GOVERNANCE AND SHAREHOLDERS AGREEMENT

(1)

LION/RALLY CAYMAN 8 , a company incorporated in the Cayman Islands whose registered office is at c/o Stuarts Corporate Services Ltd, PO Box 2510, George Town, Grand Cayman, KY1-1104, Cayman Islands (the “ General Partner ”);

(2)

LION/RALLY CAYMAN 7 L.P. , a Cayman Exempted Limited Partnership whose principal place of business is at c/o Stuarts Corporate Services Ltd, PO Box 2510, George Town, Grand Cayman, KY1-1104, Cayman Islands (“ Cayman 7 ”), acting through its general partner, the General Partner;

(3)

LION/RALLY CAYMAN 4 , a company incorporated in the Cayman Islands whose registered office is at c/o Stuarts Corporate Services Ltd, PO Box 2510, George Town, Grand Cayman, KY1-1104, Cayman Islands (“ Cayman 4 ”);

(4)

LION/RALLY CAYMAN 5 , a company incorporated in the Cayman Islands whose registered office is at c/o Stuarts Corporate Services Ltd, PO Box 2510, George Town, Grand Cayman, KY1-1104, Cayman Islands (“ Cayman 5 ”);

(5)

LION/RALLY CAYMAN 6 , a company incorporated in the Cayman Islands whose registered office is at c/o Stuarts Corporate Services Ltd, PO Box 2510, George Town, Grand Cayman, KY1-1104, Cayman Islands (the “ Company ”); and

(6)

CENTRAL EUROPEAN DISTRIBUTION CORPORATION , a Delaware Corporation, the common stock of which is listed on the NASDAQ Global Select Market under the symbol “CEDC” and the principal executive office of which is located in Warsaw, Poland at ul. Bobrowiecka 6, 02-728 Warszawa (“ CEDC ”).

(A)

The Company was incorporated on 30 April 2009 under the laws of the Cayman Islands as a private limited liability company.

(B)

Since its incorporation, the Company has not traded or undertaken any business activities of any sort, has not given any security or incurred any indebtedness, and no Shareholder nor Board resolutions of the Company have been passed, save as required pursuant to the Transaction Documents.

(C)

At the date of this Agreement, Cayman 4 and Cayman 7 hold Ordinary Shares, and Cayman 5 holds Preference Shares.

(D)

Under the terms of the Option Agreement, Cayman 7 has been granted options to acquire the Ordinary Shares and Preference Shares held by the Lion Holdcos.

(E)

The General Partner, Cayman 7, Cayman 4, Cayman 5, CEDC, and the Company have agreed to make provision for the management and administration of the affairs of the Company on the terms and conditions set out in this Agreement.

1

DEFINITIONS

1.1

In this Agreement (including the recitals), except where the context otherwise requires, the following words and expressions shall have the following meanings:

1.2

In this Agreement, save where the context otherwise requires:

1.2.1 

references to a document in the “ agreed form ” are to that document in the form agreed to and initialled for the purposes of identification by or on behalf of the Parties;

1.2.2 

references to a Clause or Schedule are to a Clause or Schedule of this Agreement and references to this Agreement include the Schedules;

1.2.3 

the headings in this Agreement do not affect its construction or interpretation;

1.2.4 

a reference to a document is a reference to that document as amended or modified from time to time in writing by the mutual consent of the parties;

1.2.5 

a reference to a specific Transaction Document is a reference to that document as amended, varied, novated, supplemented or replaced from time to time (otherwise than in breach of the provisions of this Agreement);

1.2.6 

references to “ $ ” or “ USD ” are references to the lawful currency of the time being of the United States of America;

1.2.7 

references to “ € ” or “ Euro ” are references to the single currency and the legal means of payment in the territory of the European Monetary Union; and

1.2.8 

the singular includes the plural and vice versa and any gender includes any other gender.

1.3

Unless expressly provided to the contrary, covenants and undertakings in this Agreement which are given by more than one Party are deemed to have been given severally and not jointly or jointly and severally, provided that covenants and undertakings of the Lion Parties are unless expressly provided to the contrary given on a joint and several basis.

1.4

Any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall in respect of any jurisdiction other than England be deemed to include what most nearly approximates in that jurisdiction to the English legal term and a reference to any English statute shall be construed so as to include equivalent or analogous laws of any other jurisdiction.

1.5

Save where otherwise expressly provided in this Agreement, references to any approval or consent to be given, or any action to be taken, by the Lion Parties shall mean the approval or consent given, or action taken, by or on behalf of those Lion Parties holding shares representing more than 50 per cent. of the aggregate voting rights held by all of the Lion Parties.

1.6

A procuring obligation, where used in the context of the Shareholders (or any one or more of them) means that each relevant Shareholder undertakes to exercise any and all powers and rights vested in him from time to time in his capacity as a Shareholder and any influence over any Director which was appointed following nomination by that Shareholder, or otherwise in or of the Company or any other member of the Group or other entity (as relevant), to ensure compliance with that obligation so far as he is (legally) able to do so.

1.7

Where under this Agreement any provisions are stated to apply in relation to the operation, governance and/or control of the Company (including, without limitation, the Governance Provisions and the provisions of Clause 7), the Company (in so far as it is lawfully able to do so) and the Shareholders shall procure that such provisions apply.

2

CONTROL OF THE COMPANY

2.1

The parties agree that the Company shall be controlled as follows:

2.1.1 

Lion Control

2.1.2 

JV Control

2.1.3 

CEDC Control

2.1.4 

Events of Default

(a)

if at the time of the Event of Default the Controlling Party is Cayman 5, CEDC shall have the right, subject to the Condition Precedent having been satisfied, to require that the JV Provisions shall apply by serving a JV Notice (in which event no other Governance Provisions shall apply); or

(b)

if at the time of the Event of Default the JV Provisions apply, Cayman 5 shall immediately become the Controlling Party and the Controlling Party Provisions shall apply, CEDC shall become the Minority Party and the CEDC Minority Provisions shall apply, and neither the Cayman 5 Minority Provisions nor the JV Provisions shall apply, and CEDC shall not be entitled to become the Controlling Party at any time, in any circumstances, notwithstanding any provision of this Agreement to the contrary; or

(c)

if at the time of the Event of Default the Controlling Party is CEDC, Cayman 5 shall immediately become the Controlling Party and the Controlling Party Provisions shall apply, CEDC shall become the Minority Party and the CEDC Minority Provisions shall apply, and neither the Cayman 5 Minority Provisions nor the JV Provisions shall apply, and CEDC shall not be entitled to become the Controlling Party at any time, in any circumstances, notwithstanding any provision of this Agreement to the contrary.

2.1.5 

CEDC insolvency

(a)

CEDC is unable or admits inability to pay its material debts as they fall due or declared to be unable to pay its debts under applicable law;

(b)

a moratorium is declared in respect of any material Indebtedness of CEDC; or

(c)

any legal proceedings are taken in relation to:

(i)

the suspension of payments, a moratorium of any Indebtedness, winding up, dissolution, or administration (by way of insolvent scheme of arrangement or otherwise) of CEDC;

(ii)

a composition, compromise, assignment or arrangement with any creditor of CEDC;

(iii)

the appointment of a liquidator, receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of CEDC or any of its assets; or

(iv)

the enforcement of security over any material assets of CEDC,

2.1.6 

Default Control

2.1.7 

Condition Precedent

2.1.8 

Undertakings

(a)

At all times prior to the Default Control Date, the Controlling Party (and at such times that there is no Controlling Party, the Company) from time to time undertakes to the Minority Party (and at such times that there is no Minority Party, the Parties) from time to time to use its reasonable endeavours to procure that each member of the Group (as applicable):

(i)

operates in material compliance with all applicable laws and regulations and in the ordinary course of business in a manner substantially consistent with that carried on in the 12 months prior to the date of this Agreement;

(ii)

completes and files, in a timely fashion, all necessary tax returns and pays all applicable taxes unless the relevant member of the Group reasonably believes that the non-payment of such taxes is in the best interests of the Group;

(iii)

maintains and protects material intellectual property owned or used by the Group in any market which, is, or is reasonably likely to become, material to the operations of the Group;

(iv)

maintains appropriate insurance cover for the Group’s operations in line with market practice;

(v)

operates in such a manner as to maintain the tax residency of each member of the Group as at the date of this Agreement;

(vi)

adheres to the material terms of all material contracts;

(vii)

maintains the reasonable upkeep of, and control over, all material fixed assets of the Group;

2.1.9 

At all times prior to the Default Control Date, CEDC undertakes, for so long as it is the Controlling Party, that neither it nor any of its Affiliates shall take any action which is taken with the intention of being materially prejudicial to (i) the ability of the Lion Parties to enforce any security right or interest granted to them pursuant to or in connection with the Transaction Documents; or (ii) the value of the assets pledged to the Lion Holdcos pursuant to the Cayman 7 Pledge; and

2.1.10 

At all times prior to the Default Control Date, Cayman 5 undertakes, for so long as it is the Controlling Party, that neither it nor any of its Affiliates shall take any action which is taken with the intention of being materially prejudicial to (i) the ability of Cayman 7 to enforce any security right or interest granted to it pursuant to or in connection with the Transaction Documents; or (ii) the value of the assets pledged to Cayman 7 pursuant to the Holdco Pledge.

2.2

The Company undertakes to each of the Lion Parties (for themselves and as trustee for each of their Affiliates) to indemnify the Lion Parties and each of their Affiliates against any damages, costs, fines, penalties or other losses suffered or incurred by any of them as a result of any provision of this Agreement or the exercise by any of the Parties of any right pursuant to this Agreement resulting in any breach of any applicable law or regulation relating to competition or anti-trust.

2.3

The Company undertakes to CEDC (for itself and as trustee for each of their Affiliates) to indemnify CEDC and each of its Affiliates against any damages, costs, fines, penalties or other losses suffered or incurred by any of them as a result of the breach of any applicable law or regulation relating to competition or anti-trust where such breach arises as a result of the operation of Clauses 2.1.4(b), 2.1.4(c), 2.4 or 2.5, and where such breach arises as a result of the operation of Clauses 2.4 and 2.5 such indemnification by the Company will be limited in all cases to a maximum aggregate amount of $15 million.

2.4

Notwithstanding any other provision of this Agreement, no particular element of any Governance Provision shall apply at any time when a Specified Event would be reasonably likely to occur as a consequence of the application of that element; provided that nothing in this Clause 2.4 shall limit any of CEDC’s rights pursuant to paragraph 9(a) of Schedule 2, paragraph 1.8 of Schedule 3, paragraph 7 of Schedule 4 or paragraph 6.2 of Schedule 5. For these purposes, where a Specified Event would be reasonably likely to occur as a consequence of the application of two or more elements of a Governance Provision, none of such elements shall apply.

2.5

Subject to any applicable legal or regulatory requirements, CEDC shall immediately notify the Lion Holdcos upon it becoming aware of the occurrence of any event which makes it reasonably apparent that the provisions of Clause 2.4 will apply at any time within the following 60 days. Immediately upon such notification, the provisions of Clause 2.4 shall apply in relation to the relevant element(s) of the relevant Governance Provision(s) until such time as a Specified Event would not be reasonably likely to occur as a consequence of the application of the relevant elements of the relevant Governance Provision(s).

2.6

The Lion Parties shall, at the request of CEDC, use their reasonable endeavours to procure a waiver of any relevant provisions contained in any of the Finance Documents to the extent that such waiver will prevent the application of any of the Governance Provisions giving rise to a Specified Event, provided that members of the Group shall not be obliged to pay any costs or fees in aggregate exceeding $500,000 in relation to obtaining any such waiver save to the extent that CEDC shall, through the subscription of additional partnership interests in Cayman 7, have funded such fees by the subscription of shares in the Company.

2.7

Subject always to the provisions of Schedule 2 and Schedule 4 (as applicable), each of the Ordinary Shareholders hereby undertakes to vote its Ordinary Shares in accordance with the directions of the Controlling Party.

3

ANTITRUST APPROVAL

3.1

If the approval or clearance of, or notification to, one or more Competition Authorities (each an “ Antitrust Approval ”) is in the reasonable opinion of any of the Parties required to give effect (from time to time) to the exercise by CEDC of its rights under the JV Provisions, or to enable CEDC to become the Controlling Party, or the Parties otherwise agree to seek Antitrust Approval, the Parties undertake (subject always to Clause 3.3) to each other to use their best efforts to obtain each such Antitrust Approval as soon as reasonably practicable following (i) in relation to the JV Provisions, the JV Notice Date or (ii) in relation to CEDC becoming the Controlling Party, the earlier of:

3.1.1 

the later of:

(a)

the date falling eight months prior to the date falling 95 days after the Fourth Cayman 7 Call Option Exercise Date; and

(b)

the earliest date on which the relevant Antitrust Approval could be sought and reasonably be expected to remain valid on the Fourth Cayman 7 Call Option Completion Date; and

3.1.2 

the CEDC Control Notice Date.

3.2

The Lion Parties shall provide CEDC, CEDC shall provide the Lion Parties and the Company shall provide CEDC and the Lion Parties with all information relating to obtaining each Antitrust Approval as the Lion Parties or CEDC (as applicable), acting reasonably, may request.

3.3

Without prejudice to the provisions of Clause 3.1, if an Antitrust Approval will only be granted subject to, or following the application of, certain commitments, conditions, obligations, measures, undertakings and/or modifications (each, a “ Commitment ”), CEDC and the Lion Parties undertake to each other to comply with those Commitments necessary to obtain such Antitrust Approval and hereby agree that, to the extent that such Commitments require the disposal of any asset, or if it appears to the Parties, acting reasonably, that such Antitrust Approval shall be given if the disposal of an asset is offered or made, the Parties shall, to the extent possible, and to the extent that each is able to do so, manage the disposal of assets in accordance with the following order of priority:

3.3.1 

first, the Company shall procure that members of the Group shall dispose of such assets as are necessary to obtain such Antitrust Approval provided always that in no circumstances shall it be required to procure the disposal of the assets comprising the “Green Mark” and/or “Zhuravli” brands of vodka;

3.3.2 

second, and subject always to the provisions of Clause 3.5, if and to the extent that, following the date of this Agreement, the Lion Parties have acquired any or all of the assets that have been described in a letter from the Lion Holdcos to CEDC dated 24 April 2009 and any other assets acquired with such assets or in related transactions (together the “ Potential Assets ”), the Lion Parties shall dispose of such of the Potential Assets as are necessary to obtain such Antitrust Approval;

3.3.3 

third, if and to the extent that, following the date of this Agreement, CEDC or any Affiliate of CEDC has acquired any assets, CEDC shall dispose of (or shall procure the disposal of) such of those assets as are necessary to obtain such Antitrust Approval; and

3.3.4 

fourth, and subject always to the provisions of Clause 3.5, the Lion Parties shall dispose of (or shall procure the disposal of) such assets as are necessary to obtain such Antitrust Approval,

3.4

If, following the disposal, or offer to dispose of, all of the assets referred to in Clause 3.3, the relevant Antitrust Approval is not granted, the Parties agree that CEDC and the Lion Parties shall use their best endeavours to agree upon and to implement a structure to realise their investment in the Company either by way of sale or initial public offering (an “ Exit ”). If Cayman 5 is the Controlling Party at such time, it shall, to the extent permitted by law, consult with, and take into account all reasonable requests of, CEDC in connection with effecting an Exit.

3.5

In circumstances where Clause 3.3.2 or Clause 3.3.4 apply, the Lion Parties shall have the right (but not the obligation) to surrender any of their governance rights hereunder if it becomes apparent to the Lion Parties, acting reasonably, that the relevant Antitrust Approval would be, or would be reasonably likely to be, obtained as a result of such surrender and if and to the extent that such Antitrust Approval is so obtained, the Lion Parties shall not be required to comply with Clauses 3.3.2 or Clause 3.3.4, but provided always that such surrender shall not constitute or trigger a Specified Event.

3.6

CEDC agrees that it shall not be entitled to exercise its rights under paragraph 5 and 6 of Schedule 2 until such time as:

3.6.1 

the European Commission has made a decision that: (i) the transactions contemplated by this Agreement or the Transaction Documents do not fall within the scope of Council Regulation (EC) No. 139/2004 (the “ EC Merger Regulation ”) under Article 6(1)(a) of the EC Merger Regulation; (ii) the transactions contemplated by this Agreement are compatible with the Common Market pursuant to Article 6(1)(b) of the EC Merger Regulation (or being deemed to have done so pursuant to Article 10(6) of the EC Merger Regulation);

3.6.2 

approval from the Antimonopoly Committee of Ukraine has been duly obtained in relation to the exercise of the rights under paragraphs 5 and 6 of Schedule 2; or

3.6.3 

in so far as the transactions contemplated by this Agreement are required to be notified to the Competition Authority of any other jurisdictions such that, without such notification or clearance, the exercise of the rights under paragraphs 5 and 6 of Schedule 2 would be unlawful or otherwise prohibited, all relevant consents and approvals have been received, and

4

RESTRICTIONS ON DEALINGS WITH SECURITIES

4.1

Save as provided for under the Default Governance Provisions or as otherwise required or expressly permitted pursuant to the provisions of the Transaction Documents, from the date of this Agreement, no Shareholder may, directly or indirectly, sell, assign, transfer, offer, grant a participation in, mortgage, pledge, hypothecate, create a security interest in or lien upon, encumber, donate, contribute, place in trust, enter into any voting agreement in respect of, or otherwise dispose of or create or allow to be created an Encumbrance over (collectively, “ Transfer ”) any of its Shares or the legal or beneficial interest therein without the consent of all Parties.

4.2

Notwithstanding any other provision of this Agreement, no Transfer of any Shares may be made by any Shareholder to a Prohibited Person.

4.3

In the event of any Transfer in accordance with this Clause 4, each relevant Party undertakes to take such actions and do such things as may be necessary to complete such Transfer in accordance with applicable legal requirements. To the extent that any Transfer contemplated or permitted in this Clause 4 requires the approval of any of the Parties pursuant to any law, or any provisions of the Articles or other constitutional documents, each of the relevant Parties shall, forthwith upon request, and to the extent that it is able to do so, provide, or procure the provision of, the necessary consent and shall sign or vote (or procure such signature or vote) in favour of any shareholder resolutions in connection therewith.

5

COMPLETION OF TRANSFERS

5.1

General

5.2

Encumbrances

5.3

Power of Attorney

5.3.1 

Each of the Parties (other than the Lion Parties) hereby irrevocably and unconditionally (and by way of security for the performance of its obligations under this Agreement) appoints, with effect from the Default Control Date, any Director nominated for that purpose by the Lion Parties as its attorney to execute and do in its name or otherwise and on its behalf all documents, acts and things which the attorney shall in its absolute discretion consider necessary or desirable in order to implement the obligations of that Party (if not satisfied) under Clause 4, to the extent that the Party is in default of its obligations under such Clause.

5.3.2 

Each Shareholder undertakes to ratify whatever any Director as its attorney shall lawfully do or cause to be done in accordance with the power of attorney set out in Clause 5.3.1 and to indemnify and keep indemnified such attorney from all claims, costs, expenses, damages and losses which the attorney may suffer as a result of the lawful exercise by him of the powers conferred on him under such power of attorney.

5.3.3 

If a Transfer of Shares is executed on behalf of a Shareholder under the power of attorney set out in Clause 5.3.1:

(a)

the Company may receive the purchase money in trust for that Shareholder and the receipt of the Company for the purchase money shall be a good discharge for the purchaser, who shall not be bound to see to the application of the purchase money;

(b)

the Company shall cause the purchaser to be registered as a holder of the relevant Shares; and

(c)

once registration has taken place in purported exercise of the power of attorney set out in Clause 5.3.1, the validity of the proceedings shall not be questioned by any Person; and the relevant Shareholder shall be bound to deliver up any documentation required by the Company in connection with the Transfer and on its delivery shall be entitled to receive the purchase money in respect thereof.

5.4

Effect of Void Transfers

6

CONDUCT OF THE COMPANY

7

BOARD OF DIRECTORS

7.1

The Company or a member of the Group shall reimburse and pay to each Director any travelling, hotel or other out-of-pocket expenses which the Director may reasonably incur in the performance of his duties), which shall be payable in arrears periodically upon demand, but no more than once per calendar month.

7.2

The Company or a member of the Group shall take out and maintain in force, for the duration of their appointment, a policy of insurance for Directors serving on the Board in relation to directors’ liabilities, covering such matters and on such terms and conditions as the Lion Parties shall reasonably require.

7.3

Each Director shall be entitled to appoint any other Director to be his proxy in accordance with applicable provisions of the law of the Cayman Islands and a Director or any such proxy shall not be required to hold any share qualification, shall not be subject to retirement by rotation and shall not be removed except by the Shareholder appointing them.

7.4

Each Director and any proxy appointed pursuant to Clause 7.3 shall be entitled to disclose to any Shareholder appointing him such information concerning the Group and its business as he thinks fit to the extent that such disclosure would not violate any contractual, fiduciary or other obligation.

7.5

All matters to be determined at meetings of the Board and any committees thereof shall be determined by a majority of votes cast.

7.6

Each Director of the Company and any committee thereof shall be entitled to one vote and, in the case of an equality of votes, no Person, including without limitation the Chairman of the Board, shall have a second or casting vote.

7.7

Any meeting of the Board or any committee thereof may consist of a conference call between Directors, some or all of whom are in different places provided that each Director who participates in the meeting is able:

7.7.1 

to hear each of the other participating Directors addressing the meeting; and

7.7.2 

if he so wishes, to address each of the other participating Directors simultaneously,

7.8

A resolution or other consent executed or approved in writing by all of the Directors who would have been entitled to vote thereon had the same been proposed at a meeting of the relevant Board which such Directors had attended shall be as valid and effective for all purposes as a resolution passed at a meeting of a Board duly convened and held and may consist of several documents in the like form, each signed by one or more of the Directors.

7.9

The Company will procure that Clauses 7.1 to 7.8 shall apply, mutatis mutandis , to the operation of the Operating Board.

7.10 

The Parties agree that:

7.10.1 

a meeting of the Board shall be convened and held at least once every 12 months;

7.10.2 

a meeting of the Operating Board shall be convened and held at least once every three months;

7.10.3 

all significant matters relating to the ma