval at any time necessary to enable the Borrower or any Principal Subsidiary to conduct its business shall be revoked, withdrawn or otherwise cease to be in full force and effect, unless the same would not have a Material Adverse Effect.

          SECTION 9.1.5. Non-Performance of Certain Covenants and Obligations. The Borrower shall default in the due performance and observance of any of the covenants set forth in Section 7.2.4.

          SECTION 9.1.6. Judgments. Any judgment or order for the payment of money in excess of $50,000,000 shall be rendered against the Borrower or any of the Principal Subsidiaries by a court of competent jurisdiction and the Borrower or such Principal Subsidiary shall have failed to satisfy such judgment and either:

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     (a) enforcement proceedings in respect of any material assets of the Borrower or such Principal Subsidiary shall have been commenced by any creditor upon such judgment or order and shall not have been stayed or enjoined within five Business Days after the commencement of such enforcement proceedings; or

     (b) there shall be any period of 10 consecutive Business Days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.

          SECTION 9.1.7. Condemnation, etc. Any Vessel or Vessels shall be condemned or otherwise taken under color of law and the same shall continue unremedied for at least 20 days, unless such condemnation or other taking would not have a Material Adverse Effect.

          SECTION 9.1.8. Arrest. Any Vessel or Vessels shall be arrested and the same shall continue unremedied for at least 20 days, unless such arrest would not have a Material Adverse Effect.

     SECTION 9.2. Mandatory Prepayment. If any Prepayment Event shall occur and be continuing, the Administrative Agent, upon the direction of the Required Lenders, shall by notice to the Borrower (a) require the Borrower to prepay in full on the date of such notice all principal of and interest on the Loans and all other Obligations (and, in such event, the Borrower agrees to so pay the full unpaid amount of each Loan and all accrued and unpaid interest thereon and all other Obligations) and (b) terminate the Commitments (if not theretofore terminated).

ARTICLE X

THE AGENTS

     SECTION 10.1. Actions. Each Lender hereby appoints Citibank, and insofar as the other Agents have duties under this Agreement, each other Agent, as its agent under and for purposes of this Agreement, the Notes and each other Loan Document. Each Lender authorizes the Administrative Agent to act on behalf of such Lender under this Agreement, the Notes and each other Loan Document and, in the absence of other written instructions from the Required Lenders received from time to time by the Administrative Agent (with respect to which the Administrative Agent agrees that it will comply, except as otherwise provided in this Section or as otherwise advised by counsel), to exercise such powers hereunder and thereunder as are specifically delegated to or required of the Administrative Agent by the terms hereof and thereof, together with such powers as may be reasonably incidental thereto. Each Lender hereby indemnifies (which indemnity shall survive any termination of this Agreement) the Administrative Agent, pro rata according to such Lender’s Percentage, from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and disbursements of counsel) that be incurred by or asserted or awarded against, the Administrative Agent in any way relating to or arising out of this Agreement, the Notes and any other Loan Document or any action taken or omitted by the Administrative Agent under this Agreement, the Notes or any other Loan Document; provided that no Lender shall be liable for the payment of any portion of such claims, damages, losses, liabilities and expenses which have resulted from the Administrative Agent’s gross negligence or willful misconduct. Without

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limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Administrative Agent is not reimbursed for such expenses by the Borrower. In the case of any investigation, litigation or proceeding giving rise to any such indemnified costs, this Section applies whether any such investigation, litigation or proceeding is brought by the Administrative Agent, any Lender or a third party. The Administrative Agent shall not be required to take any action hereunder, under the Notes or under any other Loan Document, or to prosecute or defend any suit in respect of this Agreement, the Notes or any other Loan Document, unless it is expressly required to do so under this Agreement or is indemnified hereunder to its satisfaction. If any indemnity in favor of the Administrative Agent shall be or become, in the Administrative Agent’s reasonable determination, inadequate, the Administrative Agent may call for additional indemnification from the Lenders and cease to do the acts indemnified against hereunder until such additional indemnity is given.

     SECTION 10.2. Funding Reliance, etc. Unless the Administrative Agent shall have been notified by telephone, confirmed in writing, by any Lender by 5:00 p.m., New York time, on the day prior to a Borrowing that such Lender will not make available the amount which would constitute its Percentage of such Borrowing on the date specified therefor, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent and, in reliance upon such assumption, make available to the Borrower a corresponding amount. If and to the extent that such Lender shall not have made such amount available to the Administrative Agent, such Lender and the Borrower severally agree to repay the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date the Administrative Agent made such amount available to the Borrower to the date such amount is repaid to the Administrative Agent, at the interest rate applicable at the time to Loans comprising such Borrowing.

     SECTION 10.3. Exculpation. Neither the Administrative Agent nor any of its directors, officers, employees or agents shall be liable to any Lender for any action taken or omitted to be taken by it under this Agreement or any other Loan Document, or in connection herewith or therewith, except for its own willful misconduct or gross negligence. Without limitation of the generality of the foregoing, the Administrative Agent (i) may treat the payee of any Note a the holder thereof until the Administrative Agent receives and accepts a Lender Assignment Agreement entered into by the Lender that is the payee of such Note, as assignor, and an Assignee Lender as provided in Section 11.11.1; (ii) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it and in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance, observance or satisfaction of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or the existence at any time of any Default or Prepayment Event or to

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inspect the property (including the books and records) of the Borrower; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by action upon any notice, consent, certificate or other instrument or writing (which may be by telecopier) believed by it to be genuine and signed or sent by the proper party or parties.

     SECTION 10.4. Successor. Any Agent may resign as such at any time upon at least 30 days’ prior notice to the Borrower and all Lenders, provided that any such resignation shall not become effective until a successor Agent for such resigning Agent has been appointed as provided in this Section 10.4 and such successor Agent has accepted such appointment (provided that no successor Agent shall be appointed for any Agent, other than the Administrative Agent, if after giving effect to such Agent’s resignation there would still be two Agents). If any Agent at any time shall resign, the Required Lenders shall, subject to the immediately preceding proviso and subject to the consent of the Borrower (such consent not to be unreasonably withheld), appoint another Lender as a successor to such Agent which shall thereupon become such Agent’s successor hereunder (provided that, in the case of a resignation of the Administrative Agent, the Required Lenders shall, subject to the consent of the Borrower unless an Event or Default or a Prepayment Event shall have occurred and be continuing (such consent not to be unreasonably withheld) offer to each of the other Agents in turn, in the order of their respective Commitment Amounts, the right to become successor Administrative Agent). If no successor Agent for any resigning Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the resigning Agent’s giving notice of resignation, then the resigning Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be one of the Lenders or, in the case of a resigning Administrative Agent, a commercial banking institution having a combined capital and surplus of at least $500,000,000 (or the equivalent in other currencies), subject, in each case, to the consent of the Borrower (such consent not to be unreasonably withheld). Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall be entitled to receive from the resigning Administrative Agent such documents of transfer and assignment as such successor Administrative Agent may reasonably request, and shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the resigning Administrative Agent, and the resigning Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any resigning Administrative Agent’s resignation hereunder as the Administrative Agent, the provisions of:

     (a) this Article X shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent under this Agreement; and

     (b) Section 11.3 and Section 11.4 shall continue to inure to its benefit.

If a Lender acting as an Agent assigns its Loans to one of its Affiliates, such Agent may, subject to the consent of the Borrower (such consent not to be unreasonably withheld) assign its rights and obligations as Agent to such Affiliate.

     SECTION 10.5. Loans by the Agents. Each Agent shall have the same rights and powers with respect to (x) the Loans made by it or any of its Affiliates, and (y) the Notes held by it or

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any of its Affiliates as any other Lender and may exercise the same as if it were not an Agent. Each Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Subsidiary or Affiliate of the Borrower as if such Agent were not an Agent hereunder and without any duty to account therefor to the Lenders. No Agent shall have any duty to disclose information obtained or received by it or any of its Affiliates relating to the Borrower or its Subsidiaries to the extent such information was obtained or received in any capacity other than as an Agent.

     SECTION 10.6. Credit Decisions. Each Lender acknowledges that it has, independently of the Administrative Agent, each other Agent and each other Lender, and based on such Lender’s review of the financial information of the Borrower, this Agreement, the other Loan Documents (the terms and provisions of which being satisfactory to such Lender) and such other documents, information and investigations as such Lender has deemed appropriate, made its own credit decision to extend its Commitment. Each Lender also acknowledges that it will, independently of the Administrative Agent, each other Agent and each other Lender, and based on such other documents, information and investigations as it shall deem appropriate at any time, continue to make its own credit decisions as to exercising or not exercising from time to time any rights and privileges available to it under this Agreement or any other Loan Document.

     SECTION 10.7. Copies, etc. The Administrative Agent shall give prompt notice to each Lender of each notice or request required or permitted to be given to the Administrative Agent by the Borrower pursuant to the terms of this Agreement (unless concurrently delivered to the Lenders by the Borrower). The Administrative Agent will distribute to each Lender each document or instrument received for its account and copies of all other communications received by the Administrative Agent from the Borrower for distribution to the Lenders by the Administrative Agent in accordance with the terms of this Agreement.

     SECTION 10.8. Agency Fee. The Borrower agrees to pay to the Administrative Agent for its own account an annual agency fee in an amount, and at such times, heretofore agreed to in writing between the Borrower and the Administrative Agent.

ARTICLE XI

MISCELLANEOUS PROVISIONS

     SECTION 11.1. Waivers, Amendments, etc. The provisions of this Agreement and of each other Loan Document may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by the Borrower and the Required Lenders; provided that no such amendment, modification or waiver which would:

     (a) modify any requirement hereunder that any particular action be taken by all the Lenders or by the Required Lenders shall be effective unless consented to by each Lender;

     (b) modify this Section 11.1, change the definition of “Required Lenders”, increase the Commitment of any Lender (other than pursuant to Section 2.7), reduce any

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fees described in Article III or extend the Commitment Termination Date shall be made without the consent of each Lender;

     (c) extend the due date for, or reduce the amount of, any scheduled repayment or prepayment of principal of or interest on any Loan (or reduce the principal amount of or rate of interest on any Loan) shall be made without the consent of each Lender; or

     (d) affect adversely the interests, rights or obligations of the Administrative Agent in its capacity as such shall be made without consent of the Administrative Agent.

No failure or delay on the part of the Administrative Agent or any Lender in exercising any power or right under this Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Borrower in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by the Administrative Agent or any Lender under this Agreement or any other Loan Document shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.

     SECTION 11.2. Notices. (a) All notices and other communications provided to any party hereto under this Agreement or any other Loan Document shall be in writing or by facsimile and addressed, delivered or transmitted to such party at its address, or facsimile number set forth below its signature hereto or set forth in the Lender Assignment Agreement or Assumption Agreement or at such other address, or facsimile number as may be designated by such party in a notice to the other parties; provided that notices, information, documents and other materials that the Borrower is required to deliver hereunder may be delivered to the Administrative Agent and the Lenders as specified in Section 11.2(b). Any notice, if mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received.

     (b) So long as Citibank is the Administrative Agent, the Borrower may provide to the Administrative Agent all information, documents and other materials that it furnishes to the Administrative Agent hereunder or any other Loan Document (and any guaranties, security agreements and other agreements relating thereto), including, without limitation, all notices, requests, financial statements, financial and other reports, certificates and other materials, but excluding any such communication that (i) relates to a request for a new, or a conversion of an existing Borrowing or other extension of credit (including any election of an interest rate or interest period relating thereto), (ii) relates to the payment of any principal or other amount due hereunder or any other Loan Document prior to the scheduled date therefor, (iii) provides notice of any Default or Event of Default or (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of the Agreement and/or any Borrowing or other extension of credit hereunder (all such non-excluded communications being referred to herein collectively as “Communications”), by transmitting the Communications in an electronic/soft medium in a format acceptable to the Administrative Agent to oploanswebadmin@ssmb.com; provided that any Communication requested pursuant to Section 7.1.1(h) shall be in a format acceptable to the Borrower and the Administrative Agent.

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          (1) The Borrower agrees that the Administrative Agent may make such items included in the Communications as the Borrower may specifically agree available to the Lenders by posting such notices, at the option of the Borrower, on Intralinks or e-Disclosure, the Administrative Agent’s internet delivery system that is part of SSB Direct, Global Fixed Income’s primary web portal (the “Platform”). Although the primary web portal is secured with a dual firewall and a User ID/Password Authorization System and the Platform is secured through a single user per deal authorization method whereby each user may access the Platform only on a deal-by-deal basis, the Borrower acknowledges that (i) the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution, (ii) the Platform is provided “as is” and “as available” and (iii) neither the Administrative Agent nor any of its Affiliates warrants the accuracy, adequacy or completeness of the Communications or the Platform and each expressly disclaims liability for errors or omissions in the Communications or the Platform. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by the Administrative Agent or any of its Affiliates in connection with the Platform.

          (2) The Administrative Agent agrees that the receipt of Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of such Communications to the Administrative Agent for purposes hereunder and any other Loan Document (and any guaranties, security agreements and other agreements relating thereto).

     (c) Each Lender agrees that notice to it (as provided in the next sentence) (a “Notice”) specifying that any Communications have been posted to the Platform shall constitute effective delivery of such Communications to such Lender for purposes of this Agreement. Each Lender agrees (i) to notify the Administrative Agent in writing (including by electronic communication) of such Lender’s e-mail address to which a Notice may be sent by electronic transmission on or before the date such Lender becomes a party to this Agreement (and from time to time thereafter to ensure that the Administrative Agent has on record an effective e-mail address for such Lender) and (ii) that any Notice may be sent to such e-mail address.

     (d) Patriot Act. Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”)), that it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Act

     SECTION 11.3. Payment of Costs and Expenses. The Borrower agrees to pay on demand all reasonable expenses of the Administrative Agent (including the reasonable fees and out-of-pocket expenses of counsel to the Administrative Agent and of local counsel, if any, who may be retained by counsel to the Administrative Agent) in connection with the preparation, execution and delivery of, and any amendments, waivers, consents, supplements or other modifications to, this Agreement or any other Loan Document. The Borrower further agrees to pay, and to save the Administrative Agent and the Lenders harmless from all liability for, any stamp, recording, documentary or other similar taxes which may be payable in connection with the execution or delivery of this Agreement, the borrowings hereunder, or the issuance of the

47

Notes or any other Loan Documents. The Borrower also agrees to reimburse the Administrative Agent and each Lender upon demand for all reasonable out-of-pocket expenses (including reasonable attorneys’ fees and legal expenses) incurred by the Administrative Agent or such Lender in connection with (x) the negotiation of any restructuring or “work-out”, whether or not consummated, of any Obligations and (y) the enforcement of any Obligations.

     SECTION 11.4. Indemnification. In consideration of the execution and delivery of this Agreement by each Lender and the extension of the Commitments, the Borrower hereby indemnifies and holds harmless the Administrative Agent, each Lender and each of their respective Affiliates and their respective officers, advisors, directors and employees (collectively, the “Indemnified Parties”) from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and disbursements of counsel), joint or several, that may be incurred by or asserted or awarded against any Indemnified Party (including, without limitation, in connection with any investigation, litigation or proceeding or the preparation of a defense in connection therewith), in each case arising out of or in connection with or by reason of this Agreement, the Notes or the other Loan Documents or the transactions contemplated hereby or thereby or any actual or proposed use of the proceeds of the Loans (collectively, the “Indemnified Liabilities”), except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted primarily from such Indemnified Party’s gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this paragraph applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, any of its directors, security holders or creditors, an Indemnified Party or any other person or an Indemnified Party is otherwise a party thereto. Each Indemnified Party shall (a) furnish the Borrower with prompt notice of any action, suit or other claim covered by this Section 11.4, (b) not agree to any settlement or compromise of any such action, suit or claim without the Borrower’s prior consent, (c) shall cooperate fully in the Borrower’s defense of any such action, suit or other claim (provided, that the Borrower shall reimburse such Indemnified Party for its reasonable out-of-pocket expenses incurred pursuant hereto) and (d) at the Borrower’s request, permit the Borrower to assume control of the defense of any such claim, other than regulatory, supervisory or similar investigations, provided that (i) the Borrower acknowledges in writing its obligations to indemnify the Indemnified Party in accordance with the terms herein in connection with such claims, (ii) the Borrower shall keep the Indemnified Party fully informed with respect to the conduct of the defense of such claim, (iii) the Borrower shall consult in good faith with the Indemnified Party (from time to time and before taking any material decision) about the conduct of the defense of such claim, (iv) the Borrower shall conduct the defense of such claim properly and diligently taking into account its own interests and those of the Indemnified Party, (v) the Borrower shall employ counsel reasonably acceptable to the Indemnified Party and at the Borrower’s expense, and (vi) the Borrower shall not enter into a settlement with respect to such claim unless either (A) such settlement involves only the payment of a monetary sum, does not include any performance by or an admission of liability or responsibility on the part of the Indemnified Party, and contains a provision unconditionally releasing the Indemnified Party and each other indemnified party from, and holding all such persons harmless, against, all liability in respect of claims by any releasing party or (B) the Indemnified Party provides written consent to such settlement (such consent not to be unreasonably withheld or delayed). Notwithstanding the Borrower’s election to assume the defense of such action, the Indemnified Party shall have the

48

right to employ separate counsel and to participate in the defense of such action and the Borrower shall bear the fees, costs and expenses of such separate counsel if (1) the use of counsel chosen by the Borrower to represent the Indemnified Party would present such counsel with an actual or potential conflict of interest, (2) the actual or potential defendants in, or targets of, any such action include both the Borrower and the Indemnified Party, and the Indemnified Party shall have concluded that there may be legal defenses available to it which are different from or additional to those available to the Borrower and determined that it is necessary to employ separate counsel in order to pursue such defenses (in which case the Borrower shall not have the right to assume the defense of such action on the Indemnified Party’s behalf), (3) the Borrower shall not have employed counsel reasonably acceptable to the Indemnified Party to represent the Indemnified Party within a reasonable time after notice of the institution of such action, or (4) the Borrower authorizes the Indemnified Party to employ separate counsel at the Borrower’s expense. The Borrower acknowledges that none of the Indemnified Parties shall have any liability (whether direct or indirect, in contract, tort or otherwise) to the Borrower or any of its security holders or creditors for or in connection with the transactions contemplated hereby, except to the extent such liability is determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted primarily from such Indemnified Party’s gross negligence or willful misconduct. In no event, however, shall any Indemnified Party be liable on any theory of liability for any special, indirect, consequential or punitive damages (including, without limitation, any loss of profits, business or anticipated savings). If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

     SECTION 11.5. Survival. The obligations of the Borrower under Sections 4.3, 4.4, 4.5, 4.6, 4.7, 11.3 and 11.4, and the obligations of the Lenders under Section 10.1, shall in each case survive any termination of this Agreement, the payment in full of all Obligations and the termination of all Commitments. The representations and warranties made by the Borrower in this Agreement and in each other Loan Document shall survive the execution and delivery of this Agreement and each such other Loan Document.

     SECTION 11.6. Severability. Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or such Loan Document or affecting the validity or enforceability of such provision in any other jurisdiction.

     SECTION 11.7. Headings. The various headings of this Agreement and of each other Loan Document are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or such other Loan Document or any provisions hereof or thereof.

     SECTION 11.8. Execution in Counterparts, Effectiveness, etc. This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. This Agreement shall become effective when counterparts hereof executed on behalf of the Borrower and each Lender (or notice thereof satisfactory to the Administrative Agent and the Borrower)

49

shall have been received by the Administrative Agent and the Borrower (or, in the case of any Lender, receipt of signature pages transmitted by facsimile) and notice thereof shall have been given by the Administrative Agent to the Borrower and each Lender.

     SECTION 11.9. Governing Law; Entire Agreement. THIS AGREEMENT AND THE NOTES SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER, AND SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK. This Agreement, the Notes and the other Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersede any prior agreements, written or oral, with respect thereto.

     SECTION 11.10. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided that:

     (a) except to the extent permitted under Section 7.2.6, the Borrower may not assign or transfer its rights or obligations hereunder without the prior written consent of the Administrative Agent and all Lenders; and

     (b) the rights of sale, assignment and transfer of the Lenders are subject to Section 11.11.

     SECTION 11.11. Sale and Transfer of Loans and Note; Participations in Loans and Note. Each Lender may assign, or sell participations in, its Loans and Commitment to one or more other Persons in accordance with this Section 11.11.

          SECTION 11.11.1. Assignments. Any Lender,

          (i) with the written consents of the Borrower and the Administrative Agent (which consents shall not be unreasonably delayed or withheld and which consent, in the case of the Borrower, shall be deemed to have been given in the absence of a written notice delivered by the Borrower to the Administrative Agent, on or before the fifth Business Day after receipt by the Borrower of such Lender’s request for consent, stating, in reasonable detail, the reasons why the Borrower proposes to withhold such consent) may at any time assign and delegate to one or more commercial banks or other financial institutions;

          (ii) with notice to the Borrower and the Administrative Agent, but without the consent of the Borrower or the Administrative Agent, may assign and delegate (A) to any Lender, (B) to any of its Affiliates or (C) following the occurrence and during the continuance of an Event of Default or a Prepayment Event; and

          (iii) may (without notice to the Borrower, the Administrative Agent or any other Lender and without payment of any fee) assign and pledge all or any portion of its Loans and Note to any Federal Reserve Bank as collateral security pursuant to Regulation A of the F.R.S. Board and any Operating Circular issued by such Federal Reserve Bank;

(each Person described in either of the foregoing clauses as being the Person to whom such assignment and delegation is to be made, being hereinafter referred to as an “Assignee Lender”),

50

all or any fraction of such Lender’s total Loans and Commitment (which assignment and delegation shall be of a constant, and not a varying, percentage of all the assigning Lender’s Loans and Commitment) in a minimum aggregate amount of $25,000,000 (or, if less, all of such Lender’s Loans and Commitment); provided that the Borrower and the Administrative Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned and delegated to an Assignee Lender until:

     (a) written notice of such assignment and delegation, together with payment instructions, addresses and related information with respect to such Assignee Lender, shall have been given to the Borrower and the Administrative Agent by such Lender and such Assignee Lender;

     (b) Such Assignee Lender shall have executed and delivered to the Borrower and the Administrative Agent a Lender Assignment Agreement, accepted by the Administrative Agent; and

     (c) the processing fees described below shall have been paid.

From and after the date that the Administrative Agent accepts such Lender Assignment Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to have become a party hereto and to the extent that rights and obligations hereunder have been assigned and delegated to such Assignee Lender in connection with such Lender Assignment Agreement, shall have the rights and obligations of a Lender hereunder and under the other Loan Documents, and (y) the assignor Lender, to the extent that rights and obligations hereunder have been assigned and delegated by it, shall be released from its obligations hereunder and under the other Loan Documents, other than any obligations arising prior to the effective date of such assignment. In no event shall the Borrower be required to pay to any Assignee Lender at the time of the relevant assignment any amount under Sections 4.3, 4.4, 4.5, 4.6 and 4.7 that is greater than the amount which it would have been required to pay had no such assignment been made. Within five Business Days after its receipt of notice that the Administrative Agent has received an executed Lender Assignment Agreement, the Borrower shall execute and deliver to the Administrative Agent (for delivery to the relevant Assignee Lender) a new Note evidencing such Assignee Lender’s assigned Loans and Commitment and, if the assignor Lender has retained Loans and a Commitment hereunder, a replacement Note in the principal amount of the Loans and Commitment retained by the assignor Lender hereunder (such Note to be in exchange for, but not in payment of, that Note then held by such assignor Lender). Each such Note shall be dated the date of the predecessor Note. The assignor Lender shall mark the predecessor Note “exchanged” and deliver it to the Borrower concurrently with the delivery by the Borrower of the new Note(s). Such assignor Lender or such Assignee Lender must also pay a processing fee to the Administrative Agent upon delivery of any Lender Assignment Agreement in the amount of $2,000 (and shall also reimburse the Administrative Agent for any reasonable out-of-pocket costs, including reasonable attorneys’ fees and expenses, incurred in connection with the assignment).

          SECTION 11.11.2. Participations. Any Lender may at any time sell to one or more commercial banks or other financial institutions (each of such commercial banks and other

51

financial institutions being herein called a “Participant”) participating interests in any of its Loans, its Commitment, or other interests of such Lender hereunder; provided that:

     (a) no participation contemplated in this Section 11.11 shall relieve such Lender from its Commitment or its other obligations hereunder;

     (b) such Lender shall remain solely responsible for the performance of its Commitment and such other obligations;

     (c) the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and each of the other Loan Documents;

     (d) no Participant, unless such Participant is an Affiliate of such Lender, shall be entitled to require such Lender to take or refrain from taking any action hereunder or under any other Loan Document, except that such Lender may agree with any Participant that such Lender will not, without such Participant’s consent, take any actions of the type described in clause (b) or (c) of Section 11.1; and

     (e) the Borrower shall not be required to pay any amount under Sections 4.3, 4.4, 4.5, 4.6 and 4.7 that is greater than the amount which it would have been required to pay had no participating interest been sold.

The Borrower acknowledges and agrees that each Participant, for purposes of Sections 4.3, 4.4, 4.5, 4.6 and clause (h) of 7.1.1, shall be considered a Lender.

     SECTION 11.12. Other Transactions. Nothing contained herein shall preclude the Administrative Agent or any Lender from engaging in any transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Affiliates in which the Borrower or such Affiliate is not restricted hereby from engaging with any other Person.

     SECTION 11.13. Forum Selection and Consent to Jurisdiction. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK FOR THE COUNTY OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND IRREVOCABLY AGREES, TO THE FULLEST EXTENT PERMITTED BY LAW, TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT

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REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN THE COURTS OF ANY JURISDICTION. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

     SECTION 11.14. Process Agent. If at any time the Borrower ceases to have a place of business in the United States, the Borrower shall appoint an agent for service of process (reasonably satisfactory to the Administrative Agent) located in New York City and shall furnish to the Administrative Agent evidence that such agent shall have accepted such appointment for a period of time ending no earlier than one year after the Commitment Termination Date.

     SECTION 11.15. Judgment. (a) If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder in Dollars into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase Dollars with such other currency at Citibank’s principal office in London at 11:00 A.M. (London time) on the second Business Day preceding that on which final judgment is given.

          (b) The obligation of the Borrower in respect of any sum due from it in any currency (the “Primary Currency”) to any Lender or the Administrative Agent hereunder shall, notwithstanding any judgment in any other currency, be discharged only to the extent that on the Business Day following receipt by such Lender or the Administrative Agent (as the case may be), of any sum adjudged to be so due in such other currency, such Lender or the Administrative Agent (as the case may be) may in accordance with normal banking procedures purchase the applicable Primary Currency with such other currency; if the amount of the applicable Primary Currency so purchased is less than such sum due to such Lender or the Administrative Agent (as the case may be) in the applicable Primary Currency, the Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender or the Administrative Agent (as the case may be) against such loss, and if the amount of the applicable Primary Currency so purchased exceeds such sum due to any Lender or the Administrative Agent (as the case may be) in the applicable Primary Currency, such Lender or the Administrative Agent (as the case may be) agrees to remit to the Borrower such excess.

     SECTION 11.16. Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, THE LENDERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN

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DOCUMENT. EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH OTHER PARTY ENTERING INTO THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT.

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SCHEDULE I

DISCLOSURE SCHEDULE

Updated December 8, 2006

Item 6.10(b): Vessels

Vessel	Owner	Flag
Sovereign of the Seas	Sovereign of the Seas Shipping Inc.	Bahamian
Empress of the Seas	Nordic Empress Shipping Inc.	Bahamian
Monarch of the Seas	Monarch of the Seas Inc.	Bahamian
Majesty of the Seas	Majesty of the Seas Inc.	Bahamian
Grandeur of the Seas	Grandeur of the Seas Inc.	Bahamian
Rhapsody of the Seas	Rhapsody of the Seas Inc.	Bahamian
Enchantment of the Seas	Enchantment of the Seas Inc.	Bahamian
Vision of the Seas	Vision of the Seas Inc.	Bahamian
Voyager of the Seas	Voyager of the Seas Inc.	Bahamian
Island Star (formerly known as Horizon)	Fantasia Cruising Inc.	Bahamian
Zenith	Zenith Shipping Corporation	Bahamian
Century	Blue Sapphire Marine Inc.	Bahamian
Galaxy	Esker Marine Shipping Inc.	Bahamian
Mariner of the Seas	Mariner of the Seas Inc.	Bahamian
Mercury	Seabrook Maritime Inc.	Bahamian
Millennium	Millennium Inc.	Bahamian
Explorer of the Seas	Explorer of the Seas Inc.	Bahamian
Infinity	Infinity Inc.	Bahamian
Radiance of the Seas	Radiance of the Seas Inc.	Bahamian
Summit	Summit Inc.	Bahamian
Adventure of the Seas	Adventure of the Seas Inc.	Bahamian
Navigator of the Seas	Navigator of the Seas Inc.	Bahamian
Constellation	Constellation Inc.	Bahamian
Serenade of the Seas	Serenade of the Seas Inc.	Bahamian
Jewel of the Seas	Jewel of the Seas Inc.	Bahamian
Xpedition	Islas Galapagos Turismo y Vapores CA	Ecuador
Legend of the Seas	Legend of the Seas Inc.	Bahamian
Splendour of the Seas	Splendour of the Seas Inc.	Bahamian
Freedom of the Seas	Freedom of the Seas Inc.	Bahamian
Oceanic	Pullmantur Cruises Oceanic Ltd.	Malta
Blue Dream	Pullmantur Cruises Blue Dream, Ltd.	Malta
Blue Moon	Pullmantur Cruises Blue Moon, Ltd.	Malta
Sky Wonder	Pullmantur Cruises Sky Wonder, Ltd.	Malta
Holiday Dream	Pullmantur Cruises Holiday Dream, Ltd.	Malta

Item 6.11: Subsidiaries

Name of Subsidiary	Jurisdiction of Organization
Jewel of the Seas Inc. *	Liberia
Sovereign of the Seas Shipping Inc.*	Liberia
Viking Serenade Inc.	Liberia
Nordic Empress Shipping Inc.*	Liberia
Majesty of the Seas Inc.*	Liberia
Monarch of the Seas Inc.*	Liberia
Admiral Management Inc.	Liberia
GG Operations Inc.	Delaware
Island for Science Inc.	Indiana
Labadee Investments Ltd.	Cayman Islands
Societe Labadee Nord, S.A.	Haiti
Royal Caribbean Cruise Line A/S	Norway
Royal Caribbean Merchandise Inc.	Florida
Eastern Steamship Lines Inc.	Liberia
Grandeur of the Seas Inc.*	Liberia
Enchantment of the Seas Inc.*	Liberia
Rhapsody of the Seas Inc.*	Liberia
Vision of the Seas Inc. *	Liberia
Voyager of the Seas Inc.*	Liberia
Explorer of the Seas Inc.*	Liberia
Royal Celebrity Tours Inc.	Delaware
White Sand Inc.	Liberia
Radiance of the Seas Inc.*	Liberia
Adventure of the Seas Inc. *	Liberia
RCL (UK) Ltd.	U.K.
Navigator of the Seas Inc. *	Liberia
Northwest Adventures Inc.	Delaware
Serenade of the Seas Inc. *	Liberia
Royal Beverage Cruise Sales LLC	Delaware
Mariner of the Seas Inc. *	Liberia
Beverage Cruise Sales LLC	Texas
Celebrity Cruise Lines Inc.	Cayman Islands
Celebrity Cruises Holdings Inc.	Liberia
Cruise Mar Shipping Holdings Ltd.	Liberia
Seabrook Maritime Inc. *	Liberia
Esker Marine Shipping Inc. *	Liberia
Blue Sapphire Marine Inc. *	Liberia
Fantasia Cruising Inc. *	Liberia
Cruise Mar Investment Inc.	Liberia
Universal Cruise Holdings Ltd.	British Virgin Islands
Celebrity Cruises Inc.	Liberia
Fourth Transoceanic Shipping Co. Ltd.	Liberia
Zenith Shipping Corporation *	Liberia
Millennium Inc.*	Liberia

2

Name of Subsidiary	Jurisdiction of Organization
Infinity Inc.*	Liberia
Summit Inc.*	Liberia
Constellation Inc. *	Liberia
Fifth Transoceanic Shipping Company Ltd.	Liberia
Serenity Management Inc.	Liberia
Galapagos Cruises Inc.	Liberia
Islas Galapagos Turismo y Vapores C.A. *	Ecuador
Cape Liberty Cruise Port LLC	Delaware
Legend of the Seas Inc. *	Liberia
Splendour of the Seas Inc. *	Liberia
Harmony Investments (Global) Limited	U.K.
Tenth Avenue Holdings, S.A. de C.V.	Mexico
The Scholar Ship Program LLC	Delaware
Royal Caribbean Cruises Espana S.L.	Spain
Puerto de Cruceros y Marina de las Islas de la Bahia, S.A. de CV.	Honduras
Freedom of the Seas Inc. *	Liberia
RCL Holdings Cooperatief U.A.	The Netherlands
Pullmantur, S.A.	Spain
Pullmantur Cruises, S.L.	Spain
Pullmantur Cruises Oceanic Ltd.*	Malta
Pullmantur Cruises Blue Dream, Ltd.*	Malta
Pullmantur Cruises Blue Moon, Ltd.*	Malta
Pullmantur Cruises Sky Wonder, Ltd.*	Malta
Pullmantur Cruises Holiday Dream, Ltd.*	Malta
Pullmantur Cruises Ship Management, Ltd	Malta
Pullmantur Ship Management, Ltd.	Bahamas
Turismo E Viagens Unipessoal, LDA.	Portugal
Royal Caribbean Holdings de Espana S.L. **	Spain

*	Shipholding companies
**	In the process of being formed.

3

EX-10

Exhibit 10.5

EXECUTION COPY

AMENDMENT NO. 1 TO CREDIT AGREEMENT

     This AMENDMENT NO. 1 TO CREDIT AGREEMENT, dated as of December 15, 2006, is among ROYAL CARIBBEAN CRUISES LTD., a Liberian corporation (the “Borrower”), the various financial institutions as are parties to the Credit Agreement referred to below (collectively, the “Lenders”) and CITIBANK, N.A., as Administrative Agent (the “Administrative Agent”) for the Lenders.

PRELIMINARY STATEMENTS

     (1) The Borrower, the Lenders and the Administrative Agent are parties to a Credit Agreement dated as of April 6, 2006 (as further amended, restated, modified, supplemented or renewed from time to time, the “Credit Agreement”); and

     (2) The Borrower, the Lenders and the Administrative Agent have agreed to amend the Credit Agreement as hereinafter set forth herein;

     NOW, THEREFORE, the parties hereto hereby agree as follows:

     SECTION 1. Amendments to the Credit Agreement. The Credit Agreement is, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2, hereby amended in its entirety to read as set forth in Annex A hereto.

     SECTION 2. Conditions of Effectiveness. This Amendment shall become effective as of the date first above written (the “Amendment Effective Date”) when and only if the Administrative Agent shall have received counterparts of this Amendment executed by the Borrower and the Required Lenders or, as to any of the Lenders, advice satisfactory to the Administrative Agent that such Lender has executed this Amendment.

     SECTION 3. Representation and Warranty. To induce the Lenders to enter into this Amendment, the Borrower represents and warrants that, as of the Amendment Effective Date:

     (a) The representations and warranties contained in Article VI of the Credit Agreement, as amended hereby (excluding, however the representations and warranties contained in Sections 6.10 and 6.13 of the Credit Agreement) are true and correct in all material respects except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct, on and as of the Amendment Effective Date, and

     (b) No Default and no Prepayment Event and no event which (with notice or lapse of time or both) would become a Prepayment Event has occurred and is continuing.

     SECTION 4. Reference to and Effect on the Credit Agreement and the Notes. (a) On and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the Notes to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Amendment.

     (b) The Credit Agreement and the Notes, as specifically amended by this Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.

     (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under the Credit Agreement, nor constitute a waiver of any provision of the Credit Agreement.

     SECTION 5. Costs and Expenses. The Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery and administration, modification and amendment of this Amendment and the other documents to be delivered hereunder (including the reasonable and documented fees and expenses of counsel for the Administrative Agent with respect hereto and thereto as agreed with the Administrative Agent) in accordance with the terms of Section 11.3 of the Credit Agreement.

     SECTION 6. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

     SECTION 7. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

     SECTION 8. Defined Terms. Capitalized terms not otherwise defined in the Amendment shall have the same meanings as specified in the Credit Agreement.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

THE BORROWER

ROYAL CARIBBEAN CRUISES LTD.
By	/s/ Antje M. Gibson
	Title: Vice President & Acting Treasurer

CITIBANK, N.A.,    as Administrative Agent and as a Lender
By	/s/ Anish M. Shah
	Title: Vice President

BNP PARIBAS
By	/s/ Duane Helkowski
	Title: Managing Director
By	/s/ Shayn March
	Title: Director

DnB NOR BANK ASA
By	/s/ Sanjiv Nayar
	Title: Senior Vice President
By	/s/ erlend Bryn
	Title: Vice President

NORDEA BANK NORGE ASA, GRAND CAYMAN BRANCH
By	/s/ Hans Chr. Kjelsrud
	Title: Executive Vice President
By	/s/ Anne Engen
	Title: Vice President

ROYAL BANK OF SCOTLAND PLC
By	/s/ Timothy J. McNaught
	Title: Managing Director

SCOTIABANC INC.
By	/s/ William E. Zarrett
	Title: Managing Director
THE BANK OF NOVA SCOTIA
By	/s/ Mark Sparrow
	Title: Director

BARCLAYS BANK PLC (did not sign) CALYON
By	/s/ G.O. Bygoat
	Title: Head of Shipping Office
By	/s/ S. Pattonieri
	Title: Director

REGIONS BANK
By	/s/ Stephen Hanas
	Title: Senior Vice President

BANK OF NEW YORK
By	/s/ Burke Keabeay
	Title: Vice President

COMERICA BANK (did not sign) JPMORGAN CHASE BANK, N.A.
By	/s/ Donald S. Shokrian
	Title: Managing Director
LLOYDS TSB BANK (did not sign) MIZUHO CORPORATE BANK, LTD.
By	/s/
	Title: Deputy General Manager

MORGAN STANLEY BANK (did not sign) SUMITOMO MITSUI BANKING CORPORATION
By	/s/ Shigeru Tsuru
	Title: Joint General Manager
U.S. BANK NATIONAL ASSOCIATION
By	/s/ Patrick H. McGraw, Jr.
	Title: Vice President

WELLS FARGO BANK, NATIONAL ASSOCIATION
By	/s/ Kevin R. Leer
	Title: Vice President

Annex A

EXECUTION COPY

U.S. $570,000,000

CREDIT AGREEMENT,

dated as of April 6, 2006

amended and restated as of December 15, 2006

ROYAL CARIBBEAN CRUISES LTD.,
as the Borrower,

and

CITIGROUP GLOBAL MARKETS INC.
BNP PARIBAS SECURITIES CORP.
DNB NOR BANK ASA
and
NORDEA BANK NORGE ASA, GRAND CAYMAN BRANCH
as Co-Lead Arrangers

and

CITIGROUP GLOBAL MARKETS INC.
and
BNP PARIBAS SECURITIES CORP.
as Co-Bookrunners and

CITIBANK, N.A.
as Administrative Agent

and

BNP PARIBAS
as Syndication Agent

and

DNB NOR BANK ASA
NORDEA BANK NORGE ASA, GRAND CAYMAN BRANCH
and
THE ROYAL BANK OF SCOTLAND PLC
as Co-Documentation Agents

and

CITIBANK, N.A.
as FEC Counterparty

TABLE OF CONTENTS

	PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms		1
SECTION 1.2. Use of Defined Terms		11
SECTION 1.3. Cross-References		12
SECTION 1.4. Accounting and Financial Determinations		12
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments		12
SECTION 2.2. Reduction of Commitment Amount		13
SECTION 2.3. Borrowing Procedure		14
SECTION 2.4. Funding		14
SECTION 2.5. Notes		14
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments		14
SECTION 3.2. Interest Provisions		15
SECTION 3.3. Commitment Fees		17
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO Rate Lending Unlawful		17
SECTION 4.2. Deposits Unavailable		17
SECTION 4.3. Increased LIBO Rate Loan Costs, etc		18

i

	PAGE
SECTION 4.4. Funding Losses		19
SECTION 4.5. Increased Capital Costs		20
SECTION 4.6. Taxes		21
SECTION 4.7. Reserve Costs		22
SECTION 4.8. Replacement Lenders, etc		23
SECTION 4.9. Payments, Computations, etc		24
SECTION 4.10. Sharing of Payments		25
SECTION 4.11. Setoff		26
SECTION 4.12. Use of Proceeds		26
ARTICLE V
CONDITIONS TO BORROWING
SECTION 5.1. Effectiveness		26
SECTION 5.2. The Loans		27
SECTION 5.3. The Borrowing		28
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. Organization, etc		28
SECTION 6.2. Due Authorization, Non-Contravention, etc		28
SECTION 6.3. Government Approval, Regulation, etc		29
SECTION 6.4. Compliance with Environmental Laws		29
SECTION 6.5. Validity, etc		29
SECTION 6.6. Financial Information		29
SECTION 6.7. Intentionally Omitted		30
SECTION 6.8. No Default, Event of Default or Prepayment Event		30
SECTION 6.9. Litigation		30

ii 

	PAGE
SECTION 6.10. Vessels		30
SECTION 6.11. Subsidiaries		30
SECTION 6.12. Obligations rank pari passu		30
SECTION 6.13. Withholding, etc		31
SECTION 6.14. No Filing, etc. Required		31
SECTION 6.15. No Immunity		31
SECTION 6.16. Pension Plans		31
SECTION 6.17. Investment Company Act		31
SECTION 6.18. Regulation U		31
SECTION 6.19. Accuracy of Information		31
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants		32
SECTION 7.2. Negative Covenants		34
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default		39
SECTION 8.2. Action if Bankruptcy		41
SECTION 8.3. Action if Other Event of Default		41
ARTICLE IX
PREPAYMENT EVENTS
SECTION 9.1. Listing of Prepayment Events		41
SECTION 9.2. Mandatory Prepayment		43

iii 

	PAGE
ARTICLE X
THE AGENTS
SECTION 10.1. Actions		43
SECTION 10.2. Funding Reliance, etc		44
SECTION 10.3. Exculpation		44
SECTION 10.4. Successor		45
SECTION 10.5. Loans by the Agents		45
SECTION 10.6. Credit Decisions		46
SECTION 10.7. Copies, etc		46
SECTION 10.8. Agency Fee; FEC Counterparty Fee		46
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Waivers, Amendments, etc		46
SECTION 11.2. Notices		47
SECTION 11.3. Payment of Costs and Expenses		49
SECTION 11.4. Indemnification		49
SECTION 11.5. Survival		51
SECTION 11.6. Severability		51
SECTION 11.7. Headings		51
SECTION 11.8. Execution in Counterparts, Effectiveness, etc		51
SECTION 11.9. Governing Law; Entire Agreement		52
SECTION 11.10. Successors and Assigns		52
SECTION 11.11. Sale and Transfer of Loans and Note; Participations in Loans and Note		52
SECTION 11.12. Other Transactions		54
SECTION 11.13. Forum Selection and Consent to Jurisdiction		54

iv 

	PAGE
SECTION 11.14. Process Agent		55
SECTION 11.15. Judgment		55
SECTION 11.16. Waiver of Jury Trial		56

v 

SCHEDULES
SCHEDULE I	-	Disclosure Schedule
SCHEDULE II	-	Repayment Schedule
EXHIBITS
Exhibit A	-	Form of Note
Exhibit B	-	Form of Borrowing Request
Exhibit C	-	Form of Opinion of Bradley Stein, Esq.
Exhibit D	-	Form of Opinion of Watson, Farley & Williams (New York) LLP
Exhibit E	-	Form of Lender Assignment Agreement
Exhibit F	-	Form of Opinion of Hannes Snellman
Exhibit G	-	Form of Opinion of Shearman & Sterling LLP

vi 

CREDIT AGREEMENT

     THIS CREDIT AGREEMENT, dated as of April 6, 2006 and amended and restated as of December 15, 2006, is among ROYAL CARIBBEAN CRUISES LTD., a Liberian corporation (the “Borrower”), the various financial institutions as are or shall become parties hereto (collectively, the “Lenders”), CITIBANK, N.A., as counterparty to the FEC Interest Equalization Documents (as defined below) (“FEC Counterparty”), and CITIBANK, N.A. (“Citibank”), as administrative agent (in such capacity, the “Administrative Agent”) for the Lenders.

WITNESSETH:

     WHEREAS, the Borrower desires to obtain Commitments from the Lenders pursuant to which Loans, in a maximum aggregate principal amount not to exceed $570,000,000 (subject to adjustment as provided herein), will be made to the Borrower on the Closing Date; and

     WHEREAS, the Lenders are willing, on the terms and subject to the conditions hereinafter set forth (including Article V), to extend such Commitments and make such Loans to the Borrower; and

     WHEREAS, the proceeds of such Loans will be used to finance up to 80% of the contract price of the Freedom class vessel #1352 built by Aker Finnyards Inc. (the “Purchased Vessel”);

     NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

     SECTION 1.1. Defined Terms. The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall, when capitalized, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof):

     “Accumulated Other Comprehensive Income (Loss)” means at any date the Borrower’s accumulated other comprehensive income (loss) on such date, determined in accordance with GAAP.

     “Administrative Agent” is defined in the preamble and includes each other Person as shall have subsequently been appointed as the successor Administrative Agent, and as shall have accepted such appointment, pursuant to Section 10.4.

     “Affiliate” of any Person means any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person. A Person shall be deemed to be “controlled by” any other Person if such other Person possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

     “Agents” means (a) the Administrative Agent and (b) BNP, DnB NOR, Nordea and RBS in their respective capacities as agents under Article X, together with their respective successors (if any) in such capacity.

     “Agreement” means, on any date, this Credit Agreement as originally in effect on the Effective Date and as thereafter from time to time amended, supplemented, amended and restated, or otherwise modified and in effect on such date.

     “Applicable Jurisdiction” means the jurisdiction or jurisdictions under which the Borrower is organized, domiciled or resident or from which any of its business activities are conducted or in which any of its properties are located and which has jurisdiction over the subject matter being addressed.

     “Applicable Margin” means, as of any date (x) so long as the FEC Interest Equalization Documents are in effect, the percentage per annum set forth below opposite the Senior Debt Rating on such date provided by S&P and Moody’s under the column “(CIRR)” (the “CIRR Applicable Margin”) and (y) if the FEC Interest Equalization Documents are not in effect, the percentage per annum set forth below opposite the Senior Debt Rating on such date provided by S&P and Moody’s under the column “(LIBO)” (the “LIBO Applicable Margin”):

Senior Debt Rating		Applicable Margin
(S&P)	(Moody's)	(CIRR)	(LIBO)
BBB+ or higher	Baa1 or higher	0.100%	0.500%
BBB	Baa2	0.200%	0.600%
BBB-	Baa3	0.300%	0.700%
BB+	Ba1	0.475%	0.875%
BB	Ba2	0.725%	1.125%
BB- or lower	Ba3 or lower	0.975%	1.375%

plus, in each case, at all times after the fifth anniversary of the Closing Date, an additional 0.075% per annum;

provided that:

     (a) if at any time the Senior Debt Rating provided by Moody’s differs from the Senior Debt Rating provided by S&P by one level, the Applicable Margin shall be the percentage per annum set forth opposite the higher of such two Senior Debt Ratings;

     (b) if at any time the Senior Debt Rating provided by Moody’s differs from the Senior Debt Rating provided by S&P by more than one level, the Applicable Margin shall be the percentage per annum set forth opposite the rating one level below the higher of such two Senior Debt Ratings;

2

     (c) if at any time a Senior Debt Rating is provided by one of but not both Moody’s and S&P, the Applicable Margin shall be determined by reference to the Senior Debt Rating provided by the agency which gives such rating; and

     (d) if at any time no Senior Debt Rating is provided by Moody’s and no Senior Debt Rating is provided by S&P, the Applicable Margin shall be the percentage per annum set forth opposite the Senior Debt Ratings of BB- or lower and Ba3 or lower unless (i) within 21 days of being notified by the Administrative Agent that both Moody’s and S&P have ceased to give a Senior Debt Rating, the Borrower has obtained from at least one of such agencies a private implied rating for its senior debt or (ii) having failed to obtain such private rating within such 21-day period, the Borrower and the Lenders shall have agreed within a further 15-day period (during which period the Borrower and the Agents shall consult in good faith to find an alternative method of providing an implied rating of the Borrower’s senior debt) on an alternative rating method, which agreed alternative shall apply for the purposes of this Agreement.

     “Approved Appraiser” means any of the following: Barry Rogliano Salles, Paris, H Clarkson & Co. Ltd., London, R.S. Platou Shipbrokers, Norway, or Fearnley AS, Norway.

     “Assignee Lender” is defined in Section 11.11.1.

     “Authorized Officer” means those officers of the Borrower authorized to act with respect to the Loan Documents to which it is a party and whose signatures and incumbency shall have been certified to the Administrative Agent by the Secretary or an Assistant Secretary of the Borrower.

     “BNP” means BNP Paribas.

     “Borrower” is defined in the preamble.

     “Borrowing” means Loans made on the same Business Day and pursuant to the same Borrowing Request in accordance with Section 2.1.

     “Borrowing Request” means a loan request and certificate duly executed by an Authorized Officer of the Borrower, substantially in the form of Exhibit B hereto.

     “Business Day” means any day which is neither a Saturday or Sunday nor a legal holiday on which banks are authorized or required to be closed in New York City or London or, if the FEC Interest Equalization is in effect, Helsinki, and if the applicable Business Day relates to the Borrowing, an Interest Period, prepayment or conversion, in each case with respect to any Loan bearing interest by reference to the LIBO Rate, on which dealings in deposits in Dollars are carried on in the London interbank market.

     “Capital Lease Obligations” means obligations of the Borrower or any Subsidiary of the Borrower under any leasing or similar arrangement which, in accordance with GAAP, would be classified as capitalized leases.

3

     “Capitalization” means, as at any date, the sum of (a) Net Debt on such date, plus (b) Stockholders’ Equity on such date.

     “Capitalized Lease Liabilities” means the principal portion of all monetary obligations of the Borrower or any of its Subsidiaries under any leasing or similar arrangement which, in accordance with GAAP, would be classified as capitalized leases, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

     “Cash Equivalents” means all amounts other than cash that are included in the “cash and cash equivalents” shown on the Borrower’s balance sheet prepared in accordance with GAAP.

     “CIRR Applicable Margin” is defined in the definition of “Applicable Margin”.

     “Closing Date” means the date of the funding of the Loans in accordance with Section 2.3, which date shall be no later than three months after the Effective Date.

     “Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.

     “Commitment” means, relative to any Lender, such Lender’s obligation to make a Loan pursuant to Section 2.1.1.

     “Commitment Amount” means, on any date, $570,000,000, as such amount shall be reduced from time to time pursuant to Section 2.2.

     “Commitment Fees” is defined in Section 3.3.

     “Contracted Rate” is defined in Section 3.2.5.

     “Controlled Group” means all members of a controlled group of corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.

     “Default” means any Event of Default or any condition, occurrence or event which, after notice or lapse of time or both, would constitute an Event of Default.

     “Disclosure Schedule” means the Disclosure Schedule attached hereto as Schedule I.

     “DnB NOR” means DnB NOR Bank ASA.

     “Dollar” and the sign “$” mean lawful money of the United States.

     “Effective Date” is defined in Section 5.1.

     “Environmental Laws” means all applicable federal, state, local or foreign statutes, laws, ordinances, codes, rules and regulations (including consent decrees and administrative orders) relating to the protection of the environment.

4

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections.

     “Event of Default” is defined in Section 8.1.

     “Existing Debt” means the obligations of the Borrower or its Subsidiaries in connection with (i) the Loan Facility Agreement with respect to the vessel CENTURY, dated November 29, 1993 between KfW and Blue Sapphire Marine Inc., (ii) the Loan Facility Agreement with respect to the vessel GALAXY, dated November 29, 1993 between KfW and Esker Marine Shipping Inc, (iii) the Loan Facility Agreement with respect to the vessel MERCURY, dated December 12, 1997 between KfW and Seabrook Maritime Inc., (iv) the Buyer Credit Agreement with respect to the vessel SUMMIT dated March 31, 2001 between Summit Inc., Societe Generale and Credit Agricole Indosuez and (v) the Bareboat Charterparty with respect to the vessel BRILLIANCE OF THE SEAS dated July 5, 2002 between Halifax Leasing (September) Limited and RCL (UK) LTD, and the replacement, extension, renewal or amendment of the foregoing without increase in the amount or change in any direct or contingent obligor of such obligations.

     “Existing Group” means the following Persons: (a) A. Wilhelmsen AS., a Norwegian corporation (“Wilhelmsen”); (b) Cruise Associates, a Bahamian general partnership (“Cruise”); and (c) any Affiliate of either or both of Wilhelmsen and Cruise.

     “Existing Principal Subsidiaries” means each Subsidiary of the Borrower that is a Principal Subsidiary on the Effective Date.

     “FEC” means Finnish Export Credit Ltd., which is a Finnish ultimately state-owned limited liability company assigned to, among other things, administer the interest equalization scheme for officially supported export credits and ship financing in accordance with the terms of the Arrangement on Guidelines for Officially Supported Export Credits agreed between the countries which are members of the Organization for Economic Cooperation and Development, by virtue of the Finnish Act on the Interest Equalization of Officially Supported Export Credit (1137/1996), and its successors.

     “FEC Break Costs” means any losses, costs or expenses which the FEC Counterparty has incurred or will incur as a result of or in connection with any termination of the FEC Interest Equalization on a date other than its originally scheduled termination date.

     “FEC CIRR Rate” means 3.47% per annum.

     “FEC Cooperation Agreement” means the cooperation agreement including FEC General Terms and Conditions entered into between FEC and the FEC Counterparty in relation to interest equalization transactions to be entered into by FEC and the FEC Counterparty.

     “FEC General Terms and Conditions” means the general terms and conditions issued by FEC and dated January 30, 2003 in relation to interest equalization transactions entered into by FEC.

5

     “FEC Interest Equalization” means the interest rate hedging arrangements made between FEC and the FEC Counterparty and in relation to the Loans in accordance with the FEC Interest Equalization Documents.

     “FEC Interest Equalization Documents” means the FEC Interest Equalization Offer, each FEC ISDA Confirmation, the FEC ISDA Master Agreement, the FEC Cooperation Agreement, all other related agreements and documents entered into between FEC and the FEC Counterparty in relation to the Loans and/or on the basis of the FEC Interest Equalization Offer, each as may be amended from time to time.

     “FEC Interest Equalization Offer” means the interest equalization offer issued by FEC in favor of the FEC Counterparty in relation to the Loans.

     “FEC ISDA Confirmation” means the confirmation issued by the FEC Counterparty and accepted by FEC in relation to each interest equalization transaction entered into between the FEC Counterparty and FEC in relation to the Loans under the FEC Cooperation Agreement and the FEC ISDA Master Agreement.

     “FEC ISDA Master Agreement” means the ISDA Master Agreement and the ISDA Schedule to the ISDA Master Agreement each entered into between the FEC Counterparty and FEC and dated as of September 14, 2004.

     “FEC Payment Amount” is defined in Section 4.9(d).

     “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

     “Fiscal Quarter” means any quarter of a Fiscal Year.

     “Fiscal Year” means any annual fiscal reporting period of the Borrower.

     “Fixed Charge Coverage Ratio” means, as of the end of any Fiscal Quarter, the ratio computed for the period of four consecutive Fiscal Quarters ending on the close of such Fiscal Quarter of:

     (a) net cash from operating activities (determined in accordance with GAAP) for such period, as shown in the Borrower’s consolidated statement of cash flow for such period, to

     (b) the sum of:

6

          (i) dividends actually paid by the Borrower during such period (including, without limitation, dividends in respect of preferred stock of the Borrower); plus

          (ii) scheduled payments of principal of all debt less New Financings (determined in accordance with GAAP, but in any event including Capitalized Lease Liabilities) of the Borrower and its Subsidiaries for such period.

     “F.R.S. Board” means the Board of Governors of the Federal Reserve System or any successor thereto.

     “GAAP” is defined in Section 1.4.

     “Government-related Obligations” means obligations of the Borrower or any Subsidiary of the Borrower under, or Indebtedness incurred by the Borrower or any Subsidiary of the Borrower to satisfy obligations under, any governmental requirement imposed by any Applicable Jurisdiction that must be complied with to enable the Borrower and its Subsidiaries to continue their business in such Applicable Jurisdiction, excluding, in any event, any taxes imposed on the Borrower or any Subsidiary of the Borrower.

     “Hedging Instruments” means options, caps, floors, collars, swaps, forwards, futures and any other agreements, options or instruments substantially similar thereto or any series or combination thereof used to hedge interest, foreign currency and commodity exposures.

     “herein”, “hereof”, “hereto”, “hereunder” and similar terms contained in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular Section, paragraph or provision of this Agreement or such other Loan Document.

     “IEA Margin” means 0.40% per annum, receivable from FEC under the FEC Interest Equalization Documents.

     “Indebtedness” means, for any Person: (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within 180 days of the date the respective goods are delivered or the respective services are rendered; (c) Indebtedness of others secured by a Lien on the property of such Person, whether or not the respective indebtedness so secured has been assumed by such Person; (d) obligations of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for the account of such Person; (e) Capital Lease Obligations of such Person; (f) Indebtedness of others guaranteed by such Person; (g) obligations of such Person in respect of surety bonds and similar obligations; and (h) Hedging Instruments.

     “Indemnified Liabilities” is defined in Section 11.4.

7

     “Indemnified Parties” is defined in Section 11.4.

     “Interest Payment Date” means any date on which interest is payable with respect to Loans pursuant to clause (c) of Section 3.2.3.

     “Interest Period” means, relative to any Loans, the period beginning on (and including) the date on which such Loan is made pursuant to Section 2.3 and shall end on (but exclude) the day which numerically corresponds to such date six months thereafter or, if such month has no numerically corresponding day, on the last Business Day of such month; provided that if such Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next following Business Day (unless such next following Business Day is the first Business Day of a calendar month, in which case such Interest Period shall end on the Business Day next preceding the first Business Day of such calendar month).

     “Interest Subsidy” means the net payment by the FEC to the FEC Counterparty pursuant to the FEC Interest Equalization.

     “Investment” means, relative to any Person,

     (a) any loan or advance made by such Person to any other Person (excluding commission, travel, expense and similar advances to officers and employees made in the ordinary course of business); and

     (b) any ownership or similar interest held by such Person in any other Person.

     “Lender Assignment Agreement” means a Lender Assignment Agreement substantially in the form of Exhibit E.

     “Lenders” is defined in the preamble.

     “Lending Office” means, relative to any Lender, the office of such Lender designated as such below its signature hereto or designated in a Lender Assignment Agreement or Assumption Agreement or such other office of a Lender as designated from time to time by notice from such Lender to the Borrower and the Administrative Agent, whether or not outside the United States, which shall be making or maintaining the Loan of such Lender hereunder.

     “LIBO Applicable Margin” is defined in the definition of “Applicable Margin”.

     “LIBO Rate” means, relative to any Interest Period, the rate per annum of the offered quotation for deposits in Dollars for delivery on the first day of such Interest Period and for the duration thereof which appears on Telerate Page 3750 at or about 11:00 a.m. (London time) two Business Days before the commencement of such Interest Period; provided that:

     (a) subject to Section 3.2.4, if no such offered quotation appears on Telerate Page 3750 at the relevant time, the LIBO Rate shall be the rate per annum certified by the Administrative Agent to be the average of the rates quoted by the Reference Lenders as the rate at which each of the Reference Lenders was (or would have been) offered deposits of Dollars by prime banks in the London interbank eurocurrency market in an

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amount approximately equal to the amount of each such Reference Lender’s Loan for the relevant Borrowing and for a period approximately equal to such Interest Period; and

     (b) for the purposes of determining the post-maturity rate of interest under Section 3.2.2, the LIBO Rate shall be determined by reference to deposits on an overnight or call basis or for such other period or periods as the Administrative Agent may determine after consultation with the Lenders.

     “Lien” means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or interest in property to secure payment of a debt or performance of an obligation or other priority or preferential arrangement of any kind or nature whatsoever.

     “Loan” is defined in Section 2.1.1.

     “Loan Documents” means this Agreement, the Notes and the FEC Interest Equalization Documents.

     “Material Adverse Effect” means a material adverse effect on (a) the business, operations or financial condition of the Borrower or the Borrower and its Subsidiaries taken as a whole, (b) the rights and remedies of the Administrative Agent, any Lender or the FEC Counterparty under or in connection with the this Agreement or the Notes or (c) the ability of the Borrower to perform its payment Obligations under the Loan Documents to which it is a party.

     “Material Litigation” is defined in Section 6.9.

     “Moody’s” means Moody’s Investors Service, Inc.

     “Net Debt” means, at any time, the aggregate outstanding principal amount of all debt (including, without limitation, the principal portion of all capitalized leases) of the Borrower and its Subsidiaries (determined on a consolidated basis in accordance with GAAP) less the sum of (without duplication);

     (a) all cash on hand of the Borrower and its Subsidiaries; plus

     (b) all Cash Equivalents.

     “Net Debt to Capitalization Ratio” means, as at any date, the ratio of (a) Net Debt on such date to (b) Capitalization on such date.

     “New Financings” means proceeds from:

     (a) borrowed money (whether by loan or issuance and sale of debt securities), including drawings under this Agreement and under the Credit Agreement dated as of March 27, 2003, as amended, among the Borrower, the lenders parties thereto and Citibank, N.A., as administrative agent; and

     (b) the issuance and sale of equity securities.

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     “Nordea” means Nordea Bank Norge ASA, Grand Cayman Branch.

     “Note” means a promissory note of the Borrower payable to any Lender, in the form of Exhibit A hereto (as such promissory note may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of the Borrower to such Lender resulting from the outstanding Loan made by such Lender, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof.

     “Obligations” means all obligations (monetary or otherwise) of the Borrower arising under or in connection with this Agreement and the Notes.

     “Organic Document” means, relative to the Borrower, its certificate of incorporation and its by-laws.

     “Participant” is defined in Section 11.11.2.

     “Pension Plan” means a “pension plan”, as such term is defined in section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the Borrower or any corporation, trade or business that is, along with the Borrower, a member of a Controlled Group, may have liability, including any liability by reason of being deemed to be a contributing sponsor under section 4069 of ERISA.

     “Percentage” means, relative to any Lender, the percentage set forth opposite its signature hereto or as set forth in the applicable Lender Assignment Agreement, as such percentage may be adjusted from time to time pursuant to Section 4.8 or pursuant to Lender Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and delivered pursuant to Section 11.11.1.

     “Person” means any natural person, corporation, partnership, firm, association, trust, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity.

     “Prepayment Event” is defined in Section 9.1.

     “Principal Subsidiary” means any Subsidiary of the Borrower that owns a Vessel.

     “Purchased Vessel” is defined in the third recital.

     “RBS” means The Royal Bank of Scotland plc.

     “Reference Lenders” means Citibank, BNP, DnB NOR, Nordea and RBS and includes each replacement Reference Lender appointed by the Administrative Agent pursuant to Section 3.2.4.

     “Required Lenders” means, at any time, Lenders that, in the aggregate, hold more than 50% of the aggregate unpaid principal amount of the Loans or, if no such principal amount is then outstanding, Lenders that in the aggregate have more than 50% of the Commitments.

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     “S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

     “Senior Debt Rating” means, as of any date, (a) the implied senior debt rating of the Borrower for debt pari passu in right of payment and in right of collateral security with the Obligations as given by Moody’s and S&P or (b) in the event the Borrower receives an actual unsecured senior debt rating (apart from an implied rating) from Moody’s and/or S&P, such actual rating or ratings, as the case may be (and in such case the Senior Debt Rating shall not be determined by reference to any implied senior debt rating from either agency).

     “Stated Maturity Date” means the seventh anniversary of the Closing Date.

     “Stockholders’ Equity” means, as at any date, the Borrower’s stockholders’ equity on such date, excluding Accumulated Other Comprehensive Income (Loss), determined in accordance with GAAP, provided that any non-cash charge to Stockholders’ Equity resulting (directly or indirectly) from a change after the Effective Date in GAAP or in the interpretation thereof shall be disregarded in the computation of Stockholders’ Equity such that the amount of any reduction thereof resulting from such change shall be added back to Stockholders’ Equity.

     “Subsidiary” means, with respect to any Person, any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person.

     “Taxes” is defined in Section 4.6.

     “Telerate Page 3750” means the display designated as “Page 3750” on the Moneyline Telerate Service (or such other page as may replace Page 3750 on that service or such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for deposits in Dollars).

     “United States” or “U.S.” means the United States of America, its fifty States and the District of Columbia.

     “Vessel” means a passenger cruise vessel owned by the Borrower or one of its Subsidiaries.

     “Voting Stock” means shares of capital stock of the Borrower of any class or classes (however designated) that have by the terms thereof normal voting power to elect the members of the Board of Directors of the Borrower (other than voting power upon the occurrence of a stated contingency, such as the failure to pay dividends).

     SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Agreement shall, when capitalized, have such meanings when used in the Disclosure Schedule and in each Note,

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Borrowing Request, notice and other communication delivered from time to time in connection with this Agreement or the Notes.

     SECTION 1.3. Cross-References. Unless otherwise specified, references in this Agreement and in each other Loan Document to any Article or Section are references to such Article or Section of this Agreement or such other Loan Document, as the case may be, and, unless otherwise specified, references in any Article, Section or definition to any clause are references to such clause of such Article, Section or definition.

     SECTION 1.4. Accounting and Financial Determinations. Unless otherwise specified, all accounting terms used herein or in any Note shall be interpreted, all accounting determinations and computations hereunder or thereunder (including under Section 7.2.4) shall be made, and all financial statements required to be delivered hereunder or thereunder shall be prepared, in accordance with United States generally accepted accounting principles (“GAAP”) consistently applied (or, if not consistently applied, accompanied by details of the inconsistencies); provided that if, as a result of any change in GAAP or in the interpretation thereof after the date of the financial statements referred to in Section 6.6, there is a change in the manner of determining any of the items referred to herein that are to be determined by reference to GAAP, and the effect of such change would (in the reasonable opinion of the Borrower or the Agents) be such as to affect the basis or efficacy of the covenants contained in Section 7.2.4 in ascertaining the financial condition of the Borrower or the consolidated financial condition of the Borrower and its Subsidiaries and the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate such change occurring after the date hereof in GAAP or the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), then such item shall for the purposes of such Sections of this Agreement continue to be determined in accordance with GAAP relating thereto as GAAP were applied immediately prior to such change in GAAP or in the interpretation thereof until such notice shall have been withdrawn or such provision amended in accordance herewith.

ARTICLE II

COMMITMENTS, BORROWING PROCEDURES AND NOTES

     SECTION 2.1. Commitments. On the terms and subject to the conditions of this Agreement (including Article V), each Lender severally agrees to make a Loan pursuant to the Commitments described in this Section 2.1.

          SECTION 2.1.1. Commitment of Each Lender. On the Closing Date, each Lender will make a loan (relative to such Lender, its “Loan”) to the Borrower equal to such Lender’s Percentage of the aggregate amount of the Borrowing requested by the Borrower to be made on such day. The commitment of each Lender described in this Section 2.1.1 is herein referred to as its “Commitment”. Any amount of the Loans that are prepaid or repaid may not be reborrowed.

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          SECTION 2.1.2. FEC. The parties hereto acknowledge the benefit of the FEC Interest Equalization and the commercial impact that the terms of the FEC Interest Equalization Documents have on the terms of this Agreement.

     The parties hereto unconditionally and irrevocably agree that if the FEC Interest Equalization is for whatever reason, in whole or in part, suspended, terminated, cancelled or ceases to be available for whatever reason or the FEC Interest Equalization Documents cease to be in full force and effect for whatever reason, that the Loans will be provided to the Borrower on a LIBO Rate basis.

     The parties hereto acknowledge that FEC has the right to terminate the payment of any Interest Subsidy and the right to terminate the FEC Interest Equalization if (a) the Borrower has used the proceeds of the Loans for a purpose other than the purpose agreed in the FEC Interest Equalization Documents; (b) the Borrower has in connection with the application for (i) the FEC Interest Equalization Offer or (ii) the Loans provided materially misleading information or concealed facts that are material when considering such application or acceptance of the FEC Interest Equalization Transaction; or (c) the Loans are transferred to a new borrower or the Purchased Vessel is transferred to a new owner without the consent of the Finnish Ministry of the Trade and Industry.

     The parties hereto acknowledge and agree that if FEC terminates the payment of any Interest Subsidy pursuant to clause (a) or (b) in the immediately preceding paragraph, the Borrower is obligated to pay FEC upon FEC’s demand the amounts of Interest Subsidy together with interest, all amounts as more specifically set out in the FEC Cooperation Agreement and Section 6 b of the Finnish Act on Interest Equalization on Officially Supported Export and Ship Credits (1137/1996, as amended).

     The parties hereto further acknowledge and agree that FEC may terminate the payment of any Interest Subsidy if (x) the Borrower fails to use its commercially reasonable efforts to co-operate and assist the Administrative Agent and the FEC Counterparty with respect to any obligations the FEC Counterparty may have under or in connection with the FEC Interest Equalization Documents, as so reasonably requested by the Administrative Agent or the FEC Counterparty or (y) the Borrower fails to use its commercially reasonable efforts to consent to amend this Agreement if such amendments are required by FEC or the FEC Interest Equalization Documents. The Administrative Agent shall provide an explanation from FEC as to the need for such amendments provided that FEC has provided such explanation to the Administrative Agent.

     SECTION 2.2. Reduction of Commitment Amount. The Commitment Amount is subject to reduction from time to time pursuant to this Section 2.2.

          SECTION 2.2.1. Optional. The Borrower may, from time to time on any Business Day occurring prior to the Closing Date, voluntarily reduce the Commitment Amount; provided that all such reductions shall be made pro rata among the Lenders and shall require at least three Business Days’ prior notice to the Administrative Agent and be permanent, and any partial reduction of the Commitment Amount shall be in a minimum amount of $10,000,000 and in a multiple of $1,000,000.

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          SECTION 2.2.2. Mandatory. On and after the Closing Date, after giving effect to the Borrowing made on such date, the Commitment Amount shall be zero.

     SECTION 2.3. Borrowing Procedure. By delivering a Borrowing Request to the Administrative Agent on or before 11:00 a.m., New York time, on a Business Day, the Borrower may irrevocably request, on not less than two Business Days’ notice, that a Borrowing be made in a minimum amount of $10,000,000 and a multiple of $1,000,000, or in the unused amount of the Commitments. On the terms and subject to the conditions of this Agreement, the Borrowing shall be made on the Business Day specified in such Borrowing Request. On or before 11:00 a.m., New York time, on the Business Day specified in the Borrowing Request, each Lender shall, without any set-off or counterclaim, deposit with the Administrative Agent same day funds in an amount equal to such Lender’s Percentage of the requested Borrowing. Such deposit will be made to an account which the Administrative Agent shall specify from time to time by notice to the Lenders. To the extent funds are so received from the Lenders, the Administrative Agent shall, without any set-off or counterclaim, make such funds available to the Borrower on the Business Day specified in the Borrowing Request by wire transfer of same day funds to the accounts the Borrower shall have specified in its Borrowing Request. No Lender’s obligation to make a Loan shall be affected by any other Lender’s failure to make a Loan.

     SECTION 2.4. Funding. Each Lender may, if it so elects, fulfill its obligation to make or continue its Loan hereunder by causing one of its foreign branches or Affiliates (or an international banking facility created by such Lender) to make or maintain such Loan; provided that such Loan shall nonetheless be deemed to have been made and to be held by such Lender, and the obligation of the Borrower to repay such Loan shall nevertheless be to such Lender for the account of such foreign branch, Affiliate or international banking facility.

     SECTION 2.5. Notes. Each Lender’s Loan under its Commitment shall be evidenced by a Note payable to the order of such Lender in a maximum principal amount equal to such Lender’s Percentage of the original Commitment Amount. The Borrower hereby irrevocably authorizes each Lender to make (or cause to be made) appropriate notations on the grid attached to such Lender’s Note (or on any continuation of such grid), which notations, if made, shall evidence, inter alia, the date of, the outstanding principal of, and the interest rate and Interest Period applicable to the Loan evidenced thereby, provided that the failure of any Lender to make any such notations shall not limit or otherwise affect any Obligations of the Borrower.

ARTICLE III

REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

     SECTION 3.1. Repayments and Prepayments. The Borrower shall repay the Loans in fourteen equal semi-annual installments on the last day of each Interest Period, as set forth on Schedule II hereto.

     In addition, the Borrower

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     (a) may, from time to time on any Business Day, make a voluntary prepayment, in whole or in part, of the outstanding principal amount of the Loans; provided that

          (i) any such prepayment shall be made pro rata among all Loans and applied in inverse order of maturity;

          (ii) all such voluntary prepayments shall require at least three Business Days (or, if such prepayment is to be made on the last day of an Interest Period for the Loans, two Business Days) prior written notice to the Administrative Agent; and

          (iii) all such voluntary partial prepayments shall be in an aggregate minimum amount of $10,000,000 and a multiple of $1,000,000 (or the remaining amount of the Loans being prepaid); and

     (b) shall, immediately upon any acceleration of the Stated Maturity Date of the Loans pursuant to Section 8.2 or 8.3 or the mandatory repayment of the Loans pursuant to Section 9.2, repay all Loans.

     Each prepayment of any Loans made pursuant to this Section shall be without premium or penalty, except as may be required by Section 4.4, provided that any prepayment under this Agreement shall be made subject to payment by the Borrower to the Administrative Agent (for the account of the FEC Counterparty) of any FEC Break Costs on written demand by the FEC Counterparty, which demand shall set forth the amount of the FEC Break Costs and reasonably detailed calculations thereof.

     SECTION 3.2. Interest Provisions. Interest on the outstanding principal amount of Loans shall accrue and be payable in accordance with this Section 3.2.

          SECTION 3.2.1. Rates. (a) At all times while the FEC Interest Equalization is in effect, the Borrower shall pay interest on the Loans at a rate per annum during each Interest Period equal to the sum of the FEC CIRR Rate plus the CIRR Applicable Margin.

     (b) At all times while the FEC Interest Equalization is not in effect, the Borrower shall pay interest on the Loans at a rate per annum during each Interest Period equal to the sum of the LIBO Rate for such Interest Period plus the LIBO Applicable Margin.

     (c) All Loans shall bear interest from and including the first day of the applicable Interest Period to (but not including) the last day of such Interest Period at the interest rate determined as applicable to such Loan.

          SECTION 3.2.2. Post-Maturity Rates. After the date any principal amount of any Loan is due and payable (whether on the maturity, upon acceleration or otherwise), or after any other monetary Obligation of the Borrower shall have become due and payable, the Borrower shall pay, but only to the extent permitted by law, interest (after as well as before judgment) on such amounts for each day during the period of such default at a rate per annum certified by the

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Administrative Agent to the Borrower (which certification shall be conclusive in the absence of manifest error) to be equal to the sum of (a) the rate of interest applicable to Loans at such time pursuant to Section 3.2.1 above plus (c) 2% per annum.

          SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be payable, without duplication:

     (a) on the Stated Maturity Date therefor;

     (b) on the date of any payment or prepayment, in whole or in part, of principal outstanding on such Loan (but only on the principal so paid or prepaid);

     (c) on the last day of each Interest Period; and

     (d) on that portion of any Loans the Stated Maturity Date of which is accelerated pursuant to Section 8.2 or Section 8.3, immediately upon such acceleration.

Interest accrued on Loans or other monetary Obligations arising under this Agreement or any Note after the date such amount is due and payable (whether on maturity, upon acceleration or otherwise) shall be payable upon demand.

          SECTION 3.2.4. Interest Rate Determination; Replacement Reference Lenders. Each Reference Lender agrees to furnish to the Administrative Agent timely information for the purpose of determining the LIBO Rate in the event that no offered quotation appears on Telerate Page 3750 and the LIBO Rate is to be determined by reference to quotations supplied by the Reference Lenders. If any one or more of the Reference Lenders shall fail to furnish in a timely manner such information to the Administrative Agent for any such interest rate, the Administrative Agent shall determine such interest rate on the basis of the information furnished by the remaining Reference Lenders (provided, that, if all of the Reference Lenders other than the Administrative Agent fail to supply the relevant quotations, the interest rate will be fixed by reference only to the quotation obtained by the Administrative Agent in its capacity as a Reference Lender). If a Reference Lender ceases for any reason to be able and willing to act as such, the Administrative Agent shall, at the direction of the Required Lenders and after consultation with the Borrower and the Lenders, appoint a replacement for such Reference Lender reasonably acceptable to the Borrower, and such replaced Reference Lender shall cease to be a Reference Lender hereunder. The Administrative Agent shall furnish to the Borrower and to the Lenders each determination of the LIBO Rate made by reference to quotations of interest rates furnished by Reference Lenders.

          SECTION 3.2.5. Interest Indemnity. If Section 3.2.1(a) applies and the interest rate received by the Lenders (or by the FEC Counterparty or the Administrative Agent on their behalf) under the Loan Documents (taking into account any interest payment (including, without limitation, the IEA Margin) made by FEC pursuant to the FEC Interest Equalization) is less than the rate per annum determined by the Administrative Agent to be the sum of the LIBO Rate for such Interest Period plus the CIRR Applicable Margin plus the IEA Margin (such rate per annum being the “Contracted Rate”), then the Borrower will fully indemnify each Lender on demand by the Administrative Agent to the extent of what such Lender would have received by applying the

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Contracted Rate, but only to the extent that there is no duplication with any other amounts payable hereunder.

     SECTION 3.3. Commitment Fees. The Borrower agrees to pay to the Administrative Agent for the account of each Lender and FEC a commitment fee (the “Commitment Fees”) on the average daily unused portion of the Commitment Amount, for the period commencing on the Effective Date and continuing through the Closing Date, as set forth below:

     (a) The Commitment Fees payable to the Lenders shall be payable by the Borrower on the Closing Date and shall be in an amount equal to the product of 0.20% per annum, multiplied by the average daily unused portion of the Commitment Amount, multiplied by the actual number of days elapsed from the date that is 15 days after the Effective Date to the Closing Date, divided by 360. Each payment of Commitment Fee to the Lenders shall be allocated by the Administrative Agent on the basis of each Lender’s Percentage of the unused portion of the Commitment Amount for the actual number of days elapsed.

     (b) The Commitment Fee payable to FEC shall be payable by the Borrower on the Closing Date and shall be in an amount equal to the product of 0.10% per annum, multiplied by the average daily unused portion of the Commitment Amount, multiplied by the actual number of days elapsed from the date this Agreement is executed and delivered by the Borrower to the Closing Date, divided by 360.

ARTICLE IV

CERTAIN LIBO RATE AND OTHER PROVISIONS

     SECTION 4.1. LIBO Rate Lending Unlawful. If the introduction of or any change in or in the interpretation of any law makes it unlawful, or any central bank or other governmental authority having jurisdiction over such Lender asserts that it is unlawful, for such Lender to make, continue or maintain any Loan bearing interest at a rate based on the LIBO Rate, the obligations of such Lender to make, continue or maintain any Loan bearing interest at a rate based on the LIBO Rate shall, upon notice thereof to the Borrower, the Administrative Agent and each other Lender, forthwith be suspended until the circumstances causing such suspension no longer exist, provided that such Lender’s obligation to make, continue and maintain its Loan hereunder shall be automatically converted into an obligation to make, continue and maintain a Loan bearing interest at a rate to be negotiated between such Lender and the Borrower that is the equivalent of the sum of the LIBO Rate for the relevant Interest Period plus the LIBO Applicable Margin or, if such negotiated rate is not agreed upon by the Borrower and such Lender within fifteen Business Days, a rate equal to the Federal Funds Rate from time to time in effect plus the LIBO Applicable Margin.

     SECTION 4.2. Deposits Unavailable. If the Administrative Agent shall have determined that:

     (a) Dollar deposits in the relevant amount and for the relevant Interest Period are not available to the Reference Lenders in their relevant market; or

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     (b) by reason of circumstances affecting the Reference Lenders’ relevant market, adequate means do not exist for ascertaining the interest rate applicable hereunder to LIBO Rate Loans,

then the Administrative Agent shall give notice of such determination (hereinafter called a “Determination Notice”) to the Borrower and each of the Lenders. The Borrower, the Lenders and the Administrative Agent shall then negotiate in good faith in order to agree upon a mutually satisfactory interest rate to be substituted for those which would otherwise have applied under this Agreement. If the Borrower, the Lenders and the Administrative Agent are unable to agree upon an interest rate (or rates) prior to the date occurring fifteen Business Days after the giving of such Determination Notice, the interest rate to take effect at the end of the Interest Period current at the date of the Determination Notice shall be equal to the sum of the LIBO Applicable Margin plus the Federal Funds Rate in effect from time to time.

     SECTION 4.3. Increased LIBO Rate Loan Costs, etc. If a change in any applicable treaty, law, regulation or regulatory requirement or in the interpretation thereof or in its application to the Borrower, or if compliance by any Lender with any applicable direction, request, requirement or guideline (whether or not having the force of law) of any governmental or other authority insofar as it may be changed or imposed after the date hereof, shall:

     (a) subject any Lender to any taxes, levies, duties, charges, fees, deductions or withholdings of any nature with respect to its Commitment or any part thereof (or in the case of the FEC Counterparty for purposes of Section 11.4(b), with respect to any payment made or received pursuant to the Loan Documents) imposed, levied, collected, withheld or assessed by any jurisdiction or any political subdivision or taxing authority thereof (other than taxation on overall net income and, to the extent such taxes are described in Section 4.6, withholding taxes); or

     (b) change the basis of taxation to any Lender (other than a change in taxation on the overall net income of such Lender) of payments of principal or interest or any other payment due or to become due pursuant to this Agreement (or in the case of the FEC Counterparty for purposes of Section 11.4(b), the Loan Documents); or

     (c) impose, modify or deem applicable any reserve or capital adequacy requirements (other than the reserve costs described in Section 4.7) or other banking or monetary controls or requirements which affect the manner in which a Lender shall allocate its capital resources to its obligations hereunder (or in the case of the FEC Counterparty for purposes of Section 11.4(b), under the Loan Documents) or require the making of any special deposits against or in respect of any assets or liabilities of, deposits with or for the account of, or loans by, any Lender (provided that such Lender shall, unless prohibited by law, allocate its capital resources to its obligations hereunder in a manner which is consistent with its present treatment of the allocation of its capital resources); or

     (d) impose on any Lender any other condition affecting its Commitment (or in the case of the FEC Counterparty for purposes of Section 11.4(b), it obligations under the Loan Documents),

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and the result of any of the foregoing is either (i) to increase the cost to such Lender of making its Loan or maintaining its Commitment or any part thereof (or in the case of the FEC Counterparty for purposes of Section 11.4(b), performing its obligations under or in connection with the Loan Documents) , (ii) to reduce the amount of any payment received by such Lender or its effective return hereunder or on its capital or (iii) to cause such Lender to make any payment or to forego any return based on any amount received or receivable by such Lender hereunder, then and in any such case if such increase or reduction in the opinion of such Lender materially affects the interests of such Lender, (A) the Lender concerned shall (through the Administrative Agent) notify the Borrower of the occurrence of such event and use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Lending Office if the making of such a designation would avoid the effects of such law, regulation or regulatory requirement or any change therein or in the interpretation thereof and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender and (B) the Borrower shall forthwith upon demand pay to the Administrative Agent for the account of such Lender such amount as is necessary to compensate such Lender for such additional cost or such reduction and ancillary expenses, including taxes, incurred as a result of such adjustment. Such notice shall (i) describe in reasonable detail the event leading to such additional cost, together with the approximate date of the effectiveness thereof, (ii) set forth the amount of such additional cost, (iii) describe the manner in which such amount has been calculated, (iv) certify that the method used to calculate such amount is the Lender’s standard method of calculating such amount, (v) certify that such request is consistent with its treatment of other borrowers that are subject to similar provisions, and (vi) certify that, to the best of its knowledge, such change in circumstance is of general application to the commercial banking industry in such Lender’s jurisdiction of organization or in the relevant jurisdiction in which such Lender does business. Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than three months prior to the date that such Lender notifies the Borrower of the circumstance giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the circumstance giving rise to such increased costs or reductions is retroactive, then the three-month period referred to above shall be extended to include the period of retroactive effect thereof, but not more than six months prior to the date that such Lender notifies the Borrower of the circumstance giving rise to such cost or reductions and of such Lender’s intention to claim compensation therefor.

     SECTION 4.4. Funding Losses. In the event any Lender shall incur any loss or expense by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to make, continue or maintain any portion of the principal amount of any Loan as a LIBO Rate Loan as a result of:

     (a) any conversion or repayment or prepayment of the principal amount of any Loans on a date other than the scheduled last day of an Interest Period, whether pursuant to Section 3.1 or otherwise; or

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     (b) any Loans not being made in accordance with the Borrowing Request therefor due to the fault of the Borrower or as a result of any of the conditions precedent set forth in Article V not being satisfied,

then, upon the written notice of such Lender to the Borrower (with a copy to the Administrative Agent), the Borrower shall, within five Business Days of its receipt thereof, pay directly to such Lender such amount as will reimburse such Lender for such loss or expense. Such written notice shall include calculations in reasonable detail setting forth the loss or expense to such Lender.

     SECTION 4.5. Increased Capital Costs. If any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other governmental authority increases the amount of capital required to be maintained by any Lender or any Person controlling such Lender, and the rate of return on its or such controlling Person’s capital as a consequence of its Commitment or the Loan made by such Lender (or in the case of the FEC Counterparty for purposes of Section 11.4(b), its obligations under the Loan Documents) is reduced to a level below that which such Lender or such controlling Person would have achieved but for the occurrence of any such change in circumstance, then, in any such case upon notice from time to time by such Lender to the Borrower, the Borrower shall immediately pay directly to such Lender additional amounts sufficient to compensate such Lender or such controlling Person for such reduction in rate of return. Any such notice shall (i) describe in reasonable detail the capital adequacy requirements which have been imposed, together with the approximate date of the effectiveness thereof, (ii) set forth the amount of such lowered return, (iii) describe the manner in which such amount has been calculated, (iv) certify that the method used to calculate such amount is such Lender’s standard method of calculating such amount, (v) certify that such request for such additional amounts is consistent with its treatment of other borrowers that are subject to similar provisions and (vi) certify that, to the best of its knowledge, such change in circumstances is of general application to the commercial banking industry in the jurisdictions in which such Lender does business. In determining such amount, such Lender may use any method of averaging and attribution that it shall, subject to the foregoing sentence, deem applicable. Each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Lending Office if the making of such a designation would avoid such reduction in such rate of return and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender. Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than three months prior to the date that such Lender notifies the Borrower of the circumstance giving rise to such reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the circumstance giving rise to such reductions is retroactive, then the three-month period referred to above shall be extended to include the period of retroactive effect thereof, but not more than six months prior to the date that such Lender notifies the Borrower of the circumstance giving rise to such reductions and of such Lender’s intention to claim compensation therefor.

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     SECTION 4.6. Taxes. All payments by the Borrower of principal of, and interest on, the Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by any Lender’s net income or receipts of such Lender and franchise taxes imposed in lieu of net income taxes or receipts, by the jurisdiction under the laws of which such Lender is organized or any political subdivision thereof or the jurisdiction of such Lender’s Lending Office or any political subdivision thereof or any other jurisdiction unless such net income taxes are imposed solely as a result of the Borrower’s activities in such other jurisdiction (such non-excluded items being called “Taxes”). In the event that any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the Borrower will:

     (a) pay directly to the relevant authority the full amount required to be so withheld or deducted;

     (b) promptly forward to the Administrative Agent an official receipt or other documentation satisfactory to the Administrative Agent evidencing such payment to such authority; and

     (c) pay to the Administrative Agent for the account of the Lenders or the FEC Counterparty such additional amount or amounts as is necessary to ensure that the net amount actually received by each Lender or the FEC Counterparty will equal the full amount such Lender or the FEC Counterparty would have received had no such withholding or deduction been required.

Moreover, if any Taxes are directly asserted against the Administrative Agent, any Lender or the FEC Counterparty with respect to any payment received or paid by the Administrative Agent, such Lender or the FEC Counterparty hereunder or under or in connection with any other Loan Document, the Administrative Agent, such Lender or the FEC Counterparty may pay such Taxes and the Borrower will promptly pay such additional amounts (including any penalties, interest or expenses) as is necessary in order that the net amount received by such person after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such person would have received had not such Taxes been asserted.

     Any Person claiming any additional amounts payable pursuant to this Section agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Lending Office or, in the case of the FEC Counterparty but subject to the approval of FEC if the FEC Interest Equalization is then in effect, its location of operations, if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Person, be otherwise disadvantageous to such Person.

     If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent, for the account of the respective Lenders or the FEC Counterparty, the required receipts or other required documentary evidence, the Borrower shall

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indemnify the Lenders and the FEC Counterparty for any incremental withholding Taxes, interest or penalties or expenses that may become payable by any Lender or the FEC Counterparty as a result of any such failure (so long as such amount did not become payable as a result of the failure of such Lender or the FEC Counterparty to provide timely notice to the Borrower of the assertion of a liability related to the payment of Taxes). For purposes of this Section 4.6, a distribution hereunder by the Administrative Agent or any Lender or the FEC Counterparty to or for the account of any Lender or the FEC Counterparty shall be deemed a payment by the Borrower.

     If any Lender or the FEC Counterparty is entitled to any refund, credit, deduction or other reduction in tax by reason of any payment made by the Borrower in respect of any tax under this Section 4.6 or by reason of any payment made by the Borrower pursuant to Section 4.3, such Lender or the FEC Counterparty shall use reasonable efforts to obtain such refund, credit, deduction or other reduction and, promptly after receipt thereof (and, in the case of any such credit, utilization thereof), will pay to the Borrower such amount (plus any interest received by such Lender or the FEC Counterparty in connection with such refund, credit, deduction or reduction) as is equal to the net after-tax value to such Lender or the FEC Counterparty of such part of such refund, credit, deduction or reduction as such Lender or the FEC Counterparty reasonably determines is allocable to such tax or such payment, less out-of-pocket expenses incurred by such Lender or the FEC Counterparty, provided that no Lender or the FEC Counterparty shall be obligated to disclose to the Borrower any information regarding its tax affairs or tax computations.

     Each Lender (and each Participant) that is organized under the laws of a jurisdiction other than the United States agrees with the Borrower and the Administrative Agent that it will (a) provide to the Administrative Agent and the Borrower an appropriately executed copy of Internal Revenue Service Form W-8ECI certifying that any payments made to or for the benefit of such Lender or such Participant are effectively connected with a trade or business in the United States (or, alternatively, Internal Revenue Service Form W-8BEN, but only if the applicable treaty described in such form provides for a complete exemption from U.S. federal income tax withholding), or any successor form, on or prior to the date hereof (or, in the case of any assignee Lender or Participant, on or prior to the date of the relevant assignment or participation), and (b) notify the Administrative Agent and the Borrower if the certifications made on any form provided pursuant to this paragraph are no longer accurate and true in all material respects. For any period with respect to which a Lender (or Participant) has failed to provide the Borrower with the foregoing forms (other than if such failure is due to a change in law occurring after the date on which a form originally was required to be provided or if such form otherwise is not required hereunder) such Lender (or Participant) shall not be entitled to the benefits of this Section 4.6 with respect to Taxes imposed by reason of such failure.

     SECTION 4.7. Reserve Costs. Without in any way limiting the Borrower’s obligations under Section 4.3, the Borrower shall pay to each Lender on the last day of each Interest Period, so long as the relevant Lending Office of such Lender is required to maintain reserves against “Eurocurrency liabilities” under Regulation D of the F.R.S. Board, upon notice from such Lender, an additional amount equal to the product of the following for each Loan for each day during such Interest Period:

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     (i) the principal amount of such Loan outstanding on such day; and

     (ii) the remainder of (x) a fraction the numerator of which is the rate (expressed as a decimal) at which interest accrues on such Loan for such Interest Period as provided in this Agreement (less the LIBO Applicable Margin) and the denominator of which is one minus any increase after the Effective Date in the effective rate (expressed as a decimal) at which such reserve requirements are imposed on such Lender minus (y) such numerator; and

     (iii) 1/360.

Such notice shall (i) describe in reasonable detail the reserve requirement that has been imposed, together with the approximate date of the effectiveness thereof, (ii) set forth the applicable reserve percentage, (iii) certify that such request is consistent with such Lender’s treatment of other borrowers that are subject to similar provisions and (iv) certify that, to the best of its knowledge, such requirements are of general application in the commercial banking industry in the United States.

     Each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to avoid the requirement of maintaining such reserves (including by designating a different Lending Office) if such efforts would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.

     SECTION 4.8. Replacement Lenders, etc. If the Borrower shall be required to make any payment to any Lender pursuant to Section 4.3, 4.4, 4.5, 4.6 or 4.7, the Borrower shall be entitled at any time (so long as no Default and no Prepayment Event shall have occurred and be continuing) within 180 days after receipt of notice from such Lender of such required payment to (a) terminate such Lender’s Commitment and such Lender’s right to receive any Commitment Fee accruing after such termination and that portion of the Commitment Amount represented by such Lender’s Commitment (whereupon the Percentages of each other Lender shall automatically be adjusted to an amount equal to each such Lender’s ratable share of the remaining Commitment Amount), (b) prepay the affected portion of such Lender’s Loan in full, together with accrued interest thereon through the date of such prepayment (provided that the Borrower shall not prepay any such Lender pursuant to this clause (b) without replacing such Lender pursuant to the following clause (c) until a 30-day period shall have elapsed during which the Borrower and the Agents shall have attempted in good faith to replace such Lender), and/or (c) replace such Lender with another bank reasonably acceptable to the Agents, provided that (i) each such assignment shall be either an assignment of all of the rights and obligations of the assigning Lender under this Agreement or an assignment of a portion of such rights and obligations made concurrently with another such assignment or other such assignments that together cover all of the rights and obligations of the assigning Lender under this Agreement and (ii) no Lender shall be obligated to make any such assignment as a result of a demand by the Borrower pursuant to this Section unless and until such Lender shall have received one or more payments from either the Borrower or one or more Assignee Lenders in an aggregate amount at least equal to the outstanding principal amount of the Loan owing to such Lender, together with accrued interest thereon to the date of payment of such principal amount and all other amounts payable to such Lender under this Agreement. Each Lender represents and warrants to the

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Borrower that, as of the date of this Agreement (or, with respect to any Lender not a party hereto on the date hereof, on the date that such Lender becomes a party hereto), there is no existing treaty, law, regulation, regulatory requirement, interpretation, directive, guideline, decision or request pursuant to which such Lender would be entitled to request any payments under any of Sections 4.3, 4.4, 4.5, 4.6 and 4.7 to or for account of such Lender.

     SECTION 4.9. Payments, Computations, etc. (a) Unless otherwise expressly provided, all payments by the Borrower pursuant to this Agreement or the Notes shall be made by the Borrower to the Administrative Agent for the pro rata account of the Lenders entitled to receive such payment. All such payments required to be made to the Administrative Agent shall be made, without setoff, deduction or counterclaim, not later than 11:00 a.m., New York time, on the date due, in same day or immediately available funds through the New York Clearing House Interbank Payments System (or such other funds as may be customary for the settlement of international banking transactions in Dollars), to such account as the Administrative Agent shall specify from time to time by notice to the Borrower. Funds received after that time shall be deemed to have been received by the Administrative Agent on the next succeeding Business Day. The Administrative Agent shall promptly (but in any event on the same Business Day that the same are received or, as contemplated in the immediately preceding sentence, deemed received) remit in same day funds to each Lender its share, if any, of such payments received by the Administrative Agent for the account of such Lender without any setoff, deduction or counterclaim. All interest and fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such interest or fee is payable over a year comprised of 360 days. Whenever any payment to be made shall otherwise be due on a day which is not a Business Day, such payment shall (except as otherwise required by clause (c) of the definition of the term “Interest Period”) be made on the next succeeding Business Day and such extension of time shall be included in computing interest and fees, if any, in connection with such payment.

     (b) Unless the FEC Counterparty shall have been notified by telephone, confirmed in writing, by FEC, the Administrative Agent or the Borrower by 5:00 p.m., London time, on the day prior to the date an amount is to be paid to the FEC Counterparty under the Loan Documents that FEC, the Administrative Agent or the Borrower will not make available the amount required to be paid to the FEC Counterparty on the date specified therefor, the FEC Counterparty may assume that such Person has made such amount available to the FEC Counterparty and, in reliance upon such assumption, make available to the Administrative Agent or FEC, as the case may be, a corresponding amount. If and to the extent that such Person shall not have made such amount available to the FEC Counterparty, such Person and the recipient of such amount severally agree to pay to the FEC Counterparty forthwith on demand such corresponding amount together with an amount sufficient to indemnify the FEC Counterparty against any cost or loss it may have suffered or incurred by reason of its having paid out such amount prior to its receipt thereof and by reason of such amount and costs or losses not being paid to the FEC Counterparty forthwith upon demand.

     (c) On receipt of any payment from FEC under or in connection with the FEC Interest Equalization Documents in respect of interest, the FEC Counterparty shall, subject to Section 4.9(b), be obliged to pay such amount to the Administrative Agent for the sole purpose of enabling the Borrower to satisfy its payment obligations under this Agreement, including, for

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the avoidance of doubt, under Section 3.2.5. The FEC Counterparty shall make such amount available to the Administrative Agent (for the account of the Lenders) for same day value by transfer to such account as the Administrative Agent may from time to time notify the FEC Counterparty. On receipt of such amount from the FEC Counterparty, the Administrative Agent shall pay to the Lenders the portion of such amount which is to be paid to the Lenders.

     (d) If the FEC Counterparty notifies the Administrative Agent that the FEC Counterparty is obliged to make a cash payment to FEC under the FEC Interest Equalization Documents (the “FEC Payment Amount”) by virtue of the FEC CIRR Rate and any other amount (including, without limitation, amounts paid in respect of withholding taxes) payable by the FEC Counterparty exceeding the sum of the LIBO Rate and the IEA Margin payable by FEC under the FEC Interest Equalization Documents, the Borrower and the Lenders hereby irrevocably direct the Administrative Agent, on receipt of the corresponding interest payment from the Borrower pursuant to Section 3.2 and subject to Section 4.9(b), to make available to the FEC Counterparty for same day value by transfer to such account as the FEC Counterparty may from time to time notify to the Administrative Agent, an amount equal to the FEC Payment Amount due to FEC under or in connection with the FEC Interest Equalization Documents.

     (e) The FEC Counterparty shall make all payments to the Administrative Agent (for the account of the Lenders) or FEC under this Agreement free and clear of any deduction or withholding except for any that may be required by law. The FEC Counterparty shall have no obligation to increase any payment made by it under this Agreement in the event of any withholding or deduction being required by law to be made by it in respect of such payments.

     SECTION 4.10. Sharing of Payments. If any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of setoff or otherwise) on account of any Loan (other than pursuant to the terms of Sections 4.3, 4.4, 4.5, 4.6 and 4.7) in excess of its pro rata share of payments then or therewith obtained by all Lenders, such Lender shall purchase from the other Lenders such participations in Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and each Lender which has sold a participation to the purchasing Lender shall repay to the purchasing Lender the purchase price to the ratable extent of such recovery together with an amount equal to such selling Lender’s ratable share (according to the proportion of (a) the amount of such selling Lender’s required repayment to the purchasing Lender to (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section may, to the fullest extent permitted by law, exercise all its rights of payment (including pursuant to Section 4.9) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section to share in the benefits of any recovery on such secured claim.

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     SECTION 4.11. Setoff. Upon the occurrence and during continuance of an Event of Default or Prepayment Event, each Lender shall have, to the extent permitted by applicable law, the right to appropriate and apply to the payment of the Obligations owing to it any and all balances, credits, deposits, accounts or moneys of the Borrower then or thereafter maintained with such Lender; provided that any such appropriation and application shall be subject to the provisions of Section 4.10. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff under applicable law or otherwise) which such Lender may have.

     SECTION 4.12. Use of Proceeds. The Borrower shall apply the proceeds of each Borrowing in accordance with the third recital; without limiting the foregoing, no proceeds of any Loan will be used to acquire any equity security of a class which is registered pursuant to Section 12 of the Securities Exchange Act of 1934 or any “margin stock”, as defined in F.R.S. Board Regulation U.

ARTICLE V

CONDITIONS TO BORROWING

     SECTION 5.1. Effectiveness. The obligations of the Lenders to fund the initial Borrowing shall be effective on and as of the first date (the “Effective Date”) on which each of the conditions precedent set forth in this Section 5.1 shall have been satisfied.

          SECTION 5.1.1. Resolutions, etc. The Administrative Agent shall have received from the Borrower:

     (a) a certificate, dated the Effective Date, of its Secretary or Assistant Secretary as to the incumbency and signatures of those of its officers authorized to act with respect to this Agreement and each other Loan Document to which it is a party and as to the truth and completeness of the attached:

     (x) resolutions of its Board of Directors then in full force and effect authorizing the execution, delivery and performance of this Agreement and each other Loan Document to which it is a party, and

     (y) Organic Documents of the Borrower,

and upon which certificate each Lender may conclusively rely until it shall have received a further certificate of the Secretary of the Borrower canceling or amending such prior certificate; and

     (b) a Certificate of Good Standing issued by the relevant Liberian authorities in respect of the Borrower.

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          SECTION 5.1.2. Delivery of Notes. The Administrative Agent shall have received, for the account of the respective Lenders, the Notes duly executed and delivered by the Borrower.

          SECTION 5.1.3. Ownership, etc. of Vessels. The Administrative Agent shall have received the following with respect to each Vessel (other than the Purchased Vessel):

     (a) evidence as to the ownership of such Vessel by the Borrower or a Principal Subsidiary;

     (b) disclosure of all recorded Liens on such Vessel;

     (c) evidence of the class of such Vessel; and

     (d) evidence as to all required insurance being in effect with respect to such Vessel.

          SECTION 5.1.4. Opinions of Counsel. The Administrative Agent shall have received opinions, dated the Effective Date and addressed to the Agents and each Lender, from:

     (a) Bradley Stein, Esq., counsel to the Borrower, substantially in the form of Exhibit C hereto;

     (b) Watson, Farley & Williams (New York) LLP, counsel to the Borrower, as to Liberian Law and New York Law, substantially in the form of Exhibit D hereto;

     (c) Hannes Snellman, counsel to the Administrative Agent and the FEC Counterparty, as to Finnish Law, substantially in the form of Exhibit F hereto; and

     (d) Shearman & Sterling LLP, counsel to the Administrative Agent, substantially in the form of Exhibit G hereto.

          SECTION 5.1.5. Closing Fees, Expenses, etc. The Administrative Agent shall have received for its own account, or for the account of each Lender, as the case may be, all fees that the Borrower shall have agreed in writing to pay to the Administrative Agent (whether for its own account or for account of any of the Lenders) and all invoiced expenses of the Administrative Agent (including the agreed fees and expenses of counsel to the Administrative Agent) on or prior to the Effective Date.

          SECTION 5.1.6. FEC Matters. The FEC Counterparty shall have confirmed that all conditions precedent under the relevant FEC Interest Equalization Documents have been satisfied or waived to its satisfaction and that the relevant FEC Interest Equalization will apply to the Loans on terms satisfactory to the FEC Counterparty.

     SECTION 5.2. The Loans. The obligation of each Lender to fund any Loan on the Closing Date shall be subject to the satisfaction of each of the conditions precedent set forth in this Section 5.2.

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          SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both before and after giving effect to such Borrowing the following statements shall be true and correct:

     (a) the representations and warranties set forth in Article VI (excluding, however, those contained in Sections 6.10 and 6.13) shall be true and correct with the same effect as if then made; and

     (b) no Default and no Prepayment Event and no event which (with notice or lapse of time or both) would become a Prepayment Event shall have then occurred and be continuing.

          SECTION 5.2.2. Borrowing Request. The Administrative Agent shall have received a Borrowing Request for such Borrowing. Each of the delivery of a Borrowing Request and the acceptance by the Borrower of the proceeds of such Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Borrowing (both immediately before and after giving effect to such Borrowing and the application of the proceeds thereof) the statements made in Section 5.2.1 are true and correct.

     SECTION 5.3. The Borrowing. For purposes of determining compliance with the conditions specified in Section 5.1, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Administrative Agent responsible for the transactions contemplated by this Agreement shall have received notice from such Lender prior to the date that the Borrower, by notice to the Lenders, designates as the proposed Effective Date, specifying its objection thereto. The Administrative Agent shall promptly notify the Lenders of the occurrence of the Effective Date.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

     To induce the Lenders and the Administrative Agent to enter into this Agreement and to make Loans hereunder, the Borrower represents and warrants to the Administrative Agent and each Lender as set forth in this Article VI as of the Effective Date and, except with respect to the representations and warranties in Section 6.10 and 6.13, as of the date of the Borrowing.

     SECTION 6.1. Organization, etc. The Borrower and each of the Principal Subsidiaries is a corporation validly organized and existing and in good standing under the laws of its jurisdiction of incorporation; the Borrower is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the nature of its business requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect; and the Borrower has full power and authority, has taken all corporate action and holds all governmental and creditors’ licenses, permits, consents and other approvals necessary to enter into each Loan Document to which it is a party and to perform the Obligations.

     SECTION 6.2. Due Authorization, Non-Contravention, etc. The execution, delivery and performance by the Borrower of this Agreement and each other Loan Document to which it is a

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party, are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action, and do not:

     (a) contravene the Borrower’s Organic Documents;

     (b) contravene any law or governmental regulation of any Applicable Jurisdiction except as would not reasonably be expected to result in a Material Adverse Effect;

     (c) contravene any court decree or order binding on the Borrower or any of its property except as would not reasonably be expected to result in a Material Adverse Effect;

     (d) contravene any contractual restriction binding on the Borrower or any of its property except as would not reasonably be expected to result in a Material Adverse Effect; or

     (e) result in, or require the creation or imposition of, any Lien on any of the Borrower’s properties except as would not reasonably be expected to result in a Material Adverse Effect.

     SECTION 6.3. Government Approval, Regulation, etc. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person is required for the due execution, delivery or performance by the Borrower of this Agreement or any other Loan Document to which it is a party (except for authorizations or approvals not required to be obtained on or prior to the Effective Date that have been obtained or actions not required to be taken on or prior to the Effective Date that have been taken). Each of the Borrower and each Principal Subsidiary holds all governmental licenses, permits and other approvals required to conduct its business as conducted by it on the Effective Date, except to the extent the failure to hold any such licenses, permits or other approvals would not have a Material Adverse Effect.

     SECTION 6.4. Compliance with Environmental Laws. The Borrower and each Principal Subsidiary is in compliance with all applicable Environmental Laws, except to the extent that the failure to so comply would not have a Material Adverse Effect.

     SECTION 6.5. Validity, etc. This Agreement constitutes, and the Notes will, on the due execution and delivery thereof, constitute, the legal, valid and binding obligations of the Borrower enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles.

     SECTION 6.6. Financial Information. The consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2005, and the related consolidated statements of operations and cash flows of the Borrower and its Subsidiaries, copies of which have been furnished to the Administrative Agent and each Lender, have been prepared in accordance with GAAP, and present fairly in all material respects the consolidated financial condition of the Borrower and its Subsidiaries as at December 31, 2005 and the results of their operations for the

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Fiscal Year then ended. Since December 31, 2005 there has been no material adverse change in the business, operations or financial condition of the Borrower and its Subsidiaries taken as a whole.

     SECTION 6.7. Intentionally Omitted.

     SECTION 6.8. No Default, Event of Default or Prepayment Event. No Default, Event of Default or Prepayment Event has occurred and is continuing.

     SECTION 6.9. Litigation. There is no action, suit, litigation, investigation or proceeding pending or, to the knowledge of the Borrower, threatened against the Borrower or any Principal Subsidiary, that (i) except as set forth in filings made by the Borrower with the Securities and Exchange Commission in the Borrower’s reasonable opinion might reasonably be expected to materially adversely affect the business, operations or financial condition of the Borrower and its Subsidiaries (taken as a whole) (collectively, “Material Litigation”) or (ii) purports to affect the legality, validity or enforceability of the Loan Documents or the consummation of the transactions contemplated hereby.

SECTION 6.10. Vessels. Each Vessel is

     (a) legally and beneficially owned by the Borrower or a Principal Subsidiary,

     (b) registered in the name of the Borrower or such Principal Subsidiary under the flag identified in Item 6.10(b) of the Disclosure Schedule,

     (c) classed as required by Section 7.1.4(b),

     (d) free of all recorded Liens, other than Liens permitted by Section 7.2.3,

     (e) insured against loss or damage in compliance with Section 7.1.5, and

     (f) except for Island Star, chartered exclusively to or operated exclusively by the Borrower or one of the Borrower’s wholly-owned Subsidiaries, except as otherwise permitted pursuant to Section 7.1.4.

     SECTION 6.11. Subsidiaries. The Borrower has no Subsidiaries on the Effective Date, except those Subsidiaries which are identified in Item 6.11 of the Disclosure Schedule. All Existing Principal Subsidiaries are designated with an asterisk in Item 6.11 of the Disclosure Schedule. All Existing Principal Subsidiaries are direct or indirect wholly-owned Subsidiaries of the Borrower, except to the extent any such Existing Principal Subsidiary or an interest therein has been sold in accordance with clause (b) of Section 7.2.7 or such Existing Principal Subsidiary no longer owns a Vessel.

     SECTION 6.12. Obligations rank pari passu. The Obligations rank at least pari passu in right of payment and in all other respects with all other unsecured unsubordinated Indebtedness of the Borrower.

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     SECTION 6.13. Withholding, etc. As of the Effective Date, no payment to be made by the Borrower under any Loan Document to which it is a party is subject to any withholding or like tax imposed by any Applicable Jurisdiction.

     SECTION 6.14. No Filing, etc. Required. No filing, recording or registration and no payment of any stamp, registration or similar tax is necessary under the laws of any Applicable Jurisdiction to ensure the legality, validity, enforceability, priority or admissibility in evidence of this Agreement or the Notes (except for filings, recordings, registrations or payments not required to be made on or prior to the Effective Date that have been made).

     SECTION 6.15. No Immunity. The Borrower is subject to civil and commercial law with respect to the Obligations. Neither the Borrower nor any of its properties or revenues is entitled to any right of immunity in any Applicable Jurisdiction from suit, court jurisdiction, judgment, attachment (whether before or after judgment), set-off or execution of a judgment or from any other legal process or remedy relating to the Obligations (to the extent such suit, court jurisdiction, judgment, attachment, set-off, execution, legal process or remedy would otherwise be permitted or exist).

     SECTION 6.16. Pension Plans. To the extent that, at any time after the Effective Date, there are any Pension Plans, no steps will have been taken to terminate any Pension Plan, and no contribution failure will have occurred with respect to any Pension Plan, in each case which could (a) give rise to a Lien under section 302(f) of ERISA and (b) result in the incurrence by the Borrower or any member of the Controlled Group of any material liability, fine or penalty.

     SECTION 6.17. Investment Company Act. The Borrower is not an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.

     SECTION 6.18. Regulation U. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock, and no proceeds of any Loans will be used for a purpose which violates, or would be inconsistent with, F.R.S. Board Regulation U. Terms for which meanings are provided in F.R.S. Board Regulation U or any regulations substituted therefor, as from time to time in effect, are used in this Section with such meanings.

     SECTION 6.19. Accuracy of Information. The financial and other information (other than financial projections or other forward looking information) furnished to the Administrative Agent and the Lenders in writing by or on behalf of the Borrower by its chief financial officer, treasurer or corporate controller in connection with the negotiation of this Agreement is, when taken as a whole, to the best knowledge and belief of the Borrower, true and correct and contains no misstatement of a fact of a material nature. All financial projections, if any, that have been furnished to the Administrative Agent and the Lenders in writing by or on behalf of the Borrower by its chief financial officer, treasurer or corporate controller in connection with this Agreement have been or will be prepared in good faith based upon assumptions believed by the Borrower to be reasonable at the time made (it being understood that such projections are subject to significant uncertainties and contingencies, many of which are beyond the Borrower’s control, and that no assurance can be given that the projections will be realized). All financial and other

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information furnished to the Administrative Agent and the Lenders in writing by or on behalf of the Borrower by its chief financial officer, treasurer or corporate controller after the date of this Agreement shall have been prepared by the Borrower in good faith.

ARTICLE VII

COVENANTS

     SECTION 7.1. Affirmative Covenants. The Borrower agrees with the Administrative Agent and each Lender that, until all Commitments have terminated and all Obligations have been paid in full, the Borrower will perform the obligations set forth in this Section 7.1.

          SECTION 7.1.1. Financial Information, Reports, Notices, etc. The Borrower will furnish, or will cause to be furnished, to the Administrative Agent (with sufficient copies for distribution to each Lender, the FEC Counterparty and FEC, as the case may be) the following financial statements, reports, notices and information:

     (a) as soon as available and in any event within 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of the Borrower, a copy of the Borrower’s report on Form 10-Q (or any successor form) as filed by the Borrower with the Securities and Exchange Commission for such Fiscal Quarter, containing unaudited consolidated financial statements of the Borrower for such Fiscal Quarter (including a balance sheet and profit and loss statement) prepared in accordance with GAAP, subject to normal year-end audit adjustments;

     (b) as soon as available and in any event within 120 days after the end of each Fiscal Year of the Borrower, a copy of the Borrower’s annual report on Form 10-K (or any successor form) as filed by the Borrower with the Securities and Exchange Commission for such Fiscal Year, containing audited consolidated financial statements of the Borrower for such Fiscal Year prepared in accordance with GAAP (including a balance sheet and profit and loss statement) and audited by PricewaterhouseCoopers LLC or another firm of independent public accountants of similar standing;

     (c) together with each of the statements delivered pursuant to the foregoing clause (a) or (b), a certificate, executed by the chief financial officer, the treasurer or the corporate controller of the Borrower, showing, as of the last day of the relevant Fiscal Quarter or Fiscal Year compliance with the covenants set forth in Section 7.2.4 (in reasonable detail and with appropriate calculations and computations in all respects reasonably satisfactory to the Administrative Agent);

     (d) as soon as possible after the occurrence of a Default or Prepayment Event, a statement of the chief financial officer of the Borrower setting forth details of such Default or Prepayment Event (as the case may be) and the action which the Borrower has taken and proposes to take with respect thereto;

     (e) as soon as the Borrower becomes aware thereof, notice of any Material Litigation except to the extent that such Material Litigation is disclosed by the Borrower in filings with the SEC;

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     (f) as soon as the Borrower becomes aware thereof, notice of any event which, in its reasonable opinion, would be expected to materially adversely affect the business, operations or financial condition of the Borrower and its Subsidiaries taken as a whole;

     (g) promptly after the sending or filing thereof, copies of all reports which the Borrower sends to all holders of each security issued by the Borrower, and all registration statements which the Borrower or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange;

     (h) within seven days after the delivery of the Purchased Vessel, (i) evidence as to the ownership of such Vessel by the Borrower or a Principal Subsidiary, (ii) disclosure of all recorded Liens on such Vessel, (iii) evidence of the class of such Vessel; and (iv) evidence as to all required insurance being in effect with respect to such Vessel; and

     (i) such other information respecting (x) the condition or operations, financial or otherwise, of the Borrower or any of its Subsidiaries or (y) the transactions and documents related to the Purchased Vessel or the delivery of the Purchased Vessel, as any Lender, FEC (through the FEC Counterparty) or the FEC Counterparty through the Administrative Agent may from time to time reasonably request.

          SECTION 7.1.2. Approvals and Other Consents. The Borrower will obtain (or cause to be obtained) all such governmental licenses, authorizations, consents, permits and approvals as may be required for (a) the Borrower to perform its obligations under this Agreement and the other Loan Documents to which it is a party and (b) except to the extent that failure to obtain (or cause to be obtained) such governmental licenses, authorizations, consents, permits and approvals would not be expected to have a Material Adverse Effect, the operation of each Vessel in compliance with all applicable laws.

          SECTION 7.1.3. Compliance with Laws, etc. The Borrower will, and will cause each of its Subsidiaries to, comply in all material respects with all applicable laws, rules, regulations and orders, except (other than as described in clause (a) below) to the extent that the failure to so comply would not have a Material Adverse Effect, which compliance shall in any case include (but not be limited to):

     (a) in the case of each of the Borrower and the Principal Subsidiaries, the maintenance and preservation of its corporate existence (subject to the provisions of Section 7.2.6);

     (b) in the case of the Borrower, maintenance of its qualification as a foreign corporation in the State of Florida;

     (c) the payment, before the same become delinquent, of all taxes, assessments and governmental charges imposed upon it or upon its property, except to the extent being diligently contested in good faith by appropriate proceedings; and

     (d) compliance with all applicable Environmental Laws.

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          SECTION 7.1.4. Vessels. The Borrower will (or will cause the applicable Principal Subsidiary to):

     (a) cause each Vessel, except for Island Star, to be chartered exclusively to or operated exclusively by the Borrower or one of the Borrower’s wholly-owned Subsidiaries, provided that the Borrower or such Subsidiary may charter out (i) any Vessels representing not more than 25% of the berths of all Vessels to entities other than the Borrower and the Borrower’s wholly-owned Subsidiaries and (ii) any Vessel for a time charter not to exceed one year in duration; and

     (b) cause each Vessel to be kept in such condition as will entitle her to classification by a classification society of recognized standing.

          SECTION 7.1.5. Insurance. The Borrower will, or will cause one or more of its Subsidiaries to, maintain or cause to be maintained with responsible insurance companies insurance with respect to all of the material properties and operations of the Borrower and each Principal Subsidiary against such casualties, third-party liabilities and contingencies and in such amounts as is customary for other businesses of similar size in the passenger cruise line industry (provided that in no event will the Borrower or any Subsidiary be required to obtain any business interruption, loss of hire or delay in delivery insurance) and will, upon request of the Administrative Agent, furnish to the Administrative Agent (with sufficient copies for distribution to each Lender) at reasonable intervals a certificate of a senior officer of the Borrower setting forth the nature and extent of all insurance maintained by the Borrower and the Subsidiaries and certifying as to compliance with this Section.

          SECTION 7.1.6. Books and Records. The Borrower will, and will cause each of its Principal Subsidiaries to, keep books and records that accurately reflect all of its business affairs and transactions and permit the Administrative Agent and each Lender or any of their respective representatives, at reasonable times and intervals, to visit each of its offices, to discuss its financial matters with its officers and to examine any of its books or other corporate records.

     SECTION 7.2. Negative Covenants. The Borrower agrees with the Administrative Agent and each Lender that, until all Commitments have terminated and all Obligations have been paid and performed in full, the Borrower will perform the obligations set forth in this Section 7.2.

          SECTION 7.2.1. Business Activities. The Borrower will not, and will not permit any of its Subsidiaries to, engage in any business activity other than those engaged in by the Borrower and its Subsidiaries on the date hereof and other business activities reasonably related thereto.

          SECTION 7.2.2. Indebtedness. The Borrower will not permit any of the Existing Principal Subsidiaries to create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness, other than, without duplication, the following:

     (a) Indebtedness secured by Liens of the type described in Section 7.2.3;

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     (b) Indebtedness owing to the Borrower or a wholly owned direct or indirect Subsidiary of the Borrower;

     (c) Indebtedness incurred to finance, refinance or refund the cost (including the cost of construction) of assets acquired after the Closing Date; and

     (d) Indebtedness in an aggregate principal amount not to exceed the amount specified therefor in Section 7.2.3(c) at any time outstanding.

          SECTION 7.2.3. Liens. The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of its property, revenues or assets, whether now owned or hereafter acquired, except:

     (a) Liens on the vessels CENTURY, GALAXY, SUMMIT and BRILLIANCE OF THE SEAS existing as of the Effective Date and securing the Existing Debt (and any Lien on CENTURY, GALAXY, SUMMIT or BRILLIANCE OF THE SEAS securing any refinancing of the Existing Debt, so long as such Vessel was subject to a Lien securing the Indebtedness being refinanced immediately prior to such refinancing);

     (b) Liens on assets (including, without limitation, shares of capital stock of corporations and assets owned by any corporation that becomes a Subsidiary of the Borrower after the Effective Date) acquired after the Effective Date (whether by purchase, construction or otherwise) by the Borrower or any of its Subsidiaries (other than (x) an Existing Principal Subsidiary or (y) any other Principal Subsidiary which, at any time, after three months after the acquisition of a Vessel, owns a Vessel free of any mortgage Lien), which Liens were created solely for the purpose of securing Indebtedness representing, or incurred to finance, refinance or refund, the cost (including the cost of construction) of such assets, so long as (i) the acquisition of such assets is not otherwise prohibited by the terms of this Agreement and (ii) each such Lien is created within three months after the acquisition of the relevant assets;

     (c) in addition to other Liens permitted under this Section 7.2.3, Liens securing Indebtedness in an aggregate principal amount, together with (but without duplication of) Indebtedness permitted under Section 7.2.2(d), at any one time outstanding not exceeding the greater of (determined at the time of creation of such Lien or the incurrence by any Existing Principal Subsidiary of such indebtedness, as applicable) (x) 3.5% of the total assets of the Borrower and its Subsidiaries taken as a whole as determined in accordance with GAAP as at the last day of the most recent ended Fiscal Quarter or (y) $225,000,000, provided that, with respect to each such item of Indebtedness, the fair market value of the assets subject to Liens securing such Indebtedness (determined at the time of the creation of such Lien) shall not exceed two times the aggregate principal amount of such Indebtedness (and for purposes of this clause (c), the fair market value of any assets shall be determined by (i) in the case of any Vessel, by an Approved Appraiser selected by the Borrower and (ii) in the case of any other assets, by an officer of the Borrower or by the board of directors of the Borrower);

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     (d) Liens on assets acquired after the Effective Date by the Borrower or any of its Subsidiaries (other than by (x) any Subsidiary that is an Existing Principal Subsidiary or (y) any other Principal Subsidiary which, at any time, owns a Vessel free of any mortgage Lien) so long as (i) the acquisition of such assets is not otherwise prohibited by the terms of this Agreement and (ii) each of such Liens existed on such assets before the time of its acquisition and was not created by the Borrower or any of its Subsidiaries in anticipation thereof;

     (e) Liens on any asset of any corporation that becomes a Subsidiary of the Borrower (other than a corporation that also becomes a Subsidiary of an Existing Principal Subsidiary) after the Effective Date so long as (i) the acquisition or creation of such corporation by the Borrower is not otherwise prohibited by the terms of this Agreement and (ii) such Liens are in existence at the time such corporation becomes a Subsidiary of the Borrower and were not created by the Borrower or any of its Subsidiaries in anticipation thereof;

     (f) Liens securing Government-related Obligations;

     (g) Liens for taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable without penalty or being diligently contested in good faith by appropriate proceedings;

     (h) Liens of carriers, warehousemen, mechanics, materialmen and landlords incurred in the ordinary course of business for sums not overdue or being diligently contested in good faith by appropriate proceedings;

     (i) Liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance or other forms of governmental insurance or benefits;

     (j) Liens for current crew’s wages and salvage;

     (k) Liens arising by operation of law as the result of the furnishing of necessaries for any Vessel so long as the same are discharged in the ordinary course of business or are being diligently contested in good faith by appropriate proceedings; and

     (l) Liens on Vessels that:

     (i) secure obligations covered (or reasonably expected to be covered) by insurance;

     (ii) were incurred in the course of or incidental to trading such Vessel in connection with repairs or other work to such Vessel; or

     (iii) were incurred in connection with work to such Vessel that is required to be performed pursuant to applicable law, rule, regulation or order;

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provided that, in each case described in this clause (l), such Liens are either (x) discharged in the ordinary course of business or (y) being diligently contested in good faith by appropriate proceedings.

          SECTION 7.2.4. Financial Condition. The Borrower will not permit:

     (a) Net Debt to Capitalization Ratio, as at the end of any Fiscal Quarter, to be greater than 0.625 to 1.

     (b) Fixed Charge Coverage Ratio to be less than 1.25 to 1 as at the last day of any Fiscal Quarter.

     (c) Stockholders’ Equity to be less than, as at the last day of any Fiscal Quarter, the sum of (i) $4,150,000,000 plus (ii) 50% of the consolidated net income of the Borrower and its Subsidiaries for the period commencing on January 1, 2006 and ending on the last day of the Fiscal Quarter most recently ended (treated for these purposes as a single accounting period, but in any event excluding any Fiscal Quarters for which the Borrower and its Subsidiaries have a consolidated net loss).

          SECTION 7.2.5. Investments. The Borrower will not permit any of the Principal Subsidiaries to make, incur, assume or suffer to exist any Investment in any other Person other than

     (a) the Borrower or any direct or indirect wholly owned Subsidiary of the Borrower; and

     (b) other Investments by the Principal Subsidiaries in an aggregate amount not to exceed $25,000,000 at any time outstanding.

          SECTION 7.2.6. Consolidation, Merger, etc. The Borrower will not, and will not permit any of its Subsidiaries to, liquidate or dissolve, consolidate with, or merge into or with, any other corporation, or purchase or otherwise acquire all or substantially all of the assets of any Person except:

     (a) any such Subsidiary may liquidate or dissolve voluntarily into, and may merge with and into, the Borrower or any other Subsidiary, and the assets or stock of any Subsidiary may be purchased or otherwise acquired by the Borrower or any other Subsidiary; and

     (b) so long as no Default has occurred and is continuing or would occur after giving effect thereto, the Borrower or any of its Subsidiaries may merge into any other Person, or any other Person may merge into the Borrower or any such Subsidiary, or the Borrower or any of its Subsidiaries may purchase or otherwise acquire all or substantially all of the assets of any Person, in each case so long as:

     (i) after giving effect thereto, the Stockholders’ Equity of the Borrower and its Subsidiaries is at least equal to 90% of such Stockholders’ Equity immediately prior thereto; and

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     (ii) in the case of a merger involving the Borrower where the Borrower is not the surviving corporation, the surviving corporation shall have assumed in a writing, delivered to the Administrative Agent, all of the Borrower’s obligations hereunder and under the other Loan Documents to which it is a party , provided, that so long as the FEC Interest Equalization is in effect, any merger under this clause (ii) is subject to the consent of FEC (it being agreed that failure to obtain the consent of FEC shall not constitute an Event of Default under Section 8.1.3 but may give FEC grounds to terminate the FEC Interest Equalization).

          SECTION 7.2.7. Asset Dispositions, etc. The Borrower will not, and will not permit any of its Subsidiaries to, sell, transfer, contribute or otherwise convey, or grant options, warrants or other rights with respect to, any material asset (including accounts receivable and capital stock of Principal Subsidiaries) to any Person, except:

     (a) sales of assets (including, without limitation, Vessels) so long as:

     (i) the aggregate net book value of all such assets sold during each 12-month period commencing on the Effective Date, and each anniversary of the Effective Date, does not exceed an amount equal to the greater of (x) 7.5% of Stockholders’ Equity as at the end of the last Fiscal Quarter, and (y) $250,000,000, provided however, that in no event shall the aggregate net book value of fixed assets disposed over the life of the Agreement (determined as of the date of any such sale) exceed 25% of Stockholders’ Equity as at the end of the most recently completed fiscal quarter; and

     (ii) to the extent any asset has a fair market value in excess of $25,000,000 the Borrower or Subsidiary selling such asset receives consideration therefor at least equal to the fair market value thereof (as determined in good faith by (x) in the case of any Vessel, the board of directors of the Borrower and (y) in the case of any other asset, an officer of the Borrower or its board of directors);

     (b) sales of capital stock of any Principal Subsidiary of the Borrower so long as a sale of all of the assets of such Subsidiary would be permitted under the foregoing clause (a);

     (c) sales of capital stock of any Subsidiary other than a Principal Subsidiary;

     (d) sales of other assets in the ordinary course of business; and

     (e) sales of assets between or among the Borrower and Subsidiaries of the Borrower.

provided, that at all times while the FEC Interest Equalization is in effect, the Borrower or a wholly-owned Subsidiary of the Borrower shall maintain ownership of the Purchased Vessel unless FEC otherwise consents.

          SECTION 7.2.8. Transactions with Affiliates. The Borrower will not, and will not permit any of the Principal Subsidiaries to, enter into, or cause, suffer or permit to exist any

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arrangement or contract with any of its Affiliates (other than arrangements or contracts among the Borrower and its wholly-owned Subsidiaries) unless such arrangement or contract is on an arms’-length basis, provided that, to the extent that the aggregate fair value of the goods furnished or to be furnished or the services performed or to be performed under all such contracts or arrangements in any one Fiscal Year does not exceed $25,000,000, such contracts or arrangements shall not be subject to this Section 7.2.8.

ARTICLE VIII

EVENTS OF DEFAULT

     SECTION 8.1. Listing of Events of Default. Each of the following events or occurrences described in this Section 8.1 shall constitute an “Event of Default”.

          SECTION 8.1.1. Non-Payment of Obligations. The Borrower shall default in the payment when due of any principal of or interest on any Loan, any Commitment Fee or the agency fee or FEC Counterparty fee provided for in Section 10.8, provided that, in the case of any default in the payment of any interest on any Loan or of any Commitment Fee, such default shall continue unremedied for a period of at least two Business Days after notice thereof shall have been given to the Borrower by any Lender; and provided further that, in the case of any default in the payment of such agency fee or FEC Counterparty fee, such default shall continue unremedied for a period of at least ten days after notice thereof shall have been given to the Borrower by the Administrative Agent or the FEC Counterparty, as applicable.

          SECTION 8.1.2. Breach of Warranty. Any representation or warranty of the Borrower made or deemed to be made hereunder (including any certificates delivered pursuant to Article V) is or shall be incorrect when made in any material respect.

          SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations. The Borrower shall default in the due performance and observance of any other agreement contained herein or in any other Loan Document to which it is a party (other than the covenants set forth in Section 7.2.4) and such default shall continue unremedied for a period of five days after notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender (or, if (a) such default is capable of being remedied within 30 days (commencing on the first day following such five-day period) and (b) the Borrower is actively seeking to remedy the same during such period, such default shall continue unremedied for at least 35 days after such notice to the Borrower).

          SECTION 8.1.4. Default on Other Indebtedness. The Borrower or any of its Principal Subsidiaries shall fail to pay any Indebtedness that is outstanding in a principal amount of at least $50,000,000 (or the equivalent in other currencies) in the aggregate (but excluding Indebtedness hereunder) when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument evidencing, securing or relating to any such Indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if

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the effect of such event or condition is to cause or permit the holder or holders of such Indebtedness to cause such Indebtedness to become due and payable prior to its scheduled maturity; or any such Indebtedness shall be declared to be due and payable or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption or by voluntary agreement), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness is required to be made, in each case prior to the scheduled maturity thereof. For purposes of determining Indebtedness for any Hedging Instrument, the principal amount of the obligations under any such instrument at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or any Principal Subsidiary would be required to pay if such instrument were terminated at such time.

          SECTION 8.1.5. Pension Plans. Any of the following events shall occur with respect to any Pension Plan:

     (a) the institution of any steps by the Borrower, any member of its Controlled Group or any other Person to terminate a Pension Plan if, as a result of such termination, the Borrower or any such member could be required to make a contribution to such Pension Plan, or could reasonably expect to incur a liability or obligation to such Pension Plan, in excess of $50,000,000; or

     (b) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA

and, in each case, such event shall continue unremedied for a period of five Business Days after notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender (or, if (a) such default is capable of being remedied within 15 days (commencing on the first day of such five-Business-Day period) and (b) the Borrower is actively seeking to remedy the same during such period, such default shall continue unremedied for at least 15 days).

          SECTION 8.1.6. Bankruptcy, Insolvency, etc. The Borrower or any of the Principal Subsidiaries (or any of its other Subsidiaries to the extent that the relevant event described below would have a Material Adverse Effect) shall:

     (a) generally fail to pay, or admit in writing its inability to pay, its debts as they become due;

     (b) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for it or any of its property, or make a general assignment for the benefit of creditors;

     (c) in the absence of such application, consent or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for it or for a substantial part of its property, and such trustee, receiver, sequestrator or other custodian shall not be discharged within 30 days, provided that the Borrower hereby expressly authorizes the Administrative Agent and each Lender to appear in any court conducting any relevant proceeding during such 30-day period to preserve, protect and defend their respective rights under the Loan Documents;

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     (d) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Borrower or any of such Subsidiaries, and, if any such case or proceeding is not commenced by the Borrower or such Subsidiary, such case or proceeding shall be consented to or acquiesced in by the Borrower or such Subsidiary or shall result in the entry of an order for relief or shall remain for 30 days undismissed, provided that the Borrower hereby expressly authorizes the Administrative Agent and each Lender to appear in any court conducting any such case or proceeding during such 30-day period to preserve, protect and defend their respective rights under the Loan Documents; or

     (e) take any corporate action authorizing, or in furtherance of, any of the foregoing.

          SECTION 8.1.7. Ownership of Principal Subsidiaries. Except as a result of a disposition permitted pursuant to clauses (a) or (b) of Section 7.2.7, the Borrower shall cease to own beneficially and of record all of the capital stock of each Existing Principal Subsidiary.

     SECTION 8.2. Action if Bankruptcy. If any Event of Default described in clauses (b) through (d) of Section 8.1.6 shall occur with respect to the Borrower, the Commitments (if not theretofore terminated) shall automatically terminate and the outstanding principal amount of all outstanding Loans and all other Obligations shall automatically be and become immediately due and payable, without notice or demand.

     SECTION 8.3. Action if Other Event of Default. If any Event of Default (other than any Event of Default described in clauses (b) through (d) of Section 8.1.6 with respect to the Borrower) shall occur for any reason, whether voluntary or involuntary, and be continuing, the Administrative Agent, upon the direction of the Required Lenders, shall by notice to the Borrower declare all of the outstanding principal amount of the Loans and other Obligations to be due and payable and/or the Commitments (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of such Loans and other Obligations shall be and become immediately due and payable, without further notice, demand or presentment, and/or, as the case may be, the Commitments shall terminate.

ARTICLE IX

PREPAYMENT EVENTS

     SECTION 9.1. Listing of Prepayment Events. Each of the following events or occurrences described in this Section 9.1 shall constitute a “Prepayment Event”.

          SECTION 9.1.1. Change in Ownership. Any Person other than a member of the Existing Group (a “New Shareholder”) shall acquire (whether through legal or beneficial ownership of capital stock, by contract or otherwise), directly or indirectly, effective control over more than 30% of the Voting Stock and:

     (a) the members of the Existing Group have (whether through legal or beneficial ownership of capital stock, by contract or otherwise) in the aggregate, directly

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or indirectly, effective control over fewer shares of Voting Stock than does such New Shareholder; and

     (b) the members of the Existing Group do not collectively have (whether through legal or beneficial ownership of capital stock, by contract or otherwise) the right to elect, or to designate for election, at least a majority of the Board of Directors of the Borrower.

          SECTION 9.1.2. Change in Board. During any period of 24 consecutive months, a majority of the Board of Directors of the Borrower shall no longer be composed of individuals:

     (a) who were members of said Board on the first day of such period; or

     (b) whose election or nomination to said Board was approved by a vote of at least two-thirds of the members of said Board who were members of said Board on the first day of such period; or

     (c) whose election or nomination to said Board was approved by a vote of at least two-thirds of the members of said Board referred to in the foregoing clauses (a) and (b).

          SECTION 9.1.3. Unenforceability. Any Loan Document to which it is a party shall cease to be the legally valid, binding and enforceable obligation of the Borrower (in each case, other than with respect to provisions of any Loan Document (i) identified as unenforceable in the form of the opinion of the Borrower’s counsel set forth as Exhibit D or (ii) that a court of competent jurisdiction has determined are not material) and such event shall continue unremedied for 15 days after notice thereof has been given to the Borrower by any Lender.

          SECTION 9.1.4. Approvals. Any material license, consent, authorization, registration or approval at any time necessary to enable the Borrower or any Principal Subsidiary to conduct its business shall be revoked, withdrawn or otherwise cease to be in full force and effect, unless the same would not have a Material Adverse Effect.

          SECTION 9.1.5. Non-Performance of Certain Covenants and Obligations. The Borrower shall default in the due performance and observance of any of the covenants set forth in Section 7.2.4.

          SECTION 9.1.6. Judgments. Any judgment or order for the payment of money in excess of $50,000,000 shall be rendered against the Borrower or any of the Principal Subsidiaries by a court of competent jurisdiction and the Borrower or such Principal Subsidiary shall have failed to satisfy such judgment and either:

     (a) enforcement proceedings in respect of any material assets of the Borrower or such Principal Subsidiary shall have been commenced by any creditor upon such judgment or order and shall not have been stayed or enjoined within five Business Days after the commencement of such enforcement proceedings; or

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     (b) there shall be any period of 10 consecutive Business Days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.

          SECTION 9.1.7. Condemnation, etc. Any Vessel or Vessels shall be condemned or otherwise taken under color of law and the same shall continue unremedied for at least 20 days, unless such condemnation or other taking would not have a Material Adverse Effect.

          SECTION 9.1.8. Arrest. Any Vessel or Vessels shall be arrested and the same shall continue unremedied for at least 20 days, unless such arrest would not have a Material Adverse Effect.

     SECTION 9.2. Mandatory Prepayment. If any Prepayment Event shall occur and be continuing, the Administrative Agent, upon the direction of the Required Lenders, shall by notice to the Borrower (a) require the Borrower to prepay in full on the date of such notice all principal of and interest on the Loans and all other Obligations (and, in such event, the Borrower agrees to so pay the full unpaid amount of each Loan and all accrued and unpaid interest thereon and all other Obligations) and (b) terminate the Commitments (if not theretofore terminated).

ARTICLE X

THE AGENTS

     SECTION 10.1. Actions. Each Lender and the FEC Counterparty hereby appoints Citibank, and insofar as the other Agents have duties under this Agreement, each other Agent, as its agent under and for purposes of this Agreement, the Notes and each other Loan Document (other than, in the case of the FEC Counterparty, the FEC Interest Equalization Documents). Each Lender and the FEC Counterparty authorizes the Administrative Agent to act on behalf of such Lender and the FEC Counterparty under this Agreement, the Notes and each other Loan Document (other than, in the case of the FEC Counterparty, the FEC Interest Equalization Documents) and, in the absence of other written instructions from the Required Lenders or the FEC Counterparty, as applicable, received from time to time by the Administrative Agent (with respect to which the Administrative Agent agrees that it will comply, except as otherwise provided in this Section or as otherwise advised by counsel), to exercise such powers hereunder and thereunder as are specifically delegated to or required of the Administrative Agent by the terms hereof and thereof, together with such powers as may be reasonably incidental thereto. Each Lender hereby indemnifies (which indemnity shall survive any termination of this Agreement) the Administrative Agent, pro rata according to such Lender’s Percentage, from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and disbursements of counsel) that be incurred by or asserted or awarded against, the Administrative Agent in any way relating to or arising out of this Agreement, the Notes and any other Loan Document or any action taken or omitted by the Administrative Agent under this Agreement, the Notes or any other Loan Document; provided that no Lender shall be liable for the payment of any portion of such claims, damages, losses, liabilities and expenses which have resulted from the Administrative Agent’s gross negligence or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its ratable share of any out-of-pocket expenses

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(including reasonable counsel fees) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Administrative Agent is not reimbursed for such expenses by the Borrower. In the case of any investigation, litigation or proceeding giving rise to any such indemnified costs, this Section applies whether any such investigation, litigation or proceeding is brought by the Administrative Agent, any Lender or a third party. The Administrative Agent shall not be required to take any action hereunder, under the Notes or under any other Loan Document, or to prosecute or defend any suit in respect of this Agreement, the Notes or any other Loan Document, unless it is expressly required to do so under this Agreement or is indemnified hereunder to its satisfaction. If any indemnity in favor of the Administrative Agent shall be or become, in the Administrative Agent’s reasonable determination, inadequate, the Administrative Agent may call for additional indemnification from the Lenders and cease to do the acts indemnified against hereunder until such additional indemnity is given.

     SECTION 10.2. Funding Reliance, etc. Unless the Administrative Agent shall have been notified by telephone, confirmed in writing, by any Lender by 5:00 p.m., New York time, on the day prior to the Borrowing that such Lender will not make available the amount which would constitute its Percentage of such Borrowing on the date specified therefor, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent and, in reliance upon such assumption, make available to the Borrower a corresponding amount. If and to the extent that such Lender shall not have made such amount available to the Administrative Agent, such Lender and the Borrower severally agree to repay the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date the Administrative Agent made such amount available to the Borrower to the date such amount is repaid to the Administrative Agent, at the interest rate applicable at the time to Loans comprising the Borrowing.

     SECTION 10.3. Exculpation. Neither the Administrative Agent nor any of its directors, officers, employees or agents shall be liable to any Lender for any action taken or omitted to be taken by it under this Agreement or any other Loan Document, or in connection herewith or therewith, except for its own willful misconduct or gross negligence. Without limitation of the generality of the foregoing, the Administrative Agent (i) may treat the payee of any Note a the holder thereof until the Administrative Agent receives and accepts a Lender Assignment Agreement entered into by the Lender that is the payee of such Note, as assignor, and an Assignee Lender as provided in Section 11.11.1; (ii) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it and in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance, observance or satisfaction of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or the existence at any time of any Default or Prepayment Event or to inspect the property (including the books and records) of the Borrower; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness,

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sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by action upon any notice, consent, certificate or other instrument or writing (which may be by telecopier) believed by it to be genuine and signed or sent by the proper party or parties.

     SECTION 10.4. Successor. Any Agent may resign as such at any time upon at least 30 days’ prior notice to the Borrower and all Lenders, provided that any such resignation shall not become effective until a successor Agent for such resigning Agent has been appointed as provided in this Section 10.4 and such successor Agent has accepted such appointment (provided that no successor Agent shall be appointed for any Agent, other than the Administrative Agent, if after giving effect to such Agent’s resignation there would still be two Agents). If any Agent at any time shall resign, the Required Lenders shall, subject to the immediately preceding proviso and subject to the consent of the Borrower (such consent not to be unreasonably withheld), appoint another Lender as a successor to such Agent which shall thereupon become such Agent’s successor hereunder (provided that, in the case of a resignation of the Administrative Agent, the Required Lenders shall, subject to the consent of the Borrower unless an Event or Default or a Prepayment Event shall have occurred and be continuing (such consent not to be unreasonably withheld) offer to each of the other Agents in turn, in the order of their respective Commitments (or, if the Commitments have been terminated, the outstanding principal amount of their respective Loans), the right to become successor Administrative Agent). If no successor Agent for any resigning Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the resigning Agent’s giving notice of resignation, then the resigning Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be one of the Lenders or, in the case of a resigning Administrative Agent, a commercial banking institution having a combined capital and surplus of at least $500,000,000 (or the equivalent in other currencies), subject, in each case, to the consent of the Borrower (such consent not to be unreasonably withheld). Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall be entitled to receive from the resigning Administrative Agent such documents of transfer and assignment as such successor Administrative Agent may reasonably request, and shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the resigning Administrative Agent, and the resigning Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any resigning Administrative Agent’s resignation hereunder as the Administrative Agent, the provisions of:

     (a) this Article X shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent under this Agreement; and

     (b) Section 11.3 and Section 11.4 shall continue to inure to its benefit.

If a Lender acting as an Agent assigns its Loan to one of its Affiliates, such Agent may, subject to the consent of the Borrower (such consent not to be unreasonably withheld) assign its rights and obligations as Agent to such Affiliate.

     SECTION 10.5. Loans by the Agents. Each Agent shall have the same rights and powers with respect to (x) the Loan made by it or any of its Affiliates, and (y) the Note held by it or any of its Affiliates as any other Lender and may exercise the same as if it were not an Agent.

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Each Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Subsidiary or Affiliate of the Borrower as if such Agent were not an Agent hereunder and without any duty to account therefor to the Lenders. No Agent shall have any duty to disclose information obtained or received by it or any of its Affiliates relating to the Borrower or its Subsidiaries to the extent such information was obtained or received in any capacity other than as an Agent.

     SECTION 10.6. Credit Decisions. Each Lender acknowledges that it has, independently of the Administrative Agent, each other Agent and each other Lender, and based on such Lender’s review of the financial information of the Borrower, this Agreement, the other Loan Documents (the terms and provisions of which being satisfactory to such Lender) and such other documents, information and investigations as such Lender has deemed appropriate, made its own credit decision to extend its Commitment. Each Lender also acknowledges that it will, independently of the Administrative Agent, each other Agent and each other Lender, and based on such other documents, information and investigations as it shall deem appropriate at any time, continue to make its own credit decisions as to exercising or not exercising from time to time any rights and privileges available to it under this Agreement or any other Loan Document.

     SECTION 10.7. Copies, etc. The Administrative Agent shall give prompt notice to each Lender of each notice or request required or permitted to be given to the Administrative Agent by the Borrower pursuant to the terms of this Agreement (unless concurrently delivered to the Lenders by the Borrower). The Administrative Agent will distribute to each Lender each document or instrument received for its account and copies of all other communications received by the Administrative Agent from the Borrower for distribution to the Lenders by the Administrative Agent in accordance with the terms of this Agreement. The Administrative Agent (a) shall give prompt notice to the FEC Counterparty and FEC of any approvals of FEC requested by the Borrower pursuant to the terms of this Agreement, (b) shall provide the FEC Counterparty and FEC copies of (i) all amendments, waivers or other modifications to this Agreement and (ii) all information related to the Borrower requested by the FEC Counterparty or FEC to the extent such information is received from the Borrower and (c) shall give prompt notice to the FEC Counterparty and FEC of the termination of this Agreement and any prepayment of the Loans hereunder.

     SECTION 10.8. Agency Fee; FEC Counterparty Fee. The Borrower agrees to pay to the Administrative Agent for its own account an annual agency fee in an amount, and at such times, heretofore agreed to in writing between the Borrower and the Administrative Agent. The Borrower agrees to pay to the FEC Counterparty for its own account an annual fee in an amount, and at such times, heretofore agreed to in writing between the Borrower and the FEC Counterparty.

ARTICLE XI

MISCELLANEOUS PROVISIONS

     SECTION 11.1. Waivers, Amendments, etc. The provisions of this Agreement may from time to time be amended, modified or waived, if such amendment, modification or waiver

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is in writing and consented to by the Borrower and the Required Lenders; provided that no such amendment, modification or waiver which would:

     (a) modify any requirement hereunder that any particular action be taken by all the Lenders or by the Required Lenders shall be effective unless consented to by each Lender;

     (b) modify this Section 11.1, change the definition of “Required Lenders”, increase the Commitment of any Lender, reduce any fees described in Article III or extend any date fixed for payment shall be made without the consent of each Lender;

     (c) extend the due date for, or reduce the amount of, any scheduled repayment or prepayment of principal of or interest on any Loan (or reduce the principal amount of or rate of interest on any Loan) shall be made without the consent of each Lender;

     (d) affect adversely the interests, rights or obligations of the Administrative Agent in its capacity as such shall be made without consent of the Administrative Agent; or

     (e) affect adversely the interests, rights or obligations of the FEC Counterparty in its capacity as such shall be made without written consent of the FEC Counterparty.

No failure or delay on the part of the Administrative Agent, any Lender or the FEC Counterparty in exercising any power or right under this Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Borrower in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by the Administrative Agent, any Lender or the FEC Counterparty under this Agreement or any other Loan Document shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.

     SECTION 11.2. Notices. (a) All notices and other communications provided to any party hereto under this Agreement shall be in writing or by facsimile and addressed, delivered or transmitted to such party at its address, or facsimile number set forth below its signature hereto or set forth in the Lender Assignment Agreement or Assumption Agreement or such Loan Document or at such other address, or facsimile number as may be designated by such party in a notice to the other parties; provided that notices, information, documents and other materials that the Borrower is required to deliver hereunder may be delivered to the Administrative Agent and the Lenders as specified in Section 11.2(b). Any notice, if mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received.

     (b) So long as Citibank is the Administrative Agent, the Borrower may provide to the Administrative Agent all information, documents and other materials that it furnishes to the Administrative Agent hereunder or any other Loan Document (and any guaranties, security

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agreements and other agreements relating thereto), including, without limitation, all notices, requests, financial statements, financial and other reports, certificates and other materials, but excluding any such communication that (i) relates to a request for a new, or a conversion of an existing Borrowing or other extension of credit (including any election of an interest rate or interest period relating thereto), (ii) relates to the payment of any principal or other amount due hereunder or any other Loan Document prior to the scheduled date therefor, (iii) provides notice of any Default or Event of Default or (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of the Agreement and/or any Borrowing or other extension of credit hereunder (all such non-excluded communications being referred to herein collectively as “Communications”), by transmitting the Communications in an electronic/soft medium in a format acceptable to the Administrative Agent to oploanswebadmin@ssmb.com; provided that any Communication requested pursuant to Section 7.1.1(h) shall be in a format acceptable to the Borrower and the Administrative Agent.

          (1) The Borrower agrees that the Administrative Agent may make such items included in the Communications as the Borrower may specifically agree available to the Lenders by posting such notices, at the option of the Borrower, on Intralinks or e-Disclosure, the Administrative Agent’s internet delivery system that is part of SSB Direct, Global Fixed Income’s primary web portal (the “Platform”). Although the primary web portal is secured with a dual firewall and a User ID/Password Authorization System and the Platform is secured through a single user per deal authorization method whereby each user may access the Platform only on a deal-by-deal basis, the Borrower acknowledges that (i) the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution, (ii) the Platform is provided “as is” and “as available” and (iii) neither the Administrative Agent nor any of its Affiliates warrants the accuracy, adequacy or completeness of the Communications or the Platform and each expressly disclaims liability for errors or omissions in the Communications or the Platform. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by the Administrative Agent or any of its Affiliates in connection with the Platform.

          (2) The Administrative Agent agrees that the receipt of Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of such Communications to the Administrative Agent for purposes hereunder and any other Loan Document (and any guaranties, security agreements and other agreements relating thereto).

     (c) Each Lender agrees that notice to it (as provided in the next sentence) (a “Notice”) specifying that any Communications have been posted to the Platform shall constitute effective delivery of such Communications to such Lender for purposes of this Agreement. Each Lender agrees (i) to notify the Administrative Agent in writing (including by electronic communication) of such Lender’s e-mail address to which a Notice may be sent by electronic transmission on or before the date such Lender becomes a party to this Agreement (and from time to time thereafter to ensure that the Administrative Agent has on record an effective e-mail address for such Lender) and (ii) that any Notice may be sent to such e-mail address.

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     (d) Patriot Act. Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”)), that it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Act.

     SECTION 11.3. Payment of Costs and Expenses. The Borrower agrees to pay on demand all reasonable expenses of the Administrative Agent (including the reasonable fees and out-of-pocket expenses of counsel to the Administrative Agent and of local counsel, if any, who may be retained by counsel to the Administrative Agent) in connection with the preparation, execution and delivery of, and any amendments, waivers, consents, supplements or other modifications to, this Agreement or any other Loan Document. The Borrower further agrees to pay, and to save the Administrative Agent, the Lenders and the FEC Counterparty harmless from all liability for, any stamp, recording, documentary or other similar taxes which may be payable in connection with the execution or delivery of this Agreement and the other Loan Documents, the borrowings hereunder or the FEC Interest Equalization, or the issuance of the Notes or any other Loan Documents. The Borrower also agrees to reimburse the Administrative Agent, each Lender and the FEC Counterparty upon demand for all reasonable out-of-pocket expenses (including reasonable attorneys’ fees and legal expenses) incurred by the Administrative Agent, such Lender or the FEC Counterparty in connection with (x) the negotiation of any restructuring or “work-out”, whether or not consummated, of any Obligations and (y) the enforcement of any Obligations or the rights of the Administrative Agent and the FEC Counterparty under or in connection with the Loan Documents.

     SECTION 11.4. Indemnification. (a) In consideration of the execution and delivery of this Agreement and the other Loan Documents by each Lender and the FEC Counterparty and the extension of the Commitments, the Borrower hereby indemnifies and holds harmless the Administrative Agent, each Lender, the FEC Counterparty and each of their respective Affiliates and their respective officers, advisors, directors and employees (collectively, the “Indemnified Parties”) from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and disbursements of counsel), joint or several, that may be incurred by or asserted or awarded against any Indemnified Party (including, without limitation, in connection with any investigation, litigation or proceeding or the preparation of a defense in connection therewith), in each case arising out of or in connection with or by reason of this Agreement or the Notes or the transactions contemplated hereby or thereby (it being agreed for the avoidance of doubt that the same shall not include matters referred to in 11.4(b)) or any actual or proposed use of the proceeds of the Loans (collectively, the “Indemnified Liabilities”), except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted primarily from such Indemnified Party’s gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this paragraph applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, any of its directors, security holders or creditors, an Indemnified Party or any other person or an Indemnified Party is otherwise a party thereto. Each Indemnified Party shall (a) furnish the Borrower with prompt notice of any action, suit or other claim covered by this Section 11.4, (b) not agree to any settlement or compromise of any such action, suit or claim without the Borrower’s prior consent, (c) shall cooperate fully in the Borrower’s defense of any

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such action, suit or other claim (provided, that the Borrower shall reimburse such Indemnified Party for its reasonable out-of-pocket expenses incurred pursuant hereto) and (d) at the Borrower’s request, permit the Borrower to assume control of the defense of any such claim, other than regulatory, supervisory or similar investigations, provided that (i) the Borrower acknowledges in writing its obligations to indemnify the Indemnified Party in accordance with the terms herein in connection with such claims, (ii) the Borrower shall keep the Indemnified Party fully informed with respect to the conduct of the defense of such claim, (iii) the Borrower shall consult in good faith with the Indemnified Party (from time to time and before taking any material decision) about the conduct of the defense of such claim, (iv) the Borrower shall conduct the defense of such claim properly and diligently taking into account its own interests and those of the Indemnified Party, (v) the Borrower shall employ counsel reasonably acceptable to the Indemnified Party and at the Borrower’s expense, and (vi) the Borrower shall not enter into a settlement with respect to such claim unless either (A) such settlement involves only the payment of a monetary sum, does not include any performance by or an admission of liability or responsibility on the part of the Indemnified Party, and contains a provision unconditionally releasing the Indemnified Party and each other indemnified party from, and holding all such persons harmless, against, all liability in respect of claims by any releasing party or (B) the Indemnified Party provides written consent to such settlement (such consent not to be unreasonably withheld or delayed). Notwithstanding the Borrower’s election to assume the defense of such action, the Indemnified Party shall have the right to employ separate counsel and to participate in the defense of such action and the Borrower shall bear the fees, costs and expenses of such separate counsel if (1) the use of counsel chosen by the Borrower to represent the Indemnified Party would present such counsel with an actual or potential conflict of interest, (2) the actual or potential defendants in, or targets of, any such action include both the Borrower and the Indemnified Party, and the Indemnified Party shall have concluded that there may be legal defenses available to it which are different from or additional to those available to the Borrower and determined that it is necessary to employ separate counsel in order to pursue such defenses (in which case the Borrower shall not have the right to assume the defense of such action on the Indemnified Party’s behalf), (3) the Borrower shall not have employed counsel reasonably acceptable to the Indemnified Party to represent the Indemnified Party within a reasonable time after notice of the institution of such action, or (4) the Borrower authorizes the Indemnified Party to employ separate counsel at the Borrower’s expense. The Borrower acknowledges that none of the Indemnified Parties shall have any liability (whether direct or indirect, in contract, tort or otherwise) to the Borrower or any of its security holders or creditors for or in connection with the transactions contemplated hereby, except to the extent such liability is determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted primarily from such Indemnified Party’s gross negligence or willful misconduct. In no event, however, shall any Indemnified Party be liable on any theory of liability for any special, indirect, consequential or punitive damages (including, without limitation, any loss of profits, business or anticipated savings). If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

     (b) The Borrower acknowledges that the FEC Counterparty has entered into the FEC Interest Equalization Documents pursuant to which the FEC Counterparty and FEC have agreed to an interest equalization in relation to the Loans.

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     Accordingly, the Borrower hereby indemnifies and holds harmless the FEC Counterparty, FEC and their respective officers, advisors, directors and employees (collectively, the “FEC Indemnitees”) from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, FEC Break Costs and reasonable fees and disbursements of counsel), joint or several, that may be incurred by or asserted or awarded against any FEC Indemnitee (including, without limitation, in connection with any investigation, litigation or proceeding or the preparation of a defense in connection therewith), in each case (i) arising out of or in connection with FEC or the FEC Counterparty’s execution, delivery and performance of the FEC Equalization Documents and (ii) for any other cost, loss or liability for which the FEC Counterparty is or may be liable to FEC or any third party in connection with the foregoing. Without limitation of the foregoing, if the FEC Counterparty shall become subject to increased costs or increased capital costs of the types described in Sections 4.3 and 4.5, the FEC Counterparty shall be entitled to payment from the Borrower under such Sections to the same extent that the FEC Counterparty would have been so entitled under such Sections as if it were a Lender (it being understood that specific references to the FEC Counterparty in Sections 4.3 and 4.5 are intended to address those requirements applicable to the FEC Counterparty that vary from those applicable to the Lenders, but are not to be construed to exempt the FEC Counterparty from any other requirements applicable to the Lenders under those Sections). Notwithstanding the provisions of this Section 11.4(b), the Borrower shall have no indemnification obligations to an FEC Indemnitee for any cost, loss or liability incurred by such FEC Indemnitee in connection with the circumstances described in (i) or (ii) above to the extent such liability is determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted primarily from the gross negligence or willful misconduct of such FEC Indemnitee. Each FEC Indemnitee shall furnish the Borrower with prompt notice of any action, suit or other claim covered by this Section 11.4(b). Any claim for FEC Break Costs under this Section 11.4(b) shall set forth the amount of the FEC Break Costs and reasonably detailed calculations thereof.

     SECTION 11.5. Survival. The obligations of the Borrower under Sections 4.3, 4.4, 4.5, 4.6, 4.7, 11.3 and 11.4, and the obligations of the Lenders under Section 10.1, shall in each case survive any termination of this Agreement and the other Loan Documents, the payment in full of all Obligations and the termination of all Commitments. The representations and warranties made by the Borrower in this Agreement shall survive the execution and delivery of this Agreement.

     SECTION 11.6. Severability. Any provision of this Agreement or the Notes which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or such Loan Document or affecting the validity or enforceability of such provision in any other jurisdiction.

     SECTION 11.7. Headings. The various headings of this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any provisions hereof.

     SECTION 11.8. Execution in Counterparts, Effectiveness, etc. This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. This

51

Agreement shall become effective when counterparts hereof executed on behalf of the Borrower and each Lender (or notice thereof satisfactory to the Administrative Agent and the Borrower) shall have been received by the Administrative Agent and the Borrower (or, in the case of any Lender, receipt of signature pages transmitted by facsimile) and notice thereof shall have been given by the Administrative Agent to the Borrower and each Lender.

     SECTION 11.9. Governing Law; Entire Agreement. THIS AGREEMENT AND THE NOTES SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER, AND SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK. This Agreement, the Notes and the other Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersede any prior agreements, written or oral, with respect thereto.

     SECTION 11.10. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided that:

     (a) except to the extent permitted under Section 7.2.6, the Borrower may not assign or transfer its rights or obligations hereunder without the prior written consent of the Administrative Agent and all Lenders; and

     (b) the rights of sale, assignment and transfer of the Lenders are subject to Section 11.11.

     SECTION 11.11. Sale and Transfer of Loans and Note; Participations in Loans and Note. Each Lender may assign, or sell participations in, its Loan and Commitment to one or more other Persons in accordance with this Section 11.11.

          SECTION 11.11.1. Assignments. Any Lender,

          (i) with the written consents of the Borrower and the Administrative Agent (which consents shall not be unreasonably delayed or withheld and which consent, in the case of the Borrower, shall be deemed to have been given in the absence of a written notice delivered by the Borrower to the Administrative Agent, on or before the fifth Business Day after receipt by the Borrower of such Lender’s request for consent, stating, in reasonable detail, the reasons why the Borrower proposes to withhold such consent) may at any time assign and delegate to one or more commercial banks or other financial institutions;

          (ii) with notice to the Borrower and the Administrative Agent, but without the consent of the Borrower or the Administrative Agent, may assign and delegate (A) to any Lender, (B) to any of its Affiliates or (C) following the occurrence and during the continuance of an Event of Default or a Prepayment Event; and

          (iii) may (without notice to the Borrower, the Administrative Agent or any other Lender and without payment of any fee) assign and pledge all or any portion of its Loan and Note to any Federal Reserve Bank as collateral security pursuant to Regulation A of the F.R.S. Board and any Operating Circular issued by such Federal Reserve Bank;

52

(each Person described in either of the foregoing clauses as being the Person to whom such assignment and delegation is to be made, being hereinafter referred to as an “Assignee Lender”), all or any fraction of such Lender’s Loan and Commitment (which assignment and delegation shall be of a constant, and not a varying, percentage of all the assigning Lender’s Loan and Commitment) in a minimum aggregate amount of $25,000,000 (or, if less, all of such Lender’s Loan and Commitment); provided that the Borrower and the Administrative Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned and delegated to an Assignee Lender until:

     (a) written notice of such assignment and delegation, together with payment instructions, addresses and related information with respect to such Assignee Lender, shall have been given to the Borrower and the Administrative Agent by such Lender and such Assignee Lender;

     (b) Such Assignee Lender shall have executed and delivered to the Borrower and the Administrative Agent a Lender Assignment Agreement, accepted by the Administrative Agent; and

     (c) the processing fees described below shall have been paid.

From and after the date that the Administrative Agent accepts such Lender Assignment Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to have become a party hereto and to the extent that rights and obligations hereunder have been assigned and delegated to such Assignee Lender in connection with such Lender Assignment Agreement, shall have the rights and obligations of a Lender hereunder and under the other Loan Documents, and (y) the assignor Lender, to the extent that rights and obligations hereunder have been assigned and delegated by it, shall be released from its obligations hereunder and under the other Loan Documents, other than any obligations arising prior to the effective date of such assignment. In no event shall the Borrower be required to pay to any Assignee Lender at the time of the relevant assignment any amount under Sections 4.3, 4.4, 4.5, 4.6 and 4.7 that is greater than the amount which it would have been required to pay had no such assignment been made. Within five Business Days after its receipt of notice that the Administrative Agent has received an executed Lender Assignment Agreement, the Borrower shall execute and deliver to the Administrative Agent (for delivery to the relevant Assignee Lender) a new Note evidencing such Assignee Lender’s assigned Loan and Commitment and, if the assignor Lender has retained any portion of its Loan and a Commitment hereunder, a replacement Note in the principal amount of the portion of the Loan and Commitment retained by the assignor Lender hereunder (such Note to be in exchange for, but not in payment of, that Note then held by such assignor Lender). Each such Note shall be dated the date of the predecessor Note. The assignor Lender shall mark the predecessor Note “exchanged” and deliver it to the Borrower concurrently with the delivery by the Borrower of the new Note(s). Such assignor Lender or such Assignee Lender must also pay a processing fee to the Administrative Agent upon delivery of any Lender Assignment Agreement in the amount of $2,000 (and shall also reimburse the Administrative Agent for any reasonable out-of-pocket costs, including reasonable attorneys’ fees and expenses, incurred in connection with the assignment).

53

          SECTION 11.11.2. Participations. Any Lender may at any time sell to one or more commercial banks or other financial institutions (each of such commercial banks and other financial institutions being herein called a “Participant”) participating interests in any of its Loan, its Commitment, or other interests of such Lender hereunder; provided that:

     (a) no participation contemplated in this Section 11.11 shall relieve such Lender from its Commitment or its other obligations hereunder;

     (b) such Lender shall remain solely responsible for the performance of its Commitment and such other obligations;

     (c) the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and each of the other Loan Documents;

     (d) no Participant, unless such Participant is an Affiliate of such Lender, shall be entitled to require such Lender to take or refrain from taking any action hereunder or under any other Loan Document, except that such Lender may agree with any Participant that such Lender will not, without such Participant’s consent, take any actions of the type described in clause (b) or (c) of Section 11.1; and

     (e) the Borrower shall not be required to pay any amount under Sections 4.3, 4.4, 4.5, 4.6 and 4.7 that is greater than the amount which it would have been required to pay had no participating interest been sold.

The Borrower acknowledges and agrees that each Participant, for purposes of Sections 4.3, 4.4, 4.5, 4.6 and clause (h) of 7.1.1, shall be considered a Lender.

     SECTION 11.12. Other Transactions. Nothing contained herein shall preclude the Administrative Agent or any Lender from engaging in any transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Affiliates in which the Borrower or such Affiliate is not restricted hereby from engaging with any other Person.

     SECTION 11.13. Forum Selection and Consent to Jurisdiction. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK FOR THE COUNTY OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY AND IRREVOCABLY AGREES, TO THE FULLEST EXTENT PERMITTED BY LAW, TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT

54

PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN THE COURTS OF ANY JURISDICTION. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY.

     SECTION 11.14. Process Agent. If at any time the Borrower ceases to have a place of business in the United States, the Borrower shall appoint an agent for service of process (reasonably satisfactory to the Administrative Agent) located in New York City and shall furnish to the Administrative Agent evidence that such agent shall have accepted such appointment for a period of time ending no earlier than one year after the Stated Maturity Date.

     SECTION 11.15. Judgment. (a) If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder in Dollars into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase Dollars with such other currency at Citibank’s principal office in London at 11:00 A.M. (London time) on the second Business Day preceding that on which final judgment is given.

     (b) The obligation of the Borrower in respect of any sum due from it in any currency (the “Primary Currency”) to any Lender or the Administrative Agent hereunder shall, notwithstanding any judgment in any other currency, be discharged only to the extent that on the Business Day following receipt by such Lender or the Administrative Agent (as the case may be), of any sum adjudged to be so due in such other currency, such Lender or the Administrative Agent (as the case may be) may in accordance with normal banking procedures purchase the applicable Primary Currency with such other currency; if the amount of the applicable Primary Currency so purchased is less than such sum due to such Lender or the Administrative Agent (as the case may be) in the applicable Primary Currency, the Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender or the Administrative Agent (as the case may be) against such loss, and if the amount of the applicable Primary Currency so purchased exceeds such sum due to any Lender or the Administrative Agent (as the case may be) in the applicable Primary Currency, such Lender or the Administrative Agent (as the case may be) agrees to remit to the Borrower such excess.

55

     SECTION 11.16. Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, THE LENDERS, THE FEC COUNTERPARTY AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT. EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH OTHER PARTY ENTERING INTO THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT.

56

SCHEDULE I

DISCLOSURE SCHEDULE

Updated December 8, 2006

Item 6.10(b): Vessels

Vessel	Owner	Flag
Sovereign of the Seas	Sovereign of the Seas Shipping Inc.	Bahamian
Empress of the Seas	Nordic Empress Shipping Inc.	Bahamian
Monarch of the Seas	Monarch of the Seas Inc.	Bahamian
Majesty of the Seas	Majesty of the Seas Inc.	Bahamian
Grandeur of the Seas	Grandeur of the Seas Inc.	Bahamian
Rhapsody of the Seas	Rhapsody of the Seas Inc.	Bahamian
Enchantment of the Seas	Enchantment of the Seas Inc.	Bahamian
Vision of the Seas	Vision of the Seas Inc.	Bahamian
Voyager of the Seas	Voyager of the Seas Inc.	Bahamian
Island Star (formerly known as Horizon)	Fantasia Cruising Inc.	Bahamian
Zenith	Zenith Shipping Corporation	Bahamian
Century	Blue Sapphire Marine Inc.	Bahamian
Galaxy	Esker Marine Shipping Inc.	Bahamian
Mariner of the Seas	Mariner of the Seas Inc.	Bahamian
Mercury	Seabrook Maritime Inc.	Bahamian
Millennium	Millennium Inc.	Bahamian
Explorer of the Seas	Explorer of the Seas Inc.	Bahamian
Infinity	Infinity Inc.	Bahamian
Radiance of the Seas	Radiance of the Seas Inc.	Bahamian
Summit	Summit Inc.	Bahamian
Adventure of the Seas	Adventure of the Seas Inc.	Bahamian
Navigator of the Seas	Navigator of the Seas Inc.	Bahamian
Constellation	Constellation Inc.	Bahamian
Serenade of the Seas	Serenade of the Seas Inc.	Bahamian
Jewel of the Seas	Jewel of the Seas Inc.	Bahamian
Xpedition	Islas Galapagos Turismo y Vapores CA	Ecuador
Legend of the Seas	Legend of the Seas Inc.	Bahamian
Splendour of the Seas	Splendour of the Seas Inc.	Bahamian
Freedom of the Seas	Freedom of the Seas Inc.	Bahamian
Oceanic	Pullmantur Cruises Oceanic Ltd.	Malta
Blue Dream	Pullmantur Cruises Blue Dream, Ltd.	Malta
Blue Moon	Pullmantur Cruises Blue Moon, Ltd.	Malta
Sky Wonder	Pullmantur Cruises Sky Wonder, Ltd.	Malta
Holiday Dream	Pullmantur Cruises Holiday Dream, Ltd.	Malta

Item 6.11: Subsidiaries

Name of Subsidiary	Jurisdiction of Organization
Jewel of the Seas Inc. *	Liberia
Sovereign of the Seas Shipping Inc.*	Liberia
Viking Serenade Inc.	Liberia
Nordic Empress Shipping Inc.*	Liberia
Majesty of the Seas Inc.*	Liberia
Monarch of the Seas Inc.*	Liberia
Admiral Management Inc.	Liberia
GG Operations Inc.	Delaware
Island for Science Inc.	Indiana
Labadee Investments Ltd.	Cayman Islands
Societe Labadee Nord, S.A.	Haiti
Royal Caribbean Cruise Line A/S	Norway
Royal Caribbean Merchandise Inc.	Florida
Eastern Steamship Lines Inc.	Liberia
Grandeur of the Seas Inc.*	Liberia
Enchantment of the Seas Inc.*	Liberia
Rhapsody of the Seas Inc.*	Liberia
Vision of the Seas Inc. *	Liberia
Voyager of the Seas Inc.*	Liberia
Explorer of the Seas Inc.*	Liberia
Royal Celebrity Tours Inc.	Delaware
White Sand Inc.	Liberia
Radiance of the Seas Inc.*	Liberia
Adventure of the Seas Inc. *	Liberia
RCL (UK) Ltd.	U.K.
Navigator of the Seas Inc. *	Liberia
Northwest Adventures Inc.	Delaware
Serenade of the Seas Inc. *	Liberia
Royal Beverage Cruise Sales LLC	Delaware
Mariner of the Seas Inc. *	Liberia
Beverage Cruise Sales LLC	Texas
Celebrity Cruise Lines Inc.	Cayman Islands
Celebrity Cruises Holdings Inc.	Liberia
Cruise Mar Shipping Holdings Ltd.	Liberia
Seabrook Maritime Inc. *	Liberia
Esker Marine Shipping Inc. *	Liberia
Blue Sapphire Marine Inc. *	Liberia
Fantasia Cruising Inc. *	Liberia
Cruise Mar Investment Inc.	Liberia
Universal Cruise Holdings Ltd.	British Virgin Islands
Celebrity Cruises Inc.	Liberia
Fourth Transoceanic Shipping Co. Ltd.	Liberia
Zenith Shipping Corporation *	Liberia
Millennium Inc.*	Liberia

Name of Subsidiary	Jurisdiction of Organization
Infinity Inc.*	Liberia
Summit Inc.*	Liberia
Constellation Inc. *	Liberia
Fifth Transoceanic Shipping Company Ltd.	Liberia
Serenity Management Inc.	Liberia
Galapagos Cruises Inc.	Liberia
Islas Galapagos Turismo y Vapores C.A. *	Ecuador
Cape Liberty Cruise Port LLC	Delaware
Legend of the Seas Inc. *	Liberia
Splendour of the Seas Inc. *	Liberia
Harmony Investments (Global) Limited	U.K.
Tenth Avenue Holdings, S.A. de C.V.	Mexico
The Scholar Ship Program LLC	Delaware
Royal Caribbean Cruises Espana S.L.	Spain
Puerto de Cruceros y Marina de las Islas de la Bahia, S.A. de CV.	Honduras
Freedom of the Seas Inc. *	Liberia
RCL Holdings Cooperatief U.A.	The Netherlands
Pullmantur, S.A.	Spain
Pullmantur Cruises, S.L.	Spain
Pullmantur Cruises Oceanic Ltd.*	Malta
Pullmantur Cruises Blue Dream, Ltd.*	Malta
Pullmantur Cruises Blue Moon, Ltd.*	Malta
Pullmantur Cruises Sky Wonder, Ltd.*	Malta
Pullmantur Cruises Holiday Dream, Ltd.*	Malta
Pullmantur Cruises Ship Management, Ltd	Malta
Pullmantur Ship Management, Ltd.	Bahamas
Turismo E Viagens Unipessoal, LDA.	Portugal
Royal Caribbean Holdings de Espana S.L. **	Spain

*	Shipholding companies
**	In the process of being formed.

SCHEDULE II

Payment Date	Principal Installment
October 20, 2006	$40,714,286
April 20, 2007	$40,714,286
October 20, 2007	$40,714,286
April 20, 2008	$40,714,286
October 20, 2008	$40,714,286
April 20, 2009	$40,714,286
October 20, 2009	$40,714,286
April 20, 2010	$40,714,286
October 20, 2010	$40,714,286
April 20, 2011	$40,714,286
October 20, 2011	$40,714,286
April 20, 2012	$40,714,286
October 20, 2012	$40,714,286
Stated Maturity Date	Remaining outstanding balance of the Loans

EX-10

Exhibit 10.12

[DLA PIPER RUDNICK GRAY CARY]

DATED 30^th August 2006

(1) DV3 ADDLESTONE LIMITED

- and -

(2) HARMONY INVESTMENTS (GLOBAL) LIMITED

- and -

(3) ROYAL CARIBBEAN CRUISES LIMITED

LEASE

of

Building X1B Aviator Business Park,

Addlestone, Surrey

Commences2006

Term15 years

Expires2021

CONTENTS

1. PARTICULARS ...............................................................................3

2. DEFINITIONS AND INTERPRETATION.............................................4

3. DEMISE RENT AND RENT REVIEW...................................................9

4. TENTANT’S CONVENANTS .......................................................14

5. LANDLORD’S CONVENANTS..........................................................36

6. INSURANCE .................................................................................36

7. PROVISOS................................................................................................................43

8. TENTANT’S OPTION TO DETERMINE.............................................48

9. GURANTEE PROVISIONS...................................................................48

SCHEDULE 1 ..............................................................................................49

Part 1 ................................................................................................49

.

Premises ............................................................................................49

Part 2 ............................................................................................49

Easements and rights granted .................................................................49

Part 3 ............................................................................................50

Exceptions and reservations ..................................................................50

Part 4 ..............................................................................................51

Matters to which the Premises are subject ..................................................51

SCHEDULE 2 ...............................................................................................52

(Matters in respect of which the Landlord may incur costs toward which the

Tenant shall contribute by payment of the Estate Interim Charge and the Estate

Service Charge) ..................................................................................52

SCHEDULE 3 ..................................................................................................54

(Provisions relating to the payment of the Estate Interim Charge and the

Estate Service Charge ..........................................................................54

SCHEDULE 4 ..................................................................................................56

Guarantee provisions ..........................................................................56

SCHEDULE 5 ..............................................................................................59

Requirements of authorised guarantee agreement ............................................59

LR1 Date of lease 30^th August 2006

LR2 Title number(s) LR2.1 Landlord’s title number(s)

SY313248, SY3925666 and SY736144

LR2.2 Other title numbers

None

LR3 Parties to this lease Landlord

DV3 ADDLESTONE LIMITED whose address for service in England is c/o Olswang, 90 High Holborn, London WC1V 6XX (Attention Kay Butler)

Tenant

HARMONY INVESTMENTS (GLOBAL) LIMITED (company number 05484410 England) whose registered office is at Ocean House, Addlestone Road, Weybridge, Surrey KT15 2UR

Guarantor

ROYAL CARIBBEAN CRUISES LIMITED a company incorporated in Liberia and whose address for service in England is c/o Watson Farley Williams LLP, 15 Appold Street, London EC2A 2HB (reference Martin Watson)

LR4 Property In the case of a conflict between this clause and the remainder of this lease then, for the purposes of registration, this clause shall prevail.

Building X1B Aviator Business Park, Addlestone, Surrey the exact extent of which is set out in part 1 of schedule 1

LR5 Prescribed statements etc LR5.1 None

LR5.2 Not applicable

LR6 Term for which the The term specified in the Particulars (defined there as "the

Property is leased Contractual Term")

1

LR7 Premium None

LR8 Prohibitions or This lease contains a provision that prohibits or restricts

restrictions on disposing of this dispositions

lease

LR9 Rights of acquisition etc LR9.1 Tenant's contractual rights to renew this lease, to acquire the reversion or another lease of the Property, or to acquire an interest in other land

None

LR9.2 Tenant's covenant to (or offer to) surrender this lease

None

LR9.3 Landlord's contractual rights to acquire this lease

None

LR 10 Restrictive covenants None

given in this lease by the

Landlord in respect of land

other than the Property

LR11 Easements LR11.1 Easements granted by this lease for the benefit of

the Property

The rights granted by clause 3.1 and set out in part 2 of schedule 1

LR11.2 Easements granted or reserved by this lease over the Property for the benefit of other property

The rights granted or reserved by clause 3.1 and set out in part 3 of schedule 1

LR12 Estate rentcharge None

burdening the Property

LR13 Application for standard None

form of restriction

2

LR14 Declaration of trust Not applicable

where there is more than one

person comprising the Tenant

THIS LEASE is made on the date set out in clause LR1 of the Prescribed Clauses BETWEEN the Landlord, the Tenant and the Guarantor respectively named in clause LR3 of the Prescribed Clauses.

WITNESSES as follows:

1. PARTICULARS

Contractual Term: 15 years from and including 30 August 2006

Rent Commencement Date: 28 June 2008

Initial Rent: eight hundred and sixty two thousand seven hundred and sixty two pounds and fifty pence (£862,762.50) per annum (exclusive of VAT)

Review Dates: 30 August in each of the years 2011 2016 and the last day of the Contractual Term

Permitted Use: use of the Premises as high class offices within Class B1 of the Schedule to the Town and Country Planning (Use Classes) Order 1987 (here meaning such Order in its form today despite the provision of clause 2.2.6)

2. DEFINITIONS AND INTERPRETATION

2.1 Definitions

In this lease (except where the contrary is stated) the terms set out in the Prescribed Clauses and in the Particulars shall have the respective meanings given there and:

"1995 Act" means the Landlord and Tenant (Covenants) Act 1995;

"Accounting Period" means a period of 12 months ending on 31 May in any year or such other period as the Landlord may at its discretion from time to time determine and notify in writing to the Tenant;

"Act of Terrorism" means an act causing damage or destruction to the Estate or any part of it by a person or persons acting on behalf of or in connection with any organisation which

3

carries on activities directed towards the overthrowing or influencing by force or violence of Her Majesty's Government in the United Kingdom or any other Government de jure or de facto;

"Apparatus" means all lifts lift shafts water treatment plant boilers heating and ventilation systems generators air-conditioning equipment hot and cold water systems window cleaning hoists and tracks electric gas and water systems or services and all other plant machinery and equipment belonging to or in the control of the Landlord in or about or serving the Premises including (without prejudice to the generality of the foregoing) the Conduits;

"Approval Date" means in relation to an application to the Landlord for consent hereunder the date on which such consent is formally granted in writing;

"Common Parts" means the access roads car parks service yards forecourts landscaped areas pedestrian walkways and all other areas or parts of the Estate which from time to time during the Term are provided by the Landlord for common use and enjoyment by the tenants and occupiers of the Estate and all persons expressly or by implication authorised by them;

"Conduits" means all wires pipes sewers drains cables ducts shafts gullies flues gutters watercourses soakaways and other like conducting media of whatsoever nature (including all meters and other apparatus used in connection with them) which now are or may hereafter during the Perpetuity Period be laid;

"Decorate" means to paint repaper or otherwise treat as the case may be all surfaces usually or requiring to be so treated having first prepared such surfaces by stripping off and priming as may be necessary and to wash down all washable surfaces and to restore point and make good all brickwork where necessary and to grain or varnish any parts usually so protected all decoration being carried out with good quality materials and in a good and workmanlike manner and where painting is involved three coats being applied to the outside and two coats to the inside;

"Demise Plan" means the annexed plans so entitled;

"Election" an election to waive exemption under paragraphs 2 and 3 of Schedule 10 VATA made by or binding on the Landlord in relation to the Estate or any part of the Estate;

"Environmental Protection Act" means the Environmental Protection Act 1990 and any Act or Acts amending replacing or modifying such Act for the time being in force or of a similar nature and all orders and regulations thereunder for the time being in force;

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"Estate" means the land and buildings at Aviator Business Park shown for the purposes of identification only edged blue on the Estate Plan and all buildings from time to time thereon or such other land (including the Premises) of a greater or lesser extent as the Landlord may determine and notify to the Tenant in writing from time to time;

"Estate Plan" means the annexed plan so entitled;

"Estate Service Charge" means the Estate Service Charge as defined in schedule 2;

"Group Company" means a company which is a member of the same group of companies as the Tenant (as defined in section 42 of the Landlord and Tenant Act 1954);

"Guarantor" means the party so named in clause LR3 of the Prescribed Clauses and includes the personal representatives of the Guarantor and any other person who may from time to time guarantee all or any of the Tenant's obligations under this lease;

"Insured Risks" means loss or damage by or in consequence of fire storm tempest lightning explosion flood earthquake aircraft and other aerial devices and things dropped therefrom (in time of peace) impact by road vehicles damage by Act of Terrorism riot civil commotion malicious damage bursting and overflowing of water tanks apparatus and pipes landslip subsidence and heave and together with such other risks as the Landlord shall insure against from time to time (subject in all cases to such excesses exclusions and limitations as may be imposed by the insurers or underwriters with whom such insurance is placed) except always such risks as cannot reasonably be insured by the Landlord on satisfactory terms (for instance where insurance is not available at all or is not available in the London insurance market at economic rates) or as the Landlord's insurers or underwriters have refused to insure;

"Landlord" means the person for the time being entitled to the reversion immediately expectant on the determination of the Term (being at the date hereof the party so named in clause LR3 of the Prescribed Clauses);

"Landlord's Surveyor" means any person appointed by or acting for the Landlord including an employee of the Landlord to perform the function of a surveyor for any purposes of this lease;

"Lease" means this lease (including any schedule hereto) and any document which is supplemental hereto or which is collateral herewith or which is entered into pursuant to or in accordance with the terms hereof;

"Letting Unit" means an entire floor within the Premises (excluding common areas);

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"Loss of Rent" means loss of three years' rent of the Premises (including proper allowances for increases in rent pursuant to the provisions for rent review herein contained);

"Particulars" means the particulars in clause 1;

"Permitted Use" means the use stated as such in the Particulars;

"Perpetuity Period" means the period of 21 years commencing on the date of this lease being the perpetuity period for the purposes of section 1 of the Perpetuities and Accumulations Act 1964 applicable to this lease;

"Plan" means the plan or plans annexed hereto;

"Planning Acts" means the Town and Country Planning Act 1990 the Planning (Listed Buildings and Conservation Areas) Act 1990 the Planning (Hazardous Substances) Act 1990 the Planning (Consequential Provisions) Act 1990 and the Planning and Compensation Act 1991 and any Act or Acts amending replacing or modifying any of such Acts for the time being in force or of a similar nature and all orders and regulations thereunder for the time being in force;

"Prescribed Clauses" mean the part of this lease comprising clauses LRl to LR14 and situated immediately after the contents list;

"Premises" means the land and premises so stated in clause LR4 of the Prescribed Clauses and as more particularly described in part 1 of schedule 1 and each and every part thereof together with the appurtenances thereto belonging and together also with any buildings and erections and each and every part thereof now or hereafter erected or in the course of erection thereon or on any part thereof together with all additions alterations and improvements thereto which may be carried out during the Term and shall also include all landlord's fixtures and fittings from time to time in and about the same;

"Rent Commencement Date" means the date stated as such in the Particulars;

"Rent Days" means 25 March 24 June 29 September and 25 December in each year and "Rent Day" shall mean any of such days as the context requires;

"Retained Parts" means those parts of the Estate which are from time to time retained by the Landlord and made available for use for the management maintenance or security of the Estate (including without prejudice to the generality thereof any accommodation provided by the Landlord for any personnel required to reside on the Estate);

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"Stipulated Rate" means in relation to interest the rate per annum of four per cent above the base rate from time to time of HSBC Bank Plc (or where such base rate is not quoted over such other rate as would in the reasonable opinion of the Landlord be the nearest equivalent thereto if such base rate were quoted);

"Structure" means the foundations external walls (including the windows and window frames therein) load bearing walls supporting columns stanchions beams supports timbers and girders floors roofs and other structural parts to the Premises;

"Tenant" means the party so named in clause LR3 of the Prescribed Clauses and shall include such party's successors in title to this lease;

"Term" means the Contractual Term together with any continuation or extension thereof (whether statutory or by the Tenant holding over or for any other reason);

"VAT" means value added tax or any tax of a similar nature that may be substituted for it or levied in addition to it;

"VATA" means the Value Added Tax Act 1994;

"VAT Group" means two or more bodies corporate registered as a group for the purposes of Section 43 and Sections 43A to 43D VATA;

"VAT Regulations" means the Value Added Tax Regulations 1995 as amended from time to time or any re-enactment thereof.

2.2 Interpretation

In this lease unless there be something in the subject or context inconsistent therewith:

2.2.1 where the expressions the "Tenant" or the "Guarantor" (if any) include two or more persons they shall include the plural number and obligations expressed or implied to be made by or with any of such persons shall be deemed to be made by or with such persons jointly and severally;

2.2.2 any covenant by the Tenant not to do or omit to do an act or thing shall be deemed to include an obligation not to permit or suffer such act or thing to be done or omitted to be done as the case may be;

2.2.3 any reference to parting with possession shall be deemed to include sharing possession and any occupation whatsoever by a licensee;

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2.2.4 any reference in this lease to the Landlord's consent shall include where necessary the consent of both the Landlord and all superior landlords (if any);

2.2.5 any references to a right exercisable by the Landlord shall include where necessary the exercise of such right by all superior landlords (if any) and all persons authorised by the Landlord or any superior landlord;

2.2.6 any reference to a statute shall include any statutory extension or modification or re-enactment of such statute and any order instrument plan regulation permission or direction made or issued thereunder or deriving validity therefrom;

2.2.7 words importing the singular meaning shall include the plural meaning and vice versa and words importing the masculine feminine and neuter genders shall include the other or others of such genders;

2.2.8 the clause and paragraph headings and the index are for convenience only and shall not affect the construction of this lease;

2.2.9 for the avoidance of any doubt expressions used in the Particulars and in the Prescribed Clauses shall have the same meanings when used elsewhere in this lease;

2.2.10 any reference to a clause paragraph or schedule shall be a reference to the clause or paragraph of or schedule to this lease so numbered.

3. DEMISE RENT AND RENT REVIEW

3.1 Demise and rent

In consideration of the rents hereinafter reserved and of the covenants and conditions hereinafter contained the Landlord hereby demises unto the Tenant all that the Premises together with so far as the Landlord can grant the same the rights (if any) contained or referred to in part 2 of schedule 1 except and reserving as provided in part 3 thereof to hold the same subject to and (insofar as the Landlord has the power to grant the same) with the benefit of the matters (if any) referred to in part 4 of that schedule unto the Tenant for the Contractual Term yielding and paying therefor unto the Landlord yearly during the Term and so in proportion for any less period than a year without any deduction first the clear yearly rent (exclusive of VAT) ascertained in accordance with clause 3.2 such rent (if the Landlord so requires) to be paid by banker's standing order direct debit or other accepted means for the transmission of money which the Landlord may from time to time reasonably nominate by equal quarterly

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payments in advance on the four Rent Days in every year the first payment (for the period beginning on the Rent Commencement Date and ending on the day preceding the next succeeding Rent Day and calculated by multiplying the said yearly rent by the fraction of which the numerator is the number of days between those dates (both included) and the denominator is 365) to be made on the date hereof secondly by way of additional rent all such monies as shall become payable in accordance with clause 4.3 thirdly by way of additional rent all such monies as shall become payable in accordance with clause 4.4 fourthly by way of additional rent on demand all such monies as shall become payable in accordance with clause 6.2.1 and fifthly by way of additional rent all other amounts (including VAT) payable to the Landlord under this lease.

3.2 Rent review

The yearly rent referred to in clause 3.1 shall be ascertained as follows:

3.2.1 from the date hereof up to the Rent Commencement Date a peppercorn;

3.2.2 from and including the Rent Commencement Date until the first Review Date such yearly rent shall be the Initial Rent;

3.2.3 from and including each successive Review Date such yearly rent shall be a rent equal to the rent previously hereby reserved immediately prior to that Review Date or such revised rent ("Revised Rent") as may be ascertained as hereinafter provided whichever be the greater;

3.2.4 the Revised Rent payable from any Review Date may be agreed at any time between the Landlord and the Tenant or (in the absence of agreement) determined not earlier than the relevant Review Date by an arbitrator such arbitrator to be a partner in a principal firm of Chartered Surveyors who is experienced in the letting and valuation of premises comparable with the Premises and to be nominated in the absence of agreement by or on behalf of the President for the time being of the Royal Institution of Chartered Surveyors on the application of the Landlord or the Tenant made not earlier than six months before the relevant Review Date and so that in the case of such arbitration the Revised Rent to be awarded or determined by the arbitrator shall be such as he shall decide should be the Open Market Rent at the relevant Review Date;

3.2.5 for the purposes of this clause 3.2 "Open Market Rent" means the yearly rent (exclusive of any VAT chargeable thereon) at which the Premises might

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reasonably be expected to be let on the relevant Review Date in the open market by a willing landlord to a willing tenant with vacant possession and without payment of a fine or premium for a term commencing on the relevant Review Date equal to the then unexpired residue of the Term or 10 years (whichever shall be the longer) and in all other respects on the terms and conditions of this lease (other than the amount of rent but including the provisions for rent review at five yearly intervals) assuming (if not facts):

3.2.5.1 that the Premises are then in existence are ready fit and available for immediate occupation and use fitted out to the requirements of the willing tenant (which for the avoidance of doubt such fitting out includes floor boxes and carpet) and ready for trading and that if the Premises or any part thereof shall have been destroyed or damaged the same have or has been fully restored;

3.2.5.2 that rent commences to be payable on the relevant Review Date and that at such date the willing tenant has already enjoyed the benefit of any rent free period or other rental concession or incentive which on a new letting with vacant possession might be granted to an incoming tenant in respect of the carrying out by such incoming tenant of fitting out works to the Premises;

3.2.5.3 that the covenants herein contained on the part of the Landlord and the Tenant have been fully performed and observed;

3.2.5.4 that no work has been carried out to the Premises whether by the Tenant or any other person which has reduced the lettable floor area of the Premises or has otherwise diminished the rental value of the Premises;

3.2.5.5 that the willing tenant is a taxable person for the purposes of the legislation relating to VAT and is able to recover all input tax paid by it as a credit against output tax or otherwise;

there being disregarded:

3.2.5.6 the fact that the Tenant its sub-tenants or their respective predecessors in title have been in occupation of the Premises;

3.2.5.7 any goodwill attached to the Premises by reason of the carrying on

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thereat of the business of the Tenant its subtenants or their respective predecessors in title;

3.2.5.8 any effect on the rental value of the Premises attributable to the existence at the relevant Review Date of any improvement to the Premises or any part thereof carried out with consent where required otherwise than in pursuance of an obligation to the Landlord or its predecessors in title by and at the sole cost of the Tenant its sub-tenants or their respective predecessors in title during the Term or during any period of occupation prior thereto arising out of an agreement to grant the Term;

3.2.6 the arbitration shall be conducted in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof for the time being in force and it is the intention of the parties that the arbitrator appointed shall be entitled to make an interim award and shall make a reasoned final award;

3.2.7 when the amount of any rent to be ascertained as hereinbefore provided shall have been so ascertained memoranda thereof shall thereupon be signed by or on behalf of the Landlord the Tenant and the Guarantor and annexed to this lease and the counterpart thereof;

3.2.8 if the Revised Rent payable on and from any Review Date has not been agreed by the relevant Review Date rent shall continue to be payable at the rate previously payable and forthwith upon the Revised Rent being ascertained the Tenant shall forthwith pay to the Landlord a sum equal to the difference between rent at the rate of the Revised Rent in respect of the period commencing on the relevant Review Date and ending on the day preceding the Rent Day immediately following such ascertainment and rent actually paid by the Tenant in respect of such period together with interest at 4% below the Stipulated Rate on each instalment of such difference from the date on which each instalment would have been payable (had the rent review been determined by the Review Date) until actual payment and for this purpose the Revised Rent shall be deemed to have been ascertained on the date when the same has been agreed between the parties or as the case may be the date of the award of the arbitrator;

3.2.9 if at any Review Date by reason or in consequence of any legislation for the time being in force it shall not be possible to review the rent payable hereunder in accordance with the terms of this lease or there shall be some restriction on the

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right of the Landlord to demand or to accept payment of the full amount of the rent for the time being payable under this lease then on each occasion that such legislation is revoked relaxed or modified the Landlord shall be entitled to give to the Tenant written notice calling for a review of the rent payable hereunder as from the date of service of such notice on the Tenant (or such later date as may be specified therein) in the manner hereinbefore provided for and the provisions of this clause 3.2 shall apply (mutatis mutandis) as if the date of service of such notice on the Tenant (or such later date as may be specified therein) is a Review Date hereunder;

3.2.10 for the avoidance of any doubt

3.2.10.1 time shall not be of the essence for the purposes of this clause 3.2; and

3.2.10.2 under no circumstances shall the rent payable from and including any Review Date be less than the rent hereby reserved immediately prior to such Review Date there being disregarded for this purpose any abatement of rent pursuant to clause 6.3 and any such legislation or restriction as is referred to in clause 3.2.9 in force at such Review Date.

4. TENANT'S COVENANTS

The Tenant hereby covenants with the Landlord as follows:

4.1 Rent

To pay the several rents reserved by this lease at the times and in manner aforesaid together with any interim rent or rents at any time agreed or ordered without any deductions and not to exercise or seek to exercise any right or claim to withhold rent or any right or claim to legal or equitable set-off (save as required by law).

4.2 Outgoings

4.2.1 To bear pay and discharge and indemnify the Landlord against all existing and future rates taxes duties levies charges assessments impositions and outgoings whatsoever whether parliamentary parochial local or of any other description and whether or not of a capital or non­recurring nature which are now or may at any time hereafter during the Term be charged levied assessed or imposed upon or

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payable in respect of the Premises or any part thereof or upon any owner or occupier or other person interested in respect thereof except only taxation (other than VAT) assessed upon the Landlord in respect of its revenue derived from its reversionary interest in the Premises or any dealing by it therewith.

4.2.2 If the Landlord shall suffer any loss of rating relief which may be applicable to empty premises after the end of the Term by reason of such relief being allowed to the Tenant in respect of any period before the end of the Term to make good such loss to the Landlord.

4.2.3 To be solely responsible for and promptly to pay all costs and charges for water gas electricity telephone and any other services used or consumed in the Premises including all meter rents and standing charges but so that the Landlord shall not be responsible for any interruption or failure in the supply of any such services.

4.3 Interest on arrears

If and whenever the Tenant shall fail to pay the rents or any other monies due under this lease on the due date (whether formally demanded or not) or the Landlord shall with good reason refuse to accept the same then (without prejudice to any other right or remedy of the Landlord including the right of re-entry hereinafter contained) the Tenant shall pay to the Landlord (whether formally demanded or not) interest at the Stipulated Rate on such rents or other monies as the case may be from the date when the same became due until payment thereof (as well after as before judgment).

4.4 Estate Service charge

To pay to the Landlord the Estate Service Charge in accordance with schedules 2 and 3.

4.5 Repairs

4.5.1 At all times during the Term to keep and maintain the Premises in good and substantial repair and condition (damage by the Insured Risks excepted save to the extent that payment of any insurance monies is withheld by reason of or arising out of any act omission neglect or default of the Tenant or any sub-tenant or their respective servants agents licensees or invitees).

4.5.2 To keep in good and safe repair all Conduits exclusively serving the Premises and to indemnify the Landlord against all liability howsoever arising from any failure to repair or the misuse or overloading of any Conduits serving the

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Premises.

4.5.3 To maintain in good and serviceable repair and condition the Landlord’s fixtures and fittings and all apparatus plant machinery and equipment (including but without prejudice to the generality of the foregoing any lifts or lift shafts and any heating or air conditioning systems and any sprinkler system) in or upon the Premises and to replace such of them as may become worn out lost unfit for use or destroyed by substituting others of a like or more modern nature and of good quality (and if the Landlord shall at any time so reasonably require to enter into agreements upon terms first approved in writing by the Landlord such approval not to be unreasonably withheld or delayed with the manufacturers thereof or with approved maintenance contractors for the regular inspection and servicing of the same).

4.5.4 To remedy any breach of covenant and to repair and make good all defects decays and wants of repair in respect of the Premises of which notice in writing shall be given by the Landlord to the Tenant and for which the Tenant may be liable hereunder within 6 weeks after the giving of such notice provided that in the case of default by the Tenant it shall be lawful for (but not obligatory upon) the Landlord (but without prejudice to the right of re-entry hereinafter contained or other rights of the Landlord with regard thereto) to enter upon the Premises and remedy the breach and/or make good such defects decays and wants of repair and the cost thereof and all proper expenses (including surveyors' and other professional fees) together with interest thereon at the Stipulated Rate from the date of expenditure by the Landlord until payment by the Tenant as well after as before judgment shall be a debt due from the Tenant to the Landlord and be forthwith recoverable by action.

4.5.5 To keep the Premises clean and in a neat and tidy condition and keep all rubbish and waste in enclosed receptacles on the Premises or where the Landlord directs and to empty the same at least once a week.

4.5.6 To clean as often as may be requisite the inside of the window panes and frames of the Premises.

4.5.7 To maintain any trees, shrubs and landscaped areas on the Premises.

4.6 Common facilities

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(In so far as not covered under the Estate Service Charge) to pay a fair and proper contribution towards the cost and expense of constructing repairing rebuilding renewing lighting cleansing and maintaining all things the use of which is common to or capable of being used in common with the Property and other premises (such contribution to be assessed by the Landlord's Surveyor acting properly and in default of payment on demand to be recoverable as rent in arrear).

4.7 Decoration

In every fifth year of the Term and also in the last three months thereof howsoever determined and in such last three months (except where the Tenant has applied to court for a new tenancy under the provisions of Part II of the Landlord and Tenant Act 1954 (as amended)) in a tint or colour to be approved by the Landlord's Surveyor to Decorate the inside of the Premises.

4.8 Alterations

4.8.1 Not to cut injure maim remove or alter the Structure or any part thereof nor to merge the Premises with any adjoining premises.

4.8.2 Not to make any alteration or addition (whether structural or non­structural) to the exterior of the Premises or to the external appearance of the Premises.

4.8.3 Not to make any internal non-structural alteration or addition whatsoever of in or to the Premises except

4.8.3.1 with the prior written consent of the Landlord (which shall not be unreasonably withheld or delayed);

4.8.3.2 subject to such terms and conditions (including provision for reinstatement at the Tenant's cost on the expiration or sooner determination of the Term) as the Landlord may require;

4.8.3.3 in accordance with drawings and specifications previously submitted in triplicate to and approved in writing by or on behalf of the Landlord (such approval not to be unreasonably withheld or delayed); and

4.8.3.4 after having obtained and supplied to the Landlord copies of all requisite consents licences and permissions for the carrying out of such works from any local public or other authority or body and after the Landlord shall have notified the Tenant in writing that the

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same are satisfactory to it (such notification not to be unreasonably withheld or delayed).

4.8.4 Not to make or carry out any alteration addition or extension to any of the water gas electricity and other public utility service systems serving the Premises except with the prior written consent of the Landlord (which shall not be unreasonably withheld or delayed) and in accordance with the relevant codes of practice of the statutory undertaker concerned and to supply to the Landlord upon request an adequate drawing or drawings showing the actual position of all pipes wires cables and other services within the Premises installed amended or extended by the Tenant.

4.8.5 Nothing in this clause 4.8 shall prevent the Tenant from erecting altering and removing non-structural demountable partitioning and installing altering and removing cabling provided that the Tenant shall provide to the Landlord detailed plans of such works within six weeks of the works being carried out and all works are removed and the Tenant to make good any damage caused at the end of the Term howsoever determined (except where the Tenant has applied to court for a new tenancy under the provisions of part 4 of the Landlord and Tenant Act 1954 (as amended)).

4.8.6 In the event of the Tenant failing to observe this covenant it shall be lawful for the Landlord and its agents or surveyors with or without workmen and others and all persons authorised by the Landlord with any necessary materials and appliances to enter upon the Premises and remove any alterations or additions and execute such works as may be necessary to restore the Premises to their former state and the cost thereof and all proper expenses (including surveyors' and other professional fees) together with interest thereon at the Stipulated Rate from the date of expenditure by the Landlord until payment by the Tenant as well after as before judgment shall be a debt due from the Tenant to the Landlord and be forthwith recoverable by action.

4.9 Entry

To permit the Landlord and its agents and all persons authorised by them with or without workmen and appliances at all reasonable times on reasonable prior notice to enter the Premises

4.9.1 to examine the state of repair and condition thereof;

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4.9.2 to check and take inventories of the Landlord's fixtures and fittings and the plant machinery and equipment therein;

4.9.3 to repair and maintain the Premises;

4.9.4 for any other purpose (including measurement and inspection in relation to any rent review hereunder or any renewal of this lease) connected with the interest of the Landlord in the Premises or any dealing therewith; or

4.9.5 to exercise the rights herein excepted and reserved.

4.10 Use

4.10.1 Subject always to the following provisions of this clause 4.10 not to use the Premises otherwise than for the Permitted Use and in accordance with the requirements and conditions of any planning permission authorising such use from time to time.

4.10.2 Not to do on the Premises anything which may be illegal or immoral or a nuisance or annoyance or cause danger or injury or damage to the Landlord or any tenant or any neighbouring owner or occupier and to pay all reasonable and proper costs charges and expenses incurred by the Landlord in abating a nuisance and in executing such works as may be required to abate a nuisance in obedience to any notice served upon the Landlord in respect of or incidental to the Premises or the use thereof.

4.10.3 Not to use the Premises for any noxious noisy or offensive trade or business and not to hold any sale by auction or public show nor keep any live animals or birds on the Premises and not to allow on the Premises anything which is or may become dangerous offensive combustible inflammable radioactive or explosive.

4.10.4 Not to trade or display goods outside the Premises nor to cause any obstruction outside the Premises.

4.10.5 Not to use on the Premises any machine (other than machinery normally associated with the Permitted Use and which where appropriate shall be mounted so as to minimise noise and vibration) without the written consent of the Landlord and not to use on the Premises any machinery or sound reproduction or amplifying equipment which shall be noisy or cause vibration or be a nuisance disturbance or annoyance to the Landlord or the owners and/or occupiers of any

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adjoining or neighbouring premises.

4.10.6 Not to do anything which imposes any excessive load or strain on the Premises or any part thereof.

4.10.7 Not to suffer or permit any person to reside or sleep on the Premises.

4.10.8 Not to discharge anything into the Conduits serving the Premises which will be corrosive or harmful or which may cause any obstruction or deposit therein.

4.10.9 Not to commit any waste upon or to the Premises.

4.10.10 Not to use the Premises as an office for a government agency or other public authority which would involve the attendance thereat of members of the public for the purpose of seeking employment or enrolling for or collecting any statutory social security health insurance or other benefit payment or applying for or collecting any licence passport certificate or similar document or paying thereat any tax imposition or other financial liability.

4.10.11 If the Premises are continually unoccupied for more than one month to provide security and caretaking arrangements to afford the Premises reasonable protection against vandalism theft or unlawful occupation.

4.10.12 Not to obstruct others lawfully using the Common Parts and to use the same in a reasonable manner and in accordance with any reasonable regulations made by the Landlord from time to time in regard thereto.

4.11 Alienation

4.11.1 Not to assign or charge part only of the Premises.

4.11.2 Save for an underletting in accordance with the succeeding provisions of this clause not to underlet the whole or any part of the Premises or to part with possession of or share occupation of the whole or any part of the Premises and not to permit any person deriving title under the Tenant by way of permitted underlease so to do in respect of the Premises.

4.11.3 Not under any circumstances to create or permit the creation of any interest derived out of this lease whether mediate or immediate and however remote or inferior:

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4.11.3.1 at a fine or premium or other capital sum (and so that no such fine premium or other capital sum shall be taken);

4.11.3.2 except at a rent which is not less than the open market rental value of the Premises (or in the case of an underlease of part only of the Premises the proportion of such rent attributable to the part of the Premises to be underlet);

4.11.3.3 except on terms which prohibit the commutation of rent;

4.11.3.4 for a term which shall extend beyond a date on which the rent payable under this lease is to be reviewed unless such underletting shall include provisions approved by the Landlord for rent reviews at the times and in accordance with the terms of this lease.

4.11.4 Not to assign part with possession or charge the whole of the Premises nor permit any person deriving title under the Tenant so to do without the prior written consent of the Landlord which shall not be unreasonably withheld or delayed but so that for the purposes of section 19(1A) of the Landlord and Tenant Act 1927 it is agreed that it shall be reasonable for the Landlord to withhold consent to an assignment of the whole of the Premises unless:

4.11.4.1 the assignee is not a Group Company;

4.11.4.2 the assignee shall by deed enter into a direct covenant with the Landlord to observe and perform the covenants and provisions of and to pay the rents reserved by this lease for (subject to the provisions of the 1995 Act) the remainder of the Term and a guarantor or guarantors acceptable to the Landlord (if more than one jointly and severally) shall enter into a covenant and guarantee with and to the Landlord in the terms set out in schedule 4 as if references therein to the "Tenant" were references to the assignee; and

4.11.4.3 the Tenant shall by deed enter into an authorised guarantee agreement in respect of the assignee which shall satisfy the requirements set out in schedule 5; and

4.11.4.4 each person who is guarantor of the Tenant under this lease immediately prior to the assignment shall enter into a guarantee in the same terms (mutatis mutandis) as schedule 4 in respect of the

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liability of the Tenant under any authorised guarantee agreement; and

4.11.4.5 at the Approval Date no rent or other monies are due to the Landlord under this lease and unpaid; and

4.11.4.6 the Tenant and/or the assignee complies with such other conditions as the Landlord may reasonably impose.

4.11.5 Subject as aforesaid not to underlet the whole of the Premises or any part thereof (being a part which comprises only a Letting Unit) without the prior written consent of the Landlord (which shall not be unreasonably withheld) and provided that the Premises must at no time comprise of more than three Letting Units;

4.11.6 To procure in the case of any permitted underletting of the Premises (whether mediate or immediate) that on or before the grant of the relevant underlease:

4.11.6.1 the underlessee shall covenant with the Landlord by deed to observe and perform the Tenant's covenants and conditions in this lease (except the covenant to pay rent) (so far as the same relate to the part of the Premises comprised in the underlease) and those of the underlessee in the relevant underlease;

4.11.6.2 if the Landlord shall so require a guarantor or guarantors acceptable to the Landlord shall covenant (if more than one jointly and severally) with the Landlord to guarantee the observance and performance by the underlessee of its covenants to be contained in such underlease such guarantee to be given (mutatis mutandis) in the form of the provisions contained in schedule 4;

4.11.7 To procure that any permitted immediate or mediate underlease is in a form approved by the Landlord (such approval not to be unreasonably withheld or delayed) and in particular contains:

4.11.7.1 covenants by the underlessee with the underlessor prohibiting the underlessee from doing or allowing any act or thing on or in relation to the premises demised by such underlease inconsistent with or in breach of the Tenant's obligations in this lease;

4.11.7.2 a condition for re-entry by the underlessor on breach of any

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covenant by the underlessee;

4.11.7.3 the same restrictions on assignment underletting parting with possession and sharing of occupation and the same provisions for direct covenants and registration as in this lease save that there shall be an absolute prohibition on any further underletting or parting with possession or sharing of occupation of the premises demised by the underlease (save by way of assignment of the whole thereof);

4.11.7.4 a prohibition on any assignment of the whole of the premises demised by the underlease without the consent of the Landlord;

4.11.7.5 an agreement excluding in relation to that underlease the provisions of sections 24-28 of the Landlord and Tenant Act 1954 (as amended) or any modification or re-enactment thereof entered into in compliance with the provisions of section 38A of that Act and the relevant Schedules of the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 (evidence of which compliance shall be provided by the Tenant to the Landlord).

4.11.8 To enforce performance by every such underlessee of the covenants and conditions in the underlease and not to release or waive any such covenants or conditions.

4.11.9 To operate and enforce all provisions for the review of rent contained in any underlease but not to agree the amount of any revised rent arising as a result of any such review of rent without the prior written consent of the Landlord (such consent not to be unreasonably withheld or delayed).

4.11.10 Upon every application for consent required by this clause to disclose to the Landlord such information as to the terms proposed as the Landlord may require.

4.11.11 Not to enter into any variation of the terms of any underlease nor to accept a surrender of the same in respect of part only (as opposed to the whole) of the premises underlet.

4.12 Sharing with a Group Company

Nothing in clause 4.11 shall restrict the right of the Tenant to allow any Group Company of the Tenant to occupy or share the occupation of the Premises from time to time provided that:

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4.12.1 no relationship of Landlord and Tenant shall be created or deemed to exist between the Group Company and the Tenant;

4.12.2 the Group Company shall not be permitted to have exclusive occupation of the whole or any part or parts of the Premises;

4.12.3 the right of any company to occupy the Premises or any part or parts of them shall forthwith determine upon such company ceasing to be a Group Company; and

4.12.4 the Tenant shall notify the Landlord immediately of any group sharing arrangements

4.13 Registration of documents

4.13.1 Within one month of any assignment or underlease or any transmission or other devolution relating to the Premises or any part thereof to give notice thereof to the Landlord's solicitor and to furnish him with a certified copy of any document relating thereto (including without limitation in the case of an underlease in respect of which the provisions of sections 24 to 28 (inclusive) of the Landlord and Tenant Act 1954 have been excluded both the notice served by the landlord and the tenant's declaration or statutory declaration in response pursuant to section 38A of that Act) and to pay to the Landlord's solicitor a reasonable fee (not being less than £50) plus VAT thereon.

4.13.2 To supply to the Landlord on request the names and addresses of any tenant deriving title from the Tenant (whether mediately or immediately) together with details of the rent payable by any such tenant and the other terms of such tenancy.

4.13.3 To supply to the Landlord any details required by the Landlord pursuant to section 40 of the Landlord and Tenant Act 1954 and to supply the Landlord with full details of any notices given pursuant to section 25 of the Landlord and Tenant Act 1954 by the Tenant to any sub-tenant and full details of any notices received by the Tenant from any sub-tenant pursuant to section 26 of the Landlord and Tenant Act 1954.

4.14 Compliance with statutes

To comply in all respects with and in a proper and workmanlike manner to execute all works required under the provisions of all statutes for the time being in force and the directions of

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any competent authority relating to the Premises or any part thereof or the use thereof or anything contained therein or the employment therein of any person or persons and not to do or omit or suffer to be done or omitted on or about the Premises any act or thing by reason of which the Landlord may under any enactment incur or have imposed upon it or become liable to pay any levy penalty damages compensation costs charges or expenses and to indemnify and keep indemnified the Landlord against all claims demands costs expenses and liability in respect of the foregoing.

4.15 Planning/environmental matters

4.15.1 Not to apply for planning permission in respect of the Premises without the Landlord's prior written consent (which shall not be unreasonably withheld in respect of any addition or alteration in respect of which the Landlord's consent is not to be unreasonably withheld under the terms of this lease) and if the Landlord attaches reasonable conditions to any such consent not to apply for any planning permission except in accordance with those conditions.

4.15.2 At all times during the Term to comply with the provisions and requirements of the Planning Acts and of any planning permissions (and the conditions thereof) relating to or affecting the Premises or the use thereof or any operations works acts or things carried out executed done or omitted thereon and to keep the Landlord indemnified in respect thereof.

4.15.3 Subject to clause 4.15.1 as often as occasion requires during the Term at the Tenant's expense to obtain and if appropriate renew all planning permissions and serve all notices required under the Planning Acts for the carrying out by the Tenant of any operations or the institution or continuance by the Tenant of any use of the Premises or any part thereof.

4.15.4 To pay and satisfy any charge imposed under the Planning Acts in respect of the carrying out or maintenance by the Tenant of any such operation or the institution or continuance by the Tenant of any such use as aforesaid.

4.15.5 Notwithstanding any consent which may be granted by the Landlord under this lease not to carry out or make any alteration or addition to the Premises or any change of use of the Premises (being an alteration or addition or change of use prohibited by or for which the Landlord's consent is required under this lease and for which a planning permission is needed) before a planning permission for such alteration addition or change of use has been produced to and acknowledged by

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the Landlord as satisfactory provided that the Landlord may refuse to express such satisfaction if the period of such permission or anything contained in or omitted from it will in the opinion of the Landlord's Surveyor be likely to prejudice the Landlord's interest in the Premises either during the Term or on or after the expiration or earlier determination of the Term.

4.15.6 Unless the Landlord otherwise directs in writing to carry out and complete before the expiration or earlier determination of the Term any work required to be carried out to the Premises as a condition of any planning permission granted during the Term whether or not the date by which the planning permission requires such works to be carried out is during the Term and any development begun on the Premises in respect of which the Landlord shall or may be or become liable for any charge or levy under the Planning Acts.

4.15.7 When called upon so to do to produce to the Landlord and the Landlord's Surveyor all plans documents and other evidence reasonably required by the Landlord to satisfy itself that the Tenant's obligations in this clause have been complied with.

4.15.8 Not without the prior written consent of the Landlord to enter into a planning obligation for the purposes of section 106 of the Town and Country Planning Act 1990.

4.15.9 Where any planning permission is granted subject to conditions involving the carrying out of works upon or change of use of the Premises the Landlord may as a condition of its consent to the carrying out of such works or change of use require the Tenant to provide security for the due compliance with those conditions and no works shall be commenced and no change of use shall be implemented until such security has been provided to the Landlord's reasonable satisfaction.

4.15.10 As soon as practicable to notify the Landlord of any order direction proposal or notice under the Planning Acts served on or received by the Tenant or coming to the Tenant's notice which relates to or affects the Premises and to produce to the Landlord if required any such order direction proposal or notice in the Tenant's possession and not to take any action in respect of such order direction proposal or notice without the Landlord's approval such approval not to be unreasonably withheld.

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4.15.11 In relation to any act the commission or omission of which requires any consent licence or other authority under the Environmental Protection Act not to do or omit to do (as the case may be) such act without obtaining such authority and not to apply for such authority without the Landlord's prior written consent.

4.16 Easements

Not to obstruct any window light or way belonging to the Premises or to any adjoining or neighbouring premises nor acknowledge that any easement or other right for the benefit of the Premises is enjoyed by consent of any other person nor permit any new easement right or encroachment to be made into against or on the Premises and to give immediate notice to the Landlord if any easement right or encroachment against or affecting the Premises shall be made or attempted and at the Landlord's request and the Tenant's cost to adopt such means as may be reasonably required to prevent the same.

4.17 Notifications

Forthwith on receipt of any permission notice order or proposal relating to the Premises or the use or condition thereof given or issued by any governmental local or other public or competent authority to give full particulars thereof to the Landlord and if so required by the Landlord to produce the same to the Landlord and to take all necessary steps to comply therewith and also when requested by the Landlord to make or join with the Landlord in making such objections and representations against or in respect of the same as the Landlord shall reasonably deem expedient.

4.18 Defects

Forthwith upon becoming aware of the same to give notice in writing to the Landlord of any defect in the state or condition of the Premises which would or might give rise to an obligation upon the Landlord to do or refrain from doing any act or thing in order to comply with any duty of care imposed upon the Landlord and to indemnify the Landlord against or in respect of any losses claims actions costs demands or liability arising out of any failure of the Tenant to comply with its obligations under this lease and at all times to give such notice and display such signs as the Landlord having regard to such duty of care requires to have displayed at the Premises.

4.19 Fire fighting

To keep the Premises supplied and equipped with all fire fighting and extinguishing appliances from time to time required by law or required by the insurers of the Premises or

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reasonably required by the Landlord such appliances being kept open to inspection and properly maintained and not to obstruct or permit or suffer to be obstructed the access to or means of working such appliances or the means of escape from the Premises in case of fire.

4.20 Advertisements/aerials

Not without the prior written consent of the Landlord (such consent not to be unreasonably withheld or delayed) to affix or exhibit any advertisement placard notice poster or sign either outside the Premises or inside the Premises so as to be seen from the outside nor without such consent to install any flagpole mast or outside satellite receiving dish or television or radio aerial on the Premises and if the Landlord so requires to remove at the end or earlier determination of the Term (except where the Tenant has applied to court for a new tenancy under the provisions of part II of the Landlord and Tenant Act 1954 (as amended)) any item so exhibited or installed making good all damage caused thereby and provided that in considering the reasonableness of any withholding of such consent it is acknowledged by the Tenant that the Landlord has a requirement to maintain a consistent look throughout the Estate and that such requirement is reasonable.

4.21 Window Blinds

In the event the Tenant intends to install window blinds to the external windows of the Premises it must prior to such installation obtain the prior written approval of the Landlord such approval not to be unreasonably withheld to both the specification and colour of such blinds so as to maintain a consistent look throughout the Estate.

4.22 Notice boards

To permit the Landlord or its agents to affix upon any suitable part of the Premises a notice board or bill relating to any reletting of the same or to any sale or other dealing with any interest in reversion to this lease and the Tenant will not remove or obscure the same and will at all reasonable times and on reasonable prior notice permit those authorised by the Landlord in connection with any such reletting sale or other dealing to enter and view the Premises without interruption.

4.23 Expenses

To pay to the Landlord on demand and on an indemnity basis all costs charges expenses damages and losses (including without limitation legal costs bailiff's fees and surveyor's fees) incurred by the Landlord in relation to or incidental to or in contemplation of:

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4.23.1 the preparation and service of a notice under section 146 of the Law of Property Act 1925 and/or any proceedings relating to the Premises whether under sections 146 and/or 147 of the Law of Property Act 1925 or otherwise (whether or not any right of re-entry or forfeiture has been waived by the Landlord or a notice served under the said section 146 is complied with by the Tenant or the Tenant has been relieved under the provisions of the Law of Property Act 1925 and notwithstanding forfeiture is avoided otherwise than by relief granted by the court) and to keep the Landlord fully indemnified against all costs charges expenses claims and demands whatsoever in respect of the said proceedings and the preparation and service of the said notices;

4.23.2 (without prejudice to the generality of the foregoing) the preparation and service of any notice or schedule relating to the repair of the Premises whether served on the Tenant during or after the expiration or earlier determination of the Term;

4.23.3 procuring the remedying of any breach of covenant on the part of the Tenant or any sub-tenant or their respective predecessors in title contained in this lease; and

4.23.4 every application made by the Tenant for a consent or licence required by the provisions of this lease whether such consent or licence is granted or refused or proffered subject to any qualification or condition or whether the application is withdrawn (but not where it is unreasonably withheld).

4.24 New guarantor

To notify the Landlord within 28 days if:

4.24.1 any Guarantor being an individual (or if individuals any one of them) shall become bankrupt or shall make any assignment for the benefit of or enter into any arrangement with his creditors either by composition or otherwise or have any distress or other execution levied on his goods or have a receiver appointed under the Mental Health Act 1983;

4.24.2 any Guarantor being an individual (or if individuals any one of them) shall die;

4.24.3 any Guarantor being a body corporate (or if bodies corporate any one of them) has a winding up order made in respect of it other than a members' voluntary winding up of a solvent company for the purposes of amalgamation or reconstruction approved by the Landlord (such approval not to be unreasonably withheld) or has a receiver administrator or an administrative receiver appointed

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of it or any of its assets or has any distress or other execution levied on its goods or is dissolved or struck off the Register of Companies or (being a body corporate incorporated outside the United Kingdom) is dissolved or ceases to exist under the laws of its country or state of incorporation,

and in any such case if the Landlord so requires then at the Tenant's expense within 28 days of such requirement to procure that some other person or persons or body or bodies corporate reasonably acceptable to the Landlord shall execute a guarantee in the terms of schedule 4 with such amendments as the Landlord shall reasonably require in the circumstances.

4.25 Indemnity

To keep the Landlord indemnified from and against all loss damage actions proceedings claims demands costs and expenses of whatsoever nature and whether in respect of any injury to or the death of any person or damage to any property movable or immovable or otherwise howsoever arising directly or indirectly from the repair or the state of repair or condition of the Premises or from any breach of covenant on the part of the Tenant herein contained or from the use of the Premises or out of any works carried out at any time during the Term to the Premises or out of anything now or during the Term attached to or projecting from the Premises or as a result of any act neglect or default by the Tenant or by any sub-tenant or by their respective servants agents licensees or invitees.

4.26 Yield up

At the expiration or sooner determination of the Term:

4.26.1 quietly to yield up the Premises to the Landlord with vacant possession in such state and condition as shall in all respects be consistent with a full and due performance by the Tenant of the covenants on its part herein contained (trade or tenant's fixtures and fittings only excepted);

4.26.2 if so required by the Landlord to remove all fixtures and fittings installed in the Premises during the Term;

4.26.3 to make good to the reasonable satisfaction of the Landlord all damage caused as a result of the removal by the Tenant of any fixtures and fittings;

4.26.4 to remove all signs and nameplates indicating the connection or former connection of the Tenant with the Premises;

4.26.5 to replace all carpeting within the Premises with new carpets of a quality design

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and colour similar to the quality design and colour of the carpeting supplied by the Landlord at the commencement of the Term and first approved in writing by the Landlord;

4.26.6 to deliver to the Landlord all assessments plans surveys and other records created by it or on its behalf in its capacity as a dutyholder (within the meaning of the Control of Asbestos at Work Regulations 2002) in relation to the Premises.

4.27 VAT

4.27.1 To pay to the Landlord by way of additional rent such VAT as may be or become payable in respect of the rents reserved by and other monies payable under and the consideration for all taxable supplies received or deemed to be received by the Tenant under or in connection with this lease.

4.27.2 In every case where the Tenant has agreed to reimburse or indemnify the Landlord in respect of any payment made by the Landlord under the terms of or in connection with this lease to reimburse in addition any VAT paid by the Landlord on such payment.

4.27.3 The Tenant is not intending to use and will not use all or any part of the Premises for a relevant charitable purpose (within the meaning of Schedule 8 Group 5 (Note 6) VATA).

4.27.4 If the covenant in clause 4.27.3 is breached by the Tenant and in consequence supplies made by the Landlord in relation to all or any part of the Estate after the making of an Election are not taxable supplies the Tenant will indemnify the Landlord against:

4.27.4.1 any VAT paid or payable by the Landlord which is or may become irrecoverable due to the Landlord's supplies not being taxable;

4.27.4.2 any amount in respect of VAT which the Landlord has to account for or will have to account for to HM Revenue & Customs under the provisions of Part XIV or Part XV of the VAT Regulations;

4.27.4.3 any consequential penalties, interest and/or default surcharge; and

4.27.4.4 any additional liability to corporation tax on any payment made to the Landlord under this clause.

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4.27.5 For the avoidance of doubt references in clauses 4.27.3 and 4.27.4 above to the Landlord or the Tenant shall include references to the representative member of the VAT Group of the Landlord or the Tenant as appropriate.

4.28 Regulations

To comply with all reasonable regulations and directions as the Landlord may from time to time make or give for the orderly convenient and proper management of the Estate or any part or parts thereof.

4.29 Observe covenants

To observe and perform the agreements covenants and stipulations (if any) referred to in part 4 of schedule 1 so far as any of the same are still subsisting and capable of taking effect and relate to the Premises and to keep the Landlord indemnified against all actions proceedings costs claims demands and liability in any way relating thereto.

4.30 Registration of this lease at the Land Registry

At the Tenant's own expense to procure that the Tenant becomes registered at the Land Registry as proprietor of this lease and that any rights granted and reserved by this lease are properly noted against the affected titles and as soon as practicable after such registration to provide the Landlord with an official copy of the register relating to title created by this lease showing itself registered as proprietor.

4.31 Removal of registrations at the Land Registry

On the expiry or sooner determination of the Term promptly and at its own expense to close the registered title relating to this lease and cancel any note of this lease made in any title at the Land Registry.

5. LANDLORD'S COVENANTS

The Landlord hereby covenants with the Tenant as follows:

5.1 Quiet enjoyment

The Tenant paying the rents and other monies hereby reserved and performing and observing the covenants conditions and agreements on the part of the Tenant herein contained the Tenant may peaceably hold and enjoy the Premises during the Term without any interruption by the Landlord or any person lawfully claiming through under or in trust for the Landlord or by title

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paramount.

5.2 Services

Subject to the payment by the Tenant of the Estate Service Charge and provided that the Landlord is not prevented by any Insured Risk accident strike combination or lockout of workmen or any other cause beyond its control the Landlord will use its reasonable endeavours to provide or secure the provision of the Services referred to in schedule 2 in an efficient manner and in accordance with the principles of good estate management provided that the Landlord may at its discretion extend, diminish or otherwise vary the Services provided in the interests of good estate management and further provided that the Landlord shall not be responsible for any temporary delay stoppage or omission in connection therewith due to any cause or circumstances beyond the Landlord's control provided that the Landlord makes good any such delay stoppage or omission as soon as reasonably possible.

6. INSURANCE

6.1 Landlord's obligations

The Landlord (for so long as and to the extent that the Landlord has an insurable interest in the Estate) hereby covenants with the Tenant as follows:

6.1.1 save to the extent that any insurance shall be vitiated by any act neglect default or omission of the Tenant or any sub-tenant or their respective servants agents licensees or invitees the Landlord will insure or cause to be insured the Estate against loss or damage by the Insured Risks in a sum equal to the likely cost of completely rebuilding reinstating and replacing the same (taking into account estimated increases in building costs) together with the cost of demolition shoring hoarding and removal of debris and a proper provision for professional fees in respect of rebuilding and reinstating together in each case with VAT and against Loss of Rent;

6.1.2 if reasonably so required by the Tenant (and upon payment of a reasonable fee for dealing with each request other than the first in each year) to produce to the Tenant from time to time reasonable evidence of the terms of the Landlord's policy of insurance and the fact that the policy is subsisting and in effect;

6.1.3 to use reasonable endeavours to procure that the Tenant's interest is noted on the policy;

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6.1.4 in case of damage or destruction to the Estate by any of the Insured Risks to expend when lawful so to do all monies received by the Landlord (other than in respect of rent and fees) under the Landlord's insurance in or towards reinstating such damage or destruction so far as practicable and to make up any shortfall but if reinstatement as aforesaid shall not be permitted or possible or shall be frustrated the insurance monies shall belong to the Landlord absolutely provided always that in such circumstances the Landlord may at its option replace the building or buildings originally comprised within the Estate by a building or buildings generally similar in concept thereto and (having regard to the then principles of good estate planning) of a similar order and size and being in or about the same position or positions as its or their predecessor or predecessors.

6.2 Tenant's obligations

The Tenant hereby covenants with the Landlord as follows:

6.2.1 to pay to the Landlord on demand:

6.2.1.1 all premiums from time to time payable by the Landlord for insuring the Premises against loss or damage by the Insured Risks in accordance with clause 6.1; and

6.2.1.2 all premiums from time to time payable by the Landlord for insuring Loss of Rent; and

6.2.1.3 any excess deducted by insurers in respect of any claim relating to the Premises; and

6.2.1.4 the cost of any professional valuation of the Premises which may at any time or times be required by the Landlord in connection with the insurance of the Premises but not more than once every 18 months,

6.2.2 not to effect any separate insurance of the Premises against loss or damage by any of the Insured Risks but if the Tenant shall become entitled to the benefit of any insurance on the Premises then the Tenant shall apply all monies received by virtue of such insurance in making good the loss or damage in respect of which the same shall have been received;

6.2.3 not to carry on upon the Premises any trade business or occupation in any manner or do any other thing which in the reasonable opinion of the Landlord may make

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void or voidable any policy for the insurance of the Premises or any adjoining or neighbouring property against any risk for the time being required by the Landlord to be covered or render any increased or extra premium payable for such insurance (without in the latter event first having paid every such increased or extra premium) and to pay to the Landlord on demand any increased premiums payable in respect of the Premises arising by reason of the Premises being unoccupied;

6.2.4 to carry out in accordance with the reasonable directions of the Landlord all such works as may be required by it for the better protection of the Premises and to comply with the reasonable requirements of the Landlord's insurers in respect of the Premises;

6.2.5 in the event of the Premises or any part thereof being destroyed or damaged by any peril whatsoever to give notice thereof to the Landlord as soon as such destruction or damage shall come to the notice of the Tenant stating whether and to what extent such destruction or damage was brought about directly or indirectly by any of the Insured Risks;

6.2.6 in the event of the Premises or any adjoining or neighbouring premises of the Landlord or any part thereof being destroyed or damaged by any of the Insured Risks and the insurance money under any insurance against the same effected thereon by the Landlord being wholly or partly irrecoverable by reason solely or in part of any act or default of the Tenant or any sub-tenant or their respective servants agents licensees or invitees then and in every such case the Tenant will forthwith pay to the Landlord the whole or (as the case may be) the irrecoverable portion of the cost (including professional and other fees and VAT) of completely rebuilding and reinstating the same;

6.2.7 to make up out of its own money any deduction in any insurance monies paid by the Landlord's insurers made as a result of the faulty repair or maintenance of the Premises.

6.3 Abatement of rent

If the Premises or any part thereof or access thereto or essential services serving the Premises shall be destroyed or damaged by any Insured Risk so as to render the Premises unfit for occupation or use then save to the extent that the insurance of the Premises shall have been vitiated by any act neglect default or omission of the Tenant or any sub-tenant or their

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respective servants agents licensees or invitees the rent first hereinbefore reserved or a fair and just proportion thereof according to the nature and extent of the damage sustained (the amount of such proportion if it cannot be agreed to be determined by a single arbitrator to be appointed on the application of either party by the President for the time being (or other next senior officer available) of the Royal Institution of Chartered Surveyors whose decision shall be final and binding) shall be suspended until the Premises or the damaged portion thereof or the access to essential services shall have been reinstated or made fit for occupation and use or (if earlier) until the insurance effected or caused to be effected by the Landlord in respect of Loss of Rent shall be exhausted.

6.4 Commissions

All monies payable by the Tenant under clause 6.2 shall be paid without deduction of any agency or other commission paid or allowed to the Landlord in respect thereof or otherwise which the Landlord shall be entitled to retain for the Landlord's own benefit free of any obligation to bring the same into account under this lease.

6.5 Break option after destruction or damage

In the case of damage or destruction by any of the Insured Risks if the Landlord has not reinstated the Premises or the means of access thereto or essential services within three years from the date of such damage or destruction so as to render the Premises capable of occupation or use then:

6.5.1 at any time after the expiration of such period and up to the date on which the Premises shall be made good the Landlord or the Tenant may determine the Term on giving not less than three months' notice in writing to the other;

6.5.2 upon the expiration of such notice the Term shall cease and determine but without prejudice to the rights and remedies of either party in respect of any antecedent claim or breach of covenant; and

6.5.3 the insurance proceeds shall belong to the Landlord absolutely

provided that any notice served by the Tenant in accordance with clause 6.5.1 shall be of no effect where the Premises shall have been rendered capable of occupation and use prior to the expiry of such notice served by the Tenant.

6.6 Provisions relating to uninsured damage

6.6.1 Definitions used in this clause:

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"Election Notice" means a notice served by the Landlord on the Tenant under clause 6.6.4 electing to reinstate Uninsured Damage;

"Insured Damage" means damage by an Insured Risk to the extent insured against by the Landlord;

"Policy Exclusion" means any condition, exclusion or limitation which may be imposed by the Landlord's insurers (but does not include any excess); and

"Uninsured Damage" means damage to or destruction of the whole or any part of the Premises by any risks expressly specified in the definition of Insured Risks in clause 2.1 and which meets the criteria laid down in clause 6.6.2.

6.6.2 Uninsured Damage

6.6.2.1 Damage to or destruction of the whole or any part of the Premises or the means of access thereto or essential services will only be Uninsured Damage if:

(a) it renders the Premises unfit for occupation and use; and

(b) it is not insured because insurance is not available at all or is not available in the London insurance market at economic rates or it is not insured or fully insured by reason of a Policy Exclusion,

so that the full cost of reinstatement is not recoverable by the Landlord under the insurance policy effected pursuant to clause 6.1.

6.6.2.2 Uninsured Damage excludes any damage in respect of which the Landlord's insurance is vitiated by the Tenant (unless the Tenant promptly pays to the Landlord the amount of insurance monies rendered irrecoverable).

6.6.3 Landlord's notification

If the Landlord does not notify the Tenant within six months of the date of any damage or destruction by any risks specified in the definition of Insured Risks that there is Uninsured Damage, then the damage or destruction shall for the purposes of this lease be taken to have been insured against pursuant to clause 6.1 except to the extent to which the Landlord's insurance is vitiated in the manner

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described in that clause 6.1 (unless the Tenant promptly pays to the Landlord the amount of the insurance monies rendered irrecoverable).

6.6.4 Landlord's election

6.6.4.1 If there is Uninsured Damage clause 6.3 shall apply as if there had been Insured Damage and the Landlord may by service of an Election Notice on the Tenant following the date on which Uninsured Damage occurs elect to rebuild or reinstate the Premises.

6.6.4.2 If the Landlord serves an Election Notice, then (subject to the provision of clause 6.1.4) the Landlord shall reinstate the Premises using its own funds.

6.6.4.3 If the Landlord has not completed such reinstatement after the expiry of three years from and including the date of the Election Notice, then either the Landlord or the Tenant may by notice to the other determine this lease, unless the Landlord has complied with such obligation before the notice is given.

6.6.4.4 If the Landlord has not served an Election Notice within six months following the date on which Uninsured Damage occurs (time being of the essence in this respect) in accordance with clause 6.6.4.1 either the Landlord or the Tenant may at anytime thereafter, unless in the meantime the Landlord gives an Election Notice, forthwith determine this lease.

6.6.4.5 The rights and remedies of each of the parties in relation to earlier breaches of the covenants by the other shall not be affected by any determination of this lease under this clause 6.6.4.

7. PROVISOS

Provided always and it is hereby agreed and declared as follows:

7.1 Forfeiture

If and whenever:

7.1.1 the rents hereby reserved or any part thereof shall be in arrear or unpaid for the space of 14 days after the same shall have become due (whether formally

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demanded or not); or

7.1.2 there shall be any other breach non-performance or non-observance of any of the covenants and conditions herein contained and on the part of the Tenant or the Guarantor to be observed or performed; or

7.1.3 the Tenant or the Guarantor enters into an arrangement or composition in satisfaction of its debts or a scheme of arrangement of its affairs or a proposal is made for such an arrangement or composition or scheme of arrangement; or

7.1.4 the Tenant or the Guarantor has any distress or other execution levied on its goods; or

7.1.5 (the Tenant or the Guarantor being in either case an individual) a petition is presented for a bankruptcy order to be made against it or it is adjudged bankrupt or is deemed unable to pay its debts within the meaning of section 268 of the Insolvency Act 1986 or it has a receiver appointed of any of its assets; or

7.1.6 (the Tenant or the Guarantor being in either case a body corporate) it is deemed unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986 or a meeting is convened or a petition is presented or an order is made or an effective resolution is passed for its winding up other than a members' voluntary winding up of a solvent company for the purposes of amalgamation or reconstruction with the prior approval of the Landlord (such approval not to be unreasonably withheld) or it has a receiver administrator provisional liquidator or administrative receiver appointed of it or any of its assets or an application is made or any meeting of its directors or members resolves to make an application or a petition is presented for the appointment of an administrator in relation to it or it is dissolved or struck off the Register of Companies or (being a body corporate incorporated outside the United Kingdom) is dissolved or ceases to exist under the laws of its country or state of incorporation,

then and in any such case it shall be lawful for the Landlord or any person authorised by the Landlord at any time thereafter to re-enter upon the Premises or any part thereof in the name of the whole and thereupon the Term shall absolutely determine without prejudice to any right or remedy of the Landlord in respect of any breach of the Tenant's or the Guarantor's covenants contained in this lease.

7.2 Exclusion of use warranty

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Nothing in this lease or in any consent granted by the Landlord under this lease shall imply or warrant that the Premises may be used for any purpose whatsoever under the Planning Acts now or from time to time in force (including the Permitted Use) or that the Premises are or will remain otherwise fit for any such use.

7.3 VAT

Except where otherwise expressly stated in this lease all rent money or other consideration in respect of supplies for VAT purposes received or deemed to be received by the Tenant under or in connection with this lease is exclusive of VAT.

7.4 Service of notices

Any notice required to be served under this lease shall be in writing and shall be properly served if it complies with the provisions of section 196 of the Law of Property Act 1925 or section 23 of the Landlord and Tenant Act 1927 and in addition any notice shall be sufficiently served if sent by facsimile transmission to the party to be served and service shall be deemed to be made on the date of transmission if transmitted before 4.00pm on the date of transmission but otherwise on the next day.

7.5 Development of neighbouring premises

The Landlord shall be entitled to carry out or permit the development of any adjoining or neighbouring premises provided that the access of light or air to the Premises is not materially diminished or otherwise materially interfered with.

7.6 Compensation

Any statutory right of the Tenant or any sub-tenant to claim compensation from the Landlord on vacating the Premises shall be excluded as far as the law allows.

7.7 Implied easements

The operation of section 62 of the Law of Property Act 1925 shall be excluded from this lease and the only rights granted to the Tenant are those expressly set out in this lease and the Tenant shall not by virtue of this lease be deemed to have acquired or be entitled to and the Tenant shall not during the Term acquire or become entitled by any means whatsoever to any easement from or over or affecting any other land or premises now or at any time hereafter belonging to the Landlord and not comprised in this lease.

7.8 Disputes with adjoining occupiers

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Any dispute arising as between the Tenant and the lessees tenants or occupiers of adjoining or neighbouring premises belonging to the Landlord relating to any easement right or privilege in connection with the Premises or as to the amount of any contribution towards the expenses of works to services or matters used in common shall be referred to the Landlord whose decision shall be binding upon all parties to the dispute.

7.9 Tenant's effects

The Tenant hereby irrevocably appoints the Landlord to be its agent to store or dispose of any effects left by the Tenant on the Premises for more than seven days after the termination of this lease (whether by effluxion of time or otherwise) on any terms that the Landlord thinks fit and without the Landlord being liable to the Tenant save to account for the net proceeds of sale less the cost of storage (if any) and any other expenses reasonably incurred by the Landlord and hereby agrees to indemnify the Landlord against any liability incurred by the Landlord to any third party whose property shall have been sold by the Landlord in the mistaken belief held in good faith (which shall be presumed unless the contrary be proved) that such property belonged to the Tenant.

7.10 Landlord's liability

7.10.1 The Landlord shall not be liable to the Tenant in respect of any failure of the Landlord to perform any of the Landlord's obligations to the Tenant under this lease whether express or implied unless and until the Tenant has notified the Landlord or the Landlord otherwise has knowledge of the facts giving rise to the failure and the Landlord has failed within a reasonable time to remedy the same.

7.10.2 Any person undertaking an obligation under or by virtue of this lease which is a landlord covenant for the purposes of the 1995 Act does so only in respect of the period of time during which the reversion immediately expectant upon the determination of the Term is vested in such person and not further or otherwise.

7.11 No waiver

7.11.1 No demand for or receipt or acceptance of any part of the rents hereby reserved or any payment on account thereof shall operate as a waiver by the Landlord of any right which the Landlord may have to forfeit this lease by reason of any breach of covenant by the Tenant and the Tenant shall not in any proceedings for forfeiture be entitled to rely on any such demand receipt or acceptance as aforesaid as a defence.

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7.11.2 The return to the Tenant of any rents or other monies paid by banker's standing order or direct debit as soon as reasonably practicable after receipt shall be treated as a refusal by the Landlord to accept the same and the Tenant shall not in any proceedings for forfeiture be entitled to rely on any such receipt as a defence.

7.12 Jurisdiction

This Lease is and shall be governed by and construed in all respects in accordance with the laws of England.

7.13 Status of lease

For the purposes of the 1995 Act this lease is a new tenancy.

7.14 Exclusion of rights under the Contracts (Rights of Third Parties) Act 1999

A person who is not party to this lease shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this lease. This clause does not affect any right or remedy of any person which exists or is available otherwise than pursuant to that Act.

7.15 Severance

If any term of this lease shall be held to any extent to be illegal or unenforceable then that term shall to that extent be deemed not to form part of this lease and the remainder of this lease shall not be affected.

7.16 Appointment of Process Agent

Any notice to be served on Royal Caribbean Cruises Ltd under or in connection with this lease shall be effectively served if sent to Royal Caribbean Cruises Ltd c/o Watson Farley Williams LLP, 15 Appold Street, London EC2A 2HB (reference Martin Watson).

8. TENANT'S OPTION TO DETERMINE

8.1 The Tenant may end this Lease on 30 August 2016 by giving at least six months' prior written notice to the Landlord provided that at the time of expiry of such notice:

8.1.1 there are no arrears of the rents firstly secondly thirdly and fourthly reserved by this Lease; and

8.1.2 vacant possession of the Premises is given.

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8.2 If any of the conditions referred to in clause 8.1.1 or 8.1.2 above are not satisfied at the date of expiry of such notice then the notice shall be of no effect and this Lease shall continue as before, provided that the Landlord may waive all or any of the said conditions by giving notice to the Tenant at any time.

8.3 The ending of this Lease shall not affect either party's rights in respect of any earlier breach of any provision of this Lease.

8.4 On the date on which this Lease ends pursuant to this clause, the Tenant shall hand over to the Landlord the original Lease and all other title deeds and documents relating to the Premises, and shall execute such documents as the Landlord shall reasonably require in order to cancel any entry or title at the Land Registry.

9. GUARANTEE PROVISIONS

In consideration of this lease having been granted at the request of the Guarantor the Guarantor hereby covenants with the Landlord in the terms of schedule 4.

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SCHEDULE 1

Part 1

Premises

Building X1B Aviator Business Park, as shown edged red on the Demise Plan including (without affecting the generality of the foregoing and so far as the same may exist at any time during the Term):

1. all Conduits forming part of or exclusively serving the Premises

2. all additions and improvements to the Premises and all fixtures and fittings of every kind which shall from time to time be in or upon the Premises (whether originally fixed or fastened to the same or otherwise) except such tenant's fixtures as can be removed from the Premises without defacing the Premises.

but specifically excluding from the Premises the airspace above the Premises.

Part 2

Easements and rights granted

The following rights are granted to the Tenant in connection with the use of the Premises in accordance with and subject to the provisions of this lease such rights being exercisable in common with the Landlord and those authorised by the Landlord including other tenants of the Estate:

1. a right of way with or without vehicles (but without parking or otherwise causing any impediment) over the access roads and pavements within the Estate for the purpose of access to and egress from the Premises and for the purpose of obtaining access to and egress from the areas designated for private motor vehicle parking referred to in paragraph 4 of this part 2 of this schedule 1;

2. the free passage of water soil gas electricity telephone and other services for the Premises through the Conduits which are in other parts of the Estate and which serve the Premises together with the right of entry on not less than 48 hours prior notice (except in cases of emergency when no notice is required) onto such parts of the Estate as reasonably necessary (but not any parts of the Estate as are let or otherwise built upon) for the purpose of inspecting repairing renewing re-laying cleansing maintaining and connecting up to any such existing or future Conduits forming part of or exclusively serving the Premises provided that any such works are carried out as expeditiously as reasonably practicable and any damage to the Estate is made good;

3. the right of access in case of emergency through any such parts of the Estate as may be necessary;

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4. the right to park 127 private motor vehicles in such positions as the Landlord may from time to time reasonably designate on the Estate;

5. the right to use the bin stores allocated to the Premises on the Estate together with a right of access to such bin stores;

6. the right to name the Premises with the Landlord's prior written approval (not to be unreasonably withheld or delayed);

7. the right to add (or at the Tenant's cost to have added by the Landlord where the Landlord maintains control of additions to any such communal signboard Estate) the Tenant's name in the usual corporate style or logo of the Tenant (provided such style or logo is in keeping with the remainder of the Estate) on any communal signboard on the Estate reasonably designated by the Landlord for the display of the Tenant's name.

Part 3

Exceptions and reservations

Excepting and reserving in favour of the Landlord and its tenants agents and licensees and those authorised by the Landlord and all other persons who now have or may hereafter be granted similar rights:

1. the full free and uninterrupted passage and running of water soil gas telephone electricity telecommunication and all other services and supplies of whatsoever nature from and to any other parts of the Premises and/or Estate and any other adjoining or neighbouring property of the Landlord through such of the Conduits serving the same which are or may hereafter during the Perpetuity Period be in on under or over the Premises and the right of entry on reasonable prior notice (except in cases of emergency when no notice is required) onto the Premises for the purpose of inspecting repairing renewing re-laying cleansing maintaining and connecting up to any such existing or future Conduits provided that any such works are carried out as expeditiously as reasonably practicable and any damage to the Premises is made good;

2. the right to erect or to consent hereafter to any person erecting a new building or to alter any part of the Estate and/or any building for the time being on any adjoining or neighbouring property of the Landlord in such manner as the Landlord or the person or persons exercising such right may think fit and provided that such alteration or erection may not materially diminish the access of light and air enjoyed by the Premises and the right to deal with the remainder of the Estate and any adjoining or neighbouring property of the Landlord as it may reasonably think fit;

3. the right for the Landlord and those authorised by the Landlord to enter the Premises for the

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purposes and in the manner mentioned in this lease;

4. all rights of light air support shelter and protection for the parts of the Estate not included in the Premises and all such rights (if any) as shall now or hereafter belong to and be enjoyed by any land or premises adjacent to the Estate.

Part 4

Matters to which the Premises are subject

1. The matters contained or referred to in the registers of title relating to title numbers SY313248, SY392566 and SY736144.

2. Section 106 Agreement dated 18 December 2000 made between (1) Runnymede Borough Council (2) Brixton (Addlestone) Limited (3) BAE Systems Electronics Limited (4) Brixton Nominee Addlestone 1 Limited and (5) Brixton Nominee Addlestone 2 Limited.

3. Combined Section 111, 278, 33 and 106 Agreement dated 21 June 2001 made between (1) Surrey County Council (2) Brixton Nominee Addlestone 1 Limited (3) Brixton Nominee Addlestone 2 Limited and (4) Brixton (Addlestone) Limited.

SCHEDULE 2

(Matters in respect of which the Landlord may incur costs towards which the Tenant shall

contribute by payment of the Estate Interim Charge and the Estate Service Charge)

So far as the same relate to the Estate and are for the benefit of the majority of the lawful occupants of the Estate.

1. Insuring cleaning lighting repairing renewing maintaining and decorating the Common Parts.

2. Providing maintaining and renewing refuse receptacles including hire charges electricity and other running costs together with the costs of refuse collection and storage of refuse.

3. Providing and maintaining directional signs and other notices for the Estate.

4. Inspecting maintaining servicing cleaning repairing improving and renewing all plant and equipment in or serving the Estate together with a fair proportion of such amount as the Landlord may reasonably estimate as being the future replacement cost of any of the items mentioned in this paragraph 4.

5. Effecting insurance and/or maintenance contracts in respect of the equipment mentioned in

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paragraph 4 above.

6. Estate caretaking security site supervisory and commissionaire services (if provided) including the salaries paid to and any other costs to the Landlord arising out of the employment of any caretakers and commissionaires including without prejudice to the generality of the foregoing the cost of providing and cleaning uniforms for such caretakers and commissionaires.

7. Any rates payable by the Landlord in respect of the Estate Common Parts or any other parts of the Estate used for the purposes of providing any of the services set out in this Schedule and any charges payable for any water fuel and electricity used or supplied in connection with such services.

8. Inspecting maintaining repairing renewing and decorating the exterior the roofs and any structural parts of the Estate and any boundary gates walls and fences (including any party walls ceilings floors foundations gutters drainpipes sewers drains roads and pavements) not demised to any tenant on the Estate or comprising other lettable buildings on the Estate not connected with the provision of any services to the Estate together with a fair proportion of such amount as the Landlord may reasonably estimate as being the future replacement cost of any of the items mentioned in this paragraph 8.

9. Maintaining and providing horticultural plants (if any) grassed areas and landscaped areas and keeping the same properly maintained and cultivated.

10. Employing or retaining any solicitor accountant surveyor valuer architect engineer managing agent or management company or other professional consultant or adviser in connection with the management administration repair and maintenance of the Estate including the preparation of any account giving any certificate and calculating the Estate Service Charge (and if the Landlord fulfils the duties normally carried out by a managing agent payment of a management fee to the Landlord).

11. The fees of any accountant or surveyor employed to determine the Total Estate Expenditure (as defined in Schedule 3) and the amount payable in respect thereof by the Tenant.

12. Providing maintaining and renewing closed circuit television and other surveillance equipment on the Estate and such other security services to the Estate as the Landlord deems appropriate including employing or retaining any security staff or company in connection with the provision of such services.

13. The proper control of vehicle parking within the Estate.

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14. Providing such other services and carrying out such other works as the Landlord in its reasonable discretion may deem desirable or necessary for the benefit of the Estate or any part thereof or the tenants or occupiers thereof or for securing or enhancing any amenity of or within the Estate or in the interests of good estate management and the generality of this paragraph shall not be restricted by any other provision of this Schedule.

SCHEDULE 3

(Provisions relating to the payment of the Estate Interim Charge

and the Estate Service Charge)

1. In this Schedule 3 the following expressions shall have the following meanings:

1.1 "Total Estate Expenditure" means the total expenditure reasonably incurred by the Landlord in any Accounting Period in respect of the various matters set out in Schedule 2.

1.2 "Estate Service Charge" means such sum of money as shall be equal to a fair and proper proportion (as determined by the Landlord acting reasonably) of Total Estate Expenditure provided that the Tenant shall not be obliged to contribute towards the actual cost of further development of the Estate by way of new building.

1.3 "Estate Interim Charge" means such sum to be paid on account of the Estate Service Charge in respect of each Accounting Period as the Landlord shall specify based on the anticipated Total Estate Expenditure for the relevant Accounting Period.

2. The Estate Interim Charge shall be paid to the Landlord on demand by four equal payments in advance each year in respect of the four periods beginning on 25 March 24 June 29 September and 25 December in each year.

3. If the Estate Interim Charge paid by the Tenant in respect of any Accounting Period exceeds the Estate Service Charge for that period such excess shall be carried forward by the Landlord and credited to the account of the Tenant in computing the Estate Service Charge for the next Accounting Period.

4. If the Estate Service Charge in respect of any Accounting Period exceeds the Estate Interim Charge paid by the Tenant in respect of that Accounting Period then the Tenant shall pay such excess to the Landlord within fourteen days of service upon the Tenant of the Certificate referred to in the following paragraph and in case of default the same shall be recoverable from the Tenant as rent in arrear.

5. As soon as reasonably practicable after the expiration of each Accounting Period there shall be

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served upon the Tenant by the Landlord a Certificate containing the following information in respect of that Accounting Period:

(a) The amount of the Total Estate Expenditure

(b) The amount of the Estate Interim Charge paid by the Tenant

(c) The amount of the Estate Service Charge

(d) The amount of any excess due to the Landlord or to be credited to the account of the Tenant as the case may be

6. The said Certificate shall be final and binding on the Tenant save in the case of manifest error but the Tenant shall be entitled at its own expense at any time within one month after service of such Certificate to inspect (or at the Tenant's expense to be supplied with copies of) the receipts and vouchers relating to payment of the Total Estate Expenditure.

Part 2

1. In calculating the Estate Service Charge

1.1 the Landlord shall be entitled (but not obliged) to include in the Total Estate Expenditure for any Accounting Period an amount or amounts which the Landlord reasonably considers appropriate to build up and maintain a sinking fund and/or a reserve fund in accordance with the principles of good estate management and so as to secure so far as may reasonably be practicable that the Service Charge shall be of a regular rather than an irregular amount and that the tenants for the time being of the Estate bear a proper part of the accumulating and future liabilities in respect of the matters for which the Service Charge is intended to provide;

1.2 the Landlord may include all VAT at the applicable rate incurred or paid by the Landlord in respect of any expenditure in connection with the services or any of them save to the extent that the same is recovered by the Landlord as input tax;

1.3 the Landlord may include all costs incurred in taking any steps deemed desirable or expedient by the Landlord for complying with or making any representations against or otherwise contesting the incidence of the provisions of any legislation or orders or statutory requirements thereunder concerning town planning compulsory purchase public health highways streets drainage or other matters relating to or allegedly relating to the Estate for which no tenant of the Estate is directly liable under any lease of any part of the Estate.

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2. The Tenant shall not be entitled to object to the Estate Service Charge or any item comprised in the Estate Service Charge or otherwise on any of the following grounds:

2.1 the inclusion in a subsequent Accounting Period of any item of expenditure or liability omitted from the Estate Service Charge for any preceding Accounting Period;

2.2 that any item of the Estate Service Charge might have been provided or performed at a lower cost;

2.3 disagreement with any estimate of future expenditure for which the Landlord requires to make provision so long as the Landlord acts reasonably and in good faith and in the absence of manifest error;

2.4 the manner in which the Landlord exercises its discretion in providing the services so long as the Landlord acts in good faith and in accordance with the principles of good estate management;

2.5 the employment of managing agents or contractors to carry out and provide on the Landlord's behalf the services in accordance with this schedule.

SCHEDULE 4

Guarantee provisions

1. That the Tenant will at all times during the period in respect of which the Tenant is liable under the covenants herein contained pay the rents reserved by this lease on the days and in manner herein provided for and will duly observe and perform all the covenants and conditions contained in this lease and on the part of the Tenant to be observed and performed and that if the Tenant shall during such period default in any respect to pay the said rents or any of them in the manner aforesaid or to observe and perform the said covenants and conditions or any of them the Guarantor will on demand fully observe perform and discharge the same and without limitation the Guarantor hereby further covenants by way of primary obligation and not merely liability as a guarantor or merely collateral to that of the Tenant to pay and make good to the Landlord forthwith on demand any losses costs damages and expenses occasioned to the Landlord arising out of or by reason of any default of the Tenant in respect of any of its obligations under the terms and provisions of this lease during the said period or in respect of any judgment or order made against the Tenant during the said period and any neglect or forbearance on the part of the Landlord in enforcing or giving time for or other indulgence in respect of the observance or performance of any of the said agreements provisions and conditions (other than a release given under seal) and (subject to the provisions of the 1995 Act) any variation of the terms of this lease shall not release the Guarantor from its

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liability under the agreements or guarantee on its part contained in this lease.

2. That if during such period as aforesaid:

2.1 the Tenant shall go into liquidation and the liquidator disclaims this lease; or

2.2 the Tenant is dissolved or struck off the register and the Crown disclaims this lease; or

2.3 the Tenant ceases for any reason to be or to remain liable under this lease or to maintain its corporate existence (otherwise than by merger consolidation or other similar corporate transaction in which the surviving corporation assumes or takes over all the liabilities of the Tenant under this lease); or

2.4 this lease shall be forfeited or otherwise prematurely determined (other than by valid exercise of the option to break),

the Landlord may within six months following any such event by notice in writing require the Guarantor to enter into a lease in the like form as this lease for the residue of the Contractual Term unexpired at the date of such event (or which but for any such disclaimer forfeiture or other event would have remained unexpired) but with the Guarantor as tenant thereunder at the same rents and subject to the like covenants provisions and conditions as are herein contained as a substitute in all respects for the Tenant under this lease and so that every Review Date thereunder shall occur on the same date as every Review Date hereunder shall occur or would but for any such disclaimer forfeiture or other event have occurred (the said new lease and the rights and liabilities thereunder to take effect as from the date of such disclaimer forfeiture or other event) and the Guarantor shall thereupon execute and deliver to the Landlord a counterpart of the new lease in exchange for the relevant lease executed by the Landlord and contemporaneously therewith the Guarantor as tenant shall pay the first instalments of the rents due provided always that if on or before the date of the disclaimer a date for review of the rent under this lease has occurred but the amount of the revised rent has not been agreed or determined the new lease shall initially be at a rent equal to the rent payable under this lease immediately before that date for review but the second day of the term of the new lease shall be an additional date for review of rent under the new lease and the parties to the new lease shall be treated as having taken the steps taken in relation to the earlier date for review by the respective landlord and tenant.

3. That if the Landlord shall not require the Guarantor to take a new lease the Guarantor shall nevertheless in addition and without prejudice to the Guarantor's other obligations under this lease upon demand pay to the Landlord a sum equal to the rents and all other sums that would have been payable under this lease at the times and in the manner at and in which the same would have been

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so payable in respect of the period of 12 months from and including the date of disclaimer or forfeiture or (if sooner) until the Landlord shall have granted a lease of the Premises to a third party.

4. That the Guarantor shall be jointly and severally liable with the Tenant (whether before or after any disclaimer by a liquidator or trustee in bankruptcy) for the fulfilment of all the Tenant's covenants conditions and other provisions contained in this lease and the Landlord in the enforcement of its rights may proceed against the Guarantor as if the Guarantor was named as the Tenant in this lease.

5. That the Guarantor waives any right to require the Landlord to proceed against the Tenant or to pursue any other remedy of any kind which may be available to the Landlord before proceeding against the Guarantor.

6. That the Guarantor shall not claim in any liquidation bankruptcy administration receivership composition or arrangement of the Tenant in competition with the Landlord and shall remit to the Landlord the proceeds of all judgments and all distributions it may receive from any liquidator trustee in bankruptcy administrator administrative receiver or supervisor of the Tenant and shall hold for the sole benefit of the Landlord all security and rights the Guarantor may have over assets of the Tenant while any liabilities of the Tenant or the Guarantor to the Landlord remain outstanding.

7. That this guarantee shall subsist for the benefit of the successors and assigns of the Landlord under this lease without the necessity for any assignment of it.

SCHEDULE 5

Requirements of authorised guarantee agreement

1. The agreement shall be prepared by the Landlord's solicitors at the reasonable expense of the Tenant and shall be executed and take effect as a deed.

2. The agreement shall contain a clause to the effect that insofar as any provision of the agreement would prevent it being an authorised guarantee agreement within the meaning of the 1995 Act the agreement shall be read and construed and shall take effect as though that provision had not been included.

3. In the agreement the Tenant shall covenant with the Landlord for the benefit of the Landlord and its successors in title and assigns the owners for the time being of the reversion immediately expectant upon the determination of the Term and those entitled to the benefit of the agreement by virtue of the 1995 Act that:

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3.1 at all times during the period ("Relevant Period") beginning with the date on which the assignment of this lease to the proposed assignee ("Assignee") takes effect and ending when the Assignee is released by virtue of section 5 of the 1995 Act from observance and performance thereof the Assignee will duly observe and perform all the terms conditions and covenants which by reference to the tenancy created by this lease are tenant covenants within the meaning of the 1995 Act ("Relevant Covenants");

3.2 if the Assignee shall default in any respect duly to observe and perform the Relevant Covenants or any of them the Tenant will on demand fully observe perform and discharge the same;

3.3 if the Assignee (being a corporation) shall go into liquidation and the liquidator disclaims this lease or is dissolved or struck off the register and the Crown disclaims this lease or (being an individual) shall become bankrupt and the trustee in bankruptcy disclaims this lease the Landlord may within six months following any such event by notice in writing require the Tenant to enter into a lease in the like form as this lease for the residue of the Contractual Term unexpired at the date of such event (or which but for any such disclaimer would have remained unexpired) but with the Tenant as tenant thereunder at the same rents and subject to the like covenants provisions and conditions as are applicable thereto at the date of such event as a substitute in all respects for the Assignee and so that every Review Date thereunder shall occur on the same date as every Review Date under this lease shall occur or would but for any such disclaimer have occurred (the said new lease and the rights and liabilities thereunder to take effect as from the date of such disclaimer) and the Tenant shall thereupon execute and deliver to the Landlord a counterpart of the new lease in exchange for the relevant lease executed by the Landlord and contemporaneously therewith the Tenant as tenant under the new lease shall pay the first instalments of the rents due thereunder and the Landlord's solicitors' proper and reasonable costs of and in connection with the preparation and completion of such new lease.

4. Without prejudice to the generality of the foregoing the Tenant shall further covenant with the Landlord by way of primary obligation and not merely as a guarantor of or collateral to the liability of the Assignee to pay and make good to the Landlord forthwith on demand any losses costs damages and expenses occasioned to the Landlord arising out of or by reason of any default of the Assignee in respect of any of its obligations under the Relevant Covenants during the Relevant Period.

5. The agreement shall contain an agreement and declaration to the effect that any neglect or

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forbearance on the part of the Landlord in enforcing or giving time for or other indulgence in respect of the observance or performance of any of the Relevant Covenants (other than a release given under seal) and (subject to the provisions of the 1995 Act) any variation of the terms of the Lease shall not release the Tenant from its liability under the covenants or guarantee to be entered into by it in the agreement.

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EXECUTED (but not delivered until the dateSign here[SEAL]

hereof) as a deed on behalf of DV3 Addlestone

Limited a company in the British Virgin Islands

by:

J.C. HENDRICKS for and on behalf

of DV3 Administration Limited

Authorised Signatory

being persons who in accordance with the laws

of the territory are acting under the authority of

the company

Authorised Signatory

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EX-10

Exhibit 10.22

EMPLOYMENT AGREEMENT

THIS AGREEMENT (“Agreement”), dated as of February 12, 2007, 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 Harri U. Kulovaara (“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. Executive shall report to the Chief Executive Officer of the Company.

(b)Duties and Location. Executive's employment duties and responsibilities will be those designated to him or her, from time to time, by Company and will, in all respects, be consistent with the duties and responsibilities of an individual serving as a full time officer of Company. Executive will, at all times during the Term, comply with all ethics and employment policies of Company applicable to full time officers of Company, as such policies may be amended by Company from time to time, including, but not limited to any policy requiring ownership of Company equity by officers of Company. When performing his or her duties hereunder, Executive shall report to such executive officer of Company as may be designated by

Company. Executive agrees to devote his or her entire professional time, energy, and skills to such employment during the Term. During the Term, Executive’s principal office, and principal place of employment, shall be in Southeast Florida.

(c)Permitted Activities. Subject to Company's ethics and employment policies, as from time to time constituted or amended, Executive shall with the prior written approval of Company, be permitted to (i) serve as a director of one or more other U.S. or non-U.S. companies during the Term, and (ii) engage in other charitable activities and community affairs; provided that, none of the foregoing activities shall interfere with the proper performance of his or her duties and responsibilities hereunder.

4. COMPENSATION.

(a)Base Compensation. Company shall pay Executive, and Executive agrees to accept, base compensation (“Base Compensation”) as designated from time to time in written communication from Company setting forth such Base Compensation. Such Base Compensation shall be paid in accordance with the Company’s payroll cycle during the Term, subject to all applicable withholding taxes. The Base Compensation may be reviewed by Company and by written notice from Company to Executive, may be increased, but not decreased, at any time during the Term at the sole discretion of Company. No increase in the Base Compensation pursuant to this Section 4(a) shall at any time operate as a cancellation of this Agreement; any such increase shall operate merely as an amendment hereof, without any further action by Executive or Company. If any such increase or increases shall be so authorized, all of the terms, provisions and conditions of this Agreement shall remain in effect as herein provided, except that the Base Compensation shall be deemed amended to set forth the higher amount of such Base Compensation to Executive.

(b)Bonus Compensation. Executive shall be eligible to participate in any cash bonus compensation program available to full time officers of Company and eligible to receive an annual cash bonus during the Term on the same basis and under substantially the same terms as such similarly situated employees. The bonus award of Executive shall be established from time to time by Company, in its sole and unfettered discretion.

(c)Equity and Long-Term Incentive Awards. Executive shall be eligible to participate in any equity or long-term incentive plans available to full time officers of Company and eligible to receive awards under such plans from time to time, as determined by Company, in its sole and unfettered discretion. Any equity grant(s) held by Executive on the date of this Agreement shall be retained by Executive, subject to the terms and conditions of the plan(s) under which such equity grant(s) were awarded.

5. FRINGE BENEFITS.

(a)Generally. Executive and his or her eligible dependents shall be entitled to participate in all pension, welfare, benefits, and fringe benefit programs or other employee perquisite programs approved by Company that now or hereafter may be made generally available to full time officers of Company and for which Executive or such dependents will qualify according to eligibility requirements under the provisions thereof. The Company shall purchase Executive a policy of insurance on the life of Executive in the amount generally

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available to full time officers of Company, plus an amount equal to two (2) times Executive’s annual Base Compensation. Benefits of any such policy of insurance shall be paid to beneficiaries designated by Executive.

(b)Vacation. During the term of this Agreement, Executive shall be entitled to paid vacation per calendar year in accordance with Company policies regarding vacation generally.

(c)Relocation. If Executive is required by Company to relocate from his or her principal place of employment as set forth in Section 3(b), he or she shall be eligible for relocation benefits in accordance with Company policy regarding relocation generally available to full time officers of Company.

6.EXPENSES. During the period of his or her employment, Executive shall be reimbursed for his or her business-related expenses incurred on behalf of Company in accordance with the travel and entertainment expense policy of Company in effect at the time the expense was incurred. Executive agrees to maintain such records and documentation of all such expenses to be reimbursed by Company hereunder as Company shall require and in such detail as Company may reasonably request.

7. TERMINATION.

(a)Generally. Executive’s employment under this Agreement may be terminated prior to expiration of the Term in accordance with the following paragraphs.

(b)Mutual. Executive’s employment under this Agreement may be terminated upon the mutual written agreement of Company and Executive.

(c)Death or Disability. In the event of the death of Executive, this Agreement shall terminate. If, during Executive’s employment under this Agreement, Executive shall become disabled, as defined by Company's then applicable and governing long term disability plan or policy, and unable to perform his or her duties as required herein (“Disability"), then Company may, upon written notice to Executive, terminate Executive’s employment under this Agreement and this Agreement shall terminate upon such termination of employment.

(d)Cause. Executive’s employment under this Agreement may be terminated by Company for Cause, as herein defined. For purposes of this Agreement, the term “Cause” shall mean the existence or occurrence of one or more of the following conditions or events:

(i)Executive's commission of an act or acts of dishonesty, including without limitation, fraud, deceit, misappropriation, theft, embezzlement, financial misrepresentation or other similar behavior or action in Executive's dealings with or with respect to Company or its subsidiaries or affiliates or any entity with which Company or its subsidiaries or affiliates shall be engaged in or be attempting to engage in commerce;

(ii)Executive being convicted of or entering a plea of guilty or nolo contendere to any crime which constitutes a felony offense or any crime involving moral turpitude;

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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(c)(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(c)(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; and (v) any outstanding equity grant(s) held by Executive at the time of such termination as governed by the agreement or plan pursuant to which such grant(s) was issued.

(d)Cause. If this Agreement and Executive’s employment hereunder is terminated for Cause pursuant to Section 7(d) hereof, Company shall have no obligation to Executive or legal representatives of Executive other than (i) payment of Executive’s Base Compensation through such date of termination; (ii) payment of any accrued benefits or obligations owed to Executive; (iii) benefits (if any) provided in accordance with applicable plans, programs and arrangements of Company or as required by law; (iv) any outstanding equity grant(s) held by Executive at the time of such termination as governed by the agreement or plan pursuant to which such grant(s) was issued.

(e)Without Cause. If this Agreement and Executive’s employment hereunder is terminated without Cause pursuant to Section 7(e) hereof, Company shall have no obligation to Executive or legal representatives of Executive other than (i) payment of termination compensation in the amount equal to two (2) times Executive's annual Base Compensation in effect on the date of such termination, subject to applicable withholding taxes, and payable, at Company's sole option, in accordance with Company’s payroll cycle or periodic lump sum(s) during the two (2) year period commencing on the date of such termination; (ii) payment of the " target bonus," as that term is used in Company's current bonus plan for full time officers of Company, or its equivalent if the term or plan should be amended, which Executive would have earned during the two (2) year period commencing on the date of such termination; (iii) continued payment of health and medical benefits for a period of two (2) years or until such time as Executive commences new employment, whichever occurs first; (iv) payment of any accrued benefits or obligations owed to Executive; (v) benefits (if any) provided in accordance with applicable plans, programs and arrangements of Company or as required by law; (vi) payment of reasonable professional search fees relating to Executive's outplacement; and (vii) any

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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)(ii) 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(f) hereof; or (ii) by the Executive for Good Reason, pursuant to Section 7(f) hereof; at the conclusion of the two (2) year period commencing with the date of such termination, at the sole and unfettered discretion of the Company, Executive may be awarded a one time termination bonus in an amount not to exceed one half of Executive's annual Base Compensation in effect on the date of such termination, subject to applicable withholding taxes.

9.CONFIDENTIAL INFORMATION. Executive recognizes and acknowledges that he or she will have access to certain confidential information of Company, its subsidiaries and affiliates and of corporations with whom Company does business, and that such information constitutes valuable, special and unique property of Company, its subsidiaries, affiliates and such other corporations. During the term of this Agreement and subsequent to the termination of this Agreement for any reason, Executive agrees not to disclose or use any confidential information, including without limitation, information regarding research, developments, product designs or specifications, manufacturing processes, “know-how,” prices, suppliers, customers, costs or any knowledge or information with respect to confidential or trade secrets of Company, it being

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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) it, as such Business is expanded or modified during the term of Executive's employment. Executive acknowledges and agrees that all discoveries, inventions, designs, improvements, formulas, formulations, ideas, devices, writings, publications, study protocols, study results, computer data or programs, or other intellectual property, whether or not subject to patent or copyright laws, which Executive shall conceive solely or jointly with others, in the course or scope of his or her employment with Company or in any way related to Company’s Business, whether during or after working hours, or with the use of Company’s equipment, materials or facilities (collectively referred to herein as “Intellectual Property”), shall be the sole and exclusive property of Company without further compensation to Executive. For purposes of this Agreement, any Intellectual Property, based upon Company’s proprietary or confidential information, developed within six (6) months after the termination of Executive’s employment, shall be presumed to be the property of Company. Executive agrees to promptly notify Company and fully disclose the nature of such Intellectual Property. Executive shall take such steps as are deemed necessary to maintain complete and current records thereof, and Executive shall assign to Company or its designees, the entire right, title and interest in said Intellectual Property.

11.NON-COMPETITION. Executive acknowledges that his or her services to be rendered hereunder are of a special and unusual character that have a unique value to Company and the conduct of its Business, the loss of which cannot adequately be compensated by damages in an action at law. In view of the unique value to Company of the services of Executive for which Company has contracted hereunder, and because of the confidential information to be obtained by or disclosed to Executive as herein above set forth, and as a material inducement to Company to enter into this Agreement and to pay and make available to Executive the compensation and other benefits referred to herein, Executive covenants and agrees that Executive will not, directly or indirectly, whether as principal, agent, trustee or through the agency of any corporation, partnership, association or agent (other than as the holder of not more than five percent (5%) of the total outstanding stock of any company the securities of which are traded on a regular basis on recognized securities exchanges):

(a)while employed under this Agreement (i) work for (in any capacity, including without limitation as a director, officer or employee) any other entity engaged in cruises, with a minimum fleet size of 3,000 berths, or cruise related businesses or affiliates of any such entity or (ii) recruit, or otherwise influence or attempt to induce employees of Company to leave the employment of Company; and

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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 engaged in cruises, with a minimum fleet size of 3,000 berths, or cruise related businesses or affiliates of any such entity. Executive further agrees that during the Non-competition Period, he or she shall not: (i) employ or seek to employ any person who is then employed or retained by Company or its affiliates (or who was so employed or retained at any time within the six (6) month period prior to the last day of Executive’s employment with Company); or (ii) solicit, induce, or influence any proprietor, partner, stockholder, lender, director, officer, employee, joint venturer, investor, consultant, agent, lessor, supplier, customer or any other person or entity which has a business relationship with Company or its affiliates at any time during the Non-competition Period, to discontinue or reduce or modify the extent of such relationship with Company or any of its subsidiaries.

Executive has carefully read and considered the provisions of Sections 9, 10, and 11 hereof and agrees that the restrictions set forth in such sections are fair and reasonable and are reasonably required for the protection of the interests of Company, its officers, directors, shareholders, and other employees, for the protection of the business of Company, and to ensure that Executive devotes his or her entire professional time, energy, and skills to the business of Company. Executive acknowledges that he or she is qualified to engage in businesses other than that described in this Section 11. It is the belief of the parties, therefore, that the best protection that can be given to Company that does not in any way infringe upon the rights of Executive to engage in any unrelated businesses is to provide for the restrictions described above. In view of the substantial harm which would result from a breach by Executive of Sections 9, 10 and 11, the parties agree that the restrictions contained therein shall be enforced to the maximum extent permitted by law as more particularly set forth in Section 12 below. In the event that any of said restrictions shall be held unenforceable by any court of competent jurisdiction, the parties hereto agree that it is their desire that such court shall substitute a reasonable judicially enforceable limitation in place of any limitation deemed unenforceable and that as so modified, the covenant shall be as fully enforceable as if it had been set forth herein by the parties.

12.REMEDIES. The provisions of Sections 9, 10 and 11 of this Agreement shall survive the termination of this Agreement as set forth therein, regardless of the circumstances or reasons for such termination, and inure to the benefit of Company. The restrictions set forth in Sections 9, 10 and 11 are considered to be reasonable for the purposes of protecting the business of Company. Company and Executive acknowledge that Company would be irreparably harmed and that monetary damages would not provide an adequate remedy to Company if the covenants contained in Sections 9, 10 and 11 were not complied with in accordance with their terms. Accordingly, Executive agrees that Company shall be entitled to injunctive and other equitable relief to secure the enforcement of these provisions, in addition to any other remedy which may be available to Company. The Company shall be entitled to receive from Executive reimbursement for reasonable attorneys’ fees and expenses incurred by Company in successfully enforcing these provisions to final judgment and Executive shall be entitled to receive from Company reasonable attorney’s fees and expenses incurred by Executive in the event Company is found to be not entitled to enforcement of these provisions.

13.NOTICES. Any notice required or permitted to be given under this Agreement shall be in writing and sent by an overnight courier service that provides proof of receipt, mailed by

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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.

If to Company:

Royal Caribbean Cruises Ltd.

1050 Caribbean Way

Miami, FL 33132

Attention: General Counsel

Telephone: (305) 539-6000

Facsimile: (305) 539-0562

With a copies to:

Royal Caribbean Cruises Ltd. Holland & Knight, LLP

1050 Caribbean Way 701 Brickell Avenue, Suite 3000

Miami, FL 33132 Miami, FL 33131

Attention: Vice President and Attention: Jorge L. Hernandez-Toraño

Chief Human Resource Officer Telephone: (305) 374-8500

Telephone: (305) 539-6000 Facsimile: (305) 789-7799

Facsimile: (305) 539-0562

14. ENTIRE AGREEMENT; MODIFICATION.

(a)This Agreement contains the entire agreement of Company and Executive with respect to the subject matter hereof, and Company and Executive hereby acknowledge and agree that this Agreement supersedes any prior statements, writings, promises, understandings or commitments with respect to the subject matter hereof.

(b)No future oral statements, promises or commitments with respect to the subject matter hereof, or other purported modification hereof, shall be binding upon the parties hereto unless the same is reduced to writing and signed by each party hereto.

15.ASSIGNMENT. The rights and obligations of Company under this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs (in the case of Executive) and assigns. No rights or obligations of Company under this Agreement may be assigned or transferred by Company, except that such rights or obligations may be assigned or transferred pursuant to a merger, consolidation or other combination, reconstruction or amalgamation or a sale or liquidation of all or substantially all of the business and assets of Company. Executive may not assign his or her rights and obligations under this Agreement other than his or her rights to compensation and benefits, which may be transferred only by will or operation of law.

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16.LEGAL EXPENSES. Each party shall pay for all expenses incurred on its behalf in connection with this Agreement.

17.CONTINUATION OF PAYMENTS DURING DISPUTE. Pending the resolution of any dispute, controversy or claim arising out of, relating to or in connection with this Agreement, including any question regarding its existence, validity or termination, or regarding a breach thereof or indemnification thereunder, Executive (and his or her successor and heirs) shall continue to receive all payments and benefits due under this Agreement or otherwise, except: (i) to the extent a court of competent jurisdiction or arbiter, otherwise expressly provides, (ii) if the nature or basis of the dispute of any aspect thereof pertains to or involves payments or monies owed by Executive to Company (including payments or monies claimed by Company as being owed by Executive) Company may suspend payments to Executive pending resolution of such dispute, controversy or claim, or (iii) as otherwise permitted elsewhere in this Agreement.

18.DISPUTE RESOLUTION. Any dispute, controversy or claim arising out of, relating to or in connection with this Agreement, including any question regarding its existence, validity or termination, or regarding a breach thereof or indemnification thereunder (a "Dispute") shall be resolved pursuant to the following:

(a)Any party (a "Disputing Party") may initiate consideration of a Dispute hereunder by giving written notice to the other party of the existence of a Dispute (a "Dispute Notice"). Such notice shall set forth in reasonable detail the nature of the Dispute to be considered and shall be accompanied by a full disclosure of all factual evidence then available to the Disputing Party and by a statement of the applicable legal basis of the dispute; provided, however, that (i) to provide any such disclosure or to state any legal basis shall not operate as a waiver of such legal basis or operate to preclude the presentation or introduction of such factual evidence at a later time or in any subsequent proceeding or litigation or otherwise constitute a waiver of any right that a party may then or thereafter possess; and (ii) any settlement proposal made or proposed shall be deemed to have been made or proposed as part of a settlement discussion and may not be introduced in a legal proceeding without the prior written consent of the party making such proposal. The parties shall thereafter engage in good faith negotiations between themselves or their representatives for a period not to exceed thirty (30) days.

(b)Upon the giving or receipt of a Dispute Notice and the expiration of the thirty (30) day period provided in Section 18(a) hereof, during which good faith negotiations must have taken place, the parties may then commence arbitration in accordance with this Section 18(b) and subsequent subsections. Any dispute or claim arising from or relating to this Agreement, any dispute or claim arising from the rights and obligations created under this Agreement, or any dispute or claim relating to the breach of this Agreement, shall be settled by binding arbitration pursuant to the Commercial Arbitration Rules (and not the National Rules for the Resolution of Employment Disputes) of the American Arbitration Association. A party with a dispute or claim shall provide written notice requesting dispute resolution pursuant to this Section (the "Notice"). The arbitration panel shall be composed of three (3) arbitrators. The arbitration proceedings shall be conducted in Miami, Florida. Each party shall appoint one arbitrator within fourteen (14) calendar days from the receipt of Notice. These two arbitrators shall appoint the third arbitrator by mutual agreement within fourteen (14) calendar days of their own appointment. If the two (2) arbitrators appointed by the parties cannot agree on the third arbitrator within the specified time frames, the American Arbitration Association shall appoint one or more qualified arbitrators, as

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the case may be, as provided for in the Commercial Arbitration Rules of the American Arbitration Association.

(c)Subject to the last sentence of this Section 18(c), each party shall be liable for 50% of the costs of the arbiters and of any other costs of the arbitration proceeding itself. If either party refuses to pay such costs and the other party makes payment of all costs which would otherwise be due, the arbitration panel shall enter an award in favor of the party which complies with its obligation to pay such costs. In accordance with Section 20(d) hereof, upon the entering of an award, the arbitration panel shall award the prevailing party all of its legal fees and costs incurred with respect to prosecuting or defending its case, including its share of the costs of the arbitration proceeding itself.

(d)The arbitration proceedings shall in all events include the right to a hearing, the right to cross-examine witnesses giving oral or written testimony, and the right to subpoena witnesses to testify at the hearing.

(e)The arbitration shall be final and binding on the parties without any right to appeal in any court of law.

(f)The covenant to arbitrate set forth in this Section 18 shall continue in effect after the expiration or termination of this Agreement.

19.INDEMNIFICATION. Company shall defend and indemnify Executive, in accordance with the then governing Articles of Incorporation, as amended, and Bylaws, as amended, of Company, for any civil or dispute resolution proceeding involving Executive, by reason of the fact that Executive is or was serving as an officer of Company or is or was otherwise serving at the request of Company.

20. MISCELLANEOUS.

(a)This Agreement shall be subject to and governed by the laws of the State of Florida, without regard to the conflicts of laws principles thereof.

(b)The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or the interpretation of this Agreement.

(c)The failure of any party to enforce any provision of this Agreement shall in no manner affect the right to enforce the same, and the waiver by any party of any breach of any provision of this Agreement shall not be construed to be a waiver by such party of any succeeding breach of such provision or a waiver by such party of any breach of any other provision.

(d)In any dispute, arbitration and/or litigation arising out of this Agreement, including appeals, the prevailing party shall be entitled to recover all legal fees and costs incurred in such dispute, arbitration and/or litigation.

(e)In the event any one or more of the provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable, the remaining provisions of this Agreement shall

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be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced by a mutually acceptable valid, and enforceable provision which comes closest to the intent of the parties.

(f)This Agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which together shall constitute one and the same instrument.

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

ROYAL CARIBBEAN CRUISES LTD.

By: /s/ Maria R. Del Busto

Its: Chief HR Officer

Vice President

2/23/2007

EXECUTIVE

/s/ Harri U. Kulovara

Harri U. Kulovaara

EXECUTIVE'S TITLE: Executive Vice President

# 2297613_v5

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EX-10

Exhibit 10.25

AMENDMENT TO THE

ROYAL CARIBBEAN CRUISES LTD. ET AL BOARD OF DIRECTORS NONQUALIFIED DEFERRED COMPENSATION PLAN

WHEREAS, Royal Caribbean Cruises Ltd. (the “Company”) currently maintains the Royal Caribbean Cruises Ltd. et al Board of Directors Nonqualified Deferred Compensation Plan (the “Plan”); and

WHEREAS, the Plan reserves to the Board of Directors (the “Board”) the authority to amend the Plan; and

WHEREAS, the Company has determined that it is desirable to amend the Plan to permit the Board to delegate authority to the Compensation Committee of the Board to either make Plan amendments that are required by law, or are administrative or immaterial in nature or to delegate such authority to the Administrative Committee of the Plan; and

WHEREAS, the Board has revised the Compensation Committee’s charter to authorize it to make such amendments or to delegate such responsibility; and

WHEREAS, the Compensation Committee has met and determined it appropriate to permit the Administrative Committee to make certain amendments.

NOW, THEREFORE, IT IS RESOLVED that, the Plan is hereby revised, effective December 12, 2006, in the following particulars:

1.The following Section 2.5 is added to Article 2 as follows, and subsequent sections shall be re-numbered accordingly:

2.5Committee means the Administrative Committee appointed to administer the Plan pursuant to Article 7.

2. Article 7 of the Plan is amended to read as follows:

ARTICLE 7. ADMINISTRATION

7.1Administration: The Plan will be administered by an Administrative Committee consisting of members from the human resources, legal, treasury, and audit departments appointed by the Company. Each member of the Committee may resign, or may be removed at any time by the Company, and, in the event of the removal, death or resignation of any member, the successor will be appointed by the Company. If a vacancy or vacancies occur on the Committee, the remaining member or members will act as the Committee until the Company fills such vacancy or vacancies.

The Committee will have all powers necessary or helpful for the carrying out of its responsibilities, and its decisions or actions, in good faith, in respect of any matter hereunder will be conclusive and binding upon all parties concerned. The Committee may delegate to one or more of its members the right to act on its behalf in any one or more matters connected with the administration of the Plan. Without limiting the generality of the foregoing, the Committee will have the power to make rules and regulations for the administration of the Plan which are not inconsistent with the terms and provisions of the Plan, to construe all terms, provisions, conditions and limitations of the Plan, and to determine all questions arising out of or in connection with the provisions of the Plan or its administration in any and all cases in which the Committee deems such a determination advisable. The Committee shall determine a Participant’s right to a benefit under the Plan. The foregoing list of powers is not intended to be either complete or exclusive, and the Committee will, in addition, have such powers as it may determine to be necessary for the performance of its duties under the Plan.

7.2Plan Expenses: The expenses of administering the Plan shall be borne by the Company.

7.3Liability Limited Except as otherwise provided by law, no person who is a member of the Committee or who is an employee, officer and/or director of the Company will incur any liability whatsoever on account of any matter connected with or related to the Plan or the administration of the Plan, unless such person has acted in bad faith, or has willfully neglected his duties, in respect of the Plan.

7.4Claims Procedure: The Committee shall establish a claims procedure in accordance with applicable law and shall afford a reasonable opportunity to any Participant whose claim for benefits has been denied for a full and fair review of the decision denying such claim. The claims procedure shall provide for a notice of denial of a claim to be received by a claimant within a reasonable period, not to exceed ninety (90) days, following the filing of a claim. The notice shall provide the reason for the denial, references to the Plan provisions on which the denial is based, a description of additional information necessary to perfect a claim and the steps required to submit a claim for review. The period to request a review must be for at least sixty (60) days after a receipt of notice of denial of a claim. A decision on review shall be made within sixty (60) days after the Plan’s receipt of a request for a review unless special circumstances require a longer period in which case the Plan shall have an additional sixty (60) days. The final decision shall be in writing and shall include specific reasons for the decision and references to Plan provisions.

7.5Notices: Any notices, designations or other communications to be given to the Company by any Eligible Participant or Beneficiary shall only be effective if delivered to the Company’s Vice President and Chief Human Resource Officer.

7.6Quorum and Voting; Procedures A majority of the members of the Committee at the time in office will constitute a quorum for the transaction of business. The Committee shall select from among its members a Chairman, and shall appoint (from its members or otherwise) a Secretary. The Committee may act by vote or consent of the majority of its members then in office (with or without a meeting) and may establish its own procedures. The Committee may authorize any one or more of its members or the Secretary of the Committee to sign and deliver any instrument, certificate or other paper or document on its behalf.

2

7.7Subcommittees, Counsel and Agents The Committee may appoint from its members such subcommittees (of one or more such members), with such powers, as it shall determine. The Committee may employ an actuary, counsel (including legal counsel, who may be counsel for the Company) and agents and such clerical and other service providers as it may require in carrying out the provisions of the Plan, and may charge the fees, charges and costs resulting from such employment as an expense to the Plan; however, to the extent such expenses are not paid for by the Plan, the Company may pay such expenses directly. Persons serving on the Committee or on any such subcommittee shall be entitled to act in accordance with the advice of legal or other counsel in carrying out these responsibilities under the Plan.

7.8Reliance on Information The members of the Committee and the Company and its respective officers, directors and employees will be entitled to rely upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, trustee, insurance company, counsel, physician or other expert who is engaged by the Committee, the Company, and the members of the Committee, the Company and its respective officers, directors and employees will be fully protected in respect of any action taken or suffered by them in good faith in reliance thereon, and all action so taken or suffered shall be conclusive upon all persons affected thereby.

7.9Instructions to trustee The Committee shall provide appropriate written instructions in accordance with the trust agreement, if any to enable the trustee to make the distributions provided for in the Plan.

7.10Genuineness of Documents The Committee and the Company and its respective officers, directors and employees, will be entitled to rely upon any notice, request, consent, letter, telegram or other paper or document believed by them or any of them, in good faith, to be genuine and to have been signed or sent by the proper person.

7.11Proper Proof In any case in which the Company, the Committee or the trustee is required under the Plan to take action upon the occurrence of any event, they will be under no obligation to take such action unless and until proper and satisfactory evidence of such occurrence has been received by them.

3. Article 8 is amended to read as follows:

ARTICLE 8. AMENDMENT AND TERMINATION

8.1Plan Amendment: The Plan may be amended or otherwise modified by the Board, in whole or in part, provided that no amendment or modification shall divest any Participant of any amount previously credited to his or her Participant Account under Article 4 or of the amount and method of crediting earnings to such Participant Account under Article 5 of the Plan as of the date of such amendment. The Board has delegated to the Compensation Committee of the Board the ability to amend the Plan. In addition, the Compensation Committee of the Board may delegate authority to the Committee to amend the Plan to make administrative or legally required changes.Notwithstanding anything herein to the contrary, in no event shall

3

any amendment be made in a manner that is inconsistent with the requirements under Section 409A of the Code.

8.2Termination of the Plan: The Board reserves the right to terminate the Plan at any time in whole or in part. In the event of any such termination, the Company shall pay a benefit to the Participant or the Beneficiary of any deceased Participant, in lieu of other benefits hereunder, equal to the value of the Participant’s Account in the form and at the benefit commencement date elected by the Participant pursuant to Article 6 of the Plan. Earnings shall continue to be allocated under Article 5 of the Plan after the termination of the Plan until the Participant’s benefits have been paid in full notwithstanding the termination of the Plan. Notwithstanding the above, the Company reserves the right to pay out Participants in a lump sum their Participant Account as soon as practicable following the termination of the Plan. Notwithstanding anything herein to the contrary, in no event shall any termination be made in a manner that is inconsistent with the requirements under Section 409A of the Code, and in no event shall any committee have the authority to terminate the Plan.

IN WITNESS WHEREOF, this Amendment is being executed as of the 12^th day of December, 2006.

ROYAL CARIBBEAN CRUISES LTD.

Attest:__/s/ Bradley Stein_______________ By:__/s/ Maria R. Del Busto_________

Bradley Stein Maria R. Del Busto

Vice President, General Counsel/ Vice President and Chief Human

Secretary Resources Officer

4

EX-10

Exhibit 10.27

Royal Caribbean Cruises Ltd. (RCL)

Executive Incentive Plan Document

1. INTRODUCTION........................................................................................2

2. ELIGIBILITY ............................................................................................2

3. PLAN OUTLINE .......................................................................................2

BONUS OPPORTUNITY .................................................................................3

PERFORMANCE METRICS ............................................................................3

BONUS CALCULATIONS ...............................................................................3

4. BONUS AWARD PAYMENTS........................................................................4

5. PLAN ADMINSITRATION AND GENERAL PROVISIONS .................................5

EXTRAORDINARY EVENTS...........................................................................5

6. DEFINITIONS........................................................... .................................6

(Revised December 12, 2006)

Page 1 of 6

1. INTRODUCTION

The Royal Caribbean Cruises Ltd.(RCL) Executive Incentive Plan is designed to promote the interests of the Company and its subsidiaries by creating an incentive program to:

§ Attract and retain employees who will strive for excellence

§ Motivate employees to set and achieve above-average objectives by providing them with rewards for contributing to the profitable growth of the Company, and

§ Execute the Compensation Philosophy of the Company by paying Participants for outstanding performance.

The Plan aligns the changing business strategies and set goals based on actual business plans. This Plan supports the near-term business initiatives and rewards the Participant for helping achieve goals that support those initiatives. By measuring key financial results, the Plan aligns the Participants’ (financial) interests with the Company’s interests—and thus increases shareholder value.

2. ELIGIBILITY

Full-time employees at the officer level and above are eligible to participate in this Plan. In addition, the Participant must have at least one year of service with the Company, one of its subsidiaries, or one of its joint ventures. Participants with less than one year of service may receive a pro-rated bonus award.

3. PLAN OUTLINE

§ The Executive Incentive Plan pays Participants a bonus based on achieving certain goals. The bonus award is normally a percentage of base pay.

§ Plan Participants receive bonuses based on results against various Performance Metrics: Corporate, Brand, or Department/Individual. Each Participant’s Metric Mix depends on their role within the Company.

§ The Weight of each Performance Metric will determine the amount of the bonus award.

Page 2 of 6

§ At the end of the year, the Company, Brand, Department, and Individual results will be assessed, and bonus amounts will be calculated based on results achieved in each Performance Metric.

§ The bonus award may then be modified at the sole discretion of the Compensation Committee. A Performance Kicker may increase or decrease the bonus award by up to 15%, depending on the EBITDA performance levels of the Company relative to leading industry competitors.

Bonus Opportunity

Company management, or the Compensation Committee (when appropriate) establishes Target Award amounts for each Plan Participant, which is a percentage of the Participant’s base salary. The Target Awardis the bonus award the Participant will earn if Target Performance is met for each Performance Metric, as follows:

§ Threshold: The minimum acceptable performance level for any particular metric. At threshold, the participant may receive 5% of the target bonus.

§ Target: The expected performance level for each metric. At target, the participant may receive 100% of the target bonus.

§ Maximum: The highest potential award level representing superior results! At maximum, the participant may receive 300% of the target bonus.

If results fall between the performance levels, (i.e., threshold, target and maximum), bonus percentages will increase. For example, if results fall between the target and the maximum levels, bonus percentages could be from 100% to 300%, depending on the actual results.

Performance Metrics

Under the Plan, bonuses are based on results in different Performance Metrics: Corporate, Brand, and/or Department/Individual. The Participant’s Metric Mix depends on the participant’s role and level within the Company.

Corporate

All Plan Participants have a Corporate Performance Metric as part of the Metric Mix.

At the beginning of each Plan Year, the Compensation Committee will determine what level of Net Income is needed to achieve the threshold, target, and maximum performance levels.

Brand

Brand Officers have a Brand Performance Metric as part of the Metric Mix, since they have a significant impact on the financial performance of a Brand.

At the beginning of each Plan Year, the Compensation Committee will determine which financial measure it will use as the Performance Metric for each Brand, as well as the dollar amounts that need to be achieved for Threshold, Target, and Maximum performance levels.

Page 3 of 6

Department/Individual

At the beginning of each Plan Year, Participants set specific department goals and/or individual goals and brand goals (if applicable) through the Company’s Performance Management process. These goals will be reviewed and approved by the officer’s management to ensure they are aligned with the Company’s overall business objectives. Objectives may be either quantitative, qualitative or both.

The Compensation Committee will establish individual goals for the CEO. As appropriate, the CEO will approve the objectives of the senior management team and make recommendations to the Compensation Committee regarding departmental/individual goals.

Performance Kicker

In addition to the above Performance Metrics, the bonus amount may be increased or decreased by up to 15%, at the discretion of the Compensation Committee, depending on the EBITDA performance levels of the Company relative to leading industry competitors.

Bonus Calculations

At the end of the year, the Company will assess the results against the goals set for each of the Plan Performance Metrics. If the Company, Brand, Department, or the Participant has met at least the threshold goal for any of the Performance Metrics, the Participant may be eligible to receive a bonus award.

4. BONUS AWARD PAYMENTS

Bonus awards will normally be payable as soon as possible after the determination of year-end audited financial results, after approval by the Compensation Committee. It is the intention of the Company that bonus award payments, under this Plan will not be subject to 409(A) of the Internal Revenue Code. Bonus awards will be paid in cash and will be calculated using the Participant’s base salary on December 31.

If the Participant voluntarily leaves the Company before the bonus award is made, the bonus is forfeited. In the case of involuntary termination of employment, retirement, permanent disability, death, lay-off, or transfer to an affiliate of the Company, a pro-rata share of the bonus award for the year may be made at the sole discretion of the Compensation Committee.

If the Participant is on a leave of absence (LOA) the bonus may be pro-rated for the portion of the Plan Year that was worked.

Notwithstanding any other provision of this plan, the issuance of bonus awards is at the sole discretion of the Compensation Committee. The Compensation Committee at its sole discretion, may increase, decrease or withhold bonus awards.

Page 4 of 6

5. PLAN ADMINISTRATION AND

GENERAL PROVISIONS

The Compensation Committee shall administer the Plan and make such decisions as it deems necessary or advisable, to implement the Plan. Decisions of the Compensation Committee shall be final and binding on all parties who have an interest in the Plan.

The Board of Directors may at any time, at its discretion, amend, suspend or terminate the Plan, provided that such action shall not adversely affect rights and interests of Plan Participants to individual bonuses awarded prior to such amendment, suspension or termination.

No amounts awarded or accrued under this Plan shall actually be funded, set aside, or otherwise segregated prior to payment.

No Plan Participant shall have the right to alienate, pledge or encumber any interest in this Plan, and such interest shall not (to the extent permitted by law) be subject in any way to the claims of the employee’s creditors or other process of law.

Neither the establishment nor administration of this Plan, nor any provision of this Plan, shall be construed to grant any person the right to remain employed by the Company or its subsidiaries. Rather, each employee will be employed “at will,” which means that either such employee or the Company may terminate the employment relationship at any time and for any reason, with or without cause.

This Plan document is the full and complete agreement between the Eligible Employees and the Company on the terms described herein.

Extraordinary Events

The cruise line industry, and the performance of the Company, can be influenced by events that are clearly outside the bounds of management’s ability to control. An example of such an event is an act of war or terrorism. To the extent that extraordinary events influence Company results, the Compensation Committee may adjust bonus awards to reflect its assessment of the Company’s ability to respond to those events.

Page 5 of 6

6. DEFINITIONS

Company: Royal Caribbean Cruises Ltd.

Compensation Committee: The Compensation Committee of the Company’s Board of Directors.

Corporate Performance: The financial results of the Company vis-à-vis the metrics established for the Plan Year.

Employee: An individual who is employed by the Company, its subsidiaries, or joint ventures (“affiliate”).

Maximum Performance: The highest performance level for which funds will be set aside to pay a bonus under the Plan. The purpose for establishing a maximum is to protect the shareholders from an unforeseen windfall.

Metric Mix: The combination of Performance Metrics that determine a Participant’s bonus award.

Net Income: Net income achieved by the Company in the Plan Year.

Participant: Any employee selected to be eligible to receive a benefit from this Plan.

Performance Kicker: Also referred to as the kicker, this is a bonus modifier that may range between +/- 15%.

Performance Metric: Measures used by the Plan to determine a Participant’s bonus award; includes Corporate, Brand, or Department/Individual.

Plan: The Executive Incentive Plan.

Plan Year: Each year for which the Plan is authorized; generally the Plan year runs from January 1 – December 31.

Subsidiaryor Joint Venture (“affiliate”): Any corporation of which the Company owns 50% or more of the voting shares, or joint venture in which the Company has a 50% or greater interest.

Target Award: The Participant’s anticipated level of bonus award if target performance is met for each Performance Metric. This is determined by the Compensation Committee, and is normally established as a percentage of base salary.

Target Performance: The level of each Performance Metric that is expected.

Threshold Performance: The minimum acceptable performance level for consideration of a bonus for any particular metric.

Weight: The percentage applied to each Performance Metric to determine the amount of the bonus award.

Page 6 of 6

EX-10

Exhibit 10.29

AMENDMENT TO THE

ROYAL CARIBBEAN CRUISES LTD. ET AL NONQUALIFIED 401(k) PLAN

WHEREAS, Royal Caribbean Cruises Ltd. (the “Company”) currently maintains the Royal Caribbean Cruises Ltd. et al Nonqualified 401(k) Plan (the “Plan”); and

WHEREAS, the Plan reserves to the Board of Directors (the “Board”) the authority to amend the Plan; and

WHEREAS, the Company has determined that it is desirable to amend the Plan to permit the Board to delegate authority to the Compensation Committee of the Board to either make Plan amendments that are required by law, or are administrative or immaterial in nature or to delegate such authority to the Administrative Committee of the Plan; and

WHEREAS, the Board has revised the Compensation Committee’s charter to authorize it to make such amendments or to delegate such responsibility; and

WHEREAS, the Compensation Committee has met and determined it appropriate to permit the Administrative Committee to make certain amendments.

NOW, THEREFORE, IT IS RESOLVED that, the Plan is hereby revised, effective December 12, 2006, in the following particulars:

1.The following Section 2.7 is added to Article 2 as follows, and subsequent sections shall be re-numbered accordingly:

2.7Committee means the Administrative Committee appointed to administer the Plan pursuant to Article 7.

2. Article 7 of the Plan is amended to read as follows:

ARTICLE 7. ADMINISTRATION

7.1Administration: The Plan will be administered by an Administrative Committee consisting of members from the human resources, legal, treasury, and audit departments appointed by the Company. Each member of the Committee may resign, or may be removed at any time by the Company, and, in the event of the removal, death or resignation of any member, his successor will be appointed by the Company. If a vacancy or vacancies occur on the Committee, the remaining member or members will act as the Committee until the Company fills such vacancy or vacancies.

The Committee will have all powers necessary or helpful for the carrying out of its responsibilities, and its decisions or actions, in good faith, in respect of any matter hereunder will

be conclusive and binding upon all parties concerned. The Committee may delegate to one or more of its members the right to act on its behalf in any one or more matters connected with the administration of the Plan. Without limiting the generality of the foregoing, the Committee will have the power to make rules and regulations for the administration of the Plan which are not inconsistent with the terms and provisions of the Plan, to construe all terms, provisions, conditions and limitations of the Plan, and to determine all questions arising out of or in connection with the provisions of the Plan or its administration in any and all cases in which the Committee deems such a determination advisable. The Committee shall determine a Participant’s right to a benefit under the Plan. The foregoing list of powers is not intended to be either complete or exclusive, and the Committee will, in addition, have such powers as it may determine to be necessary for the performance of its duties under the Plan.

7.2Plan Expenses: The expenses of administering the Plan shall be borne by the Company.

7.3Liability Limited: Except as otherwise provided by law, no person who is a member of the Committee or who is an employee, officer and/or director of the Company will incur any liability whatsoever on account of any matter connected with or related to the Plan or the administration of the Plan, unless such person has acted in bad faith, or has willfully neglected his duties, in respect of the Plan.

7.4Claims Procedure: The Committee shall establish a claims procedure in accordance with applicable law and shall afford a reasonable opportunity to any Participant whose claim for benefits has been denied for a full and fair review of the decision denying such claim. The claims procedure shall provide for a notice of denial of a claim to be received by a claimant within a reasonable period, not to exceed ninety (90) days, following the filing of a claim. The notice shall provide the reason for the denial, references to the Plan provisions on which the denial is based, a description of additional information necessary to perfect a claim and the steps required to submit a claim for review. The period to request a review must be for at least sixty (60) days after a receipt of notice of denial of a claim. A decision on review shall be made within sixty (60) days after the Plan’s receipt of a request for a review unless special circumstances require a longer period in which case the Plan shall have an additional sixty (60) days. The final decision shall be in writing and shall include specific reasons for the decision and references to Plan provisions.

7.5Notices: Any notices, designations or other communications to be given to the Company by any Eligible Participant or Beneficiary shall only be effective if delivered to the Company’s Vice President and Chief Human Resource Officer.

7.6Quorum and Voting; Procedures A majority of the members of the Committee at the time in office will constitute a quorum for the transaction of business. The Committee shall select from among its members a Chairman, and shall appoint (from its members or otherwise) a Secretary. The Committee may act by vote or consent of the majority of its members then in office (with or without a meeting) and may establish its own procedures. The Committee may authorize any one or more of its members or the Secretary of the Committee to sign and deliver any instrument, certificate or other paper or document on its behalf.

7.7Subcommittees, Counsel and Agents The Committee may appoint from its members such subcommittees (of one or more such members), with such powers, as it shall determine. The Committee may employ an actuary, counsel (including legal counsel, who may

2

be counsel for the Company) and agents and such clerical and other service providers as it may require in carrying out the provisions of the Plan, and may charge the fees, charges and costs resulting from such employment as an expense to the Plan; however, to the extent such expenses are not paid for by the Plan, the Company may pay such expenses directly. Persons serving on the Committee or on any such subcommittee shall be entitled to act in accordance with the advice of legal or other counsel in carrying out these responsibilities under the Plan.

7.8Reliance on Information The members of the Committee and the Company and its respective officers, directors and employees will be entitled to rely upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, trustee, insurance company, counsel, physician or other expert who is engaged by the Committee, the Company, and the members of the Committee, the Company and its respective officers, directors and employees will be fully protected in respect of any action taken or suffered by them in good faith in reliance thereon, and all action so taken or suffered shall be conclusive upon all persons affected thereby.

7.9Instructions to trustee The Committee shall provide appropriate written instructions in accordance with the trust agreement, if any, to enable the trustee to make the distributions provided for in the Plan.

7.10Genuineness of Documents The Committee and the Company and its respective officers, directors and employees, will be entitled to rely upon any notice, request, consent, letter, telegram or other paper or document believed by them or any of them, in good faith, to be genuine and to have been signed or sent by the proper person.

7.11Proper Proof In any case in which the Company, the Committee or the trustee is required under the Plan to take action upon the occurrence of any event, they will be under no obligation to take such action unless and until proper and satisfactory evidence of such occurrence has been received by them.

3. Article 8 is amended to read as follows:

8.1Plan Amendment: The Plan may be amended or otherwise modified by the Board, in whole or in part, provided that no amendment or modification shall divest any Participant of any amount previously credited to his or her Participant Account under Article 4 or of the amount and method of crediting earnings to such Participant Account under Article 5 of the Plan as of the date of such amendment. The Board has delegated to the Compensation Committee of the Board the ability to amend the Plan. In addition, the Compensation Committee of the Board may delegate authority to the Committee to amend the Plan to make administrative or legally required changes. Notwithstanding anything herein to the contrary, in no event shall any amendment be made in a manner that is inconsistent with the requirements under Section 409A of the Code.

8.2Termination of the Plan: The Board reserves the right to terminate the Plan at any time in whole or in part. In the event of any such termination, the Company shall pay a benefit to the Participant or the Beneficiary of any deceased Participant, in lieu of other benefits hereunder, equal to the value of the Participant’s Account in the form and at the benefit commencement date elected by the Participant pursuant to Article 6 of the Plan. Earnings shall

3

continue to be allocated under Article 5 of the Plan after the termination of the Plan until the Participant’s benefits have been paid in full notwithstanding the termination of the Plan. Notwithstanding anything herein to the contrary, in no event shall any termination be made in a manner that is inconsistent with the requirements under Section 409A of the Code, and in no event shall any committee have the authority to terminate the Plan.

IN WITNESS WHEREOF, this Amendment is being executed as of the 12^th day of December, 2006.

ROYAL CARIBBEAN CRUISES LTD.

Attest:__/s/ Bradley Stein_______________ By:__/s/ Maria R. Del Busto__________

Bradley Stein Maria R. Del Busto

Vice President, General Counsel/ Vice President and Chief Human

Secretary Resources Officer

4

EX-10

Exhibit 10.31

AMENDMENT TO THE

ROYAL CARIBBEAN CRUISES LTD. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

WHEREAS, Royal Caribbean Cruises Ltd. (the “Company”) currently maintains the Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan (the “Plan”); and

WHEREAS, the Plan reserves to the Board of Directors (the “Board”) the authority to amend the Plan; and

WHEREAS, the Company has determined that it is desirable to amend the Plan to permit the Board to delegate authority to the Compensation Committee of the Board to either make Plan amendments that are required by law, or are administrative or immaterial in nature or to delegate such authority to the Administrative Committee of the Plan; and

WHEREAS, the Board has revised the Compensation Committee’s charter to authorize it to make such amendments or to delegate such responsibility; and

WHEREAS, the Compensation Committee has met and determined it appropriate to permit the Administrative Committee to make certain amendments.

NOW, THEREFORE, IT IS RESOLVED that, the Plan is hereby revised, effective December 12, 2006, in the following particulars:

1. Section 1.2 is amended to read as follows:

1.2 Administrator or Plan Administrator means the Committee.

2.The following Section 1.5 is added to Article 1 as follows, and subsequent sections shall be re-numbered accordingly:

1.5Committee means the Administrative Committee appointed to administer the Plan pursuant to Article 6.

3. Article 6 is amended to read as follows:

ARTICLE 6

ADMINISTRATION

6.1 Appointment of Committee The Plan will be administered by an Administrative Committee consisting of members from the human resources, legal, treasury, and audit departments appointed by the Company. Each member of the Committee may resign, or may be removed at any time by the Company, and, in the event of the removal, death or resignation of any member, the successor will be appointed by the Company. If a vacancy or vacancies occur on the Committee, the remaining member or members will act as the Committee until the Company fills such vacancy or vacancies.

6.2 Powers and Authority; Action Conclusive. Except as otherwise expressly provided in the Plan or by the Board:

6.2.1The Committee will have all powers necessary or helpful for the carrying out of its responsibilities, and its decisions or actions, in good faith, in respect of any matter hereunder will be conclusive and binding upon all parties concerned.

6.2.2The Committee may delegate to one or more of its members the right to act on its behalf in any one or more matters connected with the administration of the Plan.

6.2.3Without limiting the generality of the foregoing, the Committee will have the power to make rules and regulations for the administration of the Plan which are not inconsistent with the terms and provisions of the Plan, to construe all terms, provisions, conditions and limitations of the Plan, and to determine all questions arising out of or in connection with the provisions of the Plan or its administration in any and all cases in which the Committee deems such a determination advisable. The Committee shall determine a Participant’s right to a benefit under the Plan. The foregoing list of powers is not intended to be either complete or exclusive, and the Committee will, in addition, have such powers as it may determine to be necessary for the performance of its duties under the Plan.

6.3 Records and Accounts. The Administrator shall maintain or shall cause to be maintained accurate and detailed records and accounts of Participants and of their rights under the Plan and of all investments, receipts, disbursements and other transactions.

6.4 Liability. Except as otherwise provided by law, no person who is a member of the Committee or who is an employee, officer and/or director of the Company, will incur any liability whatsoever on account of any matter connected with or related to the Plan or the administration of the Plan, unless such person has acted in bad faith, or has willfully neglected his duties, in respect of the Plan.

6.5 Quorum and Voting; Procedures. A majority of the members of the Committee at the time in office will constitute a quorum for the transaction of business. The Committee shall select from among its members a Chairman, and shall appoint (from its members or

2

otherwise) a Secretary. The Committee may act by vote or consent of the majority of its members then in office (with or without a meeting) and may establish its own procedures. The Committee may authorize any one or more of its members or the Secretary of the Committee to sign and deliver any instrument, certificate or other paper or document on its behalf.

6.6 Subcommittees, Counsel and Agents The Committee may appoint from its members such subcommittees (of one or more such members), with such powers, as it shall determine. The Committee may employ an actuary, counsel (including legal counsel, who may be counsel for the Company) and agents and such clerical and other service providers as it may require in carrying out the provisions of the Plan, and may charge the fees, charges and costs resulting from such employment as an expense to the Plan; however, to the extent not paid for by the Plan, the Company may pay such expenses directly. Persons serving on the Committee or on any such subcommittee shall be entitled to act in accordance with the advice of legal or other counsel in carrying out these responsibilities under the Plan.

6.7 Reliance on Information The members of the Committee and the Company and its respective officers, directors and employees will be entitled to rely upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, trustee, insurance company, counsel, physician or other expert who is engaged by the Committee, the Company, and the members of the Committee, the Company and its respective officers, directors and employees will be fully protected in respect of any action taken or suffered by them in good faith in reliance thereon, and all action so taken or suffered shall be conclusive upon all persons affected thereby.

6.8 Genuineness of Documents The Committee and the Company and its respective officers, directors and employees will be entitled to rely upon any notice, request, consent, letter, telegram or other paper or document believed by them or any of them, in good faith, to be genuine and to have been signed or sent by the proper person.

6.9 Proper Proof In any case in which the Company is required under the Plan to take action upon the occurrence of any event, they will be under no obligation to take such action unless and until proper and satisfactory evidence of such occurrence has been received by them.

6.10 Payment of Expenses. All expenses incurred in the operation or administration of this Plan shall be paid by Company.

6.11 Substitute Payee. If a Participant or Beneficiary entitled to receive any benefits hereunder is in his minority, or is declared legally, physically, or mentally incapable of personally receiving and receipting any distribution, the Company may make distributions to a legally appointed guardian or to such other person or institution as, in the judgment of the Company, is then maintaining or has custody of the payee.

4. Article 8 is amended to read as follows:

3

ARTICLE 8

AMENDMENT AND TERMINATION

8.1 Plan Amendment. The Plan may be amended or otherwise modified by the Board, in whole or in part, provided that no amendment or modification shall divest any Participant of any amount previously credited to his Account under Section 3.1 or of the amount and method of crediting earnings to such Account under Section 4.3 of the Plan as of the date of such amendment. The Board has delegated to the Compensation Committee of the Board the ability to amend the Plan. In addition, the Compensation Committee of the Board may delegate authority to the Committee to amend the Plan to make administrative or legally required changes; provided, however, that in no event shall any committee have the authority to amend the formula for calculating benefits under the Plan. Notwithstanding anything herein to the contrary, in no event shall any amendment be made in a manner that is inconsistent with the requirements under Section 409A of the Code.

8.2 Termination of the Plan. The Board reserves the right to terminate the Plan at any time in whole or in part. In the event of any such termination, subject to Code Section 409A, the Company shall pay a benefit to the Participant or the Beneficiary of any deceased Participant, in lieu of other benefits hereunder, equal to the value of the Participant’s Account in the form and at the benefit commencement date elected by the Participant pursuant to section 5.1 of the Plan. Earnings shall continue to be allocated under Section 4.3 of the Plan after the termination of the Plan until the Participant’s benefits have been paid in full notwithstanding the termination of the Plan. Notwithstanding anything herein to the contrary, in no event shall any termination be made in a manner that is inconsistent with the requirements under Section 409A of the Code, and in no event shall any committee have the authority to terminate the Plan.

IN WITNESS WHEREOF, this Amendment is being executed as of the 12^th day of December, 2006.

ROYAL CARIBBEAN CRUISES LTD.

Attest:____/s/ Bradley Stein_____________ By:__Maria R. Del Busto___________

Bradley Stein Maria R. Del Busto

Vice President, General Counsel/ Vice President and Chief Human

Secretary Resources Officer

4

EX-10

Exhibit 10.32

ROYAL CARIBBEAN CRUISES LTD.

CURRENT BOARD OF DIRECTOR COMPENSATION SCHEDULE

Cash Compensation Annual

Annual Retainer $ 50,000

Audit Committee Chairman Retainer $ 30,000

Audit Committee Member Retainer $ 15,000

Compensation Committee Chairman Retainer $ 15,000

Committee Chairman Retainer (All Other Committees) $ 6,000

Committee Member Retainer (All Other Committees) $ 5,000

Board Per Meeting Fees $ 1,200

Committee Per Meeting Fees (All Committees) $ 1,200

Annual Total Cash Compensation Cap $100,000

At the discretion of the Board, each non-employee director is eligible to receive an annual grant of equity awards with an aggregate value on the date of grant equal to $90,000. Sixty-seven percent of this annual grant is awarded in the form of restricted stock units and thirty-three percent is awarded in the form of options to purchase the Company's common stock.

The Company provides Board members with one passenger cabin, upon request, on a complimentary basis. Immediate family traveling with Board members will also receive a “family rate” of $40 per person per day. Non-family guests of Board members may purchase the cabin of their choice at a 25% reduction of the “lowest available fare” at time of booking.

EX-12

Exhibit 12.1

Royal Caribbean Cruises Ltd.

Ratio of Earnings to Fixed Charges

(in thousands, except ratios)

	Years Ended December 31,
	2006	2005	2004	2003	2002
Earnings
Income before cumulative effect of a change in accounting principle	$633,922	$663,465	$474,691	$280,664	$351,284
Income tax expense	7,881	16,124	2,810	2,100	1,040
(Income) loss from equity investees	(4,417)	(6,661)	(1,912)	(1,694)	6,536
Fixed charges	327,263	310,442	343,272	307,369	302,477
Capitalized interest	(27,844)	(17,688)	(7,228)	(15,932)	(23,425)
Earnings	$936,805	$965,682	$811,633	$572,507	$637,912
Fixed Charges
Interest expense (1)	$295,705	$287,438	$317,205	$284,328	$290,269
Interest portion of rent expense (2)	31,558	23,004	26,067	23,041	12,208
Fixed charges	$327,263	$310,442	$343,272	$307,369	$302,477
Ratio of Earnings to Fixed Charges	2.9x	3.1x	2.4x	1.9x	2.1x

(1) Interest expense includes capitalized interest and amortization of deferred financing expenses.

(2) Interest portion of rent expense represents actual interest charges for the Brilliance of the Seas operating lease

and, for all other rentals, we have assumed that one-third of rent expense is representative of the interest factor.

EX-21

Exhibit 21.1

LIST OF SUBSIDIARIES

The following is a list of all our subsidiaries, their jurisdiction of incorporation and the names under which they do business. This list does not include those subsidiaries that, in the aggregate, would not have been a "significant subsidiary" as of December 31, 2006.

NAME	INCORPORATION
Adventure of the Seas Inc.	Liberia
Blue Sapphire Marine Inc.	Liberia
Cape Liberty Cruise Port LLC	Delaware
Celebrity Cruise Lines Inc.	Cayman Islands
Celebrity Cruises Holdings Inc.	Liberia
Celebrity Cruises Inc., doing business as Celebrity Cruises	Liberia
Constellation Inc.	Liberia
Cruise Mar Investment Inc.	Liberia
Cruise Mar Shipping Holdings Ltd.	Liberia
Enchantment of the Seas Inc.	Liberia
Esker Marine Shipping Inc.	Liberia
Explorer of the Seas Inc.	Liberia
Fantasia Cruising Inc.	Liberia
Freedom of the Seas Inc.	Liberia
Galapagos Cruises Inc.	Liberia
GG Operations Inc	Delaware
Grandeur of the Seas Inc.	Liberia
Harmony Investments (Global) Ltd.	England
Infinity Inc.	Liberia
Island for Science Inc.	Indiana
Islas Galapagos Turismo y Vapores CA	Ecuador
Jewel of the Seas Inc.	Liberia
Labadee Investments Ltd.	Cayman Islands
Legend of the Seas Inc.	Liberia
Liberty of the Seas Inc.	Liberia
Majesty of the Seas Inc.	Liberia
Mariner of the Seas Inc.	Liberia
Millennium Inc.	Liberia
Monarch of the Seas Inc.	Liberia
Navigator of the Seas Inc.	Liberia
Nordic Empress Shipping Inc.	Liberia
Pullmantur, S.A.	Spain
Pullmantur Ship Management, Ltd.	Bahamas
Pullmantur Cruises, S.L.	Spain
Pullmantur Cruises Ship Management Ltd.	Malta
Pullmantur Cruises Oceanic Ltd.	Malta
Pullmantur Cruises Blue Dream, Ltd.	Malta
Pullmantur Cruises Holiday Dream Ltd.	Malta
Pullmantur Cruises Sky Wonder Ltd.	Malta
Pullmantur Cruises Blue Moon Ltd.	Malta
Radiance of the Seas Inc.	Liberia
RCL UK Ltd.	England

NAME	INCORPORATION
RCL Holdings Cooperatif U.A.	Netherlands
Rhapsody of the Seas Inc.	Liberia
Royal Caribbean Holdings de Espana S.L.	Spain
Royal Caribbean Cruise Lines AS	Norway
Royal Caribbean Cruises Espana S.L.	Spain
Royal Celebrity Tours Inc.	Delaware
Seabrook Maritime Inc.	Liberia
Serenade of the Seas Inc.	Liberia
Societe Labadee Nord, S.A.	Haiti
Sovereign of the Seas Shipping Inc.	Liberia
Splendour of the Seas Inc.	Liberia
Summit Inc.	Liberia
The Scholar Ship Program LLC	Delaware
Universal Cruise Holdings Ltd	British Virgin Islands
Vision of the Seas Inc.	Liberia
Voyager of the Seas Inc.	Liberia
Zenith Shipping Corporation	Liberia

EX-23

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Forms S-3 (Nos. 333-136186 and 333-115090) and Forms S-8 (Nos. 333-84982, 333-84980 and 333-7290) of Royal Caribbean Cruises Ltd. of our report dated February 28, 2007 relating to the financial statements, management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which appears in this Annual Report on Form 10-K.

/s/ PricewaterhouseCoopers LLP

Miami, FL

February 28, 2007

EX-23

Exhibit 23.2

[DRINKER BIDDLE & REATH LLP]

January 19, 2007

Royal Caribbean Cruises Ltd.

1050 Caribbean Way

Miami, FL 33132

Form 10-K for Year Ended December 31, 2006

Dear Sirs and Mesdames:

You have asked for our opinion on certain U.S. Federal income tax matters relating to Royal Caribbean Cruises Ltd. (the “Company”).

For purposes of rendering our opinion, we have examined originals, copies or certified copies of all such documents as we have deemed relevant and necessary. We have with your approval assumed the authenticity of all documents submitted to us as originals, and the conformity to original documents of all documents submitted to us as copies. As to questions of fact material to this opinion, we have, when relevant facts were not independently established, relied upon certificates of public officials and statements of representatives of the Company and of shareholders of the Company.

Certain Factual Assumptions

In issuing our opinion, we have relied upon representations and/or publicly available information that:

(1) the Company and each of its direct and indirect wholly-owned subsidiaries that operate or own a ship or ships are corporations formed under the laws of Liberia or Malta, each of which is a country that exempts from taxation all international shipping income (including bareboat charter income) of U.S. corporations;

(2) more than 50% of the outstanding shares of Company common stock are owned by persons each of whom owns less than 5% of such outstanding shares (treating as one person for this purpose any two or more persons who are related within the meaning of section 267(b) of the Internal Revenue Code of 1986, as amended (the “Code”));(Fn1)

(3) more than 20% of the outstanding shares of Company common stock are owned directly by the Company’s largest shareholder, which is a Norwegian company, owned beneficially by individuals who are residents of Norway(Fn2) (which is another country that exempts from taxation all international shipping income of U.S. corporations);

(4) the common stock of the Company is the Company’s only outstanding class of stock;

(5) all outstanding shares of common stock of the Company are listed for trading on the New York Stock Exchange (the “NYSE”), where those shares are regularly quoted by dealers making a market in the stock (by regularly and actively offering to make, and making, purchases and sales of such shares in the ordinary course of business to and from customers who are not related persons with respect to the dealers), and Company shares are not traded on any non-U.S. securities market other than the Oslo Stock Exchange;

(6) trades of Company common stock are effected on each of the NYSE and the Oslo Stock Exchange in other than deminimis quantities on at least 60 days during each year, and the aggregate number of such shares traded on each of the NYSE and the Oslo Stock Exchange each year equals or exceeds 10% of the average number of shares of Company common stock outstanding during the year;

(7) the NYSE is a national securities exchange that is registered under section 6 of the Securities Act of 1934;

(8) the Oslo Stock Exchange is officially recognized, sanctioned or supervised by a governmental authority of Norway and has an annual trading volume in excess of $1 billion; and

(9) the Company’s certificate of incorporation precludes any person from acquiring more than 4.9% of the outstanding shares of Company’s common stock (treating as one person for this purpose any two or more persons who are related within the meaning of Code section 267(b)), except that this restriction does not apply to existing 5% shareholders of the Company and may not apply, under Liberian law, to shares that were not voted in favor of the adoption of such restriction.

Discussion

Under Code section 883, certain foreign corporations are exempt from Federal income or branch profits tax on income derived from or incidental to the international operation of a ship or ships, including income from the leasing of such ships. A foreign corporation will qualify for the benefits of section 883 if, in relevant part, (1) the foreign country in which the foreign corporation is organized grants an equivalent exemption to corporations organized in the United States and (2) (a) more than 50% of the value of the corporation’s capital stock is owned, directly or indirectly, by individuals who are residents of a foreign country or countries that grant such an equivalent exemption to corporations organized in the United States or (b) the stock of the corporation (or the direct or indirect corporate parent thereof) is “primarily and regularly traded on an established securities market” in the United States or another qualifying country.

The Company and each of its subsidiaries that owns or operates a ship or ships should meet the requirements of clause (1) above because Liberia and Malta are countries that grants an equivalent exemption.(Fn3)

With respect to the requirements of clause (2)(b) above, regulations and other guidance under Code section 883 set forth the tests applicable to determine whether a corporation’s shares of stock should be considered “primarily and regularly traded on an established securities market” in the United States or another qualifying country.

The Company’s shares are traded on an established securities market in the United States and on an established securities market in Norway, which is a qualifying country for section 883 purposes. The NYSE constitutes an established securities market for purposes of section 883 because it is a “national securities exchange that is registered under section 6 of the Securities Act of 1934.”(Fn4) Likewise, the Oslo Stock Exchange constitutes an established securities market because it is “officially recognized, sanctioned, or supervised by a governmental authority of [Norway], and has an annual value of shares traded on the exchange exceeding $1 billion.”(Fn5) Norway is a qualifying country for section 883 purposes.(Fn6) 

The Company’s shares are considered “primarily” traded on either the NYSE or the Oslo Stock Exchange, because the number of such shares traded on one of those markets during the year exceeds the number of such shares traded on any other established securities market during that year.(Fn7)

Stock will generally be considered “regularly traded” on a securities market if trades in more than de minimis quantities occur on the market on at least sixty

days of the year, and the annual trading volume on the market equals or exceeds 10% of the outstanding shares.(Fn8) The Company’s shares meet this test with respect to both the NYSE and the Oslo Stock Exchange. The Company’s shares also meet an alternative basis for such a conclusion with respect to the NYSE, inasmuch as the stock is regularly quoted by dealers making a market in the stock.(Fn9)

If 50% or more of a corporation’s outstanding shares are owned by 5% or greater shareholders other than registered investment companies (a “closely-held group”), the regulations under Code section 883 provide that the shares generally will fail to be treated as “regularly traded” unless the corporation can identify sufficient qualified direct or indirect shareholders within the closely-held group as to reduce to 50% or less the aggregate shares owned by the closely-held group that are not owned, directly or indirectly, by qualified shareholders.(Fn10) Less than 50% of the Company’s outstanding shares are owned by such 5% or greater shareholders, so the Company should not be disqualified by reason of the closely-held exception. Moreover, even if the Company’s closely-held group would otherwise exceed that 50% threshold in aggregate, the percentage of shares owned by the Company’s largest shareholder, which is Norwegian company owned by Norwegian residents, could be deducted for this purpose.

Conclusion

Based upon, and subject to, the factual representations and assumptions described above, and the legal authorities and limitations set forth below, it is our opinion that the income of the Company, and its subsidiaries who own or operate a ship or ships, to the extent derived from or incidental to the operation of a ship or ships, is exempt from Federal income tax pursuant to Code section 883.

*****

This opinion represents our best legal judgment, but it has no binding effect or official status of any kind, and no assurance can be given that contrary positions may not be taken by the Internal Revenue Service or a court considering the issues. We express no opinion relating to any Federal income tax matter except on the basis of the facts described above, and any changes in such facts could require a reconsideration and modification of our opinion. We also express no opinion regarding tax consequences under foreign, state or local laws. In issuing our opinion, we have relied solely upon existing provisions of the Code, existing and proposed regulations under it, and current administrative positions and judicial decisions. Those laws, regulations, administrative positions and judicial decisions are subject to change at any time. Any such changes could affect the validity of the opinion set forth above. Also, future changes in Federal tax laws and the interpretation thereof can have retroactive effect.

Our firm includes lawyers admitted to practice in the Commonwealth of Pennsylvania, the States of California, Delaware, Illinois, New Jersey, New York and Wisconsin, and the District of Columbia. We do not purport to be experts in the laws of any other jurisdiction, aside from U.S. Federal law.

We hereby consent to the references to our firm and this opinion contained in the Company’s Form 10-K for the year ended December 31, 2006 under the captions “Business – Taxation of the Company” and “Risk Factors – A change in our tax status under the United States Internal Revenue Code may have adverse effects on our income.” By giving this consent, we do not concede that we are experts within the meaning of the Securities Act of 1933 and rules and regulations issued by the Securities and Exchange Commission under that Act, nor do we intend by this letter to certify any portion of such Form 10-K.

Very truly yours,

/s/ Drinker Biddle & Reath LLP

DRINKER BIDDLE & REATH LLP

Footnotes

1. Code §267(b) describes a number of relationships between two or more persons, including members of the same family, a grantor and a fiduciary of a trust, a fiduciary and a beneficiary of a trust, and various other relationships between individuals and entities and between entities. Additional attribution rules applicable under Code §267(b) are set forth in Code §267(c).

2. Regulations under Code §883 provide, in relevant part, that an individual is a “resident” of a qualifying foreign country such as Norway only if the individual is fully liable to tax as a resident in that country and (1) has a “tax home” there for 183 days or more of the taxable year or (2) is treated as a resident of that country under the income tax treaty, if any, between that country and the United States. Treas. Reg. §§1.883-4(b)(2)(i), (b)(3). An individual’s tax home is his regular or principal place of business or, in the absence of such a place of business, his regular place of abode in a real and substantial sense. Treas. Reg. §1.883-4(b)(2)(ii).

³ Rev. Rul. 2001-48, 2001-2 C.B. 324; see Exchange of Notes Between Liberia Ministry of Foreign Affairs, dated Oct. 7, 1987, and U.S. Embassy, Monrovia, Liberia, dated Oct. 23, 1987, reprinted at 1988-1 C.B. 463; Exchange of Notes Between Liberia Ministry of Foreign Affairs, dated Dec. 9, 2004, and U.S. Embassy, Monrovia, Liberia, dated June 4, 2005; Exchange of Notes Between Liberia Ministry of Foreign Affairs, dated Dec. 9, 2004, and U.S. Embassy, Monrovia, Liberia, dated June 4, 2005; Exchange of Notes Between Embassy of Malta, Washington, D.C., dated Dec. 26, 1996, and U.S. Department of State, dated Mar. 11, 1997, reprinted at 1997-1 C.B. 314.

4. Treas. Reg. §1.883-2(b)(1)(ii).

 

5. Treas. Reg. §1.883-2(b)(1)(i).

6. Rev. Rul. 2001-48, 2001-2 C.B. 324; see Exchange of Notes Between U.S. Department of State, dated May 22, 1990, and Royal Norwegian Embassy, dated May 24, 1990, reprinted at 1991-1 C.B. 304.

7. Treas. Reg. §1.883-2(c).

8. Treas Reg. §1.883-2(d)(1)(ii).

9. Treas. Reg. §1.883-2(d)(2).

10. Treas. Reg. §1.883-2(d)(3).

EX-24

Exhibit 24

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

The undersigned director of Royal Caribbean Cruises Ltd., a Liberian corporation (the “Company”), hereby constitutes and appoints Richard D. Fain and Brian J. Rice and each of them (with full power to each of them to act alone), the true and lawful attorneys-in-fact and agents for the undersigned, and on behalf of the undersigned and in the name, place and stead of the undersigned, in any and all capacities, to sign the Annual Report on Form 10-K for the fiscal year ended December 31, 2006 to be field by the Company with the Securities and Exchange Commission under the provisions of the Securities Exchange Act of 1934, and any and all amendments, applications, or other documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present. The undersigned hereby ratifies and confirms all that said attorney-in-fact and agent many lawfully do or cause to be done by virtue hereof.

EXECUTED as of 13^th day of February 2007

/s/ Bernard W. Aronson

Bernard W. Aronson

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

The undersigned director of Royal Caribbean Cruises Ltd., a Liberian corporation (the “Company”), hereby constitutes and appoints Richard D. Fain and Brian J. Rice and each of them (with full power to each of them to act alone), the true and lawful attorneys-in-fact and agents for the undersigned, and on behalf of the undersigned and in the name, place and stead of the undersigned, in any and all capacities, to sign the Annual Report on Form 10-K for the fiscal year ended December 31, 2006 to be field by the Company with the Securities and Exchange Commission under the provisions of the Securities Exchange Act of 1934, and any and all amendments, applications, or other documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present. The undersigned hereby ratifies and confirms all that said attorney-in-fact and agent many lawfully do or cause to be done by virtue hereof.

EXECUTED as of 13^th day of February 2007

/s/ Arvid Grundekjoen Arvid Grundekjoen

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

The undersigned director of Royal Caribbean Cruises Ltd., a Liberian corporation (the “Company”), hereby constitutes and appoints Richard D. Fain and Brian J. Rice and each of them (with full power to each of them to act alone), the true and lawful attorneys-in-fact and agents for the undersigned, and on behalf of the undersigned and in the name, place and stead of the undersigned, in any and all capacities, to sign the Annual Report on Form 10-K for the fiscal year ended December 31, 2006 to be field by the Company with the Securities and Exchange Commission under the provisions of the Securities Exchange Act of 1934, and any and all amendments, applications, or other documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present. The undersigned hereby ratifies and confirms all that said attorney-in-fact and agent many lawfully do or cause to be done by virtue hereof.

EXECUTED as of the 25^th day of February 2007

/s/ William L. Kimsey William L. Kimsey

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

The undersigned director of Royal Caribbean Cruises Ltd., a Liberian corporation (the “Company”), hereby constitutes and appoints Richard D. Fain and Brian J. Rice and each of them (with full power to each of them to act alone), the true and lawful attorneys-in-fact and agents for the undersigned, and on behalf of the undersigned and in the name, place and stead of the undersigned, in any and all capacities, to sign the Annual Report on Form 10-K for the fiscal year ended December 31, 2006 to be field by the Company with the Securities and Exchange Commission under the provisions of the Securities Exchange Act of 1934, and any and all amendments, applications, or other documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present. The undersigned hereby ratifies and confirms all that said attorney-in-fact and agent many lawfully do or cause to be done by virtue hereof.

EXECUTED as of 13^th day of February 2007

/s/ Laura LaviadaLaura Laviada

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

The undersigned director of Royal Caribbean Cruises Ltd., a Liberian corporation (the “Company”), hereby constitutes and appoints Richard D. Fain and Brian J. Rice and each of them (with full power to each of them to act alone), the true and lawful attorneys-in-fact and agents for the undersigned, and on behalf of the undersigned and in the name, place and stead of the undersigned, in any and all capacities, to sign the Annual Report on Form 10-K for the fiscal year ended December 31, 2006 to be field by the Company with the Securities and Exchange Commission under the provisions of the Securities Exchange Act of 1934, and any and all amendments, applications, or other documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present. The undersigned hereby ratifies and confirms all that said attorney-in-fact and agent many lawfully do or cause to be done by virtue hereof.

EXECUTED as of 13^th day of February 2007

/s/ Gert W. Munthe Gert W. Munthe

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

The undersigned director of Royal Caribbean Cruises Ltd., a Liberian corporation (the “Company”), hereby constitutes and appoints Richard D. Fain and Brian J. Rice and each of them (with full power to each of them to act alone), the true and lawful attorneys-in-fact and agents for the undersigned, and on behalf of the undersigned and in the name, place and stead of the undersigned, in any and all capacities, to sign the Annual Report on Form 10-K for the fiscal year ended December 31, 2006 to be field by the Company with the Securities and Exchange Commission under the provisions of the Securities Exchange Act of 1934, and any and all amendments, applications, or other documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present. The undersigned hereby ratifies and confirms all that said attorney-in-fact and agent many lawfully do or cause to be done by virtue hereof.

EXECUTED as of the 26^th day of February 2007

/s/ Eyal Ofer Eyal Ofer

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

The undersigned director of Royal Caribbean Cruises Ltd., a Liberian corporation (the “Company”), hereby constitutes and appoints Richard D. Fain and Brian J. Rice and each of them (with full power to each of them to act alone), the true and lawful attorneys-in-fact and agents for the undersigned, and on behalf of the undersigned and in the name, place and stead of the undersigned, in any and all capacities, to sign the Annual Report on Form 10-K for the fiscal year ended December 31, 2006 to be field by the Company with the Securities and Exchange Commission under the provisions of the Securities Exchange Act of 1934, and any and all amendments, applications, or other documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present. The undersigned hereby ratifies and confirms all that said attorney-in-fact and agent many lawfully do or cause to be done by virtue hereof.

EXECUTED as of the ___ day of February 2007

/s/ Thomas J. Pritzker Thomas J. Pritzker

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

The undersigned director of Royal Caribbean Cruises Ltd., a Liberian corporation (the “Company”), hereby constitutes and appoints Richard D. Fain and Brian J. Rice and each of them (with full power to each of them to act alone), the true and lawful attorneys-in-fact and agents for the undersigned, and on behalf of the undersigned and in the name, place and stead of the undersigned, in any and all capacities, to sign the Annual Report on Form 10-K for the fiscal year ended December 31, 2006 to be field by the Company with the Securities and Exchange Commission under the provisions of the Securities Exchange Act of 1934, and any and all amendments, applications, or other documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present. The undersigned hereby ratifies and confirms all that said attorney-in-fact and agent many lawfully do or cause to be done by virtue hereof.

EXECUTED as of 22 ^th day of February 2007

/s/ William K. ReillyWilliam K. Reilly

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

The undersigned director of Royal Caribbean Cruises Ltd., a Liberian corporation (the “Company”), hereby constitutes and appoints Richard D. Fain and Brian J. Rice and each of them (with full power to each of them to act alone), the true and lawful attorneys-in-fact and agents for the undersigned, and on behalf of the undersigned and in the name, place and stead of the undersigned, in any and all capacities, to sign the Annual Report on Form 10-K for the fiscal year ended December 31, 2006 to be field by the Company with the Securities and Exchange Commission under the provisions of the Securities Exchange Act of 1934, and any and all amendments, applications, or other documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present. The undersigned hereby ratifies and confirms all that said attorney-in-fact and agent many lawfully do or cause to be done by virtue hereof.

EXECUTED as of 27^th day of February 2007

/s/ Bernt ReitanBernt Reitan

POWER OF ATTORNEY

DIRECTORS OF

ROYAL CARIBBEAN CRUISES LTD.

The undersigned director of Royal Caribbean Cruises Ltd., a Liberian corporation (the “Company”), hereby constitutes and appoints Richard D. Fain and Brian J. Rice and each of them (with full power to each of them to act alone), the true and lawful attorneys-in-fact and agents for the undersigned, and on behalf of the undersigned and in the name, place and stead of the undersigned, in any and all capacities, to sign the Annual Report on Form 10-K for the fiscal year ended December 31, 2006 to be field by the Company with the Securities and Exchange Commission under the provisions of the Securities Exchange Act of 1934, and any and all amendments, applications, or other documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present. The undersigned hereby ratifies and confirms all that said attorney-in-fact and agent many lawfully do or cause to be done by virtue hereof.

EXECUTED as of 13^th day of February 2007

/s/ Arne Alexander Wilhelmsen Arne Alexander Wilhelmsen

EX-31

Exhibit 31

CERTIFICATIONS

I, Richard D. Fain, certify that:

1. I have reviewed this annual report on Form 10-K of Royal Caribbean Cruises Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant'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 registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) 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 registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’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 registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 28, 2007

/s/ RICHARD D. FAIN

Richard D. Fain

Chairman and

Chief Executive Officer

(Principal Executive Officer)

CERTIFICATIONS

I, Brian J. Rice, certify that:

1. I have reviewed this annual report on Form 10-K of Royal Caribbean Cruises Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’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 registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) 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 registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’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 registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 28, 2007

/s/ BRIAN J. RICE

Brian J. Rice

Executive Vice President and

Chief Financial Officer

(Principal Financial Officer)

EX-32

Exhibit 32

In connection with the annual report on Form 10-K for the year ended December 31, 2006 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 Brian J. Rice, 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: February 28, 2007

By: /s/ RICHARD D. FAIN

Richard D. Fain

Chairman and

Chief Executive Officer

(Principal Executive Officer)

By: /s/ BRIAN J. RICE

Brian J. Rice

Executive Vice President and

Chief Financial Officer

(Principal Financial Officer)