10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005

OR

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

FOR THE TRANSITION PERIOD FROM

COMMISSION FILE NUMBER 0-24341

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE	54-18652710
(STATE OF INCORPORATION)	(IRS EMPLOYER IDENTIFICATION NO.)
TWO BALA PLAZA, SUITE 300 BALA CYNWYD, PENNSYLVANIA	19004
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)	(ZIP CODE)

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

(610)–660–7817

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  ¨

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

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

The number of shares outstanding of the issuer’s common stock as of October 31, 2005:

Common Stock ($.01 par value) 23,721,220

INDEX

		PAGE
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements
	Consolidated Condensed Balance Sheets, September 30, 2005 (unaudited) and December 31, 2004	3
	Consolidated Condensed Statements of Income (unaudited) for the three and nine month periods ended September 30, 2005 and September 30, 2004	4
	Consolidated Condensed Statement of Changes in Stockholders’ Equity (unaudited) as of September 30, 2005	5
	Consolidated Condensed Statements of Cash Flows (unaudited) for the nine month periods ended September 30, 2005 and September 30, 2004	6
	Notes to Consolidated Condensed Financial Statements (unaudited)	7-15
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15-26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 6.	Exhibits	28
Signatures		29

2

PART I

FINANCIAL INFORMATION

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share information)

	September 30, 2005			December 31, 2004
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	20,973		$	10,491
Accounts receivable (net of allowance for doubtful accounts of $9,352 and $10,038 respectively)		125,284			131,799
Inventories		59,339			64,372
Prepaid expenses and other current assets		11,498			10,801
Deferred income taxes		5,287			822
TOTAL CURRENT ASSETS	$	222,381		$	218,285
Intangible assets, net		174,028			2,543
Goodwill, net		122,874			51,370
Tangible fixed assets, net		27,424			17,387
Deferred income taxes		1,669			1,684
Restricted cash		229,639			—
Other assets		42,588			435
TOTAL ASSETS	$	820,603		$	291,704
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Trade accounts payable	$	85,581		$	115,678
Short term bank loans and overdraft facilities		52,022			37,396
Current portion of long term debt		214			234
Current portion of obligations under capital leases		3,536			2,970
Current portion of obligations under Senior Secured Notes		—			—
Income taxes payable		494			651
Taxes other than income taxes		18,189			3,108
Other accrued liabilities		20,670			7,338
TOTAL CURRENT LIABILITIES		180,706			167,375
Long-term debt, less current maturities		1,719			1,873
Long-term obligations under capital leases		859			2,140
Long-term obligations under Senior Secured Notes		386,040			—
STOCKHOLDERS’ EQUITY
Preferred Stock ($0.01 par value, 1,000,000 shares authorized; no shares issued and outstanding)		—			—
Common Stock ($0.01 par value, 40,000,000 shares authorized, 20,524,745 and 16,677,045 shares issued at September 30, 2005 and December 31, 2004, respectively)		205			166
Additional paid-in-capital		185,012			55,663
Retained earnings		60,563			52,366
Accumulated other comprehensive income		5,649			12,271
Less Treasury Stock at cost (164,025 shares at September 30, 2005 and December 31, 2004)		(150	)		(150	)
TOTAL STOCKHOLDERS’ EQUITY		251,279			120,316
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	820,603		$	291,704

The accompanying notes are an integral part of the consolidated condensed financial statements.

3

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except share and per share information)

	Three Months Ended						Nine Months Ended
	September 30, 2005 (unaudited)			September 30, 2004 (unaudited)			September 30, 2005 (unaudited)			September 30, 2004 (unaudited)
Sales	$	197,688		$	145,831		$	511,939		$	389,312
Excise taxes		10,160			—			10,160			—
Net Sales		187,528			145,831			501,779			389,312
Cost of goods sold		160,186			127,525			433,849			340,605
Gross Profit		27,342			18,306			67,930			48,707
Selling, general and administrative expenses		17,807			11,676			43,825			31,825
Bad debt provision		319			223			668			474
Operating Income		9,216			6,407			23,437			16,408
Non operating income /(expense)
Interest income / (expense), net		(6,219	)		(519	)		(7,606	)		(1,429	)
Other financial income/(expense), net		(5,331	)		226			(5,395	)		284
Other income/(expense), net		(163	)		22			(275	)		77
Income before taxes		(2,497	)		6,136			10,161			15,340
Income tax expense / (benefit)		(474	)		1,040			1,964			2,618
Net income	$	(2,023	)	$	5,096		$	8,197		$	12,722
Net income per share of common stock, basic	$	(0.11	)	$	0.31		$	0.47		$	0.78
Net income per share of common stock, diluted	$	(0.11	)	$	0.31		$	0.47		$	0.77

The accompanying notes are an integral part of the consolidated condensed financial statements.

4

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN

STOCKHOLDERS’ EQUITY (UNAUDITED)

(in thousands)

	Capital Stock							Additional Paid-in- Capital		Retained Earnings		Accumulated Other Comprehensive Profit/Loss			Total Stock- holders Equity
	Issued Shares			In Treasury Shares
	Shares	Amount		Shares	Amount
Balance at December 31, 2004	16,677	$	166	164	$	(150	)	$	55,663	$	52,366	$	12,271		$	120,316
Net income for the nine months ended September 30, 2005											8,197					8,197
Foreign currency translation adjustment													(6,622	)		(6,622	)
Comprehensive income for the nine months ended September 30, 2005																1,575
Common stock issued in connection with acquisitions	3,410		35						126,149							126,184
Common stock issued in connection with options	437		4						3,200							3,204
Balance at September 30, 2005	20,524	$	205	164	$	(150	)	$	185,012	$	60,563	$	5,649		$	251,279

The accompanying notes are an integral part of the consolidated condensed financial statements.

5

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW (UNAUDITED)

(in thousands)

	Nine Months ended September 30, 2005			Nine Months ended September 30, 2004
	(unaudited)			(unaudited)
OPERATING ACTIVITIES
Net income	$	8,197		$	12,722
Adjustments to reconcile net income to net cash provided by / (used in) operating activities:
Depreciation and amortization		3,199			2,302
Deferred income tax benefit		(713	)		(157	)
Bad debt provision		668			474
Foreign exchange losses		—			5
Changes in operating assets and liabilities:
Accounts receivable		20,396			10,658
Inventories		8,046			7,446
Prepayments and other current assets		365			(148	)
Trade accounts payable		(28,122	)		(17,325	)
Income taxes and other taxes payable		(3,994	)		799
Other accrued liabilities and other assets		15,160			(679	)
Net Cash Provided By Operating Activities		23,202			16,097
INVESTING ACTIVITIES
Acquisition of businesses and subsidiaries, advances and other costs for acquisitions business and subsidiaries (net of cash acquired)		(178,502	)		(1,402	)
Changes in restricted cash		(229,639	)		—
Purchase of fixed assets		(3,982	)		(4,213	)
Proceeds from sales of fixed assets		1,960			275
Net Cash Used in Investing Activities		(410,163	)		(5,340	)
FINANCING ACTIVITIES
(Repayments) / Borrowings of short-term borrowings and overdraft facilities		17,697			(7,871	)
(Repayments) / Proceeds from long-term borrowings		(6	)		1,518
Borrowings of Senior Secured Notes		378,541			—
Capital lease repayments		(1,705	)		(1,733	)
Stock options exercised		3,204			987
Net Cash (Used in) / Provided By Financing Activities		397,731			(7,099	)
Effect of exchange rate changes on cash and cash equivalents		(288	)		1,845
Net increase / (decrease) in cash and cash equivalents		10,482			5,503
Cash and cash equivalents at beginning of period		10,491			6,229
Cash and cash equivalents at end of period	$	20,973		$	11,732
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES
Common stock issued for acquisitions	$	126,185		$	673
Capital leases amounts advanced	$	889		$	1,933
Supplemental disclosures of cash flow information
Net interest paid/(received)	$	(336	)	$	1,576
Income tax paid	$	1,700		$	3,425

The accompanying notes are an integral part of the consolidated condensed financial statements.

6

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(amounts in tables expressed in thousands except per share information)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Central European Distribution Corporation (“CEDC”), a Delaware corporation, and its subsidiaries (collectively referred to as “we,” “us,” “our,” or the “Company”) operate primarily in the alcohol beverage industry. Historically the Company has operated as a distributor and importer of alcoholic beverages in Poland. Recently, however, the Company expanded its strategy and has vertically integrated into production and brand ownership through the acquisition of 100% of Bols Poland in August 2005 and 66% of Polmos Bialystok in October 2005. Bols and Polmos Bialystok are leading producers and marketers of premium vodkas in Poland. Following these acquisitions the Company is one of the largest vodka producers, and the leading distributor and importer of alcoholic beverages in Poland. The Company is based in Warsaw and operates through two plants, 15 distribution centers and 87 satellite branches. Since its incorporation in September 1997, CEDC has acquired 100% of the outstanding common stock or 100% of the voting rights of its 17 distribution subsidiaries.

CEDC derives all its revenues in Poland through its various subsidiaries.

2. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include the accounts of CEDC and its subsidiaries all of which the Company wholly owns or owns 100% of the voting rights. All inter-company accounts and transactions have been eliminated in the consolidated financial statements.

CEDC’s subsidiaries maintain their books of account and prepare their statutory financial statements in Polish Zloty (PLN) in accordance with Polish statutory requirements and the Accounting Act of 29 September, 1994. The subsidiaries’ financial statements have been adjusted to reflect accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present our financial condition, results of operations and cash flows for the interim periods presented have been included. Operating results for the three and nine month periods ended September 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

The balance sheet at December 31, 2004 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

The unaudited interim financial statements should be read with reference to the consolidated financial statements and footnotes thereto included in our annual report on Form 10-K for the year ended December 31, 2004.

3. COMPREHENSIVE INCOME/(LOSS)

The Company’s financial statements are substantially all in Polish Zloty and gains or losses resulting from the translation of these balances into U.S. Dollars are posted to the Comprehensive Loss Account. As a result of the devaluation of the Polish Zloty against the U.S. Dollar during the nine month period ended September 30, 2005, the Company incurred a foreign currency translation loss of $6.6 million. The total of the accumulated other comprehensive loss consists solely of currency exchange adjustments. No tax benefit has been recorded.

4. INVENTORIES

Inventories are stated at the lower of cost or market. Elements of cost include materials, labor and overhead and are classified as follows:

	September 30, 2005		December 31, 2004
Raw materials and supplies	$	3,382	$	—
In-process inventories		57		—
Finished goods and goods for resale		55,900		64,372
Total	$	59,339	$	64,372

7

Because of the nature of the products supplied by the Company, great attention is paid to inventory rotation. Where goods are estimated to be obsolete or unmarketable they are written down to a value reflecting the net realizable value in their relevant condition.

5. ACQUISITIONS

The Company’s strategy and objectives in its acquisition policy have typically been to acquire strong regional alcohol distributors in order to build market share, and to construct a nationwide distribution network in order to attract and retain national clients and strengthen its buying leverage.

During 2005, the Company has expanded its acquisition strategy to vertically integrate into production and brand ownership by targeting and acquiring leading distilleries and their brands in Poland. Vertical integration is expected to expand margins as the Company integrates its distribution and production margins, add selling leverage to its distribution model, and tap into the growing international vodka markets with the Company’s own export brands. As a result of following this strategy, the Company has entered into two share purchase agreements as described further below and in Note 16.

The price paid by the Company in making its acquisitions is based on earnings projections of the acquired company operating under the Company’s business model.

On August 17, 2005 the Company completed a share sale agreement with Takirra Investment Corporation (“Takirra”), Rémy Cointreau S.A. (“Remy”), and Botapol Management B.V. (an indirect subsidiary of Rémy) to acquire 100% of the outstanding capital stock of Botapol Holding B.V. (“Botapol”), which itself owns 100% of the outstanding capital stock of both Bols, its principal operating subsidiary, and Hillcroft Sp. z o.o. (collectively referred to as “Bols”). Bols is a leading producer and marketer of premium vodkas and a leading importer of premium spirits and wines in Poland. The purchase price for Botapol was $270.0 million, payable in a combination of cash and shares of CEDC common stock. At closing, CEDC paid $147.9 million in cash and issued 3,382,838 shares of its common stock. Up to $5.0 million of the cash consideration may be reimbursed if the weighted average of the closing price of CEDC’s common stock exceeds $40.65 per share at any time during the period from twelve to eighteen months after the closing of the Bols Acquisition. As part of the Botapol acquisition, if the weighted average of the closing price of CEDC common stock over the four weeks immediately preceding the first anniversary of the closing date of the Botapol acquisition is below $32.59 per share, the Company will be liable to Remy and Takirra for payment of an additional amount in cash equal to the applicable price difference multiplied by 3,382,838, (the total number of shares of our common stock issued to the sellers as part of the purchase price). This will be accounted for as contingent consideration and should any additional amounts become due they will be treated as a purchase price adjustment. At the time of acquisition, Bols was exposed to certain tax penalties, for which the sellers have provided full indemnification to CEDC.

Upon closing of the acquisition the price per share for the 3,382,838 shares of common stock of CEDC was $37.01 based on the closing market price of CEDC common stock for the two days before and the two days after the acquisition announcement date (June 27, 2005). The cash consideration was financed by the release from escrow of the proceeds from the issuance of EUR 325.0 million of 8% Senior Secured Notes due 2012. Operations of Botapol are included in our income statement for the period from August 17, 2005 through September 30, 2005.

On July 11, 2005, the Company entered into a definitive share purchase agreement with the Polish Treasury Ministry to purchase 61% of the outstanding capital stock of Polmos Bialystok S.A. for a total purchase price of 1.06 billion Polish Zloty ($325.4 million based on the exchange rate as of September 30, 2005). The acquisition was subject to approvals from the Polish Anti-Monopoly Office and the Polish Securities and Stock Exchange Commission. Final permission was obtained in October 2005, and the transaction was closed on October 12, 2005 (see Note 16). Polmos Bialystok S.A.’s results will be consolidated from the acquisition date.

On August 16, 2005, the Company acquired 100% of the outstanding capital stock of Imperial, an alcohol distributor in the northeast of Poland, for a purchase price of approximately $2.3 million, of which $1.9 million was paid in cash and $0.4 million was paid in shares of common stock of the Company. Operations of Imperial are included in our income statement for the period from August 16, 2005 to September 30, 2005.

8

On April 28, 2005, the Company acquired 100% of the outstanding capital stock of Delikates, an alcohol distributor in central Poland, for a purchase price of approximately $2.4 million, of which $1.9 million was paid in cash and $0.5 million was paid in shares of common stock of the Company.

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed in the Botapol and other acquisitions at the date of acquisition. The Company is in the process of completing its valuations and refining its purchase price adjustments for Botapol, which will be finalized by December 31, 2005. As such, the allocation of the purchase price is subject to further refinement.

	Botapol		Other		Total
Current assets	$	46,933	$	1,921	$	48,854
Property, plant and equipment and other assets		13,407		234		13,641
Trademarks		172,146		101		172,247
Total assets acquired	$	232,486	$	2,256	$	234,742
Current liabilities	$	28,300	$	2,092	$	30,392
Long term liabilities		—		—		—
Total liabilities assumed		28,300		2,092		30,392
Net assets acquired	$	204,186	$	164	$	204,350
Consideration given
In cash		147,974		3,974		151,948
In shares		125,193		991		126,184
Other acquisition cost		1,670		—		1,670
Goodwill	$	70,651	$	4,801	$	75,452
Cash acquired		9,232		85		9,317
Net cash outflow	$	139,676	$	3,889	$	143,565

The following table sets forth the unaudited pro forma results of operations of the Company for the three and nine month periods ending September 30, 2005 and September 30, 2004. The unaudited pro forma results of operations give effect to the Company’s acquisitions as if they occurred on January 1, 2004. The unaudited pro forma results of operations are presented after giving effect to certain adjustments for depreciation, amortization of deferred financing costs, interest expense on the acquisition financing, and related income tax effects. The unaudited pro forma results of operations are based upon currently available information and certain assumptions that the Company believes are reasonable under the circumstances. The unaudited pro forma results of operations do not purport to present what the Company’s results of operations would actually have been if the aforementioned transactions had in fact occurred on such date or at the beginning of the period indicated, nor do they project the Company’s financial position or results of operations at any future date or for any future period.

	Three Months Ended				Nine Months Ended
	September 30, 2005		September 30, 2004		September 30, 2005		September 30, 2004
Net sales	$	211,091	$	191,822	$	587,205	$	525,392
Net income		677		1,179		2,559		3,422
Net income per share data:
Basic earnings per share of common stock		0.04	$	0.06		0.15	$	0.17
Diluted earnings per share of common stock		0.04	$	0.06		0.14	$	0.17

6. GOODWILL

Goodwill, presented net of accumulated amortization in the consolidated balance sheets, consists of:

Acquisition Cost
Balance at December 31, 2004	$	52,233
Impact of foreign exchange		(4,161	)
Additional purchase price adjustments		142
Acquisition through business combinations		75,452
Balance at September 30, 2005		123,666
Cumulative Depreciation
Balance at December 31, 2004		863
Impact of foreign exchange		(71	)
Impairment losses		—
Balance at September 30, 2005		792
NBV		122,874

9

Additional purchase price adjustments represent fair value adjustments made to the book value of entities acquired in 2004, for which updated information became available after the original acquisition date.

The Company adopted SFAS No. 142 effective January 1, 2002. Under SFAS No. 142 goodwill is no longer amortized but reviewed at the beginning of the fiscal year for impairment, or more frequently if certain indicators arise.

7. INTANGIBLE ASSETS

The major components of intangible assets are:

	September 30, 2005			December 31, 2004
Amortizable intangible assets:
Trademarks	$	4,796		$	4,261
Customer relationships		234			—
Less accumulated amortization		(3,148	)		(1,718	)
Total	$	1,882		$	2,543
Non-amortizable intangible assets:
Trademarks		172,146			—
Total		172,146			—
Total intangible assets	$	174,028		$	2,543

The increase in Trademarks results from the Botapol acquisition, the owner of the Bols and Soplica Trademarks.

Management considers the Bols and Soplica brands to have high or market-leader brand recognition within their market segments based on the length of time they have existed, the comparatively high volume sold and their general market positions relative to other products in their respective market segments. Taking the above into consideration, as well as the evidence provided by analyses of vodka products life cycles, market studies, competitive and environmental trends, Management assumes that these brands will generate cash flows for an indefinite period of time, and that the useful lives of these brands are indefinite.

8. OTHER ASSETS

The major components of other assets are:

	September 30, 2005		December 31, 2004
Fixed assets in progress	$	1,780	$	135
Advance payment for Polmos Bialystok acquisition		33,613		—
Deferred investment costs		7,195		300
	$	42,588	$	435

10

9. EARNINGS PER SHARE

Net income per share of common stock is calculated under the provisions of SFAS No. 128, “Earnings per Share”. The following table sets forth the computation of basic and diluted earnings per share for the periods indicated.

	Three Months Ended					Nine Months Ended
	September 30, 2005			September 30, 2004		September 30, 2005		September 30, 2004
Basic:
Net income	$	(2,023	)	$	5,096	$	8,197	$	12,722
Weighted average shares of common stock outstanding		18,548			16,363		17,319		16,264
Basic Earnings Per Share	$	(0.11	)	$	0.31	$	0.47	$	0.78
Diluted:
Net Income	$	(2,023	)	$	5,096	$	8,197	$	12,722
Weighted average shares of common stock outstanding		18,548			16,363		17,319		16,264
Net effect of diluted stock options-based on the treasury stock method		346			125		304		358
Total shares outstanding – fully diluted		18,894			16,488		17,623		16,622
Diluted Earnings Per Share	$	(0.11	)	$	0.31	$	0.47	$	0.77

During the three month and nine month periods ended September 30, 2005, 89,250 and 433,875 stock options were exercised, respectively.

10. BORROWINGS

The amounts of borrowings as disclosed in the financial statements are:

	September 30, 2005		December 31, 2004
Short term bank loans and overdraft facilities for working capital	$	26,424	$	37,396
Distillery acquisition related short term bank loans		25,598		—
Total short term bank loans and overdraft facilities		52,022		37,396
Current portion of long term debt		214		234
Long term obligations under Senior Secured Notes		386,040		—
Other total long term debt, less current maturities		1,719		1,873
Total debt	$	439,995	$	39,503

Principal repayments for the followings years	September 30, 2005		December 31, 2004
2005	$	51,323	$	37,630
2006		214		234
2007		214		234
2008		214		234
2009 and beyond		388,030		1,171
Total	$	439,995	$	39,503

Senior Secured Notes -

In connection with the Botapol and Polmos Bialystok acquisition, on July 25, 2005 the Company completed the issuance of €325 million 8% Senior Secured Notes due 2012 (the “Notes”). Interest is due semi-annually on the 25th of January and July, and the Notes are guaranteed on a senior basis by certain of the Company’s subsidiaries.

The Indenture governing our Notes contains certain restrictive covenants, including covenants restricting the Company’s ability to: make certain payments, including dividends or other distributions, with respect to the share capital of the parent or its subsidiaries; incur or guarantee additional indebtedness or issue preferred stock; make certain investments; prepay or redeem subordinated debt or equity; create certain liens or enter into sale and leaseback transactions; engage in certain transactions with affiliates; sell assets or consolidate or merge with or into other companies; issue or sell share capital of certain subsidiaries; and enter into other lines of business.

11

The gross proceeds of the Notes, plus an additional €11.4 million, was funded into escrow pending completion of the Botapol and Polmos Bialystok acquisition. The additional amounts paid into escrow represent pre-funded interest and penalty of 101% of the principle, to be returned to the holders of the Notes if either one or both acquisitions were not consummated. On August 17, 2005, the Botapol acquisition was completed and €144.9 million was released from escrow. The remaining amount of cash in escrow was released prior to the closing of Polmos Bialystok in October 2005.

As the coupon payments are based in Euro and the primary cash inflows of the Company are in Polish Zloty, the Company has entered into a coupon swap. As of September 30, 2005, the Company had outstanding a seven year interest rate swap agreement. The swap agreements exchanged a fixed Euro based coupon of 8%, with a variable Polish Zloty coupon. The coupon amount is a function of the six month Warsaw inter-bank rate (WIBOR) applied to a notional amount of 1,274.4 million Polish Zloty.

Bank Facilities -

The Company has banking facilities with six banks which are used primarily to support the Company’s working capital requirements. These credit lines are only denominated in Polish Zloty.

In addition to the working capital facilities, the Company had two additional short term borrowings as of September 30, 2005, relating to the Polmos Bialystok and Botapol acquisitions. As part of the Notes offering, the Company was required to pre-fund into escrow an amount for accrued interest and penalty in the event that the acquisitions were not completed and the proceeds of the Notes were to be returned to the Note holders. As such the Company had additional borrowings of approximately $13.7 million, the proceeds of which were placed into the cash held in escrow.

In connection with the acquisition of Polmos Bialystok, the Company had additional short term borrowings of approximately $15.0 million used to fund a deposit payment to the Polish State Treasury. Following the completion of the acquisition in October 2005, the funds from the Notes were released from escrow and used to repay the deposit credit in full.

As of September 30, 2005, $54.9 million remained available under the Company’s overdraft facilities. These overdraft facilities are subject to renewal between April 2005 and December 2005 and the Company has not historically encountered any difficulties in successfully renegotiating them.

11. RESTRICTED CASH

As described in Note 10, as part of terms of the Notes, the Company was required to place the €325 million proceeds of the Notes, plus additional amounts, into escrow. The release of the cash in escrow was conditioned upon the completion of the Bols and Polmos Bialystok acquisitions. As of September 30, 2005, the Company had €192.1 million or approximately $229.6 million held in escrow, which funds were subsequently released in October 2005 upon the closing of the Polmos Bialystok acquisition.

12. LEASE OBLIGATIONS

In November 2000, the Company entered into a non-cancelable five-year operating lease for its main warehouse and office in Warsaw, which stipulated monthly payments of $130,000. In February 2003, the Company renegotiated this lease by signing a seven-year agreement starting on May 1, 2003, at a lower rent of $96,000 per month. In May 2000, the Company entered into a non-cancelable operating lease for its Bols office in Warsaw, which stipulated monthly payments of $18,000 for six years. In February 2004, the Company renegotiated this lease by signing a new agreement ending May 31, 2006 at a lower rent of $16,000 per month. The following is a schedule by years of the future rental payments under the non-cancelable operating lease as of September 30, 2005:

2005	$	354
2006		1,307
2007		1,227
2008		1,227
2009		1,227
Thereafter		409
	$	5,751

12

The Company also has rental agreements for all of the regional distribution offices and warehouse space. Monthly rental payments range from approximately $67 to $23,362. All of the regional office and warehouse leases can be terminated by either party with two or three months’ prior notice, depending on the lease. The retail shop leases have no stated expiration date, but can be terminated by either party with nine months’ prior notice. The Company also has rental agreements for its production subsidiary warehouse space. The main external warehouse is located in Oborniki, in the vicinity of the production plant and is mainly used for storage of POS materials, imported products and vodka sold to duty free and foreign customers. Rental payments amount to $30,000- $40,000 per month. The warehouse lease agreement can be terminated by either party with three months’ prior notice.

The Company follows a policy of renewing its transportation fleet by way of capital leases. The future minimum lease payments for the assets under capital lease at September 30, 2005, are as follows:

2005	$	2,026
2006		1,928
2007		441
	$	4,395
Less interest		(311	)
	$	4,084

13. DERIVATIVE INSTRUMENTS

The Company is exposed to market risk from changes in foreign currency exchange rates that could affect the Company’s results of operations and financial condition. In accordance with SFAS 133, Accounting for Derivative Instruments and Hedging Activities, the Company recognizes all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value.

The fair values of the Company’s derivative instruments can change with fluctuations in interest rates and/or currency rates and are expected to offset changes in the values of the underlying exposures. The Company’s derivative instruments are held to hedge economic exposures. The Company follows internal policies to manage interest rate and foreign currency risks, including limitations on derivative market-making or other speculative activities.

To qualify for hedge accounting under SFAS No. 133, the details of the hedging relationship must be formally documented at the inception of the arrangement, including the risk management objective, hedging strategy, hedged item, specific risk that is being hedged, the derivative instrument, how effectiveness is being assessed and how ineffectiveness will be measured. The derivative must be highly effective in offsetting either changes in the fair value or cash flows, as appropriate, of the risk being hedged.

Effectiveness is evaluated on a retrospective and prospective basis based on quantitative measures. When it is determined that a derivative is not, or has ceased to be, highly effective as a hedge, the Company discontinues hedge accounting prospectively. The Company discontinues hedge accounting prospectively when (1) the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item; (2) the derivative expires or is sold, terminated, or exercised; (3) it is no longer probable that the forecasted transaction will occur; or (4) management determines that designating the derivative as a hedging instrument is no longer appropriate.

Fair value hedges are hedges that offset the risk of changes in the fair values of recorded assets, liabilities and firm commitments. The Company records changes in fair value of derivative instruments which are designated and deemed effective as fair value hedges, in earnings offset by the corresponding changes in the fair value of the hedged items.

The Company is exposed to fluctuations in foreign currency cash flows in connection with the Euro denominated Notes. In order to match the cash outflows on the coupon payments related to the obligation with the cash inflows of the Company, denominated primarily in Polish Zloty, the Company has entered into a coupon swap arrangement. As of September 30, 2005, the Company had a seven year interest rate swap agreement outstanding. The swap agreements exchanged a fixed Euro based coupon of 8% with a variable Polish Zloty coupon. The coupon amount is a function of the six month Warsaw inter-bank rate (WIBOR) applied to a notional amount of 1,274.4 million Polish Zloty. During the three months period ended September 30, 2005, a loss of $8.1 million has been recorded as part other financial income (expense), net to reflect the mark to market valuation of the swap. In addition during the three month period ended September 30, 2005 a loss of $4.2 million has been recorded as part of other financial income/(expense), net, to reflect a closed hedge entered into for economic purposes, related to acquisition of Polmos Bialystok.

13

14. INCOME TAXES

Total income tax expense varies from expected income tax expense computed at enacted Polish statutory rates (19% in 2004 and 2005) as follows:

	Three Months Ended						Nine Months Ended
	September 30 2005			September 30 2004			September 30 2005		September 30 2004
Tax at Polish statutory rate	$	(474	)	$	1,166		$	1,964	$	2,914
Tax rate differences		—			(136	)		—		(309	)
Permanent differences		—			10			—		13
Total income tax expense	$	(474	)	$	1,040		$	1,964	$	2,618

Tax liabilities (including corporate income tax, Value Added Tax (VAT), social security and other taxes) of the Company’s Polish subsidiaries may be subject to examinations by Polish tax authorities for up to five years from the end of the year in which the tax is payable. CEDC’s U.S. federal income tax returns are also subject to examination by the U.S. tax authorities. As the application of tax laws and regulations, and transactions are susceptible to varying interpretations, amounts reported in the consolidated financial statements could be changed at a later date upon final determination by the tax authorities.

15. STOCK OPTION PLANS AND WARRANTS

The Company has elected to follow APB 25. Under APB 25, no compensation expense is recognized when the exercise price of the Company’s employee stock options equals or exceeds the market price of the underlying stock on the date of grant.

The Company’s 1997 Stock Incentive Plan (the “Incentive Plan”) provides for the grant of stock options, stock appreciation rights, restricted stock and restricted stock units to directors, executives, and other employees (“employees”) of the Company and to non-employee service providers of the Company. The Incentive Plan authorizes, and the Company has reserved for future issuance, up to 1,323,713 shares of Company common stock (subject to an anti-dilution adjustment in the event of a stock-split, recapitalization, or similar transaction). The Compensation Committee of the Board of Directors of the Company administers the Incentive Plan.

Employee options to purchase a total of 433,875 shares were exercised during the first nine months of 2005.

The option exercise price for stock options granted under the Incentive Plan may not be less than fair market value but in some cases may be in excess of the market price of the Company’s common stock on the date of grant. The Company sets the stock option exercise price based on the closing price of the Company’s common stock on the day before the date of grant if such price is not materially different than the opening price of the Company’s common stock on the date of grant. Accordingly, there is no compensation expense recorded for options granted under the Incentive Plan to employees. Stock options may be exercised up to 10 years after the date of grant except as otherwise provided in the particular stock option agreement. Payment for the shares purchased under the Incentive Plan must be in cash, which must be received by the Company prior to any shares being issued.

Pro forma information regarding net income and earnings per share is required by SFAS 123, and has been determined as if the Company had accounted for its employee stock options under the fair value method of SFAS 123. The fair value of these stock options were estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rate of 3.00% in 2005 and 1.90% in 2004, dividend yields of 0.0% in both 2005 and 2004; volatility factors of the expected market price of the Company’s common stock of 1.15 in 2005 and 1.25 in 2004; and a weighted-average expected life of the option of 3.4 years in both 2005 and 2004.

The Black-Scholes option valuation method was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of subjective assumptions including the expected stock price volatility. Because the Company’s employee stock options have characteristics different from those of traded options, and because changes in the subjective input assumptions can affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s employee stock options.

14

For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period. The Company’s pro forma information follows:

	Three Months Ended					Nine Months Ended
	September 30 2005			September 30 2004		September 30 2005		September 30 2004
Net income as reported	$	(2,023	)	$	5,096	$	8,197	$	12,722
Pro forma net income	$	(2,391	)	$	4,832	$	7,154	$	12,161
Pro forma earnings per share:
Basic	$	(0.13	)	$	0.29	$	0.41	$	0.75
Diluted	$	(0.13	)	$	0.29	$	0.41	$	0.73

16. SUBSEQUENT EVENTS

On October 12, 2005 the Company completed the acquisition of 61% of the capital stock of Polmos Bialystok S.A from the Polish State Treasury, for a cash purchase price of 1.06 billion Polish Zloty ($328.2 million based upon the exchange rate on October 12, 2005). The acquisition was funded through the sale of 3,360,000 shares of Company common stock to investors in a private placement (discussed below) and the proceeds remaining from the issuance of its €325 million 8% Senior Secured Notes due 2012, which the Company closed at the end of July 2005.

In addition to the shares obtained from the Polish State Treasury, in October 2005 the Company purchased additional shares of Polmos Bialystok on the open market. Currently, the Company owns 66% of Polmos Bialystok’s outstanding capital stock.

On October 7, 2005, the Company closed the private placement of 3,360,000 shares of its common stock at $34.69 per share, for gross proceeds of approximately $116.6 million. The per-share price represented a 7% discount to the trailing 15-day closing average share price. The private placement was closed after the completion of the Company’s acquisition from the Polish Treasury of 61% of the outstanding shares of Polmos Bialystok S.A. The shares of Company common stock issued in the private placement are subject to customary registration rights granted to the investors for the resale of the shares.

17. COMMITMENTS AND CONTINGENT LIABILITIES

The Company is involved in litigation from time to time and has claims against it in connection with matters arising in the ordinary course of business. In the opinion of management, the outcome of these proceedings will not have a material adverse effect on the Company’s operations.

As part of the Botapol acquisition, if the weighted average of the closing price of the Company’s common stock over the four weeks immediately preceding the first anniversary of the closing date of the Botapol acquisition is below $32.59 per share, the Company will be liable to Remy and Takirra for payment of an additional amount in cash equal the shortfall multiplied by 3,382,838, (the total number of shares of Company common stock issued to the sellers as part of the purchase price).

As part of the Polmos Bialystok acquisition, the Company signed the Social Guarantees Package with Trade Union Organizations. Under this agreement, the Company is obligated to pay to Polmos Bialystok employees a Privatization Bonus in an amount equal to ten months of gross wages. In addition, as part of the Share Purchase Agreement, the Company is required to ensure that Polmos Bialystok will make investments of at least 77.5 million Polish Zloty (approximately $23 million based on the then-current exchange rate) during the five years after the acquisition was consummated.

18. RELATED PARTY TRANSACTION

In January 2005, the Company entered into a rental agreement for a facility located in northern Poland, which is 33% owned by the Company’s Chief Operating Officer. The monthly rent to be paid by the Company for this location is approximately $18,000 per month and relates to facilities to be shared by two subsidiaries of the Company.

During the third quarter of 2005, the Company made sales to a restaurant which is partially owned by the Chief Executive Officer of the Company. All sales were made on normal commercial terms, and total sales for the nine months ended September 30, 2005 were approximately $53,108.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following analysis should be read in conjunction with the Consolidated Financial Statements and the notes thereto appearing elsewhere in this report.

15

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Regarding Forward-Looking Information.

This report contains forward-looking statements, which provide our current expectations or forecasts of future events. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “intends,” “may,” “will” or “should” or, in each case, their negative, or other variations or comparable terminology, but the absence of these words does not necessarily mean that a statement is not forward-looking. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this report and include, without limitation:

• information concerning possible or assumed future results of operations, trends in financial results and business plans, including those relating to earnings growth and revenue growth, liquidity, prospects, strategies and the industry in which we, Bols, and Polmos Bialystok operate, as well as the completion of the acquisition of Polmos Bialystok and the effect of such acquisition on us;

• statements about the level of our costs and operating expenses relative to our revenues, and about the expected composition of our revenues;

• statements about integration of our acquisitions;

• information about the Polish regulations on our business;

• other statements about our plans, objectives, expectations and intentions; and

• other statements that are not historical facts.

By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our, Bols’ or Polmos Bialystok’s actual results of operations, financial condition and liquidity, the development of the industry in which we, Bols or Polmos Bialystok operate, and the effect of the acquisition on us may differ materially from those anticipated in or suggested by the forward-looking statements contained in this report. In addition, even if our, Bols’ or Polmos Bialystok’s results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods.

We urge you to read and carefully consider the items of the other reports that we have filed with or furnished to the SEC for a more complete discussion of the factors and risks that could affect our future performance and the industry in which we operate, including the risk factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2004, the risk factors described in our Current Report on Form 8-K furnished to the SEC on July 5, 2005, and the risk factors described in our Current Report on Form 8-K furnished to the SEC on October 17, 2005. In light of these risks, uncertainties and assumptions, the forward-looking events described in this report may not occur.

You should not unduly rely on these forward-looking statements, because they reflect our judgment only as of the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statement to reflect circumstances or events after the date of this report, or to reflect the occurrence of unanticipated events. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this report.

The following discussion and analysis provides information which management believes is relevant to the reader’s assessment and understanding of the Company’s results of operations and financial condition and should be read in conjunction with the Consolidated Financial Statements and the notes thereto found elsewhere in this report.

Significant Factors Affecting Our Results of Operations

As a distributor, producer and importer of alcoholic beverages in Poland, our results of operations can be significantly affected by the overall economic trends of Poland, as well as changes in consumer preferences, consumer spending, tax rates and consumer confidence, each of which impacts our volume of sales and the prices of our products. Over the past three years, we have succeeded in increasing our consolidated revenues. This resulted primarily from our acquisitions of distributors. In addition to the acquisitions, our results of operations were affected by the translation effects of fluctuations in the exchange rate of the Polish Zloty versus the U.S. Dollar because our functional currency is the Polish Zloty but our reporting currency is the U.S. Dollar during the periods covered.

16

Effect of Acquisitions of Distributors

As part of our strategy to increase distribution capacity we acquire existing distributors, particularly in regions where we do not have a leading position. The distributors we acquire are primarily involved in the vodka distribution business and are among the leading distributors in their regions. Over the past nine years, we have acquired 16 distributors throughout Poland. Typically, we purchase these distributors with cash and shares of our common stock. These acquisitions have had a positive impact on the results of the Company by increasing our net sales and operating profit. The following table sets forth our acquisitions of distributors for the periods covered in this analysis.

Name of acquired distributors and dates of acquisition (since January 1, 2004):

Saol Sp. z o.o.	May 21, 2004
Miro Sp. z o.o.	September 6, 2004
Polnis Sp. z o.o.	October 11, 2004
Delikates Sp. z o.o.	April 28, 2005
Imperial Sp. z o.o.	August 16, 2005

Effect of Acquisitions of Production Subsidiaries

During 2005, the Company has expanded its acquisition strategy to vertically integrate into the production of alcoholic beverages by targeting leading distilleries with the leading premium and mainstream brands in Poland. Vertical integration is expected to expand margins as the Company integrates its distribution and production margins, add selling leverage to its distribution model and tap into the growing international vodka markets with the Company’s own export brands.

On August 17, 2005 the Company completed a share sale agreement with Takirra Investment Corporation, Rémy Cointreau S.A. (“Remy”), and Botapol Management B.V. (an indirect subsidiary of Rémy) to acquire 100% of the outstanding capital stock of Botapol Holding B.V. (“Botapol”), which itself owns 100% of the outstanding capital stock of both Bols, its principal operating subsidiary, and Hillcroft Sp. z o.o. (collectively referred to as “Bols”). Bols is a leading producer and marketer of premium vodkas and a leading importer of premium spirits and wines in Poland.

On October 12, 2005 the Company acquired 61% of the capital stock of Polmos Bialystok S.A., one of the leading producers of vodka in Poland. In addition, the Company purchased 5% of the capital stock of Polmos Bialystok in the open market. As of October 12, 2005, the Company owned 66% of Polmos Bialystok’s outstanding capital.

The acquisition and integration of these businesses into our operations have had a significant effect on our results of operations. As discussed below, these acquisitions have increased our net sales, costs of goods sold and operating expense.

Effect of Exchange Rate and Interest Rate Fluctuations

As a result of the issuance of the Company’s €325 million Senior Secured Notes due 2012 (the “Notes”), we are exposed to foreign exchange risk. Movements in the EUR-Polish Zloty exchange rate will require us to revalue our liability on the Notes accordingly, the impact of which will be reflected in the results of the Company’s operations. In order to manage the cash flow impact of foreign exchange changes, the Company has entered into a coupon swap. As of September 30, 2005, the Company had outstanding a seven year interest rate swap agreement. The swap agreement exchanged a fixed Euro based coupon of 8%, with a variable Polish Zloty coupon. The coupon amount is a function of the six month Warsaw inter-bank rate (WIBOR) applied to a notional amount of 1,274.4 million Polish Zloty. As a result of this, movements in the underlying WIBOR rates will impact the results of our operations.

Because the Company’s functional currency is the Polish Zloty but its reporting currency is the U.S. Dollar, the translation effects of fluctuations in the exchange rate have impacted the Company’s financial condition and results of operations and have affected the comparability of our results between financial periods. Using period end National Bank of Poland exchange rates, which were used to translate the period end balance sheets, the exchange rate for the Polish Zloty of September 30, 2005 was 3.26 Polish Zloty per U.S. Dollar, compared to 3.56 Polish Zloty per U.S. Dollar at September 30, 2004.

17

Effects of the Botapol Acquisition and the Polmos Bialystok Acquisition

The acquisitions of the two most profitable vodka distilleries in Poland, Bols and Bialystok, will have different requirements of management expertise as compared to our current distribution business, including, but not limited to:

• The management of trademark and marketing issues surrounding brand ownership.

• The management of worldwide export agreements.

• The management of technical aspects of production.

• The management of synergies to complement production and distribution businesses, including aspects of human resource integration.

Overview

Following acquisitions of the Bols and Bialystok vodka distilleries in Poland, the Company is one of the largest vodka producers by value in Poland and the leading distributor by volume and a leading importer by value of alcoholic beverages in Poland. The Company operates the largest nationwide next-day alcoholic beverage delivery service with distribution centers and satellite branches located throughout Poland. The Company distributes over 700 brands of alcoholic beverages consisting of a wide range of alcoholic products. In addition to importing and distributing alcoholic beverages, the Company is the exclusive importer and distributor for certain non-alcoholic products in Poland.

Results of Operations:

Nine months ended September 30, 2005 compared to nine months ended September 30, 2004

A summary of the Company’s operating performance (expressed in thousands except per share amounts) is presented below.

	Nine Months Ended September 30,
	2005 (unaudited)			2004 (unaudited)
Gross Sales	$	511,939		$	389,312
Excise taxes		10,160			—
Net Sales		501,779			389,312
Cost of goods sold		433,849			340,605
Gross Profit		67,930			48,707
Selling, general and administrative expenses		43,825			31,825
Bad debt provision		668			474
Operating Income		23,437			16,408
Non operating income /(expense)
Interest income / (expense), net		(7,606	)		(1,429	)
Other financial income / (expense), net		(5,395	)		284
Other income / (expense), net		(275	)		77
Income before taxes		10,161			15,340
Income tax expense		1,964			2,618
Net income	$	8,197		$	12,722
Net income per share of common stock, basic	$	0.47		$	0.78
Net income per share of common stock, diluted	$	0.47		$	0.77

Net Sales

Net sales represent total sales net of all customer rebates, excise tax and value added tax. Total net sales increased by approximately 28.9%, or $112.5 million, from $389.3 million for the nine months ended September 30, 2004 to $501.8 million for the nine months ended September 30, 2005. This increase in sales is split as follows:

Net sales for nine months ended September 30, 2004	$	389,312
Increase from acquisitions		56,890
Existing business sales growth		55,577
Net sales for nine months ended September 30, 2005	$	501,779

18

The sales growth is driven by the following:

• Acquisitions of distributors and Botapol which provided an additional $56.9 of sales for the nine months ended September 30, 2005.

• Increased sales of imported products. Growth of imports, increased by approximately 22.8%, or $4.4 million, from $19.1 million for the nine months ended September 30, 2004 to $23.5 million for the nine months ended September 30, 2005. This increase resulted primarily from Poland’s accession to the European Union on May 1, 2004, which eliminated customs duty for products imported from other European Union countries. This elimination of customs duty reduced the price of the imported products making them more affordable to Polish consumers and thus increasing net sales.

• Increases in sales at existing outlets and sales at new outlets.

• The strength of the Polish Zloty versus the U.S. Dollar for the nine months ended September 30, 2005 as compared to the strength of the Polish Zloty versus the U.S. Dollar for the nine months ended September 30, 2004. Based upon average exchange rates for the nine months ended September 30, 2005 and 2004, the Polish Zloty appreciated by approximately 13%.

Sales of high margin import products is one of the key strategies of the Company. Sales of exclusive imported beers, spirits and wines for the nine months ended September 30, 2004 and 2005 are highlighted below on a pro forma basis. This table includes the sales of imports from the Bols Poland business for the full nine months ended September 30, 2004 and 2005, on a pro-forma basis and is intended to provide and indication of the growth of imports including the Botapol acquisition. The below numbers do not reflect the actual change in sales of CEDC imports as reported for the nine months ending September 30, 2004 and 2005.

Nine Months Ended September 30, (Sales in $000’s)	2005	2004	%
Imported Beers	4,816	4,765	1.1
Imported Spirits	14,705	10,763	36.6
Imported Wines	18,481	14,406	28.3
Total Imported Product	38,002	29,934	27.0

Gross Profit

Total gross profit increased by approximately 39.4%, or $19.2 million, to $67.9 million for the nine months ended September 30, 2005, from $48.7 million for the nine months ended September 30, 2004, reflecting the effect of the acquisition of Botapol and sales growth in the nine months ended September 30, 2005. Gross margin increased from 12.5% of net sales for the nine months ended September 30, 2004 to 13.5% of net sales for the nine months ended September 30, 2005. This increase in gross margin resulted from the acquisition of Botapol as well as changes in sales mix, including growth in the sales of imported products. Gross margins on products produced by the Company are higher than gross margins on products supplied by third-party producers.

Operating Expenses

Operating expenses consist of selling, general, administrative, and advertising expenses (“S,G&A”), non-production depreciation and amortization, and bad debt provision. Total operating expenses increased by approximately 37.8%, or $12.2 million, from $32.3 million for the nine months ended September 30, 2004 to $44.5 million for the nine months ended September 30, 2005. Approximately $6.9 million of this increase resulted primarily from the effects of the acquisitions in 2004 and 2005 and the remainder of the increase resulted primarily from the growth of the business. The table below sets forth the items of operating expenses.

Nine Months Ended September 30,	2005		2004
	($ in thousands)
S,G&A	$	40,746	$	29,523
Depreciation and amortization		3,079		2,302
Bad debt provision		668		474
	$	44,493	$	32,299

19

S,G&A consists of salaries, warehousing and transportation costs and administrative and advertising expenses. S,G&A increased by approximately 38.0%, or $11.2 million, from $29.5 million for the nine months ended September 30, 2004 to $40.7 million for the nine months ended September 30, 2005. Approximately $6.7 million of this increase resulted primarily from the effects of the acquisitions in 2004 and 2005 and the remainder of the increase resulted primarily from the growth of the business. As a percent of sales, S,G&A has increased from 7.6% of net sales in the nine months ended September 30, 2004 to 8.1% of net sales in the nine months ended September 30, 2005 primarily due to the acquisition of Botapol as production companies run a higher S,G&A as a percent of sales than distribution companies.

Depreciation and amortization increased by approximately 34.8%, or $0.8 million, from $2.3 million for the nine months ended September 30, 2004 to $3.1 million for the nine months ended September 30, 2005. This increase resulted primarily from the effect of acquisitions. The increase also reflected our continued investment in information technology systems upgrades and normal vehicle rotation.

Bad debt expense remained stable at approximately 0.1% of net sales.

Operating Income

Total operating income increased by approximately 42.8%, or $7.0 million, from $16.4 million for the nine months ended September 30, 2004 to $23.4 million for the nine months ended September 30, 2005. Operating margin increased from 4.2% of net sales for the nine months ended September 30, 2004 to 4.7% of net sales for the nine months ended September 30, 2005. The increase in operating margin is due primarily to the higher gross profit margin as described above.

Interest and Other Financial Expenses

Total interest expense increased by approximately 442.9%, or $6.2 million, from $1.4 million for the nine months ended September 30, 2004 to $7.6 million for the nine months ended September 30, 2005. This increase resulted primarily from interest and amortization of financial cost of €325 million of Senior Secured Notes issued in July 2005 to finance the Botapol and Polmos Bialystok acquisitions (see Note 5 and Note 10 to the Consolidated Financial Statements). In addition the Company had additional short-term borrowings used to finance the deposit payment in connection with the Polmos Bialystok acquisition as well as pre-fund interest and penalty into the escrow account as required by the terms of the Notes (see Note 10 to the Consolidated Financial Statements).

Interest expense on the notes began to accrue as of July 25, 2005 although the proceeds were not used until August 2005, for the Botapol closing, and October 2005, for the Polmos Bialystok closing. The timings of the acquisition closings were impacted by delays in the receipt of approval of the acquisitions from the Polish anti-monopoly office.

Other financial expenses relate primarily to the impact of movements in exchange rates and the cost of hedges. For the nine months ended September 30, 2005, these costs include $1.6 million of exchange rate losses incurred during the closing of the Botapol acquisition. In expectation of volatility in exchange rates associated with the Presidential and Parliamentary elections in Poland during the later half of September and early October 2005, the Company purchased options to hedge valuation movements in the cash held in escrow and notes payable. For the nine months ended September 30, 2005 the Company recognized a net cost of $4.7 million, relating to costs of the hedges and revaluation of acquisition related financing.

Results of Operations:

Third Quarter Fiscal 2005 Compared to Third Quarter Fiscal 2004

A summary of the Company’s operating performance (expressed in thousands except per share amounts) is presented below.

	Three Months Ended
	September 30, 2005 (unaudited)		September 30, 2004 (unaudited)
Gross Sales	$	197,688	$	145,831
Excise taxes		10,160		—
Net Sales		187,528		145,831
Cost of goods sold		160,186		127,525
Gross Profit		27,342		18,306

20

	Three Months Ended
	September 30, 2005 (unaudited)			September 30, 2004 (unaudited)
Selling, general and administrative expenses		17,807			11,676
Bad debt provision		319			223
Operating Income		9,216			6,407
Non operating income/(expense)
Interest income/(expense), net		(6,219	)		(519	)
Other financial income/(expense), net		(5,331	)		226
Other income/(expense), net		(163	)		22
Income before taxes		(2,497	)		6,136
Income tax expense / (benefit)		(474	)		1,040
Net income	$	(2,023	)	$	5,096
Net income per share of common stock, basic	$	(0.11	)	$	0.31
Net income per share of common stock, diluted	$	(0.11	)	$	0.31

Net Sales

Net sales represent total sales net of all customer rebates, excise tax and value added tax. Total net sales increased by approximately 28.6%, or $41.7 million, from $145.8 million in the three months ended September 30, 2004 to $187.5 million in the three months ended September 30, 2005.

This increase in sales is split as follows:

Net sales for the three months ended September 30, 2004	$	145,831
Increase from acquisitions		26,232
Existing business sales growth		15,465
Net sales for the three months ended September 30, 2005	$	187,528

The sales growth is driven by the following:

• Acquisitions of distributors and Botapol which provided an additional $26.2 of sales for the three months ended September 30, 2005.

• Increased sales of imported products. Growth of imports increased by approximately 11.3%, or $0.8 million, from $7.1 million for the three months ended September 30, 2004 to $7.9 million for the three months ended September 30, 2005. This increase resulted primarily from the continuation of the consumption trends that began with the elimination of customs duties following Poland’s accession to the European Union on May 1, 2004. The elimination of customs duties made imported products more affordable and began a consumer trend of increased consumption of imported products.

• Increases in sales from existing outlets and sales from new outlets.

• The strength of the Polish Zloty versus the U.S. Dollar in the three months ended September 30, 2005 as compared to the strength of the Polish Zloty versus the U.S. Dollar in the three months ended September 30, 2004. Based upon average exchange rates for the three months ended September 30, 2005 and 2004, the Polish Zloty appreciated by approximately 8%.

Sales of high margin import products is one of the key strategies of the Company. Sales of exclusive imported beers, spirits and wines for the three months ended September 30, 2004 and 2005 are highlighted below on a pro forma basis. This table includes the sales of imports from the Bols Poland business for the full three months ended September 30, 2004 and 2005, on a pro-forma basis and is intended to provide and indication of the growth of imports including the Botapol acquisition. The below numbers do not reflect the actual change in sales of CEDC imports as reported for the three months ending September 30, 2004 and 2005.

21

Three months ended to September 30, (Sales in $000’s)	2005	2004	%
Imported Beers	1,309	1,592	(17.8	)
Imported Spirits	5,527	4,487	23.2
Imported Wines	6,253	5,228	19.6
Total Imported Product	13,089	11,307	15.8

Gross Profit

Total gross profit increased by approximately 49.2%, or $9.0 million, from $18.3 million in the three months ended September 30, 2004 to $27.3 million in the three months ended September 30, 2005, primarily due to the effect of the acquisitions of Botapol and sales growth. Gross margin increased from 12.6% of net sales in the three months ended September 30, 2004 to 14.6% of net sales in the three months ended September 30, 2005. This increase in gross margin resulted from the acquisition of Botapol as well as changes in sales mix, including growth in the sales of imported products. Gross margins on products produced by the Company are higher than gross margins on products sold from third party producers.

Operating Expenses

Operating expenses consist of S,G&A, non-production depreciation and amortization and bad debt provision. Total operating expenses increased by approximately 52.1%, or $6.2 million, from $11.9 million in the three months ended September 30, 2004 to $18.1 million in the three months ended September 30, 2005. Approximately $4.8 million of this increase resulted primarily from the effects of the acquisitions in 2004 and 2005 and the remainder of the increase resulted primarily from the growth of the business.

Three Months Ended September 30,	2005		2004
	($ in thousands)
S,G&A	$	16,712	$	10,821
Depreciation and amortization		1,095		855
Bad debt provision		319		223
	$	18,126	$	11,899

S,G&A increased by approximately 54.6%, or $5.9 million, from $10.8 million in the three months ended September 30, 2004 to $16.7 million in the three months ended September 30, 2005. Approximately $4.6 million of this increase resulted primarily from the effects of the acquisitions in 2004 and 2005 and the remainder of the increase resulted primarily from the growth of the business. As a percent of sales, S,G&A has increased from 7.4% of net sales in the three months ended September 30, 2004 to 8.9% of net sales in the three months ended September 30, 2005 primarily due to the acquisition of Botapol, as production companies run a higher S,G&A as a percent of sales than distribution companies.

Depreciation and amortization increased by approximately 22.2%, or $0.2 million, from $0.9 million in the three months ended September 30, 2004 to $1.1 million in the three months ended September 30, 2005. This increase resulted primarily from the effect of acquisitions. The increase also reflected our continued investment in information technology systems upgrades and normal vehicle rotation.

Bad debt expense remained stable at approximately 0.17% of net sales.

Operating Income

Total operating income increased by approximately 43.7%, or $2.8 million, from $6.4 million in the three months ended September 30, 2004 to $9.2 million in the three months ended September 30, 2005. Operating margin increased from 4.4% of net sales for the three months ended September 30, 2004 to 4.9% of net sales for the three months ended September 30, 2005. The increase in operating margin is due primarily to the higher gross profit margin as described above.

22

Interest and Other Financial Expenses

Total interest expense increased by approximately 1140.0%, or $5.7 million, from $0.5 million in the three months ended September 30, 2004 to $6.2 million in the three months ended September 30, 2005. This increase resulted primarily from interest and amortization of financial cost of the Notes (see Note 5 and Note 10 to the Consolidated Financial Statements). In addition the Company had additional short term borrowings used to finance the deposit payment in connection with the Polmos Bialystok acquisition as well as pre-fund interest and penalty into the escrow account as required by the terms of the Notes (see Note 10 to the Consolidated Financial Statements).

Interest expense on the notes began to accrue as of July 25, 2005 although the proceeds were not used until August 2005, for the Botapol closing and October 2005, for the Polmos Bialystok closing. The timing of the closings of each of the acquisitions was impacted by delays in the receipt of approval of the acquisitions from the Polish anti-monopoly office.

Other financial expenses relate primarily to the impact of movements in exchange rates and the cost of hedges. For the three months ended September 30, 2005, these costs include $1.6 million of exchange rate losses incurred during the closing of the Botapol acquisition. In expectation of volatility in exchange rates associated with the Presidential and Parliamentary elections in Poland during the later half of September and early October 2005, the Company purchased options to hedge valuation movements in the cash held in escrow and notes payable. For the three months ended September 30, 2005, the Company recognized a net cost of $4.7 million, relating to costs of the hedges and revaluation of acquisition related financing.

Statement of Liquidity and Capital Resources

During the periods under review, the Company’s primary sources of liquidity were cash flows generated from operations, credit facilities, the issuance of the Notes and proceeds from options exercised. The Company’s primary uses of cash were to fund its working capital requirements, service indebtedness, finance capital expenditures and fund acquisitions. The following table sets forth selected information concerning the Company’s consolidated cash flow during the periods indicated.

	Nine Months Ended September 30, 2005		Nine Months Ended September 30, 2004
	($ in thousands)
Cash flow from operating activities	23,202		16,097
Cash flow from investing activities	(410,163	)	(5,340	)
Cash flow from financing activities	397,731		(7,099	)

Net cash flow from operating activities

Net cash provided by operating activities for the nine months ended September 30, 2005 was $23.2 million as compared to $16.1 million for the nine months ended September 30, 2004. The primary drivers for the increase were overall business growth and extension of payment terms through improved supplier management. Working capital movements contributed $19.7 million of cash inflows for the nine months ended September 30, 2005 as compared to $0.8 million of cash inflows for the nine months ended September 30, 2004. Included in the working capital movements for the nine months ended September 30, 2005 is $15.2 million of cash inflows from other accrued liabilities and assets. These amounts include accruals for non-cash expenses, primarily interest on the Notes and the mark to market on the Company’s coupon swap hedge.

Net cash flow from investing activities

Net cash used by investing activities for the nine months ended September 30, 2005 was $410.2 million as compared to $5.3 million for the nine months ended September 30, 2004. The primary drivers for the increase were the Botapol acquisition that took place in August 2005 for $147.9 million an increase in restricted cash related to funds in escrow of $229.6 million and deposit paid for the Polmos Bialystok acquisition of $30 million. Moreover, during the nine months ended September 30, 2004, the Company sold old or obsolete fixed assets from the acquired subsidiaries generating $2.0 million in cash inflows. Amounts spent on acquisitions during the nine months ended September 30, 2004 was $1.4 million.

23

Net cash flow from financing activities

Net cash provided by financing activities was $397.7 million for the nine months ended September 30, 2005 as compared to $7.1 million in cash used in financing activities for the nine months ended September 30, 2004. The cash inflow from financing activities during the nine months ended September 30, 2005 resulted primarily from the issuance of the Notes, which the Company closed at the end of July 2005.

The Company’s Future Liquidity and Capital Resources

The Company’s primary uses of cash in the future will be to fund its working capital requirements, service indebtedness, finance capital expenditures and fund acquisitions. The Company expects to fund these requirements in the future with cash flows from its operating activities, cash on hand, and the financing arrangements described below.

Financing Arrangements

Existing Credit Facilities

As at September 30, 2005, the Company had total debt outstanding under existing credit facilities in the Polish Zloty equivalent of approximately $52.0 million. The credit facilities are available at the subsidiary level and not at the parent company level for working capital purposes only. In order to fund working capital and other liquidity requirements, the Company also has available non-committed credit lines with various banks and credit institutions. As of September 30, 2005, the amount of available, unutilized and uncommitted credit facilities was the Polish Zloty equivalent of approximately $54.9 million. These existing credit facilities are subject to renewal on an annual basis.

Notes

On July 25, 2005 the Company completed the issuance of €325 million 8% Senior Secured Notes due 2012. The Indenture governing the Notes contains certain restrictive covenants, including covenants restricting the Company’s ability to: make certain payments, including dividends or other distributions, with respect to the share capital of the parent or its subsidiaries; incur or guarantee additional indebtedness or issue preferred stock; make certain investments; prepay or redeem subordinated debt or equity; create certain liens or enter into sale and leaseback transactions; engage in certain transactions with affiliates; sell assets or consolidate or merge with or into other companies; issue or sell share capital of certain subsidiaries; and enter into other lines of business.

Equity Offering

On October 7, 2005, the Company closed the private placement of 3,360,000 shares of its common stock at $34.69 per share, for gross proceeds of approximately $116,558,400. The per-share price represents a 7% discount to the trailing 15-day closing average share price. The closing of the private placement was subject to the completion of the Company’s acquisition of 61% of the outstanding shares of Polmos Bialystok S.A., the second largest vodka producer in Poland from the Polish Treasury. The shares of Company common stock which were issued in the private placement are subject to customary registration rights granted to the investors for the resale of the shares.

We currently believe that the Company’s operating cash flow and available cash, together with the financing arrangements described above, will be sufficient to fund our working capital needs, anticipated capital expenditure and debt service requirements for at least the next several years.

STATEMENT ON INFLATION AND FOREIGN CURRENCY MOVEMENTS

Inflation in Poland is projected at 2.1% for 2005, compared to actual inflation of 3.5% in 2004. For the nine months ended September 30, 2005, the yearly inflation was 2.5%.

The Company’s operating cash flows and substantially all of its assets are denominated in Polish Zloty. This means that the Company is exposed to translation risk both on its balance sheet and income statement. The impact on working capital items is demonstrated on the cash flow statement as the movement in exchange on cash and cash equivalents. The impact on the income statement is by the movement of the average exchange rate used to restate the income statement from Polish Zloty to U.S. Dollars. The amounts shown as exchange rate gains or losses on the face of the income statement relate only to realized gains or losses on non-Polish Zloty denominated transactions.

As a result of the issuance of the Notes, dominated in Euro, the Company is exposed to foreign exchange risk. Movements in the Euro-Polish Zloty exchange rate will require the Company to revalue its liability on the Notes accordingly, the impact

24

of which will be reflected in the results of its operations. In order to manage the cash flow impact of foreign exchange changes, the Company has entered into a coupon swap. As of September 30, 2005, the Company had outstanding a seven year interest rate swap agreement. The swap agreements exchanged a fixed Euro based coupon of 8%, with a variable Polish Zloty coupon. The coupon amount is a function of the six month Warsaw inter-bank rate (WIBOR) applied to a notional amount of 1,274.4 million PLN. As a result of this, movements in the underlying WIBOR rates will impact the results of the Company’s operations.

During the nine months ended September 30, 2005, the exchange rate for the Polish Zloty versus the U.S. Dollar weakened from 2.99 to 3.26, or 9.0%.

Critical Accounting Policies and Estimates

General

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of net sales, expenses, assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions.

Provisions for Doubtful Debts

The Company makes general provision for doubtful debt based on the aging of its trade receivables. Where circumstances require, the Company will make specific provision for any excess not provided for under the general provision.

Inventory

Because of the nature of the products supplied by the Company great attention is paid to inventory rotation. Where goods are estimated to be obsolete or unmarketable they are written down to a value reflecting the saleable value in their relevant condition.

Goodwill and Intangibles

Following the introduction of SFAS 142, acquired goodwill is no longer amortized. Instead the Company assesses the recoverability of its goodwill at least once a year or whenever adverse events or changes in circumstances or business climate indicate that expected future cash flows (undiscounted and without interest charges) for individual business units may not be sufficient to support the recorded goodwill. If undiscounted cash flows are not sufficient to support the goodwill, an impairment charge would be recognized to reduce the carrying value of the goodwill based on the expected discounted cash flows of the business unit. No such charge has been considered necessary through the date of the accompanying financial statements. Intangibles are amortized over their effective useful life.

The calculation of the impairment charge for goodwill requires use of estimates. Factoring in a deviation of 10% for estimated gross profit of the acquired entities, or the discount rate as compared to management’s estimate, there would still be no need for an impairment charge of goodwill.

Purchase Price Allocation

We account for our acquisitions under the purchase method of accounting in accordance with SFAS 141, Business Combinations, and allocate the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The determination of the values of the assets acquired and liabilities assumed, as well as associated asset useful lives, requires management to make estimates.

The calculation of purchase price allocation requires judgment on the part of management in determining the valuation of the assets acquired and liabilities assumed.

Derivative Instruments

The Company is exposed to market risk from changes in foreign currency exchange rates that could affect the Company’s results of operations and financial condition. In accordance with SFAS 133, Accounting for Derivative Instruments and Hedging Activities, the Company recognizes all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value.

25

The fair values of the Company’s derivative instruments can change with fluctuations in interest rates and/or currency rates and are expected to offset changes in the values of the underlying exposures. The Company’s derivative instruments are held to hedge economic exposures. The Company follows internal policies to manage interest rate and foreign currency risks, including limitations on derivative market-making or other speculative activities.

Recently Issued Accounting Pronouncements

In December 2004, FASB issued SFAS 123(R), Share Based Payments, a revision of the prior SFAS Statement No. 123, Accounting for Stock Based Compensation. This statement requires companies to expense the fair value of employee stock options and other forms of stock-based compensation. The statement offers a number of possibilities for implementation. The SEC has provided an extension to allow implementation during the first quarter of 2006. The Company has elected to implement the modified prospective application, which will require the Company to begin to recognize the impact of the change in January 2006 and will not require restatement of any prior periods. The potential impact during 2006 is approximately $850,000, based upon current market conditions. Management is still in process of evaluating what forms of compensation may be introduced in future periods in lieu of the existing option program.

In May 2005, FASB issued SFAS 154, “Accounting Changes and Error Corrections” which replaces Accounting Principles Board Opinion No. 20, “Accounting Changes” and SFAS 3, “Reporting Accounting Changes in Interim Financial Statements.” SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application, or the latest practicable date, as the required method for reporting a change in accounting principle and the reporting of a correction of an error. SFAS 154 is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005 and, accordingly, is required to be adopted by the Company on January 1, 2006. The Company does not expect that the adoption of SFAS 154 will have a material impact on its consolidated results of operations and financial position.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s operations are conducted primarily in Poland and its functional currency is the Polish Zloty and the reporting currency is the U.S. Dollar. The Company’s financial instruments consist mainly of cash and cash equivalents, accounts receivable, accounts payable, inventories, bank loans, overdraft facilities and long-term debt. All of the monetary assets represented by these financial instruments are located in Poland. Consequently, they are subject to currency translation risk when reporting in U.S. Dollars.

If the U.S. Dollar increases in value against the Polish Zloty, the value in U.S. Dollars of assets, liabilities, revenues and expenses originally recorded in Polish Zloty will decrease. Conversely, if the U.S. Dollar decreases in value against the Polish Zloty, the value in U.S. dollars of assets, liabilities, revenues and expenses originally recorded in Polish Zloty will increase. Thus, increases and decreases in the value of the U.S. Dollar can have an impact on the value in U.S. Dollars of the Company’s non-U.S. Dollar assets, liabilities, revenues and expenses, even if the value of these items has not changed in their original currency.

The Company’s commercial foreign exchange exposure mainly arises from the purchase of imported alcoholic beverages in currencies other than the Company’s functional currency of the Polish Zloty. Thus, accounts payable for imported beverages are billed in various currencies and the Company is subject to short-term changes in the currency markets for product purchases. The Company also operates a bonded warehouse where the inventory acquired from foreign suppliers is recorded in its source currency. Therefore, any currency movement on trade payables resulting from either a strengthening or weakening of the Polish Zloty against a foreign supplier’s currency is often compensated for by an opposite movement relating to inventories recorded in the imported currency. Because substantially all of the Company’s operations are conducted in Poland using the local currency, the impact of fluctuations in the exchange rate of the Zloty versus the U.S. Dollar on transactions using a currency different from the Zloty has been minimal.

As a result of the issuance of the Notes, denominated in Euro, the Company is exposed to foreign exchange risk. Movements in the Euro-Polish Zloty exchange rate will require the Company to revalue its liability on the Notes accordingly, the impact of which will be reflected in the results of the Company’s operations. In order to manage the cash flow impact of foreign exchange changes, the Company has entered into a coupon swap. As of September 30, 2005, the Company had outstanding a seven year interest rate swap agreement. The swap agreement exchanged a fixed Euro based coupon of 8%, with a variable Polish Zloty coupon. The coupon amount is a function of the six month Warsaw inter-bank rate (WIBOR) applied to a notional amount of 1,274.4 million Polish Zloty. As a result, movements in the underlying WIBOR rates will impact the results of the Company’s operations, such that an increase or decrease in WIBOR will result in higher or lower interest expenses, respectively.

26

The Company’s working capital facilities and the coupon swap have variable interest rates based WIBOR. As such, the Company is exposed to interest rate fluctuations based upon movements of WIBOR, such that an increase or decrease in WIBOR will result in higher or lower interest expenses, respectively.

The Company does not have any financial instruments held for trading purposes.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Internal Controls. The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934. These rules refer to the controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 (such as this quarterly report), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Internal controls over financial reporting refer to a process that is designed to provide reasonable assurance that the Company’s transactions are properly authorized, recorded and reported and that the Company’s assets are safeguarded from improper use to permit the preparation of the Company’s financial statements in conformity with generally accepted accounting principles.

Limitations on the Effectiveness of Controls. The Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Further, the design of any control system is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Accordingly, the Company’s disclosure controls and procedures are designed to provide reasonable assurance that the controls and procedures will meet their objectives.

Changes to Internal Controls. In accordance with the SEC’s requirements, the Chief Executive Officer and Chief Financial Officer note that, during the most recent fiscal quarter, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

Conclusions regarding Disclosure Controls. Based upon the required evaluation of the Company’s disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective at the reasonable assurance level as of the end of the period covered by this report.

PART II. OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Pursuant to an agreement dated August 16, 2005, the Company issued 12,480 shares of Company common stock, valued at $463,632, to T. Walkuski as partial consideration for the acquisition of 100% of the outstanding capital stock of Imperial Sp. z o.o. The shares were delivered by the Company on September 24, 2005. These shares were issued pursuant to the exemption from registration provided by Regulation S under the Securities Act. The securities were issued in off-shore private placements in reliance on Regulation S to entities which are not “United States persons” as defined by Regulation S. The stock certificates for all such securities bear a legend indicating that the stock is restricted and may not be sold in the United States without registration or an exemption from such requirements. Further, the shares of Company common stock are subject to a one-year lock-up period.

Pursuant to an agreement dated June 27, 2005, the Company issued 3,382,838 shares of Company common stock, valued at $122.5 million, to Botapol Holding B. V. and Takirra Investment Corporation N.V. as partial consideration for the acquisition of 100% of the outstanding capital stock of Botapol Holding B.V. The shares were delivered by the Company on August 17, 2005. These shares were issued pursuant to the exemption from registration provided by Regulation S under the Securities Act. The securities were issued in off-shore private placements in reliance on Regulation S to entities which are not “United States persons” as defined by Regulation S. The stock certificates for all such securities bear a legend indicating that the stock is restricted and may not be sold in the United States without registration or an exemption from such requirements. Further, the shares of Company common stock issued in the acquisition are subject to a one-year lock-up period.

27

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

Exhibit number	Exhibit description
2.11*	Conditional Share Sale Agreement for Imperial Sp. z o.o. dated August 16, 2005 by and among Carey Agri International Poland Sp. z o.o., Central European Distribution Corporation, and Tadeusz Walkuski.
2.12	Share Sale Agreement, dated June 27, 2005, by and among Rémy Cointreau S.A., Botapol Management B.V., Takirra Investment Corporation N.B., Central European Distribution Corporation and Carey Agri International Poland Sp. z o.o. (filed as Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on July 1, 2005 and incorporated herein by reference).
2.13	Share Purchase Agreement, dated July 11, 2005, by and among the State Treasury of the Republic of Poland, Carey Agri International-Poland Sp. z o.o. and Central European Distribution Corporation (filed as Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on July 15, 2005 and incorporated herein by reference).
3.1	Certificate of Incorporation of Central European Distribution Corporation (filed as Exhibit 3.1 to the Registration Statement on Form SB-2 filed with the SEC on December 16, 1997 and incorporated herein by reference).
3.2	Certificate of Amendment of Certificate of Incorporation of Central European Distribution Corporation (filed as Exhibit 3.1 to the Quarterly Report on Form 10-Q filed with the SEC on May 10, 2004 and incorporated herein by reference).
3.3	Amended and Restated Bylaws of Central European Distribution Corporation (filed as Exhibit 3.2 to the Annual Report on Form 10-K filed with the SEC on March 15, 2004 and incorporated herein by reference).
4.1	Indenture, dated July 25, 2005, by and among Central European Distribution Corporation, Carey Agri International-Poland Sp. z o.o., Onufry S.A., Multi-Ex S.A., Astor Sp. z o.o., Polskie Hurtownie Alkoholi Sp. z o.o., MTC Sp. z o.o., Przedsiebiorstwo Dystrybucji Alkoholi Agis S.A., Dako-Galant Przedsiebiorstwo Handlowo Produkcyjne Sp. z o.o., Damianex S.A., PWW Sp. z o.o. and Miro Sp. z o.o., as Guarantors, The Bank of New York, as Trustee, Principal Paying Agent, Registrar and Transfer Agent, and ING Bank N.V., London Branch, as Note Security Agent (filed as Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on July 25, 2005 and incorporated herein by reference).
4.2	First Supplemental Indenture, dated August 31, 2005, by and among Central European Distribution Corporation, as Issuer, Carey Agri International-Poland Sp. z o.o., Onufry S.A., Multi-Ex S.A., Astor Sp. z o.o., Polskie Hurtownie Alkoholi Sp. z o.o., MTC Sp. z o.o., Przedsiebiorstwo Dystrybucji Alkoholi Agis S.A., Dako-Galant Przedsiebiorstwo Handlowo Produkcyjne Sp. z o.o., Damianex S.A., PWW Sp. z o.o. and Miro Sp. z o.o., as Initial Guarantors, Botapol Holding B.V. and Bols Sp. z o.o., as Additional Guarantors, The Bank of New York, as Trustee, and ING Bank N.V., London Branch, as Note Security Agent (filed as Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on September 2, 2005 and incorporated herein by reference).
10.1*	Purchase Agreement dated as of August 3, 2005 by and among Central European Distribution Company and the investors signatory thereto.
10.2*	Registration Rights Agreement dated as of August 3, 2005 by and among Central European Distribution Corporation and the investors signatory thereto.
10.3	Registration Rights Agreement, dated August 17, 2005, by and among Central European Distribution Corporation, Botapol Management B.V. and Takirra Investment Corporation N.V. (filed as Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on August 23, 2005 and incorporated herein by reference).
10.4	Employment Agreement, dated August 10, 2005, by and between Central European Distribution Corporation and Richard Roberts (filed as Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on October 13, 2005 and incorporated herein by reference).
31.1*	Rule 13a-14(a) Certification of Chief Executive Officer of Central European Distribution Corporation in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Rule 13a-14(a) Certification of Chief Financial Officer of Central European Distribution Corporation in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Section 1350 Certification of Chief Executive Officer of Central European Distribution Corporation in accordance with Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Section 1350 Certification of Chief Financial Officer of Central European Distribution Corporation in accordance with Section 906 of the Sarbanes-Oxley Act of 2002.

*  Filed herewith

** Furnished herewith

28

SIGNATURES

Pursuant to the requirements 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.

	CENTRAL EUROPEAN DISTRIBUTION CORPORATION (registrant)
Date: November 9, 2005	By:	/s/ William V. Carey
		William V. Carey President and Chief Executive Officer
Date: November 9, 2005	By:	/s/ Chris Biedermann
		Chris Biedermann Vice President and Chief Financial Officer

Exhibit Index

Exhibit number	Exhibit description
2.11*	Conditional Share Sale Agreement for Imperial Sp. z o.o. dated August 16, 2005 by and among Carey Agri International Poland Sp. z o.o., Central European Distribution Corporation, and Tadeusz Walkuski.
2.12	Share Sale Agreement, dated June 27, 2005, by and among Rémy Cointreau S.A., Botapol Management B.V., Takirra Investment Corporation N.B., Central European Distribution Corporation and Carey Agri International Poland Sp. z o.o. (filed as Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on July 1, 2005 and incorporated herein by reference).
2.13	Share Purchase Agreement, dated July 11, 2005, by and among the State Treasury of the Republic of Poland, Carey Agri International-Poland Sp. z o.o. and Central European Distribution Corporation (filed as Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on July 15, 2005 and incorporated herein by reference).
3.1	Certificate of Incorporation of Central European Distribution Corporation (filed as Exhibit 3.1 to the Registration Statement on Form SB-2 filed with the SEC on December 16, 1997 and incorporated herein by reference).
3.2	Certificate of Amendment of Certificate of Incorporation of Central European Distribution Corporation (filed as Exhibit 3.1 to the Quarterly Report on Form 10-Q filed with the SEC on May 10, 2004 and incorporated herein by reference).
3.3	Amended and Restated Bylaws of Central European Distribution Corporation (filed as Exhibit 3.2 to the Annual Report on Form 10-K filed with the SEC on March 15, 2004 and incorporated herein by reference).
4.1	Indenture, dated July 25, 2005, by and among Central European Distribution Corporation, Carey Agri International-Poland Sp. z o.o., Onufry S.A., Multi-Ex S.A., Astor Sp. z o.o., Polskie Hurtownie Alkoholi Sp. z o.o., MTC Sp. z o.o., Przedsiebiorstwo Dystrybucji Alkoholi Agis S.A., Dako-Galant Przedsiebiorstwo Handlowo Produkcyjne

29

	Sp. z o.o., Damianex S.A., PWW Sp. z o.o. and Miro Sp. z o.o., as Guarantors, The Bank of New York, as Trustee, Principal Paying Agent, Registrar and Transfer Agent, and ING Bank N.V., London Branch, as Note Security Agent (filed as Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on July 25, 2005 and incorporated herein by reference).
4.2	First Supplemental Indenture, dated August 31, 2005, by and among Central European Distribution Corporation, as Issuer, Carey Agri International-Poland Sp. z o.o., Onufry S.A., Multi-Ex S.A., Astor Sp. z o.o., Polskie Hurtownie Alkoholi Sp. z o.o., MTC Sp. z o.o., Przedsiebiorstwo Dystrybucji Alkoholi Agis S.A., Dako-Galant Przedsiebiorstwo Handlowo Produkcyjne Sp. z o.o., Damianex S.A., PWW Sp. z o.o. and Miro Sp. z o.o., as Initial Guarantors, Botapol Holding B.V. and Bols Sp. z o.o., as Additional Guarantors, The Bank of New York, as Trustee, and ING Bank N.V., London Branch, as Note Security Agent (filed as Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on September 2, 2005 and incorporated herein by reference).
10.1*	Purchase Agreement dated as of August 3, 2005 by and among Central European Distribution Company and the investors signatory thereto.
10.2*	Registration Rights Agreement dated as of August 3, 2005 by and among Central European Distribution Corporation and the investors signatory thereto.
10.3	Registration Rights Agreement, dated August 17, 2005, by and among Central European Distribution Corporation, Botapol Management B.V. and Takirra Investment Corporation N.V. (filed as Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on August 23, 2005 and incorporated herein by reference).
10.4	Employment Agreement, dated August 10, 2005, by and between Central European Distribution Corporation and Richard Roberts (filed as Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on October 13, 2005 and incorporated herein by reference).
31.1*	Rule 13a-14(a) Certification of Chief Executive Officer of Central European Distribution Corporation in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Rule 13a-14(a) Certification of Chief Financial Officer of Central European Distribution Corporation in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Section 1350 Certification of Chief Executive Officer of Central European Distribution Corporation in accordance with Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Section 1350 Certification of Chief Financial Officer of Central European Distribution Corporation in accordance with Section 906 of the Sarbanes-Oxley Act of 2002.

*  Filed herewith

** Furnished herewith

30

EX-2.11

Exhibit 2.11

Warsaw, 16 August 2005

SHARE SALE AGREEMENT

entered into by and between

Carey Agri International Poland Sp. z o.o.,

and

Central European Distribution Corporation

and

Tadeusz Wałkuski

Umowa sprzedazy udziałów - Imperial 16/08/2005

SHARE SALE AGREEMENT

This share sale agreement (hereinafter the “Agreement”) was entered into by and between:

Carey Agri International Poland Sp. z o.o., with registered office at ul. Bokserska 66A, 02-690 Warszawa, Poland, KRS No. 0000051098, represented by William V. Carey, (hereinafter referred to as “Carey Agri”),

Central European Distribution Corporation, with registered office at 2 Bala Plaza, Suite 300, Bala Cynwyd PA 19004, USA,, represented by William V. Carey, (hereinafter referred to as “CEDC”),

hereinafter jointly referred to as the “Purchasers”,

and

Tadeusz Wałkuski, residing at ul. Por. łagody 8/4, 18-400 łomza, hereinafter referred to as the “Seller”.

(Documents certifying the Purchasers’ authorisation to enter into the Agreement are attached hereto as Appendix 1).

GENERAL PROVISIONS

A. The Seller, as shareholder, holds in aggregate 120 (one hundred twenty) shares in “Imperial” Sp. z o.o., with registered office in Łomza, ul. Nowogrodzka 151A, zip code 18-400, entered in the register of entrepreneurs of the Polish Business Register maintained by the District Court in Białystok, 12th Commercial Department of the Polish Business Register, under number KRS 0000232064 (hereinafter referred to as the “Company”).

B. The Seller agrees to sell, and the Purchasers agrees to purchase, 120 shares in the Company owned by Seller, representing 100% of the Company’s share capital, on the terms and conditions set forth herein.

1. DEFINITIONS

Unless the context requires otherwise, the following capitalised terms and expressions used herein shall have the following meaning:

“Parties” - means the Seller and the Purchasers;

2

Umowa sprzedazy udziałów - Imperial 16/08/2005

“Shares”	- means the shares in the Company, i.e., unless the Agreement provides otherwise, 120 (one hundred twenty) shares in the Company, each of the nominal value of PLN 500.00 (five hundred).
“Price”	- means the total remuneration for the sold Shares in the Company, as set forth in Item 3.1 hereof, expressed in Polish zlotys and in CEDC Shares;
“CEDC Shares”	- means the shares in Central European Distribution Corporation, a corporation listed at NASDAQ in the United States of America, whose number and value have been set forth in Items 3.3 and 3.4 hereof;
“CEDC Share Certificates”	- means registered depositary certificates for CEDC Shares;
“Imperial Enterprise”	- means business enterprise run by Mr. Tadeusz Wałkuski as part of his business activity; and
“Transaction Date”	- means the date on which this Share Sale Agreement is signed.

2. SALE AND PURCHASE

2.1 The Seller hereby sells the Shares to the Purchasers, and the Purchasers hereby purchase the Shares from the Seller as follows:

2.1.1 Carey Agri hereby purchases 95 (ninety-five) Shares; and

2.1.2 CEDC hereby purchases 25 (twenty-five) Shares.

2.2 The Shares sold to the Purchasers shall be sold with any and all underlying rights, free and clear of any pledges, encumbrances, liabilities or rights of third parties.

3. PRICE FOR THE SHARES

3.1 The total price for all Shares shall amount to PLN 7,092,924.76. (seven million ninety-two thousand nine hundred twenty-four and 76/100). The Price for the Shares shall be paid in accordance with the principles set forth herein as illustrated in the Table below:

Payer – form of payment	Total
Number of Shares	120
Carey Agri - cash	5,592,924.76 PLN
CEDC - shares	1,500,000.00 PLN
Total	7,092,924.76 PLN

3.2 Carey Agri shall pay for the purchased Shares referred to in Item 2.1.1 the amount of PLN 5,592,924,76 (five million five hundred ninety-two thousand nine

3

Umowa sprzedazy udziałów - Imperial 16/08/2005

hundred twenty-four and 76/100). This amount shall be transferred within one business day of the Transaction Date, to the following bank account of the Seller in: BPH bank, Łomza, Account No.: 4410 6000 7600 0040 1340 0129 08

3.3 Carey Agri undertakes to provide the Seller, within 2 days of the Transaction Date, with a copy of “transfer confirmation” certified by the bank, which shall be the evidence of making the payment for the Shares referred to in Item 2.1.1.

3.4 The payment for the Shares purchased by CEDC, in the amount of PLN 1,500,000 (one million five hundred thousand), shall be made in the form of 12 480 CEDC Shares whose number has been calculated according to the following principles:

3.4.1 The number of CEDC Shares to be transferred to the Seller has been calculated on the basis of the average closing rate per CEDC Share from 60 days preceding the Transaction Date (i.e., USD 37.15), translated into PLN according to the average exchange rate of USD against PLN published by the National Bank of Poland on the day directly preceding the Transaction Date - 12 August 2005 i.e.,. PLN 3.2353). The above calculation gave the number of 12,480 (twelve thousand four hundred eighty) CEDC Shares.

3.4.2 Within 30 days of the Transaction Date, 12,480 CEDC Shares shall be issued, and CEDC Share Certificates representing the shares shall be released to the Seller.

3.5 CEDC Share Certificates issued for the Seller’s name shall bear a clause on a 12-month prohibition of disposal.

4. TRANSACTION DATE

On the date of signature of the Agreement, i.e., the Transaction Date, the Parties shall undertake the following steps:

4.1 The Extraordinary Shareholders’ Meeting of the Company shall appoint a new Management Board composed of:

4.1.1 Tadeusz Wałkuski – President of the Management Board

4.1.2 Wanda Wałkuska - Vice President of the Management Board

4.1.3 Evangelos Evangelou – Member of the Management Board

4.1.4 William V. Carey – Member of the Management Board

4.1.5 Christopher Franz Biedermann - Member of the Management Board.

4.2 The Purchasers shall enter into employment contracts with Mr. Tadeusz Wałkuski (in the form attached as Appendix 2) and Mrs. Wanda Wałkuska (in the form attached as Appendix 3).

4.3 The Seller shall provide the Purchasers with:

4.3.1 consent of his spouse to the sale of Shares to the Purchasers, with signature certified by a notary (hereinafter the “Consent of Spouse”). The Consent of Spouse has been attached as Appendix 4;

4

Umowa sprzedazy udziałów - Imperial 16/08/2005

4.3.2 certificates issued by a competent Tax Office and Social Security Office (ZUS) according to which the Company is not in arrears with payment of any taxes or social security premiums. The above certificates have been attached as Appendix 5 hereto;

4.4 Having completed all the steps specified in Items 4.1.- 4.3, Carey Agri shall pay the Seller, by wire transfer, the cash portion of the Price referred to in Item 3.2. The above transfer shall be made in accordance with Items 3.1 and 3.2, to the respective bank account of the Seller.

5. STEPS TO BE TAKEN AFTER THE TRANSACTION DATE AND OTHER OBLIGATIONS

5.1 Within 30 days of the Transaction Date, CEDC shall provide the Seller with CEDC Share Certificates, in accordance with Item 3.4.2.

5.2 The Seller shall not use or engage in any business activity carried out under the name including the word “Imperial”. The necessary changes shall be introduced to the name of Imperial Enterprise by 31 December 2005, at the latest, subject that the Seller may use the name of Imperial Enterprise for the needs of court, enforcement, administrative and other proceedings initiated and not completed before the Transaction Date, as well as proceedings initiated after that date but connected with receivables and liabilities which arose before that date as a result of the Seller’s running Imperial Enterprise.

5.3 The Seller shall execute with the Company a lease agreement for the storage and office, which belong to Imperial Enterprise. The rent shall amount to PLN 10,000 net monthly, for the next 3 years. The text of the lease agreement constitutes Appendix 10.

5.4 The Seller shall not conduct any activity related to wholesale trade in alcohol beverages.

6. REPRESENTATIONS AND WARRANTIES OF THE SELLER

6.1 The Seller hereby represents and warrants to the Purchasers that any of the representations and warranties below is true, complete, accurate and fair:

6.1.1 The Company has been incorporated and validly operates under the laws of Poland. The current uniform text of the Company’s Articles of Association has been attached as Appendix 6.

6.1.2 The Company’s share capital amounts to PLN 60,000.00 (sixty thousand) and is divided into 120 (one hundred twenty) shares of the nominal value of PLN 500.00 (five hundred) each. Each Share gives the right to one vote at the Company’s Shareholders’ Meeting. A copy of the current share ledger signed by the Management Board has been attached as Appendix 7 hereto. The Shares have been duly issued and subscribed for by the Seller. The Shares have been paid up in full and are free and clear of any pledges, encumbrances, liabilities or rights of third parties;

6.1.3 On 14 August 2005, Imperial Enterprise entered into agreements on termination of employment contracts with its 53 employees. Based on these agreements, the employment contracts were terminated as of 14 August 2005;

5

Umowa sprzedazy udziałów - Imperial 16/08/2005

6.1.4 On 15 August 2005, the Company executed employment contracts with these employees, on the same terms and conditions as those in employment contracts referred to above, setting the work commencement date at 15 August 2005;

6.1.5 The employer has no outstanding obligations towards the employees referred to above, and in particular, the employees do not have any outstanding vacation leaves and have used proportional parts of their leaves for which they were eligible for seven months of 2005;

6.1.6 The Shares were not and are not co-owned. The Seller does not have and shall not have in future any claims against the Company in connection with the Shares or other assets of the Company, and has fulfilled any and all existing obligations towards the Company in connection with the Shares;

6.1.7 The Seller has been using the “IMPERIAL” verbal and graphic mark in the business activity of Imperial Enterprise;

6.1.8 On 16 August 2005, the Company purchased from Imperial Enterprise fixed assets and equipment listed in Appendix 8 hereto, for the net price of PLN 407,075.24 (four hundred seven thousand seventy-five and 24/100). The payment date was set at six months of the date on which the invoice is issued;

6.1.9 On 16 August 2005, the Company purchased from Imperial Enterprise its fully valuable inventory listed in Appendix 9 for PLN 1,297,837. The payment date for the purchased goods shall be as follows:

• 1/3 of the transaction value shall be paid by the Company within 30 days of the invoice date;

• 1/3 of the transaction value shall be paid by the Company within 60 days of the invoice date; and

• 1/3 of the transaction value shall be paid by the Company within 90 days of the invoice date;

6.1.10 The Company’s Shareholders’ Meeting has consented to the sale of the Shares;

6.1.11 The sale of the Shares to the Purchasers shall not constitute basis for any third party to terminate or amend any contracts to which the Company is a party. As at the date of signature hereof, the Seller is not aware of any intention of the Company’s suppliers or clients to cease co-operation with the Company;

6.1.12 The Seller is duly authorised to enter into the Agreement and to execute the transaction contemplated hereby. The performance of this Agreement and the obligations set forth herein has been duly procured by the Seller and shall not constitute a breach of any provisions of law, any agreement to which the Seller is a party or which concerns the Seller’s assets, or any court decision or approval of any governmental agency;

6.1.13 This Agreement constitutes a valid and legally binding obligation of the Seller, enforceable in accordance with its terms;

6

Umowa sprzedazy udziałów - Imperial 16/08/2005

6.1.14 All resolutions of shareholders of the Company have been adopted in accordance with all formal requirements and are legally binding;

6.1.15 The Company does not have any liabilities towards its shareholders;

6.1.16 The Company has duly filed all tax and social security contribution returns, including but not limited to those relating to income taxes and tax on goods and services (VAT), excise duty, taxes on remuneration, and social security contributions, and paid any and all amounts which were or are due before or upon the signature hereof. There are no outstanding taxes or social security contributions to be paid by the Company or its shareholders;

6.1.17 No tax or treasury inspections have been carried out at the Company. The Company timely pays its tax liabilities;

6.1.18 The Company is not a party in any proceedings, including civil law proceedings, no proceedings or investigations are pending or expected by the Company (including court, enforcement, arbitration, injunction, tax, administrative, bankruptcy or arrangement proceedings or other investigations in which the Company participates);

6.1.19 The Company has not executed any loan, surety or guarantee agreement;

6.1.20 The Company has not issued any promissory notes;

6.1.21 The Company has not executed any agreements on collateral transfer of ownership or any agreements on establishment of a pledge, including registered pledge;

6.1.22 The Company is not a party to any agreement on co-operation of distributors of alcoholic beverages;

6.1.23 The Company is not a party to any leasing agreement;

6.1.24 No proceedings have been instituted, aimed at satisfying any creditor in connection with any asset of the Company covered by security. The Company holds full rights to its assets and property;

6.1.25 Agreements entered into by the Company are enforceable and legally binding. The text of the lease agreement of real property (currently in force) has been attached as Appendix 10 hereto;

6.1.26 No petition in bankruptcy has been filed against the Company and no arrangement proceedings or proceedings for compulsory management under Article 1064.1 et seq. of the Code of Civil Procedure have been instituted, and no receiver referred to in Article 27 of the Law on Registered Pledge has been appointed for the operations of the Company;

6.1.27 The Company was granted the following permits for sale of alcoholic beverages (which continue to be in force):

a) Permit for wholesale of alcoholic beverages up to 4.5% alcohol volume, and beer (number: 54/P/05 dated 11 May 2005)

b) Permit for wholesale of alcoholic beverages from 4.5% to 18% alcohol volume, excluding beer (number 54/W/05 dated 11 May 2005)

7

Umowa sprzedazy udziałów - Imperial 16/08/2005

c) Permit for wholesale of alcoholic beverages over 18% alcohol volume (number 69/S/05 dated 11 May 2005)

6.1.28 The Company is not in default of any payments to its employees, there are no grounds for any claims of employees connected with remuneration, vacation leaves, additional benefits, accidents at work or redundancies, related to the period ending on the Transaction Date;

6.1.29 No proceedings are pending in connection with the existing or former shareholders of the Company or members of its Management Board;

6.1.30 The Company is not an owner (co-owner) or perpetual usufructuary (co-usufructuary) of any real property;

6.1.31 The Company is not a party in any transactions with entities affiliated with the existing shareholders and has not entered into any agreements on provision of services with affiliated entities – members of family, relatives or next of kin;

6.1.32 The Company’s property has not been not rented, leased or let for use to the Seller or third parties;

6.1.33 Since the registration day until 16 August the Company did not conduct any business; and

6.1.34 The Company is not a shareholder, general partner or limited partner of any civil law partnership or a commercial company;

6.2 The Seller represents that he has disclosed to the Purchasers any and all information concerning all aspects of the Company’s functioning, that is or may be reasonably deemed necessary for proper evaluation of the Company’s operations, its assets and liabilities, its equity, financial standing and sales.

6.3 The Seller is aware that the Purchasers enter into this Agreement based on the assumption that the above representations and warranties are complete, fair, accurate and fully true.

6.4 The Seller undertakes to indemnify and hold the Purchasers or the Company harmless or to redress damage suffered by the Purchasers or the Company due to violation of the provisions hereof by the Seller (including but not limited to incorrectness or inaccuracy of representations and warranties referred to in Item 6.1. hereof). In particular, the Seller shall indemnify and hold the Purchasers harmless in connection with any tax liabilities of the Company or other public charges or claims of third parties (including the employees of Imperial Enterprise) concerning the Company’s operations before the date of execution of the Agreement.

7. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

The Purchasers hereby represent and warrant to the Seller that any of the representations and warranties below is true, complete, accurate and fair:

7.1 CEDC has been duly organised and validly exists under the laws of the State of Delaware and has the right to execute the transaction contemplated hereby;

7.2 Carey Agri has been duly organised and validly exists under the laws of Poland and has the right to execute the transaction contemplated hereby.

8

Umowa sprzedazy udziałów - Imperial 16/08/2005

7.3 The performance of this Agreement and of the obligations set forth herein have been duly authorised by the Purchasers and shall not result in violation of any law, or any contract to which the Purchasers are parties, or any judgment of any court, or any permit or approval of any governmental agency.

7.4 This Agreement constitutes a valid and legally binding obligation of the Purchasers, enforceable in accordance with its terms.

7.5 All resolutions of the Buyers’ shareholders were adopted properly and are legalny binding.

8. COVENANTS

8.1 Each Party shall keep confidential all information contained in this Agreement. The above undertaking shall not apply to any information which is currently in public domain or the disclosure of which is required by mandatory provisions of law or is necessary for proper performance of this Agreement.

8.2 The Sellers shall immediately procure that the Articles of Association of the Company be amended in such way that the Company shall be represented by the President acting solely or three other Members of the Management Board acting jointly.

8.3 Within a week of the Transaction Date the Seller shall waive, for the benefit of the Company, the rights to „Imperial” verbal and graphic mark.

9. NOTICES

9.1 All notices, statements and communications required or permitted under this Agreement shall be effectively given if personally delivered or sent by registered mail (return receipt requested) to the following addresses:

To the Purchasers:

Carey Agri International Poland Sp. z o.o. and Central European Distribution Corporation

ul. Bokserska 66A,

02-690 Warszawa, Poland,

Fax: 22 455 18 10

Attention of William V. Carey.

To the Seller:

Mr. Tadeusz Wałkuski

ul. Por. Łagody 8/4

18-400 Łomza

Fax: 0 86 216 62 95

9

Umowa sprzedazy udziałów - Imperial 16/08/2005

9.2 The Parties undertake to promptly notify one another of the change in the address for correspondence. In the event of failure to notify the other party of the change in the address, all correspondence sent to the addresses indicated above shall be deemed delivered to the appropriate address.

10. FINAL PROVISIONS

10.1 Any legal, financial and consulting expenses of the Seller incurred in relation to this Agreement shall be borne solely by the Seller. The Purchasers shall be responsible for their own costs and expenses.

10.2 The cost of tax on civil law transactions (1% of the Price) shall be borne jointly by the Seller and the Purchasers in equal parts.

10.3 This Agreement shall be governed by and construed in accordance with the laws of the Republic of Poland.

10.4 Any and all disputes arising in connection with this Agreement shall be settled by the Common Court competent for the registered office of Carey Agri.

10.5 The titles of Articles have been introduced for ease of reference only and shall not affect the interpretation of the Agreement.

10.6 Any amendments hereto or any notices or statements required hereunder shall be made in writing with signatures certified by a notary, otherwise they shall be null and void.

10.7 Subject to Article 58 § 3 of the Civil Code, should any part or provision hereof be deemed by court or other authority invalid or unenforceable in full or in part, the Parties shall immediately agree, in good faith, upon a substitution provision which shall be valid and enforceable and which shall reflect original intentions of the Parties.

10.8 This Agreement has been executed in three counterparts in Polish and three counterparts in English, one counterpart of each language version for the Seller and for each of the Purchasers. The Polish language version shall be prevailing for the interpretation of the Agreement.

Appendices to the Agreement:

1. Purchasers’ authorisation to enter into the Agreement

2. Employment contract with Mr. Tadeusz Wałkuski

3. Employment contract with Mrs. Wanda Wałkuska

4. Consent of Spouse

5. Certificates from Social Security Office and Tax Office

6. Uniform text of the Company’s Articles of Association

7. Share ledger

8. List of fixed assets and equipment purchased by the Company

9. List of inventory purchased by the Company

10

Umowa sprzedazy udziałów - Imperial 16/08/2005

10. Text of the lease agreement

Seller:

Signed by:

/s/ Tadeusz Wałkuski

Tadeusz Wałkuski

Purchaser:

Signed by:

/s/ William V. Carey

William V. Carey

(notarial certification of signatures)

11

EX-10.1

Exhibit 10.1

Execution Version

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT (“Agreement”) is made as of the 3rd day of August, 2005 by and among Central European Distribution Corporation, a Delaware corporation (the “Company”), and the Investors listed on Schedule I attached hereto (each an “Investor” and collectively the “Investors”).

In consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions. In addition to those terms defined above and elsewhere in this Agreement, for the purposes of this Agreement, the following terms shall have the meanings set forth below:

“Affiliate” means, with respect to any Person, any other Person which directly or indirectly through one or more intermediaries Controls, is controlled by, or is under common control with, such Person.

“Agents” means Avondale Partners, LLC, ING Bank N.V. (London Branch) and ING Financial Markets LLC.

“Bialystok Acquisition” means the acquisition by the Company of 61% of the outstanding share capital of Polmos Bialystok S.A. pursuant to that certain Share Purchase Agreement, dated as of July 11, 2005, by and among the State Treasury of Poland, Carey Agri International Poland Sp. z o.o., and the Company.

“Business Day” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.

“Commission” means the U.S. Securities and Exchange Commission.

“Common Stock” means the Company’s common stock, par value $0.01 per share.

“Knowledge” means the actual knowledge of William V. Carey or Chris Biedermann, after reasonable inquiry.

“Confidential Information” means trade secrets, confidential information and know-how (including but not limited to ideas, formulae, compositions, processes, procedures and techniques, research and development information, computer program code, performance specifications, support documentation, drawings, specifications, designs, business and marketing plans, and customer and supplier lists and related information).

“Control” (including the terms “controlling”, “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Escrow Agent” means Wachovia Bank, National Association.

“Escrow Agreement” means that certain Escrow Agreement, dated as of the date hereof, by and among the Company, the Investors and the Escrow Agent.

“Intellectual Property” means all of the following: (i) patents, patent applications, patent disclosures and inventions (whether or not patentable and whether or not reduced to practice); (ii) trademarks, service marks, trade dress, trade names, corporate names, logos, slogans and Internet domain names, together with all goodwill associated with each of the foregoing; (iii) copyrights and copyrightable works; (iv) registrations, applications and renewals for any of the foregoing; and (v) proprietary computer software (including but not limited to data, data bases and documentation).

“Material Adverse Effect” means a material adverse effect on (i) the assets, liabilities, results of operations, condition (financial and otherwise) and business of the Company and its Subsidiaries taken as a whole, or (ii) the ability of the Company to perform its obligations under the Transaction Documents.

“Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

“Registration Rights Agreement” means that certain Registration Rights Agreement, in the form attached hereto as Exhibit A, pursuant to which the Company will agree to provide certain registration rights under the 1933 Act and applicable state securities laws.

“SEC Filings” has the meaning set forth in Section 4.6.

“Shares” means the shares of Common Stock being purchased by the Investors hereunder.

“Subsidiary” has the meaning set forth in Section 4.1.

“Transaction Documents” means this Agreement, the Escrow Agreement and the Registration Rights Agreement.

“1933 Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

“1934 Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

2. Purchase and Sale of the Shares; Escrow.

2.1 Purchase and Sale of the Shares. Subject to the terms and conditions of this Agreement, on the Closing Date, (a) each of the Investors hereby severally, and not jointly, agrees to purchase that number of Shares listed opposite such Investor’s name on Schedule I, and (b) the Company hereby agrees to sell and issue to the Investors an aggregate of 3,360,000 Shares. The per share purchase price of the Shares to by paid by the Investors under this Agreement shall be $34.69 (the “Per Share Purchase Price”). The aggregate purchase price for the Shares to be paid by all Investors under this Agreement shall be referred to as the “Purchase Price.”

2

2.2 Escrow. Contemporaneously with the execution and delivery of this Agreement, the Company, each Investor and the Escrow Agent have executed and delivered the Escrow Agreement. Within one (1) Business Day of the date of this Agreement, each Investor will cause a wire transfer in same day funds to be sent to the account of the Escrow Agent in the amount set forth opposite such Investor’s name on Schedule I.

3. Closing. Upon confirmation that the conditions to Closing specified herein have been satisfied or duly waived by the Investors and the Company, as applicable, prior to the termination of this Agreement pursuant to Section 6.3 below, (a) the Company shall deliver to the Escrow Agent a notice that the Purchase Price being held pursuant to the Escrow Agreement shall be released to the Company, with any interest that has accrued under the Escrow Agreement to be delivered to the Investors pro rata, (b) the Company shall deliver to the Agents, in trust, a certificate or certificates, registered in such name or names as the Investors may designate, representing the Shares, with instructions that such certificates are to be held for release to the Investors only upon receipt by the Company of the Purchase Price pursuant to the terms of the Escrow Agreement. On the date (the “Closing Date”) the Company receives the Purchase Price, the certificates evidencing the Shares shall be released to the Investors (the “Closing”). The Closing of the purchase and sale of the Shares shall take place at the offices of Dickstein Shapiro Morin & Oshinsky LLP, 1177 Avenue of the Americas, New York, N.Y. 10036, or at such other location and on such other date as the Company and the Investors shall mutually agree.

4. Representations and Warranties of the Company. The Company hereby represents and warrants to the Investors that, except as set forth in the SEC Filings (as defined below):

4.1 Organization, Good Standing and Qualification. Each of the Company and its Subsidiaries is a corporation duly organized and validly existing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own its properties. Each of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not and could not reasonably be expected to have a Material Adverse Effect. The Company’s subsidiaries (the “Subsidiaries”) are reflected in the SEC Filings.

4.2 Authorization. The Company has full power and authority and has taken all requisite action on the part of the Company, its officers, directors and stockholders necessary for (i) the authorization, execution and delivery of the Transaction Documents, (ii) authorization of the performance of all obligations of the Company hereunder or thereunder, and (iii) the authorization, issuance and delivery of the Shares. The Transaction Documents constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally, and subject to general equitable principles. The issuance of the Shares does not require the approval of the Company’s stockholders pursuant to the Company’s Bylaws, Certificate of Incorporation, the provisions of the Delaware General Corporation Law, Nasdaq Marketplace Rule 4350(i) or any other similar rules or regulations promulgated under other trading markets or securities exchanges that are applicable to the Company, or otherwise.

4.3 Capitalization. The SEC Filings set forth (a) the authorized capital stock of the Company on the date hereof; (b) the number of shares of capital stock issued and outstanding; (c) the number of shares of capital stock issuable pursuant to the Company’s stock plans; and (d) the number of shares of capital stock issuable and reserved for issuance pursuant to securities exercisable for, or

3

convertible into or exchangeable for any shares of capital stock of the Company. All of the issued and outstanding shares of the Company’s capital stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights and were issued in full compliance with applicable state and federal securities law and any rights of third parties. All of the issued and outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, were issued in full compliance with applicable state and federal securities law and any rights of third parties and are owned by the Company, beneficially and of record, subject to no lien, encumbrance or other adverse claim. No Person is entitled to preemptive or similar statutory or contractual rights with respect to any securities of the Company. Except as set forth in the SEC Filings, there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of any character under which the Company or any of its Subsidiaries is or may be obligated to issue any equity securities of any kind and except as contemplated by this Agreement, neither the Company nor any of its Subsidiaries is currently in negotiations for the issuance of any equity securities of any kind. There are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other similar agreements of any kind among the Company and any of the securityholders of the Company relating to the securities of the Company held by them. Except for the Registration Rights Agreement, no Person has the right to require the Company to register any securities of the Company under the 1933 Act, whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the account of any other Person.

The issuance and sale of the Shares will not obligate the Company to issue shares of Common Stock or other securities to any other Person (other than the Investors) and will not result in the adjustment of the exercise, conversion, exchange or reset price of any outstanding security.

The Company does not have outstanding stockholder purchase rights or “poison pill” or any similar arrangement in effect giving any Person the right to purchase any equity interest in the Company upon the occurrence of certain events.

4.4 Valid Issuance. The Company has reserved a sufficient number of shares of Common Stock for the issuance of the Shares pursuant to this Agreement. The Shares have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and shall be free and clear of all encumbrances and restrictions (other than those created by the Investors), except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws.

4.5 Consents. The execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Shares require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official, including without limitation, any trading market or securities exchange, other than the following: (a) filings, if any, pursuant to applicable state and federal securities laws which the Company undertakes to file within the applicable time periods, (b) the filing with the Commission of one or more registration statements in accordance with the requirements of the Registration Rights Agreement, and (c) the filing of a listing application for the listing of the Shares with the Trading Market (as defined below), which shall be done pursuant to the rules of the Trading Market. Subject to the accuracy of the representations and warranties of each Investor set forth in Section 5 hereof, the Company has taken all action necessary to exempt (i) the issuance and sale of the Shares, and (ii) the other transactions contemplated by the Transaction Documents from the provisions of any stockholder rights plan or other “poison pill” arrangement, any anti-takeover, business combination or control share law or statute binding on the Company or to which the Company or any of its assets and properties may be subject and any provision of the Company’s Certificate of Incorporation or Bylaws that is or could reasonably be expected to become applicable to the Investors as a result of the transactions contemplated hereby, including, without limitation, the issuance of the Shares and the ownership, disposition or voting of the Shares by the Investors or the exercise of any right granted to the Investors pursuant to this Agreement or the other Transaction Documents.

4

4.6 SEC Filings; Financial Statements.

(a) The Company has filed all reports required to be filed by it under the 1934 Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials, including the exhibits thereto (together with any materials filed by the Company under the 1934 Act, whether or not required), being collectively referred to herein as the “SEC Filings,” except that solely for purposes of this Section 4.6(a), “SEC Filings” shall not be deemed to include any Current Reports on Form 8-K (or amendments thereto) that are “furnished” by the Company to the Commission solely to comply with Regulation F-D promulgated under the 1934 Act) on a timely basis or has timely filed a valid extension of time of filing and has filed any such SEC Filings prior to the expiration of any such extension. As of their respective dates, the SEC Filings complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Filings, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

(b) The financial statements of the Company included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 and SEC Filings filed subsequent to the filing of such filings comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. Except as set forth in the most recent financial statements of the Company included in the SEC Filings filed prior to the date hereof, neither the Company nor any Subsidiary has incurred any liabilities, contingent or otherwise, except those incurred in the ordinary course of business, consistent (as to amount in nature) with past practices since the date of such financial statements, none of which, individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect. All material agreements to which the Company and its Subsidiaries are a party or to which any of their respective property or assets are subject that are required to be filed as exhibits to the SEC Filings under Item 601 of Regulation S-K are included as a part of, or specifically identified in, the SEC Filings.

4.7 Business. The Company and its Subsidiaries are engaged only in the business described in the SEC Filings, and the SEC Filings contain a complete and accurate description of the business of the Company and its Subsidiaries, taken as a whole.

4.8 Use of Proceeds. The net proceeds of the sale of the Shares hereunder shall be used by the Company to finance a portion of the purchase price for the Bialystok Acquisition.

4.9 No Material Adverse Change. Since December 31, 2004, except as identified and described in the SEC Filings, there has not been:

(i) any change in the consolidated assets, liabilities, financial condition or operating results of the Company from that reflected in the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, except for changes in the ordinary course of business which have not and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate;

5

(ii) any declaration or payment of any dividend, or any authorization or payment of any distribution, on any of the capital stock of the Company, or any redemption or repurchase of any securities of the Company;

(iii) any material damage, destruction or loss, whether or not covered by insurance to any material assets or properties of the Company or its Subsidiaries;

(iv) any waiver, not in the ordinary course of business, by the Company or any Subsidiary of a material right or of a material debt owed to it;

(v) any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company or a Subsidiary, except in the ordinary course of business and which is not material to the assets, properties, financial condition, operating results or business of the Company and its Subsidiaries taken as a whole (as such business is presently conducted and as it is proposed to be conducted);

(vi) any change or amendment to the Company’s Certificate of Incorporation or Bylaws, or material change to any material contract or arrangement by which the Company or any Subsidiary is bound or to which any of their respective assets or properties is subject, except for changes in the ordinary course of business which have not and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate;

(vii) any material labor difficulties or labor union organizing activities with respect to employees of the Company or any Subsidiary;

(viii) any transaction entered into by the Company or a Subsidiary other than in the ordinary course of business;

(ix) the loss of the services of any key employee, or material change in the composition or duties of the senior management of the Company or any Subsidiary; or

(x) the loss or threatened loss of any supplier or customer which has had or could reasonably be expected to have a Material Adverse Effect.

4.10 No Conflict, Breach, Violation or Default. The execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Shares will not conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under (i) the Company’s Certificate of Incorporation or the Company’s Bylaws, both as in effect on the date hereof, or (ii)(a) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company, any Subsidiary or any of their respective assets or properties, or (b) any agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or a Subsidiary is bound or to which any of their respective assets or properties is subject, except, in the case of clause (ii) above, for such conflicts, breaches, violations or defaults as could not reasonably be expected to have a Material Adverse Effect.

6

4.11 Tax Matters. The Company and each Subsidiary have timely prepared and filed all tax returns required to have been filed by the Company or such Subsidiary with all appropriate governmental agencies and timely paid all taxes shown thereon or otherwise owed by it, except those being contested in good faith. The charges, accruals and reserves on the books of the Company in respect of taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against the Company or any Subsidiary nor, to the Company’s Knowledge, any basis for the assessment of any additional taxes, penalties or interest for any fiscal period or audits by any federal, state or local taxing authority except for any assessment which is not material to the Company and its Subsidiaries, taken as a whole. All taxes and other assessments and levies that the Company or any Subsidiary is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental entity or third party when due. There are no tax liens or claims pending or, to the Company’s Knowledge, threatened against the Company or any Subsidiary or any of their respective assets or property. There are no outstanding tax sharing agreements or other such arrangements between the Company and any Subsidiary or other corporation or entity.

4.12 Certificates, Authorities and Permits. The Company and each Subsidiary possess adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by it, and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Company or such Subsidiary, could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.

4.13 No Labor Disputes. No material labor dispute with the employees of the Company or any Subsidiary exists or, to the Company’s Knowledge, is threatened.

4.14 Intellectual Property. The Company owns or possesses sufficient rights to use all Intellectual Property free and clear of any material liens, security interests, charges, encumbrances, equities and other adverse claim, which is necessary to conduct its businesses as currently conducted and as presently contemplated to be conducted. The Company has not received any written notice of, nor has Knowledge of, any infringement of or conflict with asserted rights of others with respect to any Intellectual Property, and to the Company’s Knowledge, the present activities of the Company and the Subsidiaries do not infringe any patent, copyright, trademark, trade name, or other proprietary rights of any third party.

4.15 Environmental Matters. Neither the Company nor any Subsidiary (a) is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), (b) owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, (c) is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or (d) is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim has had or could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate, and there is no pending or, to the Company’s Knowledge, threatened, investigation that might lead to such a claim.

4.16 Litigation. There are no pending actions, suits, inquiries, notices of violations, investigations, or proceedings (collectively, an “Action”) against the Company, its Subsidiaries or any of its or their properties, and, to the Company’s Knowledge, no such Action is threatened or contemplated, which Action, if determined adversely to the Company, its Subsidiaries or any of its or their properties, as

7

the case may be, would have or could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof in their capacity as such, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the Company’s Knowledge, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company.

4.17 Compliance.

(a) Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, could result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation, all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety, and employment and labor matters, except in each case as did not or would not (as applicable), individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

(b) The Company is in compliance with the applicable requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder by the Commission, except where such noncompliance would not have or reasonably be expected to result in a Material Adverse Effect.

4.18 Insurance Coverage. The Company and each Subsidiary maintains in full force and effect insurance coverage against such liabilities, claims and risks and in such amounts as is customary for comparably situated companies for the business being conducted and properties owned or leased by the Company and each Subsidiary.

4.19 Brokers and Finders. Other than fees paid to the Agents, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Investors shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement.

4.20 No General Solicitation or General Advertising. Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D under the 1933 Act) in connection with the offer or sale of any of the Shares.

4.21 No Integrated Offering. Neither the Company nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any Company security or solicited any offers to buy any security, under circumstances that would adversely affect reliance by the Company on Section 4(2) for the exemption from registration for the transactions contemplated hereby or would require registration of the Shares under the 1933 Act.

8

4.22 Private Placement; State Securities Laws. Subject in part to the accuracy of the representations and warranties of the Investors contained in Section 5, the offer and sale of the Shares to the Investors as contemplated hereby is exempt from the registration requirements of the 1933 Act. On or before the Closing Date, if required, the Company shall take all necessary action to qualify, or to obtain, an exemption for the Shares under such securities laws of each state as shall be necessary to qualify, or to obtain an exemption from, the sale of the Shares.

4.23 Transactions with Affiliates. Except as disclosed in the SEC Filings, none of the officers or directors of the Company and, to the Company’s Knowledge, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than as holders of stock options and/or warrants, and for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the Company’s Knowledge, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

4.24 Accounting System; Controls and Procedures. The Company makes and keeps accurate books and records and maintains a system of accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established and maintains disclosure controls and procedures (as defined in 1934 Act Rules 13a-15(e) and 15d-15(e)), which (i) are designed to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the Company’s principal executive officer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the 1934 Act are being prepared; (ii) have been evaluated for effectiveness as of the end of the period covered by the Company’s most recent annual or quarterly report with the Commission which precedes the date of this Agreement; and (iii) are effective in all material respects to perform the functions for which they were established. Based on the most recent evaluation of its disclosure controls and procedures, as of the date hereof, the Company is not aware of (i) any significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting (as defined in 1934 Act Rules 13a-15(f) and 15d-15(f)) which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information or (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. The Company is not aware of any change in its internal control over financial reporting that has occurred during its most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

4.25 No Price Stabilization or Manipulation; Compliance with Regulation M. The Company has not taken directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of the shares of the Common Stock or any other “Reference Security” (as defined in Rule 100 of Regulation M under the 1934 Act (“Regulation M”)) to facilitate the sale or resale of the Shares, and has taken no action which would directly or indirectly violate Regulation M.

4.26 Investment Company. The Company is not, and after giving effect to the sale of the Shares and the application of the net proceeds therefrom, will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or an Affiliate of an “investment company.”

9

4.27 Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries, nor, to the Company’s Knowledge, any of their respective current or former directors, officers, employees, agents or other Person acting on behalf of the Company or any of its Subsidiaries, have (i) directly or indirectly, used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any direct or indirect unlawful payments to any governmental officials or employees from corporate funds, (iii) failed to disclose fully any contribution made by the Company or made by any Person acting on its behalf and of which the Company is aware in violation of law; (iv) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (v) made any false or fictitious entries on the books and records of the Company or any Subsidiary; (vi) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment of any nature; or (vii) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

5. Representations and Warranties of the Investors. Each of the Investors hereby severally, and not jointly, represents and warrants to the Company and each other Investor that:

5.1 Organization and Existence. The Investor is a validly existing corporation, limited partnership or limited liability company and has all requisite corporate, partnership or limited liability company power and authority to invest in the Shares pursuant to this Agreement. Such Investor (if not an individual) has not been formed for the specific purpose of acquiring the Shares. Such Investor has provided the Company with its jurisdiction of organization and its principal place of business.

5.2 Authorization; Non-contravention. The execution, delivery and performance by the Investor of the Transaction Documents to which such Investor is a party have been duly authorized and will each constitute the valid and legally binding obligation of the Investor, enforceable against the Investor in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally, and subject to general equitable principles.

5.3 Purchase Entirely for Own Account. The Shares to be received by the Investor hereunder will be acquired for the Investor’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the 1933 Act, and the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same in violation of the 1933 Act. Such Investor does not have any agreement or understanding, whether or not legally binding, direct or indirect, with any other Person to sell or otherwise distribute the Shares. The Investor is not a broker dealer registered with the Commission under the 1934 Act or an entity engaged in a business that would require it to be so registered.

5.4 Investment Experience. The Investor acknowledges that it can bear the economic risk and complete loss of its investment in the Shares and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby. Such Investor understands that the purchase of the Shares involves substantial risk.

5.5 Disclosure of Information. The Investor has had an opportunity to receive all additional information related to the Company requested by it and to ask questions of and receive answers from the Company regarding the terms and conditions of the issuance and sale of the Shares and the business, properties, prospects and financial condition of the Company and to obtain any additional

10

information requested and has received and considered all information such Investor deems relevant to make an informed decision to purchase the Shares. The Investor acknowledges that the Company has made copies of the SEC Filings available to such Investor. Neither such inquiries nor any other due diligence investigation conducted by the Investor shall modify, amend or affect the Investor’s right to rely on the Company’s representations and warranties contained in this Agreement. The Investor has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Shares.

5.6 Restricted Securities. The Investor understands that the Shares are characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the 1933 Act only in certain limited circumstances. The Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.

5.7 Legends. The Investor understands that, except as provided below and until such time as the resale of the Shares have been registered under the 1933 Act as contemplated by the Registration Rights Agreement, certificates evidencing the Shares shall bear the following or any similar legend:

(a) “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OFFERED FOR SALE, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION FROM COUNSEL IN A FORM ACCEPTABLE TO THE COMPANY AND ITS LEGAL COUNSEL STATING THAT SUCH REGISTRATION IS NOT REQUIRED.”

(b) If required by the authorities of any state in connection with the issuance of sale of the Shares, the legend required by such state authority.

5.8 Accredited Investor. The Investor is an accredited investor as defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act.

5.9 No General Solicitation. The Investor did not learn of the investment in the Shares by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (i) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media, or broadcast over television or radio, or (ii) any seminar or meeting to which such Investor was invited by any of the foregoing means of communications.

5.10 Brokers and Finders. Except for the fees payable to the Agents, for which the Company is solely responsible, no Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Investor.

11

5.11 Prohibited Transactions.

(a) Since the date each Investor entered into a confidentiality agreement with the Agents or the Company and prior to the date of this Agreement, no Investor has, directly or indirectly, effected or agreed to effect any short sale, whether or not against the box, established any “put equivalent position” (as defined in Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock, granted any other right (including, without limitation, any put or call option) with respect to the Common Stock or with respect to any security that includes, relates to or derived any significant part of its value from the Common Stock or otherwise sought to hedge its position in the Shares.

(b) The Investor is aware of the following Telephone Interpretation in the SEC Manual of Publicly Available Telephone Interpretations (July 1997):

A.65. Section 5

An issuer filed a Form S-3 registration statement for a secondary offering of common stock which is not yet effective. One of the selling shareholders wanted to do a short sale of common stock “against the box” and cover the short sale with registered shares after the effective date. The issuer was advised that the short sale could not be made before the registration statement becomes effective, because the shares underlying the short sale are deemed to be sold at the time such sale is made. There would, therefore, be a violation of Section 5 if the shares were effectively sold prior to the effective date.

5.12 Reliance on Exemptions. The Investor understands that the Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Investor set forth herein in order to determine the availability of such exemptions and the eligibility of such to acquire the Shares.

6. Conditions to Closing; Termination.

6.1 Conditions to the Investors’ Obligations. The obligation of the Investors to purchase the Shares at the Closing is subject to the fulfillment to the Investors’ satisfaction, on or prior to the Closing Date, of the following conditions, any of which may be waived by an Investor (as to itself only):

(a) The representations and warranties made by the Company in Section 4 hereof qualified as to materiality shall be true and correct in all respects on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date, and the representations and warranties made by the Company in Section 4 hereof not qualified as to materiality shall be true and correct in all material respects on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date. The Company shall have performed in all material respects all obligations and conditions herein required to be performed or observed by it on or prior to the Closing Date.

12

(b) The Company shall have obtained any and all consents, permits, approvals, registrations and waivers necessary for consummation of the purchase and sale of the Shares and the consummation of the other transactions contemplated by the Transaction Documents, all of which shall be in full force and effect.

(c) The Company shall have executed and delivered the Registration Rights Agreement.

(d) No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby or in the other Transaction Documents.

(e) The Company shall have delivered a Certificate, executed on behalf of the Company by its Chief Executive Officer or its Chief Financial Officer, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in subsections (a), (h) and (j) of this Section 6.1.

(f) The Company shall have delivered a Certificate, executed on behalf of the Company by its Secretary, dated as of the Closing Date, certifying the resolutions adopted by the Board of Directors of the Company approving the transactions contemplated by this Agreement and the other Transaction Documents and the issuance of the Shares, certifying the current versions of the Certificate of Incorporation and Bylaws of the Company and certifying as to the signatures and authority of persons signing the Transaction Documents and related documents on behalf of the Company.

(g) The Investors shall have received opinions from the Company’s legal counsel, dated as of the Closing Date, in form and substance reasonably acceptable to the Investors and addressing such legal matters as the Investors may reasonably request.

(h) No stop order or suspension of trading shall have been imposed by the Commission or any other governmental or regulatory body with respect to public trading in the Common Stock.

(i) No statute, rule, regulation, executive order, decree, ruling, injunction, action, proceeding or interpretation shall have been enacted, entered, promulgated, endorsed or adopted by any court or governmental authority of competent jurisdiction or any self-regulatory organization or trading market or the staff of any of the foregoing, having authority over the matters contemplated hereby which questions the validity of, or challenges or prohibits the consummation of, any of the transactions contemplated by this Agreement.

(j) All conditions to the obligation of the Company to consummate the Bialystok Acquisition shall have been fulfilled to the Company’s satisfaction, and contemporaneous with the Closing the Company shall consummate the Bialystok Acquisition.

(k) William V. Carey, Evangelos Evangelou and Chris Biedermann shall have executed and delivered the Lock-up Agreement in the form attached hereto as Exhibit B.

13

6.2 Conditions to Obligations of the Company. The Company’s obligation to sell and issue the Shares at the Closing is subject to the fulfillment to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may be waived by the Company:

(a) The representations and warranties made by the Investors in Section 5 hereof, other than the representations and warranties contained in Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 (the “Investment Representations”), shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date with the same force and effect as if they had been made on and as of said date. The Investment Representations shall be true and correct in all respects when made, and shall be true and correct in all respects on the Closing Date with the same force and effect as if they had been made on and as of said date. The Investors shall have performed in all material respects all obligations and conditions herein required to be performed or observed by them on or prior to the Closing Date.

(b) The Investors shall have executed and delivered the Registration Rights Agreement.

(c) No statute, rule, regulation, executive order, decree, ruling, injunction, action, proceeding or interpretation shall have been enacted, entered, promulgated, endorsed or adopted by any court or governmental authority of competent jurisdiction or any self-regulatory organization or trading market or the staff of any of the foregoing, having authority over the matters contemplated hereby which questions the validity of, or challenges or prohibits the consummation of, any of the transactions contemplated by this Agreement

(d) All conditions to the obligation of the Company to consummate the Bialystok Acquisition shall have been fulfilled to the Company’s satisfaction and contemporaneous with the Closing the Company shall consummate the Bialystok Acquisition.

(e) Each of the Agents shall have executed and delivered a Placement Agent Certificate in the form attached hereto as Exhibit C.

6.3 Termination of Obligations to Effect Closing; Effects.

(a) The obligations of the Company, on the one hand, and the Investors, on the other hand, to effect the Closing shall terminate as follows:

(i) Upon the mutual written consent of the Company and the Investors;

(ii) By the Company if any of the conditions set forth in Section 6.2 shall have become incapable of fulfillment, and shall not have been waived by the Company;

(iii) By an Investor (with respect to itself only) if any of the conditions set forth in Section 6.1 shall have become incapable of fulfillment, and shall not have been waived by the Investor; or

(iv) Unless waived pursuant to Section 9.6 of this Agreement, if the Closing has not occurred on or prior to November 30, 2005;

14

provided, however, that, except in the case of clauses (ii) and (iii) above, the party seeking to terminate its obligation to effect the Closing shall not then be in breach of any of its representations, warranties, covenants or agreements contained in this Agreement or the other Transaction Documents if such breach has resulted in the circumstances giving rise to such party’s seeking to terminate its obligation to effect the Closing.

(b) In the event of termination by the Company or any Investor of its obligations to effect the Closing pursuant to this Section 6.3, written notice thereof shall forthwith be given to the other Investors and the other Investors shall have the right to terminate their obligations to effect the Closing upon written notice to the Company and the other Investors. Nothing in this Section 6.3 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents.

7. Covenants and Agreements of the Company.

7.1 Listing of Underlying Shares and Related Matters. The Company hereby agrees, promptly following the Closing of the transactions contemplated by this Agreement, to cause the Shares to be listed on the Nasdaq National Market or such other securities exchange or trading market in which the Company’s Common Stock is listed or quoted (the “Trading Market”). For so long as the Investors beneficially own any of the Shares, the Company will use its best efforts to continue the listing and trading of its Common Stock on the Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of such Trading Market to ensure the continued eligibility for trading of the Shares thereon.

7.2 Removal of Legends. Upon the earlier of (i) registration for resale pursuant to the Registration Rights Agreement and receipt by the Company of the Investor’s written confirmation that such Shares will not be disposed of except in compliance with the prospectus delivery requirements of the 1933 Act or (ii) Rule 144(k) becoming available the Company shall, upon an Investor’s written request, promptly cause certificates evidencing the Investor’s Shares to be replaced with certificates which do not bear such restrictive legends.

7.3 Lock-Up Agreement. Without the prior written consent of the Agents (which consent may be withheld at the sole discretion of the Agents) and other than as contemplated by this Agreement or the Registration Rights Agreement with respect to the Shares, during the period commencing on the date hereof and continuing to and including the later of (i) the 90th day following the Closing Date or (ii) the effectiveness of the registration statement to be filed by the Company pursuant to the Registration Rights Agreement (the “Lock-Up Period”), the Company will not, directly or indirectly, sell, offer, contract or grant any option to sell (including without limitation any short sale), pledge, transfer, establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the 1934 Act, give, donate or otherwise dispose of, directly or indirectly, or announce the offering of, or file any registration statement under the 1933 Act in respect of, any shares of Common Stock, options or warrants to acquire shares of Common Stock, or securities exchangeable or exercisable for or convertible into shares of Common Stock, or publicly announce an intention to do any of the foregoing; provided, however, that the Company may (i) issue shares of its Common Stock or options to purchase its Common Stock, or shares of Common Stock upon exercise of options, pursuant to any stock option, stock bonus or other stock plan or compensatory arrangement duly approved by the Board of Directors of the Company, (ii) issue shares of its Common Stock pursuant to the acquisition of another entity by the Company by merger, purchase of all or substantially all of the assets, or otherwise; provided, that the fair market value (as determined in good faith by the Board of Directors of the Company) of such shares issued in connection with each such acquisition (other than the issuance of shares pursuant to that certain Share

15

Sale Agreement, dated as of June 27, 2005, between Remy Cointreau S.A., Botapol Management B.V., Takirra Investment Corporation N.V., Carey Agri International Poland Sp. z o.o. and the Company) does not exceed $10,000,000, (iii) issue shares of its capital stock upon conversion, exercise or exchange of any warrants, options, securities or other rights directly or indirectly convertible into, or exercisable or exchangeable for, Common Stock, and (iv) issue securities in connection with a joint venture or development agreement or strategic partnership or similar agreement approved by the Board of Directors of the Company, the primary purpose of which is not to raise equity capital; provided, that the fair market value (as determined in good faith by the Board of Directors of the Company) of such shares issued pursuant to this subsection (iv) does not exceed $10,000,000,

8. Survival and Indemnification.

8.1 Survival. The representations, warranties, covenants and agreements contained in this Agreement shall survive the Closing of the transactions contemplated by this Agreement for a period of one (1) year after the Closing.

8.2 Indemnification. The Company agrees to indemnify and hold harmless each Investor and its Affiliates and their respective directors, officers, employees and agents from and against any and all losses, claims, damages, liabilities and expenses (including without limitation reasonable attorney fees and disbursements and other expenses incurred in connection with investigating, preparing or defending any action, claim or proceeding, pending or threatened and the costs of enforcement thereof) (collectively, “Losses”) to which such Person may become subject as a result of any breach of representation, warranty, covenant or agreement made by or to be performed on the part of the Company under the Transaction Documents, and will reimburse any such Person for all such amounts as they are incurred by such Person.

8.3 Conduct of Indemnification Proceedings. Promptly after receipt by any Person (the “Indemnified Person”) of notice of any demand, claim or circumstances which would or might give rise to a claim or the commencement of any action, proceeding or investigation in respect of which indemnity may be sought pursuant to Section 8.2, such Indemnified Person shall promptly notify the Company in writing and the Company shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person, and shall assume the payment of all fees and expenses; provided, however, that the failure of any Indemnified Person so to notify the Company shall not relieve the Company of its obligations hereunder except to the extent that the Company is materially prejudiced by such failure to notify. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company and the Indemnified Person shall have mutually agreed to the retention of such counsel; or (ii) in the reasonable judgment of counsel to such Indemnified Person representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Company shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, but if settled with such consent, or if there be a final judgment for the plaintiff, the Company shall indemnify and hold harmless such Indemnified Person from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, the Company shall not effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such proceeding.

16

9. Miscellaneous.

9.1 Successors and Assigns. This Agreement may not be assigned by a party hereto without the prior written consent of the Company and (i) prior to the Closing, the Investors purchasing at least 67% of the Shares pursuant to this Agreement and (ii) following the Closing, holders of at least a majority of the Shares then outstanding; provided, however, that an Investor may assign its rights and delegate its duties hereunder in whole or in part to an Affiliate or to a third party, in each case acquiring some or all of its Shares in a private transaction without the prior written consent of the Company or the other Investors; provided, that such transferee agrees in writing to be bound by the terms, provisions and conditions of this Agreement and the Transaction Documents, and such transfer is in compliance with all of the terms and provisions of this Agreement and the Transaction Documents and permitted by federal and state securities laws; and, provided, further, that no such assignment or obligation shall affect the obligations of such Investor hereunder. The provisions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

9.2 Counterparts; Faxes. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed via facsimile, which shall be deemed an original.

9.3 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

9.4 Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii) if given by telex or telecopier or electronic mail, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one business day after delivery to such carrier. All notices shall be addressed to the party to be notified at the address as follows, or at such other address as such party may designate by ten days’ advance written notice to the other party:

If to the Company:

Central European Distribution Corporation

Two Bala Plaza

Suite 300

Bala Cynwyd, Pennsylvania 19004

Telephone: (610) 660-7817

Facsimile: (610) 667-3308

Attention: Chief Executive Officer

17

with a copy to:

Dickstein Shapiro Morin & Oshinsky LLP

1177 Avenue of the Americas

New York, New York 10036

Telephone: (212) 835-1412

Facsimile: (212) 997-9880

Attention: Malcolm I. Ross, Esq.

If to the Investors:

to the addresses set forth on Schedule I hereto.

9.5 Expenses. The parties hereto shall pay their own costs and expenses in connection herewith. In the event that legal proceedings are commenced by any party to this Agreement against another party to this Agreement in connection with this Agreement or the other Transaction Documents, the party or parties which do not prevail in such proceedings shall severally, but not jointly, pay their pro rata share of the reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses incurred by the prevailing party in such proceedings.

9.6 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and (i) prior to the Closing, the Investors purchasing at least 67% of the Shares pursuant to this Agreement and (ii) following the Closing, holders of at least a majority of the Shares then outstanding. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Shares purchased under this Agreement at the time outstanding, each future holder of all such Shares, and the Company.

9.7 Publicity. Except as set forth below, no public release or announcement concerning the transactions contemplated hereby shall be issued by the Company or the Investors without the prior written consent of the Company (in the case of a release or announcement by the Investors) or the Agents (in the case of a release or announcement by the Company) (which consents shall not be unreasonably withheld), except as such release or announcement as the Company reasonably determines may be required by law or the applicable rules or regulations of any securities exchange or securities market, in which case the Company or the Investors, as the case may be, shall allow the Agents or the Company, as applicable, to the extent reasonably practicable in the circumstances, reasonable time to comment on such release or announcement in advance of such issuance. By 8:30 a.m. (New York City time) on the trading day immediately following the Closing Date, the Company shall issue a press release disclosing the consummation of the transactions contemplated by this Agreement. No later than the fourth business day (as defined by the Commission) following the Closing Date, the Company will file a Current Report on Form 8-K attaching the press release described in the foregoing sentence as well as copies of the Transaction Documents. In addition, the Company will make such other filings and notices in the manner and time required by the Commission.

18

9.8 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

9.9 Entire Agreement. This Agreement, including the Exhibits, and the other Transaction Documents constitute the entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

9.10 Further Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

9.11 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

9.12 Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under any Transaction Document are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Document. The decision of each Investor to purchase Shares pursuant to the Transaction Documents has been made by such Investor independently of any other Investor. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no Investor will be acting as agent of such Investor in connection with monitoring its investment in the Shares or enforcing its rights under the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction

19

Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. The Company acknowledges that each of the Investors has been provided with the same Transaction Documents for the purpose of closing a transaction with multiple Investors and not because it was required or requested to do so by any Investor.

[Signature Page Follows]

20

IN WITNESS WHEREOF, the parties have executed this Purchase Agreement or caused their duly authorized officers to execute this Purchase Agreement as of the date first above written.

INVESTORS: Strategic Advisors Corp. - on behalf of managed account
Name of Entity
By:	/s/ Martin G. Braun
Name:	Martin G. Braun
Title:	President
Strategic Advisors Corp. - on behalf of managed account
Name of Entity
By:	/s/ Martin G. Braun
Name:	Martin G. Braun
Title:	President
Epic Capital Management as Investment Manager
Name of Entity
By:	/s/ David Fawcett
Name:	David Fawcett
Title:	CEO
Gluskin Sheff + Associates, Inc.
Name of Entity
By:	/s/ Sylvia Cheung
Name:	Sylvia Cheung
Title:	VP, Investment Accounting
Castlerigg Master Investments Ltd.
Name of Entity
By:	/s/ John Nusbaum
Name:	John Nusbaum
Title:	Senior Managing Director
Gardner Lewis
Name of Entity
By:	/s/ William D. Zantzinger, Jr.
Name:	William D. Zantzinger, Jr.
Title:	Partner
Magna Global Emerging Markets Fund (Sub-Fund of Magna Umbrella Fund Pic)
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of Magna Global Emerging Markets Fund (Sub-Fund of Magna Umbrella Fund Pic)
Magna Eastern European Fund (Sub-Fund of Magna Umbrella Fund Pic)
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of Magna Eastern European Fund (Sub-Fund of Magna Umbrella Fund Pic)
Julius Bear Multistock - Central Europe Stock Fund
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of Julius Bear Multistock - Central Europe Stock Fund
US Global Accolade Funds - Eastern European Fund
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of US Global Accolade Funds - Eastern European Fund
US Global Accolade Funds - Global Emerging Markets Fund
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of US Global Accolade Funds - Global Emerging Markets Fund
Nouvelle Croissance Europe
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of Nouvelle Croissance Europe
Manulife Global Fund - Emerging Eastern Europe Fund
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of Manulife Global Fund - Emerging Eastern Europe Fund
Charlemagne CIS Fund Limited
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of Charlemagne CIS Fund Limited
OCCO Eastern European Fund
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of OCCO Eastern European Fund
OCCO Global Emerging Markets Fund
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of OCCO Global Emerging Markets Fund

Elliot Associates LP
Name of Entity
By:	/s/ Elliot Greenberg
Name:	Elliot Greenberg
Title:	Elliot Greenberg, Vice President
Elliot International, LP
Name of Entity
By:	/s/ Elliot Greenberg
Name:	Elliot Greenberg
Title:	Elliot Greenberg, Vice President
Greenway Managed Account Series E
Name of Entity
By:	/s/ Randel Freeman
Name:	Randel Freeman
Title:	Authorized Signatory
Centaurus Alpha Master Fund LP
Name of Entity
By:	/s/ Randel Freeman
Name:	Randel Freeman
Title:	Authorized Signatory
Citi Centaurus Ltd
Name of Entity
By:	/s/ Randel Freeman
Name:	Randel Freeman
Title:	Authorized Signatory
Trellus Partners, LP, LP2, Offshore
Name of Entity
By:	/s/ Adam Lisden
Name:	Adam Lisden
Title:	President
Capital Ventures International, by Heights Capital Management Inc. as Authorized Agent
Name of Entity
By:	/s/ Martin J. Kobinger
Name:	Martin J. Kobinger
Title:	Investment Manager
Perry Partners LP
Name of Entity
By:	/s/ Randall Borkenstein
Name:	Randall Borkenstein
Title:	Managing Director and Chief Financial Officer
Perry Commitment Master Fund, LP
Name of Entity
By:	/s/ Randall Borkenstein
Name:	Randall Borkenstein
Title:	Managing Director and Chief Financial Officer
Perry Commitment Fund, LP
Name of Entity
By:	/s/ Randall Borkenstein
Name:	Randall Borkenstein
Title:	Managing Director and Chief Financial Officer
Perry Partners, International, Inc.
Name of Entity
By:	/s/ Randall Borkenstein
Name:	Randall Borkenstein
Title:	Managing Director and Chief Financial Officer
Ascend Offshore Fund, Ltd.
Name of Entity
By:	/s/ Malcolm Fairbairn
Name:	Malcolm Fairbairn
Title:	Director
Ascend Offshore Leveraged Fund, Ltd.
Name of Entity
By:	/s/ Malcolm Fairbairn
Name:	Malcolm Fairbairn
Title:	Director
Ascend Partners Leveraged Fund, LP
Name of Entity
By:	/s/ Malcolm Fairbairn
Name:	Malcolm Fairbairn
Title:	Managing Member
Allen Investment Management LLC, F/B/O Allen Archon LP
Name of Entity
By:	/s/ Rosemary Farelli
Name:	Rosemary Farelli
Title:	Secretary
Wells Capital Management
Name of Entity
By:	/s/ Mai S. Shiver
Name:	Mai S. Shiver
Title:	Director Business Risk

IN WITNESS WHEREOF, the parties have executed this Purchase Agreement or caused their duly authorized officers to execute this Purchase Agreement as of the date first above written.

CENTRAL EUROPEAN
DISTRIBUTION CORPORATION
By:	/s/ William V. Carey
Name:	William V. Carey
Title:	President and Chief Executive Officer

Signature Page to CEDC Purchase Agreement

EX-10.2

Exhibit 10.2

Execution Version

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (the “Agreement”) is made and entered into as of this 3rd day of August, 2005 by and among Central European Distribution Corporation, a Delaware corporation (the “Company”), and the “Investors” named in that certain Purchase Agreement by and among the Company and the Investors of even date herewith (the “Purchase Agreement”).

The parties hereby agree as follows:

1. Certain Definitions.

As used in this Agreement, the following terms shall have the following meanings:

“Affiliate” means, with respect to any person, any other person which directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, such person.

“Business Day” means a day, other than a Saturday or Sunday, on which banks in New York City and Warsaw, Poland are open for the general transaction of business.

“Common Stock” shall mean the Company’s common stock, par value $0.01 per share, and any securities into which such shares may hereinafter be reclassified.

“Investors” shall mean the Investors identified in the Purchase Agreement and any Affiliate or permitted transferee of any Investor who is a subsequent holder of any Registrable Securities.

“Prospectus” shall mean the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus.

“Register,” “registered” and “registration” refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the 1933 Act (as defined below), and the declaration or ordering of effectiveness of such Registration Statement or document.

“Registrable Securities” shall mean the Shares and any other securities issued or issuable with respect to or in exchange for the Shares; provided, that, a security shall cease to be a Registrable Security upon (A) sale pursuant to a Registration Statement or Rule 144 under the 1933 Act, or (B) such security becoming eligible for sale by the Investors pursuant to Rule 144(k).

“Registration Statement” shall mean any registration statement of the Company filed under the 1933 Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

“SEC” means the U.S. Securities and Exchange Commission.

“Shares” means the shares of Common Stock issued pursuant to the Purchase Agreement.

“1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

2. Registration.

(a) Registration Statement. Promptly following the closing of the Bialystok Acquisition (as defined in the Purchase Agreement) (the “Closing Date”) but in no event following the later of September 19, 2005 or five (5) Business Days after the Closing Date (the “Filing Deadline”), the Company shall prepare and file with the SEC one Registration Statement on Form S-3 (or, if Form S-3 is not then available to the Company, on such form of registration statement as is then available to effect a registration for resale of the Registrable Securities), covering the resale of the Registrable Securities in an amount at least equal to the number of Shares. Such Registration Statement shall include the plan of distribution attached hereto as Exhibit A. Such Registration Statement also shall cover, to the extent allowable under the 1933 Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Securities. No securities held by a third party shall be included in such Registration Statement without the consent of each Investor. The Registration Statement (and each amendment or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided in accordance with Section 3(c) to the Investors and the Legal Counsel (as defined below) prior to its filing or other submission.

(b) Expenses. The Company will pay all expenses associated with each registration, including filing and printing fees, the Company’s counsel and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities laws, listing fees, fees and expenses, up to a maximum aggregate amount of $10,000, of one counsel to the Investors (“Legal Counsel”), which shall be Bass Berry & Sims PLC, or such other counsel as thereafter designated by the holders of at least a majority of the Registrable Securities, and the Investors’ reasonable expenses in connection with the registration, but excluding discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the Registrable Securities being sold.

(c) Effectiveness.

(i) The Company shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable, but in no event later than November 11, 2005. The Company shall notify the Investors by facsimile or e-mail as promptly as practicable, and in any event, within one Business Day, after the Registration Statement is declared effective and shall at such time provide the Investors with copies of any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby.

(ii) For not more than thirty (30) consecutive days or for a total of not more than sixty (60) days in any twelve (12) month period, the Company may delay the disclosure of material non-public information concerning the Company, by suspending the use of any Prospectus included in any registration contemplated by this Section which would be required to contain such information, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company (an “Allowed Delay”); provided, that the Company shall promptly (A) notify the Investors in writing of the existence of (but in no event shall the Company disclose to such Investor any of the facts or circumstances regarding) material non-public information giving rise to an Allowed Delay, (B) advise the Investors in writing to cease all sales under the Registration Statement until the end of the Allowed Delay and (C) use its commercially reasonable efforts to terminate an Allowed Delay as promptly as practicable.

-2-

3. Company Obligations. The Company will use its commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the terms hereof, and pursuant thereto the Company will, as expeditiously as possible:

(a) use its commercially reasonable efforts to cause such Registration Statement to become effective and to remain continuously effective for a period that will terminate upon the earlier of (i) the date on which all Registrable Securities covered by such Registration Statement as amended from time to time, have been sold, and (ii) the date on which all Registrable Securities covered by such Registration Statement may be sold pursuant to Rule 144(k) (the “Effectiveness Period”) and advise the Investors in writing when the Effectiveness Period has expired;

(b) prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement effective for the period specified in Section 3(a) and to comply with the provisions of the 1933 Act and the 1934 Act with respect to the distribution of all of the Registrable Securities covered thereby;

(c) provide copies to and permit Legal Counsel to review (i) each Registration Statement no fewer than five (5) Business Days prior to its filing with the SEC, and (ii) all amendments and supplements thereto (except for periodic reports filed pursuant to the 1934 Act) within a reasonable number of days prior to their filing with the SEC, and the Company shall not file any such Registration Statement, amendment or supplement in a form to which such Legal Counsel reasonably objects;

(d) furnish to the Investors and Legal Counsel (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company (but not later than two (2) Business Days after the filing date, receipt date or sending date, as the case may be) one (1) copy of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and each amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC, and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion of any thereof which contains information for which the Company has sought confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as each Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor that are covered by the related Registration Statement;

(e) use its commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if such order is issued, obtain the withdrawal of any such order at the earliest possible moment;

(f) prior to any public offering of Registrable Securities, unless an exemption from registration and qualification applies, use its commercially reasonable efforts to register or qualify or cooperate with the Investors and Legal Counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions requested by the Investors and do any and all other reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(f) or (ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject but for this Section 3(f);

-3-

(g) use its commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on each securities exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed;

(h) notify the Investors, at any time when a Prospectus relating to Registrable Securities is required to be delivered under the 1933 Act, as promptly as practicable upon discovery that, or upon the happening of any event as a result of which, the Prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing (provided that in no event shall such notice contain any material, non-public information), and at the request of any such holder, promptly prepare and furnish to such holder a reasonable number of copies of a supplement to or an amendment of such Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

(i) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the 1933 Act and the 1934 Act and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and

(j) with a view to making available to the Investors the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the SEC that may at any time permit the Investors to sell shares of Common Stock to the public without registration, the Company covenants and agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earlier of (A) six months after such date as all of the Registrable Securities may be resold pursuant to Rule 144(k) or any other rule of similar effect or (B) such date as all of the Registrable Securities shall have been resold; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the 1934 Act so long as the Company remains subject to such requirements and the filing of such reports and documents is required for the applicable provisions of Rule 144; and (iii) furnish to each Investor upon request, as long as such Investor owns any Registrable Securities, (A) a written statement by the Company that it has complied with the reporting requirements of the 1934 Act and (B) such other information as may be reasonably requested in order to avail such Investor of any rule or regulation of the SEC that permits the selling of any such Registrable Securities without registration; provided, that the Company shall not be obligated to deliver to any Investor any information that is filed by the Company with the SEC and is available on EDGAR.

4. Information. The Company shall not disclose material non-public information to the Investors, or to advisors to or representatives of the Investors, unless prior to disclosure of such information the Company identifies such information as being material non-public information and provides the Investors, such advisors and representatives with the opportunity to accept or refuse to accept such material non-public information for review and any Investor wishing to obtain such information enters into an appropriate confidentiality agreement with the Company with respect thereto.

5. Obligations of the Investors.

(a) Each Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it which shall be consistent with Exhibit A, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection

-4-

with such registration as the Company may reasonably request. In connection therewith, upon the execution of this Agreement, each Investor shall complete, execute and deliver to the Company the Selling Securityholder Notice and Questionnaire in the form attached hereto as Exhibit B. At least five (5) Business Days prior to the first anticipated filing date of any Registration Statement, the Company shall notify each Investor of any additional information the Company requires from such Investor if such Investor elects to have any of the Registrable Securities included in the Registration Statement. An Investor shall provide such information to the Company at least two (2) Business Days prior to the first anticipated filing date of such Registration Statement if such Investor elects to have any of the Registrable Securities included in the Registration Statement.

(b) Each Investor, by its acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of a Registration Statement hereunder, unless such Investor has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement.

(c) Each Investor agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii) the happening of an event pursuant to Section 3(h) hereof (each, a “Suspension Event”), such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the Investor’s receipt of the copies of the supplemented or amended prospectus filed with the SEC and until any related post-effective amendment is declared effective and, if so directed by the Company, the Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in the Investor’s possession of the Prospectus covering the Registrable Securities current at the time of receipt of such notice.

(d) Each Investor covenants and agrees that it shall comply with the prospectus delivery requirements of the 1933 Act as applicable to it in connection with sales of Registrable Securities pursuant to any Registration Statement.

6. Indemnification. In the event any Registrable Securities are included in a Registration Statement under this Agreement:

(a) Indemnification by the Company. The Company will indemnify and hold harmless, to the fullest extent permitted by law, each Investor and its officers, directors, members, employees and agents, successors and assigns, and each other person, if any, who controls such Investor within the meaning of the 1933 Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof; (ii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities laws thereof (any such application, document or information herein called a “Blue Sky Application”); (iii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; or (iv) any violation by the Company or its agents of any rule or regulation promulgated under the 1933 Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration (the matters in the foregoing clauses (i), (iii) and (iv) being collectively referred to herein as “Violations”); and will reimburse such Investor, and each such officer, director or member and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or

-5-

action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon (x) an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Investor or any such controlling person in writing specifically for use in such Registration Statement or Prospectus, or (y) a failure of such Investor to deliver or to cause to be delivered a prospectus made available by the Company in a timely manner pursuant to Section 3(d).

(b) Indemnification by the Investors. Each Investor agrees, severally but not jointly, to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, stockholders and each person who controls the Company (within the meaning of the 1933 Act) against any losses, claims, damages, liabilities (or actions in respect of the foregoing) and costs and expenses (including reasonable attorneys’ fees and expenses) that arise out of or are based upon any Violation, in each case to the extent, but only to the extent that such Violation arises out of or is based upon any information furnished in writing by such Investor to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment or supplement thereto. In no event shall the aggregate liability of an Investor pursuant to this Section 6(b) be greater in amount than the dollar amount of the proceeds received by such Investor upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.

(c) Conduct of Indemnification Proceedings. Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation.

(d) Contribution. If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no event shall the contribution obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses

-6-

paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.

7. Miscellaneous.

(a) Amendments and Waivers. This Agreement may be amended only by a writing signed by the Company and the holders of at least a majority of the Registrable Securities. The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent to such amendment, action or omission to act, of the holders of at least a majority of the Registrable Securities.

(b) Notices. All notices and other communications provided for or permitted hereunder shall be made as set forth in Section 9.4 of the Purchase Agreement.

(c) Assignments and Transfers by Investors. The provisions of this Agreement shall be binding upon and inure to the benefit of the Investors and their respective successors and assigns. An Investor may transfer or assign, in whole or from time to time in part, to one or more persons its rights hereunder in connection with the transfer of Registrable Securities by such Investor to such person, provided that such Investor complies with all laws applicable thereto and provides written notice of assignment to the Company promptly after such assignment is effected.

(d) Assignments and Transfers by the Company. This Agreement may not be assigned by the Company (whether by operation of law or otherwise) without the prior written consent of the holders of at least a majority of the Registrable Securities; provided, however, that the Company may assign its rights and delegate its duties hereunder to any surviving or successor corporation in connection with a merger or consolidation of the Company with another corporation, or a sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation, without the prior written consent of the holders of at least a majority of the Registrable Securities, after notice duly given by the Company to each Investor.

(e) Benefits of the Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

(f) Counterparts; Faxes. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed via facsimile, which shall be deemed an original.

(g) Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

(h) Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render

-7-

unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable in any respect.

(i) Further Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

(j) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

(k) Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

[Remainder of Page Intentionally Left Blank]

-8-

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement or caused their duly authorized officers to execute this Registration Rights Agreement as of the date first above written.

CENTRAL EUROPEAN
DISTRIBUTION CORPORATION INVESTORS: Strategic Advisors Corp. - on behalf of managed account
Name of Entity
By:	/s/ Martin G. Braun
Name:	Martin G. Braun
Title:	President
Strategic Advisors Corp. - on behalf of managed account
Name of Entity
By:	/s/ Martin G. Braun
Name:	Martin G. Braun
Title:	President
Epic Capital Management as Investment Manager
Name of Entity
By:	/s/ David Fawcett
Name:	David Fawcett
Title:	CEO
Gluskin Sheff + Associates, Inc.
Name of Entity
By:	/s/ Sylvia Cheung
Name:	Sylvia Cheung
Title:	VP, Investment Accounting
Castlerigg Master Investments Ltd.
Name of Entity
By:	/s/ John Nusbaum
Name:	John Nusbaum
Title:	Senior Managing Director
Gardner Lewis
Name of Entity
By:	/s/ William D. Zantzinger, Jr.
Name:	William D. Zantzinger, Jr.
Title:	Partner
Magna Global Emerging Markets Fund (Sub-Fund of Magna Umbrella Fund Pic)
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of Magna Global Emerging Markets Fund (Sub-Fund of Magna Umbrella Fund Pic)
Magna Eastern European Fund (Sub-Fund of Magna Umbrella Fund Pic)
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of Magna Eastern European Fund (Sub-Fund of Magna Umbrella Fund Pic)
Julius Bear Multistock - Central Europe Stock Fund
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of Julius Bear Multistock - Central Europe Stock Fund
US Global Accolade Funds - Eastern European Fund
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of US Global Accolade Funds - Eastern European Fund
US Global Accolade Funds - Global Emerging Markets Fund
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of US Global Accolade Funds - Global Emerging Markets Fund
Nouvelle Croissance Europe
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of Nouvelle Croissance Europe
Manulife Global Fund - Emerging Eastern Europe Fund
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of Manulife Global Fund - Emerging Eastern Europe Fund
Charlemagne CIS Fund Limited
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of Charlemagne CIS Fund Limited
OCCO Eastern European Fund
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of OCCO Eastern European Fund
OCCO Global Emerging Markets Fund
Name of Entity
By:	/s/ Adrian Jones
Name:	Adrian Jones
Title:	Authorized Signatory for and on Behalf of OCCO Global Emerging Markets Fund

Signature Page to CEDC Registration Rights Agreement

-9-

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement or caused their duly authorized officers to execute this Registration Rights Agreement as of the date first above written.

INVESTORS: Elliot Associates LP
Name of Entity
By:	/s/ Elliot Greenberg
Name:	Elliot Greenberg
Title:	Elliot Greenberg, Vice President
Elliot International, LP
Name of Entity
By:	/s/ Elliot Greenberg
Name:	Elliot Greenberg
Title:	Elliot Greenberg, Vice President
Greenway Managed Account Series E
Name of Entity
By:	/s/ Randel Freeman
Name:	Randel Freeman
Title:	Authorized Signatory
Centaurus Alpha Master Fund LP
Name of Entity
By:	/s/ Randel Freeman
Name:	Randel Freeman
Title:	Authorized Signatory
Citi Centaurus Ltd
Name of Entity
By:	/s/ Randel Freeman
Name:	Randel Freeman
Title:	Authorized Signatory
Trellus Partners, LP, LP2, Offshore
Name of Entity
By:	/s/ Adam Lisden
Name:	Adam Lisden
Title:	President
Capital Ventures International, by Heights Capital Management Inc. as Authorized Agent
Name of Entity
By:	/s/ Martin J. Kobinger
Name:	Martin J. Kobinger
Title:	Investment Manager
Perry Partners LP
Name of Entity
By:	/s/ Randall Borkenstein
Name:	Randall Borkenstein
Title:	Managing Director and Chief Financial Officer
Perry Commitment Master Fund, LP
Name of Entity
By:	/s/ Randall Borkenstein
Name:	Randall Borkenstein
Title:	Managing Director and Chief Financial Officer
Perry Commitment Fund, LP
Name of Entity
By:	/s/ Randall Borkenstein
Name:	Randall Borkenstein
Title:	Managing Director and Chief Financial Officer
Perry Partners, International, Inc.
Name of Entity
By:	/s/ Randall Borkenstein
Name:	Randall Borkenstein
Title:	Managing Director and Chief Financial Officer
Ascend Offshore Fund, Ltd.
Name of Entity
By:	/s/ Malcolm Fairbairn
Name:	Malcolm Fairbairn
Title:	Director
Ascend Offshore Leveraged Fund, Ltd.
Name of Entity
By:	/s/ Malcolm Fairbairn
Name:	Malcolm Fairbairn
Title:	Director
Ascend Partners Leveraged Fund, LP
Name of Entity
By:	/s/ Malcolm Fairbairn
Name:	Malcolm Fairbairn
Title:	Managing Member
Allen Investment Management LLC, F/B/O Allen Archon LP
Name of Entity
By:	/s/ Rosemary Farelli
Name:	Rosemary Farelli
Title:	Secretary
Wells Capital Management
Name of Entity
By:	/s/ Mai S. Shiver
Name:	Mai S. Shiver
Title:	Director Business Risk

Signature Page to CEDC Registration Rights Agreement

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement or caused their duly authorized officers to execute this Registration Rights Agreement as of the date first above written.

CENTRAL EUROPEAN
DISTRIBUTION CORPORATION
By:	/s/ William V. Carey
Name:	William V. Carey
Title:	President and Chief Executive Officer

Signature Page to CEDC Registration Rights Agreement

Exhibit A

Plan of Distribution

We are registering the shares of common stock owned by the selling stockholders to permit the resale of these shares of common stock by the holders from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common stock. We will bear all fees and expenses incident to our obligation to register the shares of common stock.

The selling stockholders may sell all or a portion of the shares of common stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers, the selling stockholders would be responsible for underwriting discounts or commissions or agent’s commissions. The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions, in any one or more of the following methods:

• on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

• in the over-the-counter market;

• in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

• through the writing of options, whether such options are listed on an options exchange or otherwise;

• ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

• block trades in which the broker-dealer would attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

• purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

• an exchange distribution in accordance with the rules of the applicable exchange;

• privately negotiated transactions;

• through the settlement of short sales;

• pursuant to Rule 144 under the 1933 Act;

• broker-dealers may agree with the selling security holders to sell a specified number of such shares at a stipulated price per share;

• a combination of any such methods of sale; and

• any other method permitted pursuant to applicable law.

If the selling stockholders effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the common stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the common stock in the course of hedging in positions they assume. The selling stockholders may also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions. The selling stockholders may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares.

The selling stockholders may pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the 1933 Act, amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest would be the selling beneficial owners for purposes of this prospectus.

The selling stockholders and any broker-dealer participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the 1933 Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the 1933 Act. At the time a particular offering of the shares of common stock is made, a prospectus supplement, if required, would be distributed which would set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling stockholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.

Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

There can be no assurance that any selling stockholder could sell any or all of the shares of common stock registered pursuant to the shelf registration statement, of which this prospectus forms a part.

The selling stockholders and any other person participating in such distribution would be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of common stock.

We will pay all expenses of the registration of the shares of common stock pursuant to the registration rights agreement, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that a selling stockholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling stockholders against liabilities, including some liabilities under the 1933 Act, in accordance with the registration rights agreements, or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the 1933 Act, that may arise from any written information furnished to us by the selling stockholders specifically for use in this prospectus, in accordance with the related registration rights agreements, or we may be entitled to contribution.

Once sold under the shelf registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our affiliates.

Exhibit B

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

SELLING SECURITYHOLDER NOTICE

AND QUESTIONNAIRE

The undersigned is a purchaser of common stock, par value $.01 per share (“Common Stock”), of Central European Distribution Corporation, a Delaware corporation (the “Company”), pursuant to that certain Purchase Agreement dated as of August 3, 2005 (the “Purchase Agreement”) by and among the Company and the Investors listed on Schedule I thereto (the “Investors”). Pursuant to the Purchase Agreement, the Company also entered in a Registration Rights Agreement dated as of August 3, 2005 with the Investors (the “Registration Rights Agreement”) pursuant to which the Company agreed, among other things, to file with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (as amended, modified or supplemented, the “Shelf Registration Statement”), for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “1933 Act”), of the shares of Common Stock issued and sold by the Company to the Investors (including the undersigned) pursuant to the Purchase Agreement (including any other securities issued or issuable with respect to or in exchange for such shares, the “Registrable Securities”). All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

Each beneficial owner of Registrable Securities is entitled to the benefits of the Registration Rights Agreement. In order to sell or otherwise dispose of any Registrable Securities pursuant to the Shelf Registration Statement, a beneficial owner of Registrable Securities generally will be required to be named as a selling securityholder in the related prospectus, deliver a prospectus to purchasers of Registrable Securities and be bound by those provisions of the Registration Rights Agreement applicable to such beneficial owner (including certain indemnification provisions, as described below). Beneficial owners that do not complete this Selling Securityholder Notice and Questionnaire (this “Questionnaire”) and deliver it to the Company as provided below will not be named as selling securityholders in the prospectus and therefore will not be permitted to sell any Registrable Securities pursuant to the Shelf Registration Statement. Beneficial owners are required to complete and deliver this Questionnaire prior to the filing of the Shelf Registration Statement so that such beneficial owners may be named as selling securityholders in the related prospectus at the time of the filing of the Shelf Registration Statement. Upon receipt of a completed Questionnaire from all beneficial owners of Registrable Securities, the Company will file the Shelf Registration Statement.

Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and the related prospectus.

NOTICE

The undersigned beneficial owner (the “Selling Securityholder”) of Registrable Securities hereby gives notice to the Company of its intention to sell or otherwise dispose of Registrable Securities beneficially owned by it and listed below in Item 3 pursuant to the Shelf Registration Statement. The undersigned, by signing and returning this Questionnaire, understands that it will be bound by the terms and conditions of this Questionnaire and the Registration Rights Agreement.

Pursuant to the Registration Rights Agreement, the undersigned has agreed to indemnify and hold harmless the Company, the Company’s directors, officers, employees and stockholders and each person, if any, who controls the Company within the meaning of the Securities Act, from and against certain losses arising in connection with statements concerning the undersigned made in the Shelf Registration Statement or the related prospectus in reliance upon the information provided in this Notice and Questionnaire.

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate and complete:

QUESTIONNAIRE

1. Full Legal Name of Selling Stockholder.

______________________________________________________________________________________

2. Address for Notices to Selling Stockholder:

______________________________________________________________________________________

______________________________________________________________________________________

______________________________________________________________________________________

Telephone:                                                                                                                                                             

Facsimile:                                                                                                                                                              

Contact Person:                                                                                                                                                      

3. Number of Shares of Common Stock to be included in Shelf Registration Statement:

______________________________________________________________________________________

4. Beneficial Ownership of Other Securities of the Company owned by the Selling Securityholder:

	Of Record	Beneficially
Common Stock (other than the Shares to be included in the Shelf Registration Statement):	__________	__________

Except as set forth in this Item (4), the undersigned is not the beneficial or registered owner of any securities of the Company other than the Registrable Securities listed above in Item (3).

State any exceptions here:

5. Relationships with the Company:

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equityholders (5% or more) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

State any exceptions here:

6. Plan of Distribution:

Except as set forth below, the undersigned (including its donees or pledgees) intends to distribute the Registrable Securities listed above in Item (3) pursuant to the Shelf Registration Statement in accordance with the Plan of Distribution attached as Exhibit A to the Registration Rights Agreement.

State any exceptions here:

Note: In no event will such method(s) of distribution take the form of an underwritten offering of the Registrable Securities without the prior agreement of the Company.

The undersigned acknowledges that it understands its obligation to comply with the provisions of the Exchange Act and the rules thereunder relating to stock manipulation, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Registrable Securities pursuant to the Shelf Registration Statement. The undersigned agrees that neither it nor any person acting on its behalf will engage in any transaction in violation of such provisions.

Once this Questionnaire is executed by the undersigned and received by the Company, this Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives, and assigns of the Company and the undersigned (with respect to the Registrable Securities beneficially owned by the undersigned and listed in Item (3) above).

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items (1) through (6) above and the inclusion of such information in the Shelf Registration Statement and the related prospectus. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Shelf Registration Statement and the related prospectus and for any required disclosures to any self-regulatory body, including the NASD. The Selling Securityholder understands that such information will be relied upon by the Company in connection with the preparation of the Shelf Registration Statement and the related prospectus and any amendments or supplements thereto.

In accordance with the undersigned’s obligation under the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration Statement, the undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains effective.

[Signature page follows.]

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Selling Securityholder Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

Dated:             , 2005

Beneficial Owner

By:

Name:

Title:

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, William V. Carey, President and Chief Executive Officer of Central European Distribution Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Central European Distribution Corporation;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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 quarterly 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 quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

d) Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter 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 registrant’s board of directors (or persons performing the equivalent function):

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: November 9, 2005

By:	/s/ William V. Carey
	William V. Carey President and Chief Executive Officer (principal executive officer)

31

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Chris Biedermann, Chief Financial Officer of Central European Distribution Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Central European Distribution Corporation;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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 quarterly 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 quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

d) Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter 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 registrant’s board of directors (or persons performing the equivalent function):

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: November 9, 2005

By:	/s/ Chris Biedermann
	Chris Biedermann Vice President and Chief Financial Officer (principal financial officer)

32

EX-32.1

Exhibit 32.1

Written Statement of Chief Executive Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned, the Chief Executive Officer of Central European Distribution Corporation (the “Company”), hereby certifies that, to his knowledge on the date hereof:

(a) the Form 10-Q of the Company for the quarterly period ended September 30, 2005, filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William V. Carey

William V. Carey

Chairman, President and Chief Executive Officer

November 9, 2005

33

EX-32.2

Exhibit 32.2

Written Statement of Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned, the Chief Financial Officer of Central European Distribution Corporation (the “Company”), hereby certifies that, to his knowledge on the date hereof:

(a) the Form 10-Q of the Company for the quarterly period ended September 30, 2005, filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Chris Biedermann

Chris Biedermann

Vice President and Chief Financial Officer

November 9, 2005

34