terms and conditions of contract

 

                                                                    Exhibit 10.4

 

Pier Luigi Foschi

c/o Costa Crociere S.p.A.

Via XII Ottobre, 2

16150 Genoa

Italy

 

                                                               February 10, 2005

 

Dear Mr. Foschi,

 

      According  to our mutual  understanding,  we hereby  confirm the terms and

conditions of your contract related to your appointment as Chairman of the Board

(Presidente   del   Consiglio  di   Amministrazione)   and   Managing   Director

(Amministratore Delegato) of Costa Crociere S.p.A. (the "Company").

 

                                     *******

 

1.    FUNCTIONS AND POWERS

 

1.1   You shall act as Chairman  and  Managing  Director of the Company with the

      powers contemplated by the by-laws of the Company and granted by the Board

      of Directors of the Company from time to time,  which shall be an integral

      and substantial part of this Agreement.

 

1.2   In your capacity as Managing  Director,  and in accordance with the powers

      granted by the Board of Directors  of the Company,  you shall be entrusted

      with the managerial control of the Company;  you shall report to the Board

      of Directors of the Company on all major matters  and/or matters which are

      outside the scope of your powers.

 

2.    DUTIES

 

2.1   You shall undertake to accept and hold the above mentioned  offices,  with

      the connected powers granted to you, and to perform your functions, as set

      out above:

 

      a)    in compliance with the Company's by-laws;

 

      b)    for the  achievement of the business  targets which shall be set out

            by the Company's Board of Directors;

 

      c)    in compliance  with the Italian Laws in force and with the Company's

            Code of Conduct.

 

2.2   While  performing  your  functions you shall comply with the business plan

      and the business guidelines adopted by the Company's Board of Directors.

 

3.    COMPENSATION

 

3.1   The Company will pay for your services and for the obligations  undertaken

      by you  herein  a base  yearly  pre-tax  compensation  of EURO  757,000.00

      (sevenhundredfiftyseventhousand),    a   portion   of   which   represents

      compensation   of  your  office  as  Chairman   as   established   by  the

      Shareholders'   Meeting  from  time  to  time,  gross  of  the  applicable

      withholding  tax  and  social  security  contributions  to be  paid  in 12

      installments  of equal amount in arrears on the last  business day of each

      month  during the term of this  Agreement,  to the extent you are still in

      office as Chairman and Managing Director of the Company.

 

3.2   In  addition,  you will be  entitled  to payment of a  performance-related

      bonus  pursuant  to the  terms  and  conditions  which  are  described  in

      Enclosure 1 attached hereto.

 

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3.3   You will be entitled to use a company car, also for private purposes.  The

      fringe-benefit  value  of such  car  will be  calculated  pursuant  to the

      criteria set forth by the law currently in force.  All  maintenance,  fuel

      and insurance costs will be borne by the Company.

 

3.4   The Company will grant in your favor insurance  policies covering the risk

      of death,  illness and permanent disability in case of injuries at work as

      well as injuries in general.

 

3.5   The Company  will  provide you with an  accommodation  in Genoa or nearby,

      according to the terms and conditions to be agreed upon by the parties.

 

4.    NON-COMPETITION

 

4.1   During the term of this Agreement and thereafter, you hereby undertake (a)

      not to operate - either  directly or  indirectly  - as  principal,  agent,

      owner,  director,  employee,  partner or advisor in favor of  companies in

      competition  with the Company,  which carry out the ownership,  management

      and  commercial  operations  of  cruise  vessels,  and  not to  acquire  a

      shareholding in the aforesaid  companies,  except for  participations  not

      exceeding 2% in listed  companies  (b) not to endeavor to entice away from

      the  Company or any of its  subsidiaries,  any  person,  firm,  company or

      organization (i) who or which in the preceding 12 months shall have been a

      supplier of goods or services to the Company or any of its  affiliates  or

      subsidiaries,  and (ii) with whom or which you had,  during  the course of

      performance  of your  office of  director,  direct  dealings  or  personal

      contact,  so as to harm the goodwill or, or so as to the compete with, the

      Company or any of its subsidiaries;  (c) not to induce any employee of the

      Company or any of its affiliates and/or subsidiaries to resign in order to

      enter into an employment or independent contractor  relationships in favor

      of third  parties  engaged in the  ownership,  management  and  commercial

      operation of cruise vessels.

 

      Such  obligations  shall be  effective  for a period  of 3 years as of the

      expiration or the termination of this Agreement for whatsoever reason.

 

4.2   This  obligation  must be  referred  to the  territory  of Italy,  France,

      Germany and Spain and the  parties  acknowledge  that the above  mentioned

      territorial extension is based upon (i) the multinational character of the

      Company, and (ii) on the fact that the business activity of the Company is

      carried out not only in Italy but also throughout Europe.

 

4.3   As specific consideration for this non competition obligation, you will be

      paid during the term of this  Agreement  an annual  gross  amount equal to

      Euro 115,000  (onehundredfifteenthousand),  payable in 12  installments of

      equal amount in arrears on the last  business day of each month during the

      term of this Agreement,  to the extent you are still in office as Chairman

      and Managing Director of the Company.

 

4.4   In the event you do not comply with the obligation of this non competition