DISTRIBUTION AGREEMENT

(1)

CLS Rémy Cointreau, a company registered under the laws of France, whose registered office is at 21 Boulevard Haussmann, 75009 Paris, France (the “ Supplier ”);

(2)

Central European Distribution Corporation, a company registered under the laws of Delaware, whose registered office is at Two Bala Plaza, Suite 300, Philadelphia, United States of America (the “ Guarantor ”); and

(3)

Bols S.p. z.o.o., a company registered under the laws of Poland whose registered office is at [ · ], (the “ Distributor ”).

(A)

The Distributor carries on the business of distributing and selling wines and spirits within the Market (as defined below), and is also involved in certain marketing activities.

(B)

The Supplier wishes to appoint the Distributor as exclusive distributor for the promotion and sales of the Stocks under the Brands (as defined below) in the Market, on the terms and subject to the conditions of this Agreement.

(C)

The Guarantor has agreed to guarantee the performance by the Distributor, a subsidiary of the Guarantor, of its obligations under this Agreement.

1.

INTERPRETATION

1.1

In this Agreement, unless the context otherwise requires, the following words and expressions bear the meanings respectively set out below:

(i)

holds a majority of the voting rights in it;

(ii)

is a member or shareholder of it and has the right to appoint or remove a majority of its board of directors or equivalent managing body;

(iii)

is a member or shareholder of it and controls alone or pursuant to an agreement with other shareholders or members, a majority of the voting rights in it; or

(iv)

has the right to exercise a dominant influence over it, for example by having the right to give directions with respect to its operating and financial policies, with which directions its directors are obliged to comply.

1.2

Unless the context otherwise requires, any reference in this Agreement to:

1.2.1

a clause, sub-clause or Schedule is to a clause, sub-clause or Schedule, as the case may be, of or to this Agreement;

1.2.2

this Agreement includes the Schedules;

1.2.3

the singular shall be deemed to include the plural and vice versa;

1.2.4

any one gender shall be deemed to include the other genders; and

1.2.5

any provision of a statute shall be construed as a reference to that provision as amended, modified, re-enacted or extended from time to time.

1.3

The headings in this Agreement are for ease of reference only and shall not affect the construction of this Agreement.

1.4

Any reference to any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept shall in respect of any jurisdiction other than England be interpreted to mean the nearest and most appropriate analogous term to the English legal term in the legal language of that jurisdiction as the context reasonably requires so as to produce as nearly as possible the same effect in relation to that jurisdiction as would be the case in relation to England.

2.

TERMS OF APPOINTMENT

2.1

The Supplier hereby appoints the Distributor, which accepts such appointment, as exclusive importer and distributor to import and distribute the Stocks for resale within the Market on the terms of this Agreement.

2.2

The Supplier shall not, during the continuance of the Distributor’s appointment as distributor pursuant to this Agreement, appoint any agent or other distributor for the sale of the Stocks within the Market.

2.3

During the continuance of the Distributor’s appointment as exclusive distributor pursuant to this Agreement, the Supplier shall not actively supply or sell and shall procure that no Affiliates shall actively supply or sell Stocks directly to any customer within the Market and the Supplier shall use reasonable endeavours to ensure that any distribution contract entered into by the Supplier or its Affiliates shall incorporate clauses which prevent the counterparty to such contract from actively selling the Brands into the Territory.

2.4

Nothing in this Agreement shall:

2.4.1

give the Distributor any right or remedy against the Supplier if any Stocks are sold within the Market by any third party without the co-operation of the Supplier; or

2.4.2

entitle the Distributor to any priority of supply in relation to Stocks as against the Supplier, other distributors, agents or customers.

2.5

The Distributor shall distribute the Stocks within the Market for as long as this Agreement is effective and in force.

2.6

The Supplier shall not be under any obligation to maintain, control or own any of the Brands, or to continue the production of Stocks, and shall be entitled from time to time to make such alterations as it may think fit to the specifications of any of the Stocks. The Supplier shall have no liability to the Distributor should it dispose of control or ownership, or not maintain, any of the Brands or discontinue or reduce the sale or production of Stocks or alter the specifications thereof.

3.

OBLIGATIONS OF DISTRIBUTOR

3.1

Appointment of agents and sub-distributors

(i)

the Distributor may not appoint a single agent or sub-distributor (other than a member of the CEDC Group) in respect of a material part of the Market; and

(ii)

the Distributor remains entirely responsible to the Supplier for all acts of such agents or sub-distributors.

3.2

Exclusivity of Purchase

3.3

Competition

3.3.1

actively sell any Stocks to or solicit any customers outside the Market;

3.3.2

establish any branch or maintain any distribution depot outside the Market for the sale of Stocks of the Supplier; or

3.3.3

provided that such prohibition does not contravene any applicable law in the Market, produce, manufacture, sell, distribute, deal in or be the agent for any brand or product competing with any Rémy Martin, Cointreau or any champagne or liqueur brand owned by the Supplier or one of its Affiliates, unless expressly authorized in writing by the Supplier.

3.4

Advertising and Promotion

3.4.1

Unless the Supplier in its sole discretion decides otherwise, advertising and promotion in respect of each Stock shall be developed jointly by the Supplier and the Distributor.

3.4.2

The initial Marketing Plan for the year ending [ · ] 2006 is set out in Schedule 3. The volume sales target by Brand for the five years ending [ · ] are set out in Schedule 4. Only the sales targets by Brand set out in Schedule 5 in respect of the three years ending [ · ] shall be binding on the Parties. The sales targets set out in Schedule 4 in respect of the two years ending [ · ] are merely provided on an indicative basis only.

3.4.3

Subsequent Marketing Plans shall be prepared annually. On or before 1 February of each calendar year (unless otherwise agreed) the Distributor shall submit a draft Marketing Plan to the Supplier in the form set out in Schedule 3 for the latter’s review and acceptance. Such plan shall outline sales volumes, market share objectives, pricing strategy for the Brands for the relevant year as well as sales, merchandising and promotional strategies and tactics and budget to achieve them. The plan shall be submitted in the form

used by the Supplier and set out in Schedule 3 (which form of Schedule may be revised by the Supplier from time to time). The budget shall be based on projected depletions during the Distributor’s financial year which runs from [ · ] to [ · ] .

3.4.4

If despite good faith efforts, the parties cannot reach an agreement concerning the volume sales target applicable to any Brand in respect of any year in any subsequent Marketing Plan, then the volume sales targets applicable to that Brand in the immediately preceding year shall apply after being revised upwards take into account the increase in inflation as officially published by the Polish Government between the previous financial year and the year in dispute.

3.4.5

Since the volume sales targets set out in each Marketing Plan are regarded as a major clause of this Agreement, the failure of the Distributor to reach at least 80% of the volume sales targets for any Brand (the “ Minimum Target ”) in respect of any Brand during two ( 2 ) consecutive years shall entitle the Supplier to terminate this Agreement in respect of such Brand in accordance with Clause 13.

3.4.6

All costs incurred by the Distributor in accordance with Clause 3.4.1 and related to the advertising and promotion of the Stocks shall be borne by the Supplier and the Distributor in such ratio as they may agree in writing from time to time.

3.4.7

The Supplier may at all times, and subject always to prior notice, have access to the Distributor’s appropriate evidence justifying the validity and status of any requests for reimbursement of any costs incurred by the Distributor in accordance with Clause 3.4.5.

3.4.8

The Distributor shall during the term of this Agreement use its best endeavours to promote the Brands and Stocks and increase sales of the Stocks in the Market.

3.5

Stocks

3.5.1

During the continuance of this Agreement the Distributor shall maintain:

at all times maintain such minimum amounts of Stocks as shall enable the Distributor to meet the expected demand for the immediately following [45] days as based on the most recent sales forecast;

OR

sufficient Stocks in order to enable the Distributor to meet expected demand in the Market for the following three months from time to time;

3.5.2

sufficient and proper insurance cover for the Stocks with a reputable insurance company and produce to the Supplier on reasonable prior written notice full particulars of that insurance and the payment of the relevant premiums;

3.5.3

Promotional Material sufficient to promote and maximize sales of Stocks in the Market; and

3.5.4

properly store the Stocks in suitable conditions, provide appropriate security arrangements for such Stocks, and supply only those Stocks which are both in good condition and within their shelf life. The Distributor undertakes to use the FIFO storage method at all times.

3.6

Sales Objectives and Sales Personnel

3.6.1

During the continuance of this Agreement the Distributor shall at all times ensure that it employs or has otherwise available a sufficient number of sales personnel who are able to effectively market and supply Stocks to customers and potential customers and provide a high level of after sales services throughout the Market. Distributor shall notify the Supplier and its representatives of any reduction of more than 25 (twenty five)% in either (1) the Distributor’s sales of all products sold by it (including the Stocks) over twelve months or (2) the number of people employed within the sales force of the CEDC Group to promote the Brands and Stocks within 5 days of any such reduction taking place provided that the employment of such persons by another member of the CEDC Group who continue to perform such functions shall not constitute a reduction for these purposes.

3.6.2

Notwithstanding the above provisions the Distribution hereby undertakes to the Supplier at all times to maintain at least its existing coverage of the on-trade and to maintain a proper presence for the Brands in the on-trade.

3.6.3

Distributor shall at its cost appoint and maintain a Brand Manager. The Brand Manager must have previously been approved in writing by the Supplier (such approval not to be unreasonably withheld or delayed).

3.7

Compliance with Laws, Licenses etc.

3.7.1

be responsible for obtaining, paying for and maintaining in force all licences, consents, permits and approvals of all regulatory authorities whatsoever which are or may be necessary or advisable in connection with the carrying out by the Distributor of any of its obligations pursuant to this Agreement; and

3.7.2

comply with all applicable laws and regulations relating to the importation, transportation, distribution, storage, marketing, offer for sale and sale of the Stocks within the Market, save where such laws or regulations relate solely to the nature or method of manufacture, packaging or labelling of Stocks and the Distributor shall notify the Supplier of any changes or proposed changes that are made or proposed from time to time in such laws relating to the nature or method of production, packaging or labelling of Stocks within the Market as soon as reasonably practicable after the fact of the change or proposed change comes to the attention of the Distributor.

3.8

Reporting

3.8.1

create and maintain an up-to-date list of (1) its twenty largest customers (outside the CEDC Group) and (2) each customer which is a CEDC Group Company, in each case showing the volumes and Net Sales of Stocks of each Brand sold to each customer or CEDC Group Company of within the Market and shall, at the request of the Supplier, supply the Supplier with a copy of that list;

3.8.2

keep the Supplier regularly informed of the progress and development and likely future development of the market for the Stocks in the Market and shall, without prejudice to the generality of the foregoing, inform the Supplier, immediately upon becoming aware of:

(A) the entry into the Market of any product competing with any Stock; and/or

(B) the activities of any of the Supplier’s competitors that might affect sales of Stocks within the Market;

3.8.3

The Distributor shall provide the Supplier with:

(a) monthly statements showing Depletions by Brand;

(b) monthly statements showing Depletions by stock-keeping unit;

(c) monthly statements showing Depletions by channel and numeric distribution of all Products;

(d) monthly statements showing Depletions to all key off-premise accounts; and

(e) information reasonably requested by the Supplier including but not limited to customer statistics;

3.8.4

The Distributor shall provide the Supplier at the end of each quarter with a statistical appraisal of the prices paid by customers (provided that the Distributor shall at all times remain free to determine such prices) and such other market and sales related information as the Supplier may reasonably require, including Stocks in respect of each of the Brands, and including a survey of orders outstanding at the end of such quarter;

3.8.5

upon request by the Supplier, send to the Supplier as soon as is reasonably practicable such details of future sales and stocks and other statistical forecasts as the Supplier may reasonably require for budgetary purposes and for planning future production;

3.8.6

inform the Supplier of all complaints relating to the Stocks and provide the Supplier with all relevant available evidence and other information relating thereto and forward to it at its expense for examination representative samples of the Stocks in respect of which complaints have been made together with full identification of such Stocks including product reference numbers;

3.8.7

keep accurate and separate records and accounts in respect of all its purchases from the Supplier, and the sale to customers, of Stocks;

3.8.8

inform the Supplier of any significant change in the Distributor’s ownership or in its control or any change in its organisation or method of doing business which may affect the Distributor’s performance of its obligations under this Agreement; and

3.8.9

meet with a representative of the Supplier upon its reasonable request for the purposes of discussing or reviewing any of the foregoing.

3.9

Other

3.9.1

clearly indicate that it is acting at all times on its own behalf as principal and shall in no circumstances expressly or impliedly do any act or thing which may cause it to be taken by third parties to be an agent of the Supplier;

3.9.2

not make any representation nor give any warranty in relation to the Stocks or Brands unless the same is either in the Supplier’s standard form or in advertising material which has been supplied by the Supplier or has been previously approved in writing by the Supplier; and

3.9.3

not engage in any conduct, which is prejudicial to the Brands.

4.

OBLIGATIONS OF THE SUPPLIER

4.1

The Supplier shall at its own cost (unless otherwise agreed pursuant to Clause 3.4.3) supply the Distributor with advertising material, specifications and other information relating to the Brands and Stocks in order to assist the Distributor as may reasonably be necessary to comply with its obligations under this Agreement. Such material, specifications and information shall not contain any restriction, either direct or indirect, as to the price at which the Distributor may resell Stocks.

4.2

The Supplier may at its own cost (unless otherwise agreed pursuant to Clause 3.4.3) provide employees of the Distributor with training in the sales and marketing of Stocks as it, after consultation with the Distributor, may consider appropriate to assist the Distributor in complying with its obligations under this Agreement. The content and duration of such training shall be determined by the Supplier after consultation with the Distributor.

5.

TERMS OF SALE

5.1

Orders

5.1.1.

By the 10 ^th working day of every calendar month the Distributor shall send to the Supplier a rolling purchasing forecast for the next 6 months detailing per Brand the details of both future sales and Stocks.

5.2.2

The Distributor shall periodically submit to the Supplier, in writing, orders for specified quantities of certain Stocks. The Supplier shall within [ · ] days after receipt of a written order advise the Distributor in writing and at its sole option of its acceptance or rejection of the order. In the case of any rejection of an order the Supplier shall be required to provide reasonable evidence to the Distributors of the basis upon which such rejection was made. Upon acceptance by the Supplier of an order submitted by the Distributor, the order shall become a binding contract between the Supplier and the Distributor.

5.2

Deliveries

5.3

Prices

(i) once in any 12 month period taking into account inflation and cost of dry goods;

(ii) at any time subject to [ · ] % margin on the Net Sales of the Distributor not being affected and subject the price positioning of each Brand to be consistent with the direct competitive environment and the worldwide positioning of that Brand.

5.4

Invoices and Payments

5.4.1

The Supplier shall invoice the Distributor in respect of all Stocks ordered and delivered pursuant to Clauses 5.1 and 5.2 within 7 days after Delivery thereof.

5.4.2

Unless otherwise agreed in writing, payment by the Distributor in respect of each invoice shall be made unless otherwise specified by the Supplier in writing within 60 days of the invoice date, in Polish Zlotys.

5.4.3

If during the performance of this Agreement the above terms of payment are not respected by the Distributor twice or more in any twelve month period, the Supplier shall have the right both to shorten the above payment terms accordingly and to require additional security for the performance by the Distributor if its obligations under this Agreement such as the supply by the Distributor at its cost of a revolving irrevocable letter of credit, stand-by letter of credit or bank guarantee from an international first rank bank in a form acceptable to the Supplier. The Distributor agrees in such circumstances to provide such additional security and to accept such reduced payment terms.

5.4.4

If any amount payable under this Clause 5 is not received by the Supplier by its due date, then, without prejudice to the provisions of Clause 5.4.3 or any other rights or remedies the Supplier might have and to the extent permitted by law, the Distributor shall be liable to pay interest on such amount at the rate of 2% per calendar month, or part thereof, from the due date until payment in full is received.

6.

LIABILITY

6.1

Subject to Clauses 6.2 to 6.4, the Supplier shall not be responsible for any loss or damage caused by or resulting from any delay in delivery or non-delivery of Stocks or any part thereof for whatever reason and the Distributor shall not be entitled to repudiate the order for any such delay in delivery or non-delivery. However in such circumstances the sales targets set out in the applicable Marketing Plan shall be reduced accordingly.

6.2

The Distributor shall:

6.2.1

examine all Stocks upon delivery for any damage to such Stocks and for any short shipment of such Stocks and indicate such damage or short shipment on the delivery receipt; and

6.2.2

notify the Supplier in writing of any damage or short shipment referred to in Clause 6.