Licence Agreement

RNS Number : 4459V

Blavod Extreme Spirits PLC

28 May 2008

BLAVOD EXTREME SPIRITS PLC ('THE COMPANY')

LICENCE AGREEMENT

28 MAY 2008

Blavod Extreme Spirits PLC announces that Blavod Drinks Limited has today signed a full licence agreement for the use of the intellectual property rights ('IPR') of Blackwood's Gin and Blackwood's Vodka, and is in advanced discussions to sign a licence agreement for Jago's Vodka cream liqueur.

The agreement in respect of Blackwood's Gin and Vodka has been reached with Shetland Spirit Company Limited (in administration) ('Shetland Spirits'), with whom a short term UK distribution agreement was announced on 25 April 2008.

Blackwood's Gin is unique in that it is made with hand picked Shetland botanicals from a single season - hence a single 'vintage' gin. This agreement allows the Company to participate in the attractive 'premium' part of the spirits market: Blackwood's commands a premium price and competes in the same market as Bombay Sapphire gin. It is currently stocked in many of the major multiple supermarket and off-licence chains in the UK, and also has export potential in markets where premium priced gin is showing growth such as the USA, Duty Free and markets such as Spain and Germany.

The consideration amounts to £300,000 in cash payable immediately, and a further £300,000 in cash phased over the next 12 months. From year 3 post agreement until the end of year 7 a profit share is payable to Shetland Spirits amounting to 35% of net profits before tax attributable to the Blackwood's IPR. At the end of the seventh year Blavod Drinks Limited has the option to acquire the IPR for £1. If certain conditions are satisfied early then the option to purchase may be exercised earlier.